Reports from the Economic Front

a blog by Marty Hart-Landsberg

Category Archives: Organizing

False Promises: Trump And The Revitalization Of The US Economy

President Trump likes to talk up his success in promoting the reindustrialization of the United States and the return of good manufacturing jobs.  But there is little reason to take his talk seriously.

Microsoft closes shop

For example, as reported in a recent article in the Oregonian, Microsoft just decided to close its two year old Wilsonville factory, where it built its giant touch-screen computer, the Surface Hub.  As the article explains :

Just two years ago, Microsoft cast its Wilsonville factory as the harbinger of a new era in American technology manufacturing.

The tech giant stamped, “Manufactured in Portland, OR, USA” on each Surface Hub it made there. It invited The New York Times and Fast Company magazine to tour the plant in 2015, then hired more than 100 people to make the enormous, $22,000 touch-screen computer. . . .

“We looked at the economics of East Asia and electronics manufacturing,” Microsoft vice president Michael Angiulo told Fast Company in a fawning 2015 article that heaped praise on the Surface Hub and Microsoft’s Wilsonville factory.

“When you go through the math, (offshoring) doesn’t pencil out,” Angiulo said. “It favors things that are small and easy to ship, where the development processes and tools are a commodity. The machines that it takes to do that lamination? Those only exist in Wilsonville. There’s one set of them, and we designed them.” . . .

But last week Microsoft summoned its Wilsonville employees to an early-morning meeting and announced it will close the factory and lay off 124 employees – nearly everyone at the site – plus dozens of contract workers. . . .

Even as President Donald Trump heralds “Made in America” week, high-tech manufacturing remains an endangered species across the United States. Oregon has lost more than 14,000 electronics manufacturing jobs since 2001, according to state data, more than a quarter of the total job base.

Microsoft is moving production of its Surface Hub to China, which is where it makes all its other Surface products.  Apparently, the combination of China’s low-cost labor and extensive supplier networks is an unbeatable combination for most high-tech firms.  In fact, the Oregonian article goes on to quote a Yale economist as saying:

“Re-shoring” stories like the tale Microsoft peddled in 2015 are little more than public relations fakery,” [providing] “lip services or window-dressing to please politicians and the general public.”

Foxconn says it is investing

But now we have another bigger and bolder re-shoring story: The Taiwanese multinational Foxconn has announced it will spend $10 billion to build a new factory somewhere in Wisconsin (likely in Paul Ryan’s district), where it will produce flat-panel display screens for televisions and other consumer electronics.

As reported in the press, Foxconn is pledging to create 13,000 jobs in six years—but only 3000 at the start.  In return, the state of Wisconsin is offering the company $3 billion in subsidies.

According to the Trump administration, this is a sign that its efforts to bring back good manufacturing jobs is working.  The Guardian quotes a senior administration official “who said the announcement was ‘meaningful,’ because ‘it [represents] a milestone in bringing back advanced manufacturing, specifically in the electronics sector, to the United States.’”  President Trump followed with “If I didn’t get elected, [Foxconn] definitely would not be spending $10bn.”

However, there are warning signs.  For example, as an article in the Cap Times points out, Foxconn doesn’t always follow through on its promises:

  • Foxconn promised a $30 million factory employing 500 workers in Harrisburg, Pennsylvania, in 2013. The plant was never built, not a single job was created.
  • That same year, the company signed a letter of intent to invest up to $1 billion in Indonesia. Nothing came of it.
  • Foxconn announced it would invest $5 billion and create 50,000 jobs over five years in India as part of an ambitious expansion in 2014. The investment amounted to a small fraction of that, according to The Washington Post’s Todd Frankel.
  • Foxconn committed to a $5 billion investment in Vietnam in 2007, and $10 billion in Brazil in 2011. The company made its first major foray in Vietnam only last year. In Brazil, Foxconn has an iPhone factory, but its investment has fallen far short of promises.
  • Foxconn recently laid off 60,000 workers, more than 50 percent of its workforce at its IPhone 6 factory in Kushan, China, replacing them with robots that Foxconn produces.

In fact, even the Wisconsin Legislative Fiscal Bureau is worried that the state may be overselling the deal, promising billions for very little.  As a Verge article reported:

Wisconsin’s plan to treat Foxconn to $3 billion in tax breaks in exchange for a $10 billion factory is looking less and less like a good deal for the state. In a report issued this week, Wisconsin’s Legislative Fiscal Bureau said that the state wouldn’t break even on its investment until 2043 — and that’s in an absolute best-case scenario.

How many workers Foxconn actually hires, and where Foxconn hires them from, would have a significant impact on when the state’s investment pays off, the report says.

The current analysis assumes that “all of the construction-period and ongoing jobs associated with the project would be filled by Wisconsin residents.” But the report says it’s likely that some positions would go to Illinois residents, because the factory would be located so close to the border. That would lower tax revenue and delay when the state breaks even.

And that’s still assuming that Foxconn actually creates the 13,000 jobs it claimed it might create, at the average wage — just shy of $54,000 — it promised to create them at. In fact, the plant is only expected to start with 3,000 jobs; the 13,000 figure is the maximum potential positions it could eventually offer. If the factory offers closer to 3,000 positions, the report notes, “the break-even point would be well past 2044-45.”

The authors of the report even seem somewhat skeptical of the best-case scenario happening. Foxconn is already investing heavily in automation, and there’s no guarantee it won’t do the same thing in Wisconsin. Nor is there any guarantee that Foxconn will remain such a manufacturing powerhouse. (Its current success relies heavily on the success of the iPhone.)

It is because of concerns like these, that the Milwaukee Journal Sentinel reports that the state’s Senate Majority Leader has said he doesn’t yet have the votes to pass the tax package Governor Scott Walker has promised.

Forget the new trade deals

President Trump has also spoken often about his determination to revisit past trade deals and restructure them in order to strengthen the economy and boost manufacturing employment.  However, it is now clear that the agreement restructuring he has in mind is what he calls “modernization” and that translates into expanding the terms of existing agreements to cover new issues of interest to leading US multinational corporations.

As Inside US Trade explains:

Commerce Secretary Wilbur Ross on Wednesday said “the easiest issues” to be addressed in North American Free Trade Agreement modernization talks “should be” those that were not part of the existing agreement, which entered into force in 1994.

“The easiest ones will be the ones that weren’t contained in the original agreement because that’s new territory; that’s not anybody giving up anything,” Ross said at an event hosted by the Bipartisan Policy Institute on May 31. “And by and large, those should be the easiest issues to get done.”

Ross added that those new issues are important “because one of our objectives will be to try to incorporate in NAFTA kind of basic principles that we would like to have followed in subsequent free-trade agreements, rather than starting each one with a blank sheet of paper.”

Among those issues — which he called “big holes” in the old agreement — he listed the digital economy, services, and financial services. . . .

Ross reiterated the administration’s stance that the “guiding principle is do no harm” in redoing NAFTA, while the second “rule of thumb” is to view concessions made by Mexico and Canada in the Trans-Pacific Partnership negotiations “as sort of a starting point” for NAFTA talks.

Asked whether the administration has set itself up for “unrealistic aspirations” on NAFTA — promising to return to the U.S. jobs that the president has often claimed were lost due to the agreement with Mexico and Canada — Ross cautioned against viewing a retooled deal as a “silver bullet.”

In short, it is foolish and costly to believe the promises made to working people by leading corporations and the Trump administration.  Hopefully, growing numbers of people are getting wise to the game being played, making it easier for us to more effectively organize and advance our own interests.

The Popularity Of Unions Is Growing, Especially Among Younger People

The Pew Research Center recently surveyed Americans about their views of labor unions and corporations.

As the chart below shows, a growing percentage of Americans view both unions and corporations favorably.  The favorable rating for unions, at 60 percent, is near its 2001 high.  The favorable rating for corporations still remains significantly below its 2001 high.

Favorable ratings for corporations are no doubt boosted by the steady drumbeat of media celebrations of corporate leaders as American heroes and “job creators.”  Unions, on the other hand, rarely get positive press.  In fact, they are being attacked across most of the country by state legislators eager to curry corporate favor by passing new laws designed to weaken worker and unions rights.  Thus, it seems likely that their growing popularity is the result of a growing awareness that organized resistance is needed to reverse the decline in majority living and working conditions, and that unions are one of the most important instruments to help organize that resistance.

As we see next, there is broad support for unions.  Dividing the population by age, with the exception of those over 65 years of age, the favorable view of unions is greater than the favorable view of corporations.  The strong support by those 18-29 is especially striking; three out of four have a favorable view of labor unions.  Dividing the population by family income, only those with an income of $75,000 or more view corporations more favorably than unions.

Looking at political party registration shows that “Democrats and Democratic-leaning independents are much more favorable toward labor unions than business corporations, while the inverse is true for Republicans and Republican leaners.”

However, while “There are no significant demographic differences among Democrats in views of labor unions, . . . Republicans are divided along age, educational and ideological lines.”  In particular, as we see below, among Republican and Republican leaners 18 to 49 years of age, the percent with a favorable view of unions is far greater than the percent with an unfavorable view.

In sum, the Pew survey points to the growth of an increasingly fertile environment for the rebirth of a strong union movement, especially among younger people.

US Health Care: Profits Over People

The US health care system produces healthy profits while leaving growing numbers of people without access to affordable, quality health care.

The US is one of the only advanced capitalist countries without a system of universal health coverage.  Tens of millions are uninsured, and many millions more pay for insurance that is either too limited in its coverage or too expensive to use.  What we need, and could implement if political realities change, is a “Medicare for all,” single-payer system of national health insurance.

As the organization Physicians for a National Health Program explains:

Single-payer national health insurance, also known as “Medicare for all,” is a system in which a single public or quasi-public agency organizes health care financing, but the delivery of care remains largely in private hands. Under a single-payer system, all residents of the U.S. would be covered for all medically necessary services, including doctor, hospital, preventive, long-term care, mental health, reproductive health care, dental, vision, prescription drug and medical supply costs.

The program would be funded by the savings obtained from replacing today’s inefficient, profit-oriented, multiple insurance payers with a single streamlined, nonprofit, public payer, and by modest new taxes based on ability to pay. Premiums would disappear; 95 percent of all households would save money. Patients would no longer face financial barriers to care such as co-pays and deductibles, and would regain free choice of doctor and hospital. Doctors would regain autonomy over patient care.

Bad health care outcomes

Our health care system fails to deliver affordable, accessible, quality health care. Even a writer for Forbes magazine, a publication that proclaims itself to be a “capitalist tool,” acknowledges this:

It’s fairly well accepted that the U.S. is the most expensive healthcare system in the world, but many continue to falsely assume that we pay more for healthcare because we get better health (or better health outcomes). The evidence, however, clearly doesn’t support that view.

For example, take a look at the exhibit below, which comes from a 2014 Commonwealth Fund study on health care in the eleven listed nations.

As you can see, the US ranked last in the overall ranking, thanks to its relative poor performance in the category of access and last place standing in the categories of efficiency, equity, and healthy lives.

The Forbes article summarizes the reasons given by the Commonwealth Fund for the poor US performance:

Access: Not surprisingly — given the absence of universal coverage — people in the U.S. go without needed health care because of cost more often than people do in the other countries.

Efficiency: On indicators of efficiency, the U.S. ranks last among the 11 countries, with the U.K. and Sweden ranking first and second, respectively. The U.S. has poor performance on measures of national health expenditures and administrative costs as well as on measures of administrative hassles, avoidable emergency room use, and duplicative medical testing.

Equity: The U.S. ranks a clear last on measures of equity. Americans with below-average incomes were much more likely than their counterparts in other countries to report not visiting a physician when sick; not getting a recommended test, treatment, or follow-up care; or not filling a prescription or skipping doses when needed because of costs. On each of these indicators, one-third or more lower-income adults in the U.S. said they went without needed care because of costs in the past year.

Healthy lives: The U.S. ranks last overall with poor scores on all three indicators of healthy lives — mortality amenable to medical care, infant mortality, and healthy life expectancy at age 60. Overall, France, Sweden, and Switzerland rank highest on healthy lives.

What accounts for this outlier status in health care?  According to the report:

The most notable way the U.S. differs from other industrialized countries is the absence of universal health insurance coverage. Other nations ensure the accessibility of care through universal health systems and through better ties between patients and the physician practices that serve as their medical homes.

A Guardian article on the US health care system provides further confirmation of US outlier status:

Broadly speaking, the World Health Organization (WHO) defines universal health coverage as a system where everyone has access to quality health services and is protected against financial risk incurred while accessing care. . . . Among the 35 OECD member countries, 32 have now introduced universal healthcare legislation that resembles the WHO criteria.

And yet we pay the most

The graphic below, from the Guardian article, provides a stark picture of just how much we pay to get our poor health care outcomes.

Significantly, it was in the early 1980s that our per capita health care spending began to soar compared with all other developed capitalist countries, a period marked by the government’s growing embrace of pro-market, neoliberal policies designed to promote corporate profitability. And as the graphic also makes clear, we have seen limited gains in life expectancy despite dramatically outspending the other listed developed countries.

So what gives?

So, you might ask, where is all the money we spend on health care going if not to improve our health care outcomes?  Well, the answer is simple: higher profits for the health care industry.

The headline of a New York Times article says it all: “Gripes About Obamacare Aside, Health Insurers Are in a Profit Spiral.”  As a result:

Since March 2010, when the Affordable Care Act was signed into law, the [stock prices of] managed care companies within the Standard & Poor’s 500-stock index — UnitedHealth, Aetna, Anthem, Cigna, Humana and Centene — have risen far more than the overall stock index. This is no small matter: The stock market soared during that period.

The numbers are astonishing. The Standard & Poor’s stock index returned 135.6 percent in those seven years through Thursday, a performance that we may not see again in our lifetimes. But the managed care stocks, as a whole, have gained nearly 300 percent including dividends, according to calculations by Bespoke Investment Group.

These and other leading health care corporations oppose a Medicare for all system because its adoption would put an end to their massive profits.  And these companies have many allies in the rest of the corporate community because any policy that strengthens the principle of putting people before profits is a threat to them all.

Hopefully, however, the importance of health care and the obviously poor performance of our health care system as a health care system (as opposed to a profit center) will motivate people to keep pressing for real change.  And, who knows, a health care victory might also encourage a broader public discussion about how best to organize the rest of our economy.

Unions Fight Inequality

The decline in unionization is one of the most important factors promoting the concentration of income at the upper end of the income distribution.  The statement may not surprise you, but the fact that this was the conclusion of an IMF study of the causes of inequality might.

Here is how the authors of Inequality and Labor Market Institutions summarize their main findings:

The results indicate that the rise of inequality in the advanced economies included in this study has been driven by the upper part of the income distribution, owing largely to the increase in income shares of top 10 percent earners. We find evidence that the decline in union density—the fraction of union members in the workforce—is strongly associated with the rise of top income shares. . . . Our empirical results also indicate that unions can affect income redistribution through their influence on public policy. We further find that reductions in the minimum wage relative to the median wage are related to significant increases in inequality.

Of course, the authors of the study were quick to add: “These findings, however, should not be seen as a blanket recommendation for strengthening these labor market institutions.”

While we should never count on the IMF to promote progressive policies, the findings of the study do highlight the importance of a strong trade union movement if we want to build an economy that works for the great majority of working people.  The fact that unionization has been in decline in the great majority of the twenty advanced capitalist countries studied by the IMF researchers strongly suggests that elites know exactly what they want.

Trends in inequality and labor market institutions

Inequality has been on the rise in almost all advanced capitalist economies, with attention increasingly focused on the growing concentration of income at the top of the distribution.  Common explanations for this trend include globalization, skill-based technological change, financial deregulation, and the decline in top marginal personal tax rates.  In their study for the IMF, Florence Jaumotte and Carolina Osorio Buitron investigate whether labor market institutions, in particular the degree of unionization and relative value of minimum wage, might also be responsible.

The authors examine inequality trends in twenty advanced capitalist countries over the period 1980 to 2010 using two main measures of inequality, the income share of the top 10 percent earners and the Gini coefficient (which ranges from 0 to 1 with higher numbers showing greater inequality).  The former is most useful for capturing changes at the top of the income distribution.  The latter, because of data limitations, is better at showing changes at the middle and bottom of the income distribution.  They therefore use Gini coefficients of gross and net income to test whether the strength of labor market institutions affects redistribution.

Figure 2 below illustrates the growth in inequality in the sample of advanced capitalist economies, and the importance of income concentration at the top of the income distribution.  As the authors explain:

Gross earnings differentials between the 9th and 5th deciles of the distribution have increased over four times as much as the differential between the 5th and 1st deciles. Moreover, data from the Luxembourg Income Survey on net income shares indicate that income shares of the top 10 percent earners have increased at the expense of all other income groups.

Figure 3 looks at trends in union density and relative minimum wage values, the authors’ proxies for the strength of labor market institutions.  As we can see, the degree of unionization has fallen steadily over the period, while the decline in the relative value of the minimum wage has been far more modest.  However, national experiences differ greatly.  In the case of union density, some countries actually registered an increase while in others density declined by almost 50 percent. Interestingly, the authors find no evidence of a relationship between changes in union density and changes in the minimum wage.

Union strength reduces inequality

The authors begin their test of the relationship between labor market institutions and inequality by running simple correlations between the two.  They find

a strong negative relation between the top 10 percent income share and union density, both within and across countries. The Gini of gross income is also negatively related with union density, but the relationship is somewhat weaker and mostly present within countries. The correlation coefficients for the minimum wage and the various inequality measures are more mixed. A similar exercise suggests a positive association between union density and redistribution: while the correlation between union density and the Gini coefficient of gross income is weak, its correlation with the Gini of net income is clearly negative.

While these correlation results suggest that greater union density helps workers claw back income from those at the top and improve the overall income distribution, simple correlations are far from conclusive because they do not hold other factors that might influence the variables constant.

Therefore, the authors use sophisticated econometric methods to try and isolate the importance of labor market institutions on inequality.  Among the factors they control for are:

technology (the share of information and communications technology capital in the total capital stock); globalization (the share of China in world exports interacted with the country’s lagged level of income per capita); financial reform (the index constructed by Abiad, Detragiache, and Tressel, 2008, which varies with changes in credit controls and reserve requirements, interest rate controls, entry barriers, state ownership, securities market policies, banking regulations, and capital account restrictions); the top marginal personal income tax rate; and a banking crisis dummy variable.

The authors find, consistent with the literature, that technology, globalization, financial liberalization, and tax reductions all increase inequality, with the latter two variables positively associated with an increase in top income shares.  But they also find a significant negative relationship between union strength and inequality and income concentration:

Our benchmark estimates of gross income inequality indicate that the weakening of unions is related to increases in the top 10 percent income share. A 10 percentage point decline in union density is associated with a 5 percent increase in the top 10 percent income share. The relation between union density and the Gini of gross income is also negative and significant.

At the other end of the income distribution, the minimum wage is closely associated with the Gini coefficient of gross income but not with the top income share. A 10 percentage point decline in the ratio of the minimum wage to the median wage is related to a 5 percent increase in the Gini coefficient of gross income.

The authors then test the robustness of their results by adding additional labor market, economic, and social variables, but with little change in outcome.  Their strong conclusion remains: an increase in union density reduces the share of income going to the top 10 percent and improves the overall distribution of income.

Magnitude of the effects

The authors illustrate the relative importance union density and the minimum wage to the growth in inequality in Figure 7, below. “The height of each bar measures the contribution of a variable to the rise in inequality over the period 1980–2010—calculated as the product of the change in the variable over the period and its coefficient—averaged across countries.”

More specifically, as the authors explain:

On average, the decline in union density explains about 40 percent of the 5 percentage point increase in the top 10 percent income share (top panel). . . . By contrast, the decline in unionization contributes more modestly to the rise of the gross income Gini, reflecting the somewhat weaker relation between these variables. However, about half of the increase in the Gini of net income is explained by the decline in union density, evidencing the additional and statistically significant relation between this institution and redistribution. The decline in union density was a widespread phenomenon which, as our estimation results suggest, could be an important contributing factor to the rise in top income shares (middle panel).

Contributions of changes in the minimum wage to inequality appear close to zero on average. However, averaging its contribution across countries hides the important role the minimum wage has played in driving inequality in some countries, as its evolution has been highly heterogenous. Bottom panel in Figure 7 shows the country-specific impact of changes in the minimum wage on the Gini of gross income. In countries where the minimum wage declined the most, it accounts for about 2 percentage points of the increase in the Gini coefficient. Conversely, where the minimum wage rose substantially, it appears to have contributed to reduce the Gini coefficient by 2 percentage points. Overall, these illustrative calculations suggest that changes in labor market institutions are key drivers of the evolution of inequality, alongside other determinants.

Next steps: Movement building

Living conditions have deteriorated for majorities in most advanced capitalist countries.  The rise in inequality, driven by the ever-increasing concentration of income at the top of the distribution, is one major reason.  The IMF has laid out a clear program of action to improve things: strengthen unions and boost minimum wages.  Of course, our fight against inequality would be greatly enhanced if we also intensified our efforts to stop the advance of capitalist globalization, reverse the financialization of economic activity, and raise taxes on the wealthy.

I am not sure that we needed IMF researchers to clarify our tasks, but thanks anyway IMF!

Why Unions Matter

I write an occasional column for Street Roots, a wonderful Portland, Oregon weekly newspaper that is sold on the streets by homeless vendors, who keep 75 percent of the dollar cost of each Friday issue.

As the paper explains:

Street Roots creates income opportunities for people experiencing homelessness and poverty by producing a newspaper and other media that are catalysts for individual and social change.

In addition to income and an opportunity for meaningful street conversations, Street Roots also provides venders, who number in the hundreds, a safe place with “access to computers, a mailing address, hygiene items, socks, fresh water, coffee, and public restrooms.”  It also maintains “a vendor health fund to support vendors when they are sick or in an extreme crisis.”

The paper does outstanding reporting on local, national, and even international issues; it has 20,000 readers throughout the region.  Check it out.

Here is my latest piece, published June 9, 2017.

The attack on labor unions – and why they matter

Fewer workers are in unions now than in 1983, the earliest year in the Bureau of Labor Statistics series on union membership. In 1983 there were 17.7 million, 20.1 percent of the workforce. In 2016 the number had fallen to 14.6 million, or 10.7 percent of the workforce. While union membership rates in Oregon have been above the U.S. average, they have also followed the national trend, falling to 13.5 percent in 2016.

This decline in unionization is largely the result of a sustained corporate directed and, in many ways, government-aided attack on unions. Its success is one important reason why corporate profits have soared and most people have experienced deteriorating working and living conditions over the past decades.

Improving our quality of life will require rebuilding union strength. And, although rarely mentioned by the media, things are starting to happen in Portland. Over the last few years new unions were formed and/or new contracts signed by workers at our airport, zoo, K-12 public schools, colleges and universities, parks and recreation centers, hotels, restaurants, hospitals and office buildings.

The attack on unions 

Not long after President Reagan declared the 1981 air traffic controllers strike illegal and fired 11,000 air traffic controllers, corporations began illegally opposing union organizing efforts by aggressively firing union organizers.

According to studies based on NLRB records, the probability of a union activist being illegally fired during a union organizing campaign rose from about 10 percent in the 1970s to 27 percent over the first half of the 1980s. Since then it has remained around 20 percent. Illegal firings occurred in approximately 12 percent of all union election campaigns in the 1970s and in roughly one out of every three union election campaigns over the first half of the 1980s. They now occur in approximately 25 percent of all union election campaigns.

It is a violation of U.S. labor law for an employer to “interfere with, restrain or coerce” employees who seek to exercise their right to unionize. However, the law is so weak that many employers willingly disregard it and accept the consequences in order to stymie union organizing efforts.

Many companies also try to undermine union organizing campaigns by illegally threatening to shut down or move operations if workers vote to unionize. One mid-1990s study found that more than 50 percent of all private employers made such a threat. The acceleration of globalization in the following decades, thanks to government support, has made growing numbers of workers fearful of pursuing unionization, even without an explicit threat by management.

Although not the most important factor, unions also have some responsibility for their decline. Union leaders have often been reluctant to aggressively organize new sectors; encourage new leadership from people of color, women, and other marginalized groups; promote rank and file democracy in decision-making and organizing; and vigorously defend the rights of their members to live in healthy communities as well as work in safe workplaces.

Taking all this into account, it is no wonder that the share of workers in unions has declined.

The union difference 

The decline in union strength matters. Here are a few examples of what unions still deliver:

According to the Economic Policy Institute, “the union wage premium – the percentage-higher wage earned by those covered by a collective bargaining contract, adjusted for workers’ education, age and other characteristics – is 13.6 percent overall.”

Unionized workers are 28.2 percent more likely to be covered by employer-provided health insurance and 53.9 percent more likely to have employer-provided pensions.

Working women in unions are paid 94 cents, on average, for every dollar paid to unionized working men, compared to non-union working women who receive only 78 cents on the dollar for every dollar paid to non-union working men. This union wage premium is significant for unionized working women regardless of race and ethnicity.

Looking just at Oregon, the Oregon Center for Public Policy found that “union representation boosts the wages of Oregon’s lowest paid workers by about 21 percent, while middle-wage workers enjoy an increase of about 17 percent. Even the highest paid workers benefit from unionizing, with a 6 percent increase to their wages.”

Studies also show that strong unions force non-union employers to lift up the wages and improve the working conditions of their own employees for fear of losing them or encouraging unionization.

More generally, unions provide workers with voice and the means to use their collective strength to gain job security and say over key aspects of their conditions of employment, including scheduling and safety. These gains are significant in our “employment at will” economy where, without a union, employers can fire a worker whenever they want and for whatever reason, subject to the weak protections afforded by our labor laws.

Why unions still matter 

Two widely respected labor economists, Lawrence F. Katz and Alan B. Krueger, recently published a study of the growth in the number of workers with so-called “alternative work arrangements,” which they “defined as temporary help agency workers, on-call workers, contract workers, and independent contractors or freelancers.” They found that the percentage of U.S. workers with such alternative work arrangements rose from 10.1 percent of all employed workers in 2005 to 15.8 percent in 2015. But their most startling finding was that “all of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements.”

Large corporations are driving this explosion in irregular and precarious work by applying the same strategy here in the U.S. that they have long used in the third world. They are increasingly outsourcing to smaller non-unionized firms the jobs that were once done by their own in-house workers. This allows these large corporations to escape paying many of those who “work for them” the wages and benefits offered to their remaining employees. Instead, their salaries are paid by smaller firms, whether they be independent businesses, temporary work agencies, or franchise owners, or in more extreme cases so-called independent contractors. And because these second-tier smaller businesses operate in highly competitive markets, with substantially lower profit margins than the corporations they service, these outsourced workers now receive far lower salaries with few if any benefits and protections.

As the Wall Street Journal describes, “Never before have American companies tried so hard to employ so few people. The outsourcing wave that moved apparel-making jobs to China and call-center operations to India is now just as likely to happen inside companies across the U.S. and in almost every industry.”

At most large firms, 20 percent to 50 percent of the total workforce is now outsourced. This includes big and profitable U.S. companies like Google, Bank of America, Verizon, Procter & Gamble and FedEx.

In sum, companies aren’t going to willingly offer us jobs that pay a living wage, provide opportunities for skill development, and afford the security necessary to plan for the future. We are going to have to fight for them. And the strength of unions will be critical in that effort. So, the next time you hear about a unionization campaign or union organized workplace action— support it. You will be helping yourself.

The Problem Of Hunger In The US

Food insecurity is a major problem in the US.   The food stamp program–renamed the Supplemental Nutrition Assistance Program (SNAP) in 2008–helps, but that program is now threatened by the Trump administration.  An organization of the food insecure, echoing the Councils of the Unemployed of the 1930s, may well be needed if we are to make meaningful progress in reducing hunger.

The extent of food insecurity  

The federal government measures food insecurity using a yearly set of questions that are part of the U.S. Census Bureau’s Current Population Survey (CPS).  The questions asked, as a Hamilton Project study on food insecurity and SNAP explains, are about:

households’ resources available for food and whether adults or children in the household adjusted their food intake—cutting meal size, skipping meals, or going for a day without food—because of lack of money for food. A household is considered to be “food insecure” if, due to a lack of resources, it had difficulty at some time during the year providing enough food for all of its members. The more-severe categorization of “very low food security” status describes those food-insecure households in which members’ food intake was reduced and their normal eating patterns disrupted at some point during the year because of a lack of resources for food. Food insecurity and very low food security are measured at the household level, though questions about adults and children are asked separately.

Officially, 12.7 percent of US households were food insecure in 2015.  Five percent were very low food secure.

The extent of food insecurity is significantly greater in households with children under 18.  As we see below, 16.6 percent of all households with children suffered from food insecurity in 2015.  In more than half of those households, the adults were able to shelter their children.  However, both children and adults were food insecure in 7.8 percent of all households with children.

Food insecurity trends

Food insecurity is a problem in the United States even during periods of economic expansion.  As the following chart shows, more than one in ten households suffered from food insecurity during the growth years of 2001 to 2007.  The percentage of households experiencing food insecurity spiked with the start of the Great Recession and was slow to decline.  Although it is now falling, it is unclear whether it will return to pre-recession levels.

And, not surprisingly, non-white households are far more likely to experience food insecurity than white households.

It is also important to recognize that annual rates of food insecurity tend to minimize the true extent of the problem.  That is because households tend to move into and then out of food insecurity over time.  In other words, it is often a temporary problem.  Thus, many more families will experience food insecurity over a period of time than suggested by the annual numbers.  Of course, even one year of food insecurity can have serious health consequences.

As the Hamilton Institute study notes:

Annual rates of food insecurity mask the extent of the food insecurity problem. Using the Current Population Survey, we can follow large numbers of households across two consecutive years, allowing us to compare food security status over time. In consecutive years during the post-recession period 2008–14, over 24 percent of households with children experienced food insecurity in one or both years: 9 percent of household experienced food insecurity in consecutive years, and an additional 15 percent of households experienced food insecurity in only one of the two years.

SNAP 

SNAP is one of the most important federal responses to food insecurity. To qualify for food stamps, a household needs to earn at or below 130% of the poverty line—or about $26,000 or less a year for a family of three. As of May 2017, 42.3 million people were receiving food stamps. Without the SNAP program, many more people would be experiencing food insecurity.

The following figures show the rise in the number and percentage of people receiving food stamps, and the average monthly food stamp benefit.  The growth in the number of food stamp recipients over the 2001 to 2007 period of economic growth reflects the explosion in inequality and weak job growth.  And the need for food assistance exploded with the Great Recession and has remained high because of the weak economic recovery that has followed.

The challenge ahead

Determined to slash all non-military discretionary programs, President Trump’s proposed budget calls for cutting almost $200 billion over the next decade from the Department of Agriculture’s SNAP program.  That is a cut of approximately 25 percent.

With weak job growth and stagnant wages likely in the years ahead, any cut to the SNAP budget will mean a new spike in hunger, especially for children.  One has to wonder when people will reach their limit and begin to organize and fight back.

Those struggling with food insecurity might well take inspiration from the work of the unemployed councils of the 1930s.  These councils provided a basis for the unemployed to resist rent increases and evictions, as well as fight for public assistance, unemployment insurance, and a public works program.  The councils also strongly supported union organizing efforts, ensuring that the unemployed respected union picket lines.  In return, many unions supported the work of the councils.

The unemployed in the 1930s eventually recognized that their situation was largely the result of the dysfunctional workings of the economic system of the time and they organized to defend their rights and change that system.  Households experiencing hunger today need to develop that same understanding about the root cause of their situation and respond accordingly.

We Need To Once Again Take “The Working Class” Seriously

The great majority of working people in the US have experienced tough times over the last few decades.  And all signs point to the fact that those in power are committed to policies that will mean a further deterioration in majority living and working conditions.

One obvious response to this situation is organizing; working people need strong organizations that are capable of building the broad alliances and advancing the new visions necessary to challenge and transform existing political-economic relationships and institutions. Building such organizations requires, as a first step, both acknowledging the existence of the working class and taking the concerns of its members seriously.

Unfortunately, as Reeve Vanneman shows in a Sociological Images blog post, writers appear to have largely abandoned use of the term “working class.”  One indicator is the trend illustrated in the chart below, which is derived from Google Books’ Ngram Viewer.  The Ngram Viewer is able to display a graph showing how often a particular word or phrase appears in a category of books over selected years.  In this case, the chart below shows how often the two-word phrase “working class” (a bigram) appears as a percentage of all two word phrases used in all books written in American English.

google

As Vanneman explains:

a Google ngram count of the phrase “working class” in American books shows a spike in the Depression Thirties and an even stronger growth from the mid-1950s to the mid-1970s. But after the mid-1970s, there is a steady decline, implying a lack of discussion just as their problems were growing.

A similar overall trend emerges from “a count of the frequencies of ‘working class’ in the titles or abstracts of articles in the American Journal of Sociology and the American Sociological Review.”  As we see in the chart below, there was a rapid growth in the use of the phrase from the late 1950s through most of the 1960s, followed by a slow but steady decline until the mid-1980s, and then, after a brief resurgence, a dramatic fall off in its use.

sociology

As Vanneman comments: “These articles on the working class were not insignificant; even through the 21st century, the authors include a number of ASA presidents. But overall, working-class issues seem to have lost their salience, as if even American sociology was also telling them that they didn’t matter.”

While there is no simple relationship between working class activism and scholarship on the working class, the synergy is important.  Now is the time to take working class issues seriously.  Given current trends, we desperately need a revival of labor activism and the development of labor-community alliances around issues such as housing, health care, discrimination, and the environment.  And we also need new scholarship that shines a light on as well as engages the challenges of our time from a working class standpoint.

Gender, Race, Ethnicity and Labor Unity

There was a lot of talk this election season about the worsening economic conditions of White males.

The chart below, from an Economic Policy Institute report by Alyssa Davis and Elise Gould titled Closing the Pay Gap and Beyond, shows the hourly median wage growth for workers of different gender, race, and ethnicity compared with the economy-wide growth in productivity over the period 1979 to 2014.  As we can see, White male workers do indeed have something to complain about; in contrast to worker productivity, which grew by 62.7 percent over the period, their hourly median wage actually fell by 3.1 percent.

all-worker-decline

But, all this talk about White male workers distracts from the fact that Hispanic and Black men, who on average make significantly less than White men, suffered an even greater decline in their respective hourly median wages.  Thus, relatively speaking, White male workers have far less to complain about than Black and Hispanic male workers.

At the same time, the chart does show positive gains in hourly median wages for women, with White women enjoying the largest gain over the period, 30.2 percent.   However, these gains need to be put in perspective.

As the chart below shows, the earnings gap between men and women remains significant.  The gender gap narrowed over the decades of the 1980s and 1990s, partly because women’s wages rose and partly because men’s wages fell.  However, the size of the gap has not changed much since.  In fact, the most striking thing is that the median hourly wages of both men and women have been in decline.

gender-gap

It is also worth noting, as we can see in the chart below, that this gender gap exists at all levels of education, and in fact grows with the level of education.

education-and-gender

And, just as with men, it is important to recognize that the experience of women workers is also shaped by race and ethnicity. As we saw in the first chart above, White women did far better than Black and Hispanic women over the period 1979 to 2014.  And they did so from a higher earnings base: while White women earn approximately 81.8 percent of the White male median wage level, the corresponding percentage for Black women is 65.1 percent, and for Hispanic women only 58.9 percent.  Clearly, there is not a lot for women to cheer about either, despite their relatively better wage performance over the entire period.

Unfortunately, the media focus on White males and their economic difficulties works to weaken the unity, and by extension power, of the labor movement.  One reason is that it marginalizes non-White workers by making them invisible, despite the fact that they confront, as we saw above, far worse economic conditions than White males. Another is that it divides the labor movement into competing groups, setting up a gender conflict in which White male losses are explained by female gains, even though both male and female hourly median wages are falling.

The fact is that the great majority of workers are struggling, even during this so-called period of economic recovery.  As the chart below shows, while productivity grew by 62.7 percent over the period 1979 to 2014, the overall hourly compensation (which includes both wages and benefits) of a typical worker grew by only 8 percent.  This growing gap between productivity and compensation, created by corporate and state policies, helps to explain why profits and the income of the wealthy are growing so rapidly while worker earnings stagnate at best.

pay-and-productivity

There is no shortcut to confronting and reversing existing trends.  Only a strong united labor movement can anchor the broader movement for change that we need.  Building that unity requires developing a shared understanding of the way discrimination produces pay gaps based on gender, race, and ethnicity, gaps that disproportionately benefit corporate bottom lines.  It also requires prioritizing struggles that help to close those gaps in ways that strengthen worker power in both the workplace and community.

The authors of the EPI study provide a useful list of demands that point in the right direction:

Besides doing everything we can to eradicate labor market disparities based on gender and race, to maximize women’s economic security, we should pursue policies that spur broad-based wage growth by giving workers more leverage to secure higher pay. These policies include bringing about full employment, restoring the right to collective bargaining, raising the minimum wage and tipped minimum wage, guaranteeing access to paid sick leave and paid family leave, providing accessible and high-quality child care, ensuring that hourly workers can get the number of hours they need and curtailing employers’ irregular scheduling practices, increasing retirement security, updating  and enforcing labor standards (e.g., raising the overtime salary threshold and cracking down on wage theft), enacting comprehensive immigration reform and providing undocumented workers a path to citizenship, and strengthening the social safety net.

The new Trump administration has made clear its anti-worker agenda and determination to break unions.  Our response has to include serious efforts to revitalize the trade union movement and build popularly-led labor-community alliances in support of good jobs, a strong and accountable public sector, and sustainable and healthy cities.  Cutting through the misinformation about the divisions within and conditions facing US workers is a small but necessary step.

The Devastating Transformation Of Work In The US

Two of the best-known labor economists in the US,  Lawrence F. Katz and Alan B. Krueger, recently published a study of the rise of so-called alternative work arrangements.

Here is what they found:

The percentage of workers engaged in alternative work arrangements – defined as temporary help agency workers, on-call workers, contract workers, and independent contractors or freelancers – rose from 10.1 percent [of all employed workers] in February 2005 to 15.8 percent in late 2015.

That is a huge jump, especially since the percentage of workers with alternative work arrangements barely budged over the period February 1995 to February 2005; it was only 9.3 in 1995.

But their most startling finding is the following:

A striking implication of these estimates is that all of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements. Total employment according to the CPS increased by 9.1 million (6.5 percent) over the decade, from 140.4 million in February 2005 to 149.4 in November 2015. The increase in the share of workers in alternative work arrangements from 10.1 percent in 2005 to 15.8 percent in 2015 implies that the number of workers employed in alternative arrangement increased by 9.4 million (66.5 percent), from 14.2 million in February 2005 to 23.6 million in November 2015. Thus, these figures imply that employment in traditional jobs (standard employment arrangements) slightly declined by 0.4 million (0.3 percent) from 126.2 million in February 2005 to 125.8 million in November 2015.

Take a moment to let that sink in—and think about what that tells us about the operation of the US economy and the future for working people.  Employment in so-called traditional jobs is actually shrinking. The only types of jobs that have been growing in net terms are ones in which workers have little or no security and minimal social benefits.

Figure 2 from their study shows the percentage of workers in different industries that have alternative employment arrangements.  The share has grown substantially over the last ten years in almost all of them.  In Construction, Professional and Business Services, and Other Services (excluding Public Services) approximately one quarter of all workers are employed using alternative work arrangements.

distribution

The study

Because the Bureau of Labor Statistics has not updated its Contingent Work Survey (CWS), the authors contracted with the RAND institute to do their own study.  Thus, Rand expanded its own American Life Panel (ALP) surveys in October and November 2015 to include questions similar to those asked in the CWS.   They surveys only collected information about the surveyed individual’s main job.  And, to maintain compatibility with the CWS surveys, day laborers were not included in the results.  Finally, the authors only included information from individuals who had worked in the survey reference week.

People were said to be employed under alternative work arrangements if they were “independent contractors,” “on-call workers,” “temporary help agency workers,” or “workers provided by contract firms.  The authors defined these terms as follows:

“Independent Contractors” are individuals who report they obtain customers on their own to provide a product or service as an independent contractor, independent consultant, or freelance worker. “On-Call Workers” report having certain days or hours in which they are not at work but are on standby until called to work. “Temporary Help Agency Workers” are paid by a temporary help agency. “Workers Provided by Contract Firms” are individuals who worked for a company that contracted out their services during the reference week.

The results in more detail

All four categories of nonstandard work recorded increases:

Independent contractors continue to be the largest group (8.9 percent in 2015), but the share of workers in the three other categories more than doubled from 3.2 percent in 2005 to 7.3 percent in 2015. The fastest growing category of nonstandard work involves contracted workers. The percentage of workers who report that they worked for a company that contracted out their services in the preceding week rose from 0.6 percent in 2005 to 3.1 percent in 2015.

Table 4 shows the percentage of workers in different categories that are employed for their main job in one of the four nonstandard work arrangements.  The relevant comparisons over time are with the two CPS studies and the Alternative Weighted results from the Rand study.

4b

Here are some of the main findings:

There is a clear age gradient that has grown stronger, with older workers more likely to have nonstandard employment than younger workers.  In 2015, 6.4 percent of those aged 16 to 24 were employed in an alternative work arrangement, while 14.3 percent of those aged 25-54 and 23.9 percent of those aged 55-74 had nonstandard work arrangements.

The percentage of women with nonstandard work arrangements grew dramatically from 2005 to 2015, from 8.3 percent to 17 percent.  Women are now more likely to be employed under these conditions than men.

Workers in all educational levels experienced a jump in nonstandard work, with the increase greatest for those with a bachelor’s degree or higher.  “Occupational groups experiencing particularly large increases in the nonstandard work from 2005 to 2015 include computer and mathematical, community and social services, education, health care, legal, protective services, personal care, and transportation jobs.”

The authors also tested to determine “whether alternative work is growing in higher or lower wage sectors of the labor market.”  They found that “workers with attributes and jobs that are associated with higher wages are more likely to have their services contracted out than are those with attributes and jobs that are associated with lower wages. Indeed, the lowest predicted quintile-wage group did not experience a rise in contract work.”

The take-away

The take-away is pretty clear.  Corporate profits and income inequality have grown in large part because US firms have successfully taken advantage of the weak state of unions and labor organizing more generally, to transform work relations.  Increasingly workers, regardless of their educational level, find themselves forced to take jobs with few if any benefits and no long-term or ongoing relationship with their employer.  Only a rejuvenated labor movement, one able to build strong democratic unions and press for radically new economic policies will be able to reverse existing trends.

The Importance Of Solidarity

As we begin to take stock of the political moment in the United States and strategize ways to build a movement strong enough to resist the policies of the Trump administration and confident enough to project a new social vision, it is important to learn from the efforts of people in other countries facing similar challenges.  South Korea for example.

Park Geun-hye, the current president of South Korea, took office in February 2013.  The daughter of Park Chung-Hee, the brutal military dictator who ruled the country from 1961 until his assassination in 1979, Park Geun-hye presented herself as a “soft” conservative during the presidential campaign.  But once elected she moved quickly and decisively, with the support of the country’s security forces, to expand the neoliberal and anti-democratic policies of her conservative predecessor and crush any opposition.

The consequences of her rule have been devastating for the great majority of Koreans.  Some highlights: her deregulation of health and safety standards led directly to the sinking of a ferry carrying over 400 students; more than 300 of whom drowned.  Her labor initiatives include laws to increase the precariousness of work and difficulty of unionization, and lower the wages of regular workers.  Her education policies require that public school teachers use only state written history books.  Her militarist policies include the construction of a new naval base for US warships on Jeju island, over the objections of the residents; an intensification of war games directed against North Korea; the closure of the Kaesong industrial zone; and the welcoming of a US THAAD anti-missile battery aimed at China and Russia on South Korean soil.  And she has advanced her policies by outlawing demonstrations, arresting hundreds of union leaders, and dissolving a political party.

Korean social movements, led by the Korean Confederation of Trade Unions, have responded to this rightward movement with ever larger demonstrations, despite the jailing of many labor leaders.  Now, the balance of forces appears to be decisively shifting against the government.  The reason: new revelations point to the fact that many of Park’s policies were made either in consultation with or in response to the dictates of an unelected confidant, the daughter of a now deceased cult leader.

As the website Zoom in Korea explains:

Since late October, when news broke of the government corruption scandal involving South Korean president Park Geun-hye, South Korean citizens have demanded the removal of Park and her administration from office. Last week on November 5, close to 200,000 people took to the streets of Seoul to demand her resignation. A diverse range of people from different social enclaves of South Korean society joined together to send a common message to their government – “Park Geun-hye, step down.”

Throughout the streets of Seoul, one could see recently politicized high school students marching side by side with elderly folks who had experienced past revolutionary moments in South Korean history.

Here is a short clip which shows what it looks like when 200,000 people crowd the streets of Seoul to demand change.

For more on the growing movement in South Korea, its demands and its challenges, read the rest of the Zoom in Korea article here.

 

We are not alone in facing powerful dictatorial rightwing political forces.  As we develop our own response here in the United States we need to keep solidarity in mind, which means both supporting and learning from struggles elsewhere.

 

November 12 update

Zoom in Korea reports:

1 Million in Historic Protest to Oust Park Geun-hye
As of 8:30 pm (Seoul time) on Saturday, November 12, 2016

South Korean media report 1 million gathered at Gwanghwamun Plaza to demand Park Geun-hye’s resignation. This is the largest protest South Korea has seen since the democratic uprising of June 1987. People from across the country, including conservative strongholds Busan and Daegu have traveled to Seoul to join the protest. Youth in school uniforms and mothers with children are among the protest.

Protesters on the way to the Blue House are blocked by a barricade of police buses near Gyeongbok Palace. The police have also blocked off entrances to subway stations between the police barricade and the presidential residence. Protesters are intent on reaching the Blue House but so far remain peaceful.

Seoul Mayor Park Won-soon refused to supply water from the city’s fire hydrants to the police, which had threatened to use water cannons to block protesters.  Referring to the death of farmer Baek Nam-gi, hit by a high-pressure water cannon at a mass demonstration in November 2015, Mayor Park said in a radio interview, “No more.” He added, “Water from fire hydrants is intended for putting out fires, not peaceful protests.”  A reporter outside the Blue House says protesters can be heard from the Blue House, which has been in a state of emergency since Saturday morning but has not issued an official response to the calls for the president’s resignation.

The Korean Confederation of Trade Unions has vowed a general strike if Park Geun-hye refuses to resign.