US Public School Teachers: Declining Pay, Growing Militancy

Strikes continue to be an effective way for teachers to improve their living and working (and by extension student learning) conditions.  And, polls show that a strong majority of parents continue to support them.

Popular support for teacher strikes remains strong

The education pollster PDK recently asked adults what they thought about teacher salaries and whether they would support teachers if they struck to improve their conditions.   According to PDK,

73% of Americans surveyed in the 2018 PDK poll say they would support public school teachers in their community if they went on strike for higher pay. Even among public school parents — those who would be most directly affected by a strike — 78% say they’d support a teacher walkout.

This strong public support was certainly visible during the spring public teacher strikes in West Virginia, Oklahoma, and Arizona.  And it continues this fall.  For example, teacher strikes delayed the start of the new school year for thousands of students in Washington state.  As Don McIntosh reports in the Northwest Labor Press:

As many as 5,000 teachers went out on strike the week before Labor Day at seven Southwest Washington school districts — districts where school superintendents tried to hold on to funds the Legislature had granted for long-overdue teacher raises. In each case, strikes were authorized by overwhelming majorities — from 93 percent to as high as 98.4 percent. The strikes resulted in the complete closure of whole school districts, postponing the school year’s start for over 60,000 students.

Highlighting public support for Evergreen High School teachers, McIntosh writes:

All day long, passing motorists honked their support, and parents, students and members of the community dropped by bringing water and snacks. Some parents handed out strips of paper with a message: “We love you and support you! Thank you for taking the time to show us what it means to stand up for yourself even when it is difficult.”

“Kids and parents and dogs, everybody’s walking the line with us,” [Evergreen Education Association president] Beville said. “Among all the things that we expected when we went on strike, the most unexpected was the overwhelming support we’re getting from the community. Even on Facebook, when people post negative messages, parents are jumping on them like piranhas.”

Washington teachers ended their strikes with sizeable wage increases in five districts, but remain out in two others.  School officials in Tumwater in Thurston County and Longview in Cowlitz County filed injunctions in an attempt to force teachers back to work.  County judges in both districts declared the strikes illegal, but significantly refused to impose any penalties; the strikes continue.

Teacher pay is too low

While right-wing politicians like to portray public school teachers as a “labor aristocracy,” profiting at the expense of ordinary workers, the fact is that teachers have suffered real wage declines.  A case in point: average teacher pay in Washington state fell 8 percent in real (inflation-adjusted) dollars over the last 16 years according to figures from the U.S. Education Department.

More generally, as a Guardian article explains:

American teachers are getting paid less – even though they are better qualified than ever, new research has found.

Teacher salaries are down by nearly 5% compared with before the Great Recession – and it’s not because teachers are younger or less educated, according to the Brown Center on Education Policy at the Brookings Institution.

In fact, the opposite is true.

And, as the following figure shows, not only has teacher pay fallen over the last seven years, the gap in earnings relative to other college educated workers has significantly grown.

In fact, an Economic Policy Institute study determined, as shown below, that there is no state in which public school teachers are paid more than college graduates.

The teacher wage penalty has dramatically grown, even when wages are adjusted for “education, experience, and other factors known to affect earnings.”  More specifically the Economic Policy Institute study found that the regression-adjusted wage gap for all public sector teachers grew from 1.8 percent in 1994, to 4.3 percent in 1996, and reached a record 18.7 percent in 2017.

Challenges ahead

Teacher strikes have been fueled by a number of factors in addition to the wage declines highlighted above, including new testing mandates which crowd out instruction and planning time, and cuts in education budgets which have left teachers with outdated materials and overcrowded classrooms.  The recent Janus decision and the efforts of the rightwing State Policy Network to weaken public sector unions makes clear that the teacher movement cannot stand still if it hopes to maintain if not actually build on its recent gains.  Public school teachers will have to strengthen their unions and deepen their community ties, and in concert with other public sector workers, build a campaign that makes clear the importance of a well-funded and accountable public sector and the need for new progressive tax measures to raise the required funds.

Obviously, this is no simple task.  It is not just a rightwing fringe that opposes public sector unions and raising taxes to ensure a healthy public sector that meets community needs.  For example, as the Intercept reports:

State Policy Network member think tanks generally do not disclose their donors. Several are generously funded by foundations controlled by billionaire brothers David and Charles Koch. The Texas Public Policy Foundation, the State Policy Network affiliate in Texas, inadvertently revealed its donor list several years ago. The donor list included foundation grants from the Koch Industries, AT&T, Verizon, Altia, Geo Group, Exxon Mobil, Coca-Cola, Blue Cross Blue Shield of Texas, and the Claude Lambe Charitable Foundation, a nonprofit controlled by the Kochs, among others.

In short, we are engaged in a real class struggle and that understanding has to be built into our organizing from the very beginning.

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Forgotten Workers And The US Expansion

There is a lot of celebrating going on in mainstream policy circles.  The economy is said to be running at full steam with the unemployment rate now below 4 percent.  As Clive Crook puts it in Bloomberg Businessweek, “The U.S. expansion has put millions of people back to work and economists agree that the economy is now at or close to full employment.”

Forgotten in all this celebration is the fact that wages remain stagnant.  Also forgotten are the millions of workers who are no longer counted as part of the labor force and thus not counted as unemployed.

Forgotten workers

One of the best indicators of the weakness of the current recovery is the labor market status of what is called the core workforce, those ages 25-54.  Their core status stems from the fact that, as Jill Mislinski explains, “This cohort leaves out the employment volatility of the high-school and college years, the lower employment of the retirement years and also the age 55-64 decade when many in the workforce begin transitioning to retirement … for example, two-income households that downsize into one-income households.”

The unemployment rate of those 25-54 reached a peak of 9 percent in 2009 before falling steadily to a low of 3.2 percent as of July 2018.  However, the unemployment rate alone can be a very misleading indicator of labor market conditions.  That is certainly true when it comes to the labor market status of today’s core workforce.

A more revealing measure is the Labor Force Participation Rate, which is defined as the Civilian Labor Force (i.e. the sum of those employed and unemployed) divided by the Civilian Noninstitutional Population (i.e. those of working age who are not in the military or institutionalized). Because there can be significant monthly swings in both the numerator and denominator of this measure, the Labor Force Participation Rate shown in the chart below is calculated using a 12-month moving average.

As we can see, the Labor Force Participation Rate for the 25-54 core cohort has sharply declined, from a mid-2000 high of 84.2 percent, down to a low of 81.9 percent in July 2018. Mislinski calculates that:

Based on the moving average, today’s age 25-54 cohort would require 1.6 million additional people in the labor force to match its interim peak participation rate in 2008 and 2.9 million to match the peak rate around the turn of the century.

A related measure of labor market conditions is the Employment-to-Population Ratio, which is defined as the Civilian Employed divided by the Civilian Noninstitutional Population.  As we can see in the next chart, the Employment-to-Population Ratio of our core cohort has also declined from its mid-2000 peak.

Again, according to Mislinski,

First the good news: This metric began to rebound from its post-recession trough in late 2012. However, the more disturbing news is that the current age 25-54 cohort would require an increase of 1.2 million employed prime-age participants to match its ratio peak in 2007. To match its mid-2000 peak would require a 3.1 million participant increase.

The takeaway

Both the Labor Force Participation Rate and the Employment-to-Population Ratio are useful measures of the employment intensity of the economy.  And in a healthy economy we should expect to see high values for both measures for the 25-54 age cohort. That is especially true for a country like the United States, where the non-market public provision of education, health care, and housing is quite limited, and an adequate retirement depends upon private savings.  In other words, people need paid employment to live and these are prime work years.

The decline, over the business cycle, in both the Labor Force Participation Rate and the Employment-to-Population Ratio for our core cohort strongly suggests that our economy is undergoing a profound structural change, with business increasingly organizing its activities in ways that require fewer workers. More specifically, the lower values in these measures mean that millions of prime age workers are being sidelined, left outside the labor market.

It is hard to know what will become of these workers and by extension their families and communities.  Moreover, this is not a problem only of the moment.  This cohort is still relatively young, and the social costs of being sidelined from employment—and here we are not even considering the quality of that employment—will only grow with age.  We can only hope that workers of all ages will eventually recognize that our growing employment problems are the result, not of individual failings, but an increasingly problematic economic system, and begin pushing for its structural transformation.

What Next For The Teacher’s Movement?

Public school teachers in West Virginia, Oklahoma, Kentucky, and Arizona have won meaningful salary gains for themselves, and in several cases other school workers, and real although limited increases in education spending.  Unfortunately, their demands for significant tax reform, including new taxes on corporations and the wealthy to fund a more general increase in public services, remain largely unfulfilled.  Hopefully, the lessons learned and the connections made will lead to more democratic and powerful unions and worker-community movements for change that can carry the fight forward.

Teachers deserved a raise

Teachers definitely deserve a raise.  A recent Economic Policy Institute study by Sylvia Allegretto and Lawrence Mishel finds a substantial and growing wage and compensation gap between what teachers and other similarly educated workers earn.  For example:

  • Average weekly wages (inflation adjusted) of public-sector teachers decreased $30 per week from 1996 to 2015, from $1,122 to $1,092 (in 2015 dollars). In contrast, weekly wages of all college graduates rose from $1,292 to $1,416 over this period.
  • For all public-sector teachers, the relative wage gap (regression adjusted for education, experience, and other factors) has grown substantially since the mid-1990s: It was ‑1.8 percent in 1994 and grew to a record ‑17.0 percent in 2015.
  • While relative teacher wage gaps have widened, some of the difference may be attributed to a tradeoff between pay and benefits. Non-wage benefits as a share of total compensation in 2015 were more important for teachers (26.6 percent) than for other professionals (21.6 percent). The total teacher compensation penalty was a record-high 11.1 percent in 2015 (composed of a 17.0 percent wage penalty plus a 5.9 percent benefit advantage). The bottom line is that the teacher compensation penalty grew by 11 percentage points from 1994 to 2015.
  • Collective bargaining helps to abate the teacher wage gap. In 2015, teachers not represented by a union had a ‑25.5 percent wage gap—and the gap was 6 percentage points smaller for unionized teachers.

The figure below highlights the growing wage gap between public school teachers and similar workers (controlling for age, education, race/ethnicity, geographic region, marital status, and gender).

The next figure shows that in no state are teachers paid more than other college graduates.  In fact, as the EPI study points out:

The ratio for the overall United States is 0.77, meaning that, on average, teachers earn just 77 percent of what other college graduates earn in wages. . . . In 18 states, public school teacher weekly wages lag by more than 25 percent. In contrast, there are only five states where teacher weekly wages are less than 10 percent behind.

And, as the table below makes clear, teachers suffer an overall compensation gap, with their benefit advantage not nearly big enough to compensate for their large and growing wage penalty.

The rightwing playbook

Teacher victories in West Virginia, Oklahoma, Kentucky, and Arizona were made possible by strong community support for their strike actions.  However, teachers and other activists need to prepare for the likely rightwing counter attack, which will aim to break the newly created bonds of solidarity and support for collective, militant action.

A Guardian newspaper article, which includes a secret three-page manual on how to talk about teacher strikes produced by the State Policy Network, sheds light on rightwing fears and planning.  The State Policy Network is “an alliance of 66 rightwing ‘ideas factories’ that span every state in the nation,” that is well funded by, among others, the Koch brothers, the Walton Family Foundation, and the DeVos family.

The manual talks about the need to discredit the strikes by portraying them as harmful to low income parents and their children.  But it also recognizes that this is a challenging task.  For example, it says:

A message that focuses on teacher hours or summer vacations will sound tone-deaf when there are dozens of videos and social media posts going vital from teachers about their second jobs, teachers having to rely on food pantries, classroom books that are falling apart, paper rationing, etc.  This is an opportunity to sympathize with teachers, while still emphasizing that teacher strikes hurt kids.  It is also not the right time to talk about social choice—that’s off topic, and teachers at choice-schools are often paid less than district school teachers.

As to what should be said, the manual encourages rightwing activists to respond to concerns about insufficient school funding by calling for more efficient use of existing monies, in particular by reducing “administrative bloat” and “red tape.”  And, it has special advice for those that live in states where taxes have been recently slashed:

That is obviously a challenging message to counter.  But you can consider something like “One of the most important things we can do to make sure our schools are properly funded is to have a strong economy where everyone who can work can find a job and contribute to the tax coffers that fund the government. Lower tax rates help contribute to stronger job growth.  Also lower taxes on individuals let teachers keep more of the money they earn.”

More dangerous are some of the ways in which the rightwing actually seeks to punish or intimidate teachers.  Jeff Bryant, writing at OurFuture.org provides a sobering list:

Leading into the two-day teacher walkout in Colorado, Republican legislators introduced a bill that would lead to fines and potentially up to six month’s jail time for the striking teachers. The bill was pulled, when it became clear even some Republicans weren’t too keen on the measure.

In Arizona, a libertarian think tank sent letters to school district superintendents threatening them with lawsuits if they didn’t reopen closed schools and order striking teachers to return to work. It’s unclear how or whether the threat will actually be carried out now that teachers are back on the job.

In West Virginia, where teachers used a nine-day strike to secure a five percent raise, Republicans have vowed to get their revenge by cutting $20 million to Medicaid and other parts of the state budget to pay for the increase. No doubt, when the axe falls on these programs, Republican lawmakers will be quick to blame the “greedy” teachers.

In Kentucky, Republican Governor Matt Bevin accused striking teachers of leaving children exposed to sexual assaults or being in danger of ingesting toxic substances because teachers weren’t at school. Now that the uprising has ended, Bevin has turned his revenge against teachers into an effort to take over the largest school system in the state and take away local control of the schools.

No doubt, this is just the beginning, which means that activists need to move quickly to build on victories and expand their challenge to existing relations of power.

The challenges ahead

One hopes that teacher activists in states where strikes have taken place are finding ways to build upon recent mobilizations to build organizations and revitalize their unions.  And, that they are also reaching out to other public sector unions, with the aim of building a broad alliance that can spearhead a grass-roots movement for new progressive taxes and a more class conscious vision of state policy. Despite the dangers, this is a hopeful political moment for all of us.

Public School Teacher Strikes Show Workplace Organizing Pays Off  

While those at the top of the income pyramid continue to celebrate economic trends, the great majority of working people continue to struggle to make ends meet.  However, teacher victories in West Virginia, Oklahoma, and Arizona demonstrate that broad-based sustained workplace organizing, labor-community solidarity, and importantly a willingness to strike, can change the balance of power in favor of working people and produce meaningful gains.

Teacher Strikes

West Virginia, Oklahoma, and Arizona are all considered red states, with legislatures that have aggressively reduced taxes on the wealthy and corporations, slashed spending on social programs, and gutted union rights for public sector workers by denying them the right to collectively bargain or strike.  Yet, after months of careful workplace and community organizing, West Virginia teachers launched a nine-day strike in February that shut down the entire state’s public school system and won them and all other state workers a 5 percent salary increase and a government promise to convene a task force to find ways to reign in worker health care costs.

Oklahoma teachers followed with their own workplace and community actions and a nine-day statewide strike in early April. The day before the start of the strike the legislature hurriedly approved salary increases of $6000 for teachers and $1250 for support staff, and days later a modest $40 million increase in the education budget.  This wasn’t enough to convince the teachers to call off their strike; they had demanded a raise of $10,000 for teachers and $5,000 for support staff, $200 million for increased school funding, $213 million for state employee raises, and a $255.9 million increase in health care funding.  However, after the head of the state’s largest teacher’s union called for an end to the walkout, saying that it had achieved all it could, teachers, many reluctantly, agreed to return to work without further gains.

Arizona teachers have participated in workplace actions and demonstrations to press their demand for salary increases for themselves and other education workers and a significant boost to the education budget.  The governor, hoping to avoid a threatened strike, announced a plan to give teachers a 20 percent raise by 2020, including a nine percent raise this year.  The teachers weren’t satisfied: they didn’t find the governor’s plan to raise their wages financially realistic, they wanted raises for all school workers, and they wanted school funding returned to its 2008 level.  In a statewide vote of teachers and other school personal, approximately 80 percent voted to walk out on April 26 if their demands were not met.  This would be Arizona’s first statewide walkout.

While the gains won in these states are not sufficient to reverse decades of concerted action by state legislatures to undermine public services and public workers, they are impressive nonetheless and should encourage a renewed focus on and support for workplace organizing and collective action.

Organizing To Win

These victories did not come easily.  Teachers were willing to take the bold step of engaging in a technically illegal strike for at least two main reasons.  The first is that they have endured terrible working conditions for years, conditions which also weighed heavily on those they teach.  For example, per student instructional funding in Oklahoma was some 30 percent below its 2008 level.  Some 20 percent of the state’s school districts were forced by financial pressures to adopt four-day school weeks.  Textbooks remain in short supply and out of date. Classes are so overcrowded that many students must sit on the floor.  And the state’s public school teachers and staff had not received a raise in ten years; pay was so low that many have been forced to work multiple jobs.

And adding insult to injury is the fact that state legislatures in all three states have slashed spending on education and teacher salaries in order to finance massive tax cuts for corporations and the wealthy.  A case in point: The Arizona legislature has cut approximately $1 billion from schools since the 2008 recession while simultaneously reducing taxes.  No doubt the fact that such regressive policies were often supported by both Democratic as well as Republican lawmakers, as in Oklahoma, also encouraged teachers to embrace direct-workplace action rather than more traditional lobbying to force needed legislative changes.

The second reason is that strike votes were proceeded by months of organizing that informed and created bonds of solidarity.  West Virginia was a model. Forums were held in most schools which educated and also encouraged local leadership development, teachers joined by other school workers engaged in ever more militant school-based actions, and eventually strike votes were held in every school with the participation of all teachers and staff regardless of union affiliation.  Teacher activists, most of whom were rank and file union activists, used a variety of methods, including social media, to build a strong state-wide network to coordinate their work.  The strike was called only when it was clear that it had the support of the overwhelming majority of teachers, support staff, and school bus drivers.

This strong rank and file base was key to the strike’s success.  After five days, the Governor and teacher union leaders announced that a deal had been reached and called for an end to the strike.  However, the rank and file refused.  They held their strike until the state legislature actually approved an agreement that met their demands.

The Oklahoma strike was less successful in part because a weaker union movement meant fewer trained labor activists.  This made it harder to engage in school-by-school organizing and forge a strong state network. As a consequence the strike was launched without the same level of workplace organization and connection to other education workers such as support staff and bus drivers.  And as a result, it made it much harder for rank and file teacher activists to effectively oppose the teacher union leadership’s call to settle for what was won and to return to work.  It is likely that Oklahoma law, which requires that 75 percent of the legislature vote in favor of any revenue hike, also contributed to teacher willingness to end the strike.

Arizona teachers are now preparing to strike.  Teachers in Kentucky and Colorado recently engaged in one day walkouts, shutting down schools and demonstrating at their respective state capitals to protest low wages and inadequate education budgets.  Discussions continue in both states about the possibility of renewed strikes to win their demands.  We should be studying as well as supporting all their efforts.

Reasons to Celebrate

These teacher strikes are important and have deservedly won widespread community support.  They have raised the salaries of teachers and other education workers, thereby helping their schools attract and retain talented people.  They have also boosted state education budgets, which benefits the broader community, especially students and their parents.  They also shine a spotlight on the destructive consequences of past tax giveaways to the rich and powerful and the need for new progressive sources of tax revenue.  Finally, they show that workers can effect change, improving their own living and working conditions, even under extremely hostile conditions, through sustained workplace organization and audacity.

Taxes, Inequality, And Class Power

No doubt about it, the recently passed tax bill is terrible for working people.  But as Lance Taylor states in a blog post titled “Why Stopping Tax ‘Reform’ Won’t Stop Inequality”: “Inequality isn’t driven by taxes—its driven by the power of capital in relation to workers.”  Said differently we need to concentrate our efforts on shifting the balance of class power.  And that means, among other things, putting more of our energy into workplace organizing and revitalizing the trade union movement.

The rich really are different

Taylor uses the Palma ratio to highlight the growth of income inequality.  The measure, proposed by the Cambridge University economist Jose Gabriel Palma, is defined as the ratio of the average income of a wealthy group relative to the average income of a poorer group.  Taylor calculates Palma ratios “for the top one percent vs. households between the 61st and 99th percentiles of the size distribution (the ‘middle class’) and the sixty percent at the bottom.”

The first figure looks at Palma ratios for pre-tax income.  The second figure uses disposable or after-tax income.

In both figures we see growing ratios, which means that the top 1 percent is increasing its income faster than the other two groups, although the gains are not quite as large in the case of after-tax income, suggesting that taxes and transfers do make a small but real difference.

Be that as it may, the ratio of the top group’s after-tax income relative to Taylor’s middle group grew 3.85 percent per year over the period 1986 to 2014, while the ratio with the bottom group grew 3.54 percent a year.  As Taylor comments, “Such rising inequality is unprecedented. These rates are a full percentage point higher than output growth, and are not sustainable in the long run.”

What is also noteworthy is that the Palma growth rates for both the middle and bottom groups are quite close.  This is important because it shows that inequality is largely driven by the top earners pulling income from the rest of the population, rather than a widening income gap between Taylor’s middle and bottom groups.

An IMF study of the relationship between income inequality and labor market institutions in twenty developed capitalist countries over the period 1980 to 2011 came to a similar conclusion, although it focused on the top 10 percent rather than the top 1 percent. As Florence Jaumotte and Carolina Osorio Buitro, the authors of the study, explain (and illustrate in the figure below):

As with measures of income inequality, changes in the distribution of earnings indicate that inequality has risen owing largely to a concentration of earnings at the top of the distribution. 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. While there is some country heterogeneity, the increase in top income shares since the 1980s appears to be a pervasive phenomenon.  

Class power counts

As we can see in the first figure above, rich households, with a mean income of greater than $2 million a year, have “40 times the income of the bottom 60 percent and 13.5 times payments going to the middle class.” In the figure below, Taylor illustrates the source of that income.  One way or another, he finds that it comes from capital ownership and profits.

As we can see, labor compensation has grown rapidly over the last few years, and now exceeds $500,000 per year.  Still, it represents only roughly nine percent of the total, significantly less than either of the other two main income categories, proprietor’s income and interest and dividends.  Proprietor’s income, interest and dividends, and capital gains all flow from ownership.  So, in fact, does an important share of labor compensation which includes bonuses and stock options.

As Taylor explains:

Given that the bulk of income of the top one percent comes from profits through one channel or another, the obvious inference is that the rising Palma ratios in Figure 1 were fueled by an ongoing shift away from wages in the “functional” income distribution between labor and capital.

The question is why wages of ordinary households lagged.

After examining patterns and trends in business profits, Taylor concludes that the primary answer lies in the ability of firms to hold down wages.  Among the reasons for their success:

Changes in institutional norms (laws, unionization and other of the game) surely played a role. Robert Solow (2015) from MIT, the doyen of mainstream macroeconomics, observes that labor suffered for reasons including “the decay of unions and collective bargaining, the explicit hardening of business attitudes, the popularity of right-to-work laws, and the fact that the wage lag seems to have begun at about the same time as the Reagan presidency all point in the same direction: the share of wages in national value added may have fallen because the social bargaining power of labor has diminished.”

Divide-and-rule in a “fissuring” labor market, as described by David Weil (2014) is one aspect of this process. Globalization, which came to the forefront in the 2016 Presidential election, also played a role.

The IMF study again provides support for this conclusion. A simple correlation test of the relationship between labor market institutions and inequality produced “a strong negative relation between the top 10 percent income share and union density.”  Econometric tests that attempted to control for technology, globalization, financialization, tax rates and a host of other variables confirmed the relationship.  As the authors explain:

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.

On average, the decline in union density explains about 40 percent of the 5 percentage point increase in the top 10 percent income share . . . . 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.

The takeaway

Taylor doesn’t minimize the significance of the ongoing tax changes.  But as he states:

it took 30 or 40 years for the present distributional mess to emerge. It may well take a similar span of time to clean it up.  Progressive tax changes of $100 billion here or $50 billion there are not going to impact overall inequality. The same is true of once-off interventions such as raising the minimum wage by a few dollars per hour.

Long-term improvement requires changes to the present situation that can cumulate over time.

And that requires rebuilding labor’s strength so as to secure meaningful wage increases and a transformation in economic institutions and dynamics.  As the IMF study makes clear, fighting for strong unions must be an important part of the process.

Just Say No To NAFTA

The North American Free Trade Agreement (NAFTA) is unpopular with many working people in the United States, who correctly blame it for encouraging capital flight, job losses, deindustrialization, and wage suppression.   President Trump has triggered the renegotiation of the agreement, which will likely conclude early next year.  Unfortunately, progressives are in danger of missing an important opportunity to build a working class movement for meaningful economic change.  By refusing to openly call for termination of the agreement, they are allowing President Trump to present himself as the defender of the US workers, a status that will likely help him secure the renewal of the treaty and a continuation of destructive globalization dynamics.

The NAFTA debate

According to a recent poll commissioned by Public Citizen:

At a time of great peril for our democracy and deepening public opposition to Donald Trump on many fronts, he wins high marks from voters on handling trade and advocating for American workers: 46 percent approve of his handling of trade agreements with other countries, 51 percent, his ‘putting American workers ahead of the interests of big corporations’ and 60 percent, how he is doing “keeping jobs in the United States.”

This perception of Trump’s advocacy for workers is encouraged by media stories of the strong opposition by leading multinational corporations to several of President Trump’s demands for changes to the existing NAFTA agreement.

The most written about and controversial proposals include:

  • Major modifications to NAFTA’s investor-state dispute settlement system, which allows foreign investors to sue host governments in secret tribunals that trump national laws if these investors believe that government actions threaten their expected profits. The Trump administration proposes to change this system by (1) establishing an “opt-in” provision that would make participation voluntary and (2) ending the ability of private investors to use claims of denial of “minimum standard of treatment” or an “indirect expropriation” as grounds for filing a claim.
  • A tightening of the rules on the origins of car parts. NAFTA rules govern the share of a product that must be sourced within NAFTA member countries to receive the agreement’s low tariff benefits. The Trump administration wants to raise the auto rules of origin to 85 percent from the current 62.5 percent and include steel as one of the products to be included in the calculations.  It has also proposed adding a new US-only content requirement of 50 percent.
  • The introduction of a NAFTA sunset clause that would allow any of the participating countries to terminate the deal after five years, a clause that could well mean a renegotiation of the agreement every five years.

Canadian and Mexican government trade representatives have publicly rejected these proposals.  The US corporate community has called them “poison pills” that could doom the renegotiating process, possibly leading to a termination of the agreement.  The president of the US Chamber of Commerce has said that:

All of these proposals are unnecessary and unacceptable. They have been met with strong opposition from the business and agricultural community, congressional trade leaders, the Canadian and Mexican governments, and even other U.S. agencies. . . . The existential threat to the North American Free Trade Agreement is a threat to our partnership, our shared economic vibrancy, and clearly the security and safety of all three nations.

Corporate lobbyists are hard at work, trying to convince members of Congress to use their influence to get Trump to withdraw these proposals, but so far with little success.  In fact, the Trump administration has pushed back:

In remarks to the news media in mid-October, Robert E. Lighthizer, the United States trade representative, said that businesses should be ready to forego some of the advantages they receive under NAFTA as the United States seeks to negotiate a better deal for workers. In order to win the support of people in both parties, businesses would have to “give up a little bit of candy,” he said.

It is this kind of public back and forth between corporate leaders and the Trump administration that has encouraged many working people to see President Trump as sticking up for their interests.  In broad brush, workers do not trust a dispute resolution settlement system that allows corporations to pursue profits through secret tribunals that stand above national courts.  They also welcome measures that appear likely to force multinational corporations to reverse their past outsourcing of jobs, especially manufacturing jobs, and promote “Buy American” campaigns.  And, they have no problem with periodic reviews of the overall agreement to allow for ongoing corrections that might be needed to improve domestic economic conditions.

The rest of the story

Of course, NAFTA negotiations are not limited to these few contentious issues.  In fact, trade negotiators have made great progress in reaching agreement in many other areas.  However, because of the lack of disagreement between corporations and the Trump administration on the relevant issues, the media has said little about them, leaving the public largely ignorant about the overall pace and scope of the renegotiation process.

Perhaps the main reason that agreement is being reached quickly on many new issues is because many of the Trump administration’s trade proposals closely mirror those previously agreed to by all three NAFTA country governments during the Transpacific Partnership negotiations.  These include “measures to regulate treatment of workers, the environment and state-owned enterprises” as well as “new rules to govern the trade of services, like telecommunications and financial advice, as well as digital goods like music and e-books.”  In short, taken overall, it is clear that the Trump administration remains committed to “modernizing” NAFTA in ways designed to expand the power and profitability of transnational corporations.

A case in point is the proposed change to the existing NAFTA side-agreement on labor rights.  NAFTA currently includes a rather useless side agreement on labor rights.  It only requires the three governments to enforce their own existing labor laws and standards and limits the violations that are subject to sanctions.  For example, sanctions can only be applied—and only after a long period of consultations, investigations, and hearings–to violations of laws pertaining to minimum wages, child labor, and occupational safety and health.  Violations of the right to organize, bargain collectively, and strike are not subject to sanctions.

The labor standards agreement that the US proposes to include in NAFTA is one that it has used in more recent trade agreements and was to be part of the Transpacific Partnership.  It says that “No Party shall fail to effectively enforce its labor laws through a sustained or recurring course of action or inaction in a manner affecting trade or investment between the Parties, after the date of entry into force of this Agreement for that Party.”

This labor agreement is included in the US-Dominican-Central American Free Trade Agreement (DR-CAFTA) and we now have an example of how it works, thanks to a case filed in 2011 by the US against Guatemala.  The panel chosen to hear the case concluded, in June 2017, that the US “did not prove that Guatemala failed to conform to its obligations.”  The reason: the three person panel made its own monetary calculations about whether Guatemalan labor violations were serious enough to affect trade or investment flows between the two countries and decided they were not.

As Sandra Polaski, former Deputy Director-General for Policy of the International Labor Organization, writes:

The panel reached its decision that Guatemala had not breached its obligations under the DR-CAFTA because the violations had not occurred “in a manner affecting trade” between the parties. . . . The panel chose to establish a demanding standard in its interpretation of that phrase, requiring that a complaining country would have to prove that there were cost savings from specific labor rights violations and that the savings were of sufficient scale to confer a material competitive advantage in trade between the parties.  This threshold is unprecedented in any analogous applications: WTO panels have interpreted similar language much more narrowly, as affecting conditions of competition, without requiring demonstration of costs and their effects. Demonstrating changes in costs at this level would require access to sensitive internal company accounts (at a minimum), and the perpetrators of labor violations would likely have hidden them in any case. This standard could not be met without subpoena power, which does not exist under the trade agreements. . . .

The decision is disturbing for multiple reasons: because of the injustice toward the affected Guatemalan workers; because it invalidated the parties’ explicit commitment to broad enforcement of labor rights contained both in the obligatory commitments and the overall stated purposes of the agreement; and because as the first and as of now only arbitration arising from a labor clause (or environmental clause) it set a precedent for future cases.

In short, labor exploitation is likely to continue unchecked under a possible new NAFTA, which can be expected to remain as corporate friendly as the original agreement.

The need for a new progressive strategy of opposition

President Trump has threatened to withdraw the US from NAFTA if the other two countries do not agree to his demands for key NAFTA changes, in particular to the investor-state dispute settlement system and rules on the origins of car parts, the inclusion of a sunset clause, and an end to government procurement restrictions.  While we cannot predict the future, the odds are great that compromises will be reached on these issues, allowing President Trump to present a renegotiated NAFTA as a win for working people.

As Jeff Faux, founder of the Economic Policy Institute, comments:

The erratic and belligerent Trump might, of course, drive US-Mexican relations over a cliff. But he prides himself as a deal-maker, not a deal-breaker. So the most likely outcome is a modestly revised NAFTA that: 1) Trump can boast fulfills his pledge 2) Peña Nieto can use to claim that he stood up to the bullying gringo 3) doesn’t threaten the low-wage strategy for both countries that NAFTA represents.

Revisions might include weakening NAFTA’s dispute settlement courts, raising the minimum required North American content for duty-free goods, and reducing the obstacles to cross-border trade for small businesses on both sides of the border.

Changes like this could marginally improve the agreement, and would be acceptable to the Canadians, who have been told by Trump that he is not going after them. But from the point of view of workers in the American industrial states who voted for Trump, the new NAFTA is likely to be little different from of the old one. The low-wage strategy underlying NAFTA that keeps their jobs drifting south and US and Mexican workers’ pay below their productivity will continue.

But you can bet that Trump will assure them that it is the greatest trade deal the world has ever seen.

Sadly, the progressive movement has pursued the wrong strategy to build the kind of movement we need to oppose the likely NAFTA renewal or take advantage of a possible US withdrawal.  In fact, it has largely allowed President Trump to shape the public discussion around the renegotiations.

To this point, progressive trade groups, labor unions, and Democratic Party politicians have refrained from calling Trump’s bluff and demanding termination of the agreement, despite the fact that this and other so-called free trade agreements are not really reformable in a meaningful pro-worker sense. Instead, they have concentrated on demonstrating the ways that NAFTA has harmed workers, highlighting areas that they think are in most need of revision and offering suggestions for their improvement, and mobilizing their constituencies to press the US trade representative to adopt their desired changes.  Progressive trade groups have generally turned their spotlight on the investor-state dispute resolution system and outsourcing, as have Democratic Party politicians.  Trade unions, for their part, have emphasized outsourcing and labor rights.

Significantly, these are all areas, with the exception of labor rights, where the Trump administration has put forward proposals for change which if realized would go some way to meeting progressive demands.  The result is that the progressive movement appears to be tailing or reinforcing Trump’s claims to represent popular interests.  And, by focusing on targeted issues, the movement does little to educate the population about the ways in which the ongoing negotiations are creating new avenues for corporations to enhance their mobility and profits, especially in services, finance, and e-commerce.

Apparently, leading progressive groups plan to wait until they see the final agreement and then, if they find it unacceptable with regards to their specific areas of concern, call for termination of the agreement.  But this wait and see strategy is destined to fail, not only to build a movement capable of opposing a revised NAFTA agreement, but even more importantly to advance the creation of a working class movement with the political awareness and vision required to push for a progressive transformation of US economic dynamics.

For example, this strategy of creating guidelines for selective changes in the agreement tends to encourage people to see the government as an honest broker that, when offered good ideas, is likely to do the right thing.  It also implies that the agreement itself is not a corporate creation and that a few key changes can make it an acceptable vehicle for advancing “national” interests.  Finally, because agreements like NAFTA are complex and hard to interpret it will be no simple matter for the movement to help its various constituencies truly understand whether a renegotiated NAFTA is better, worse, or essentially unchanged from the original, an outcome that is likely to demobilize rather than energize the population to take action.  Of course, if Trump actually decides to terminate the agreement, the movement will be put in the position of either having to praise Trump or else criticize him for not doing more to save NAFTA, neither outcome being desirable.

There is, in my opinion, a better strategy: engage in popular education to show the ways that trade agreements are a direct extension of decades of domestic policies designed to break unions and roll back wages and working conditions, privatize key social services, reduce regulations and restrictions on corporate activity, slash corporate taxes, and boost multinational corporate power and profitability.  Then, organize the most widespread movement possible, in concert with workers in Mexico and Canada, to demand an end to NAFTA.  Finally, build on that effort, uniting those fighting for a change in domestic policies with those resisting globalization behind a campaign directed at transforming existing relations of power and creating a new, sustainable, egalitarian, and solidaristic economy.

It is not too late to take up the slogan: just say no to NAFTA!

The Bipartisan Militarization Of The US Federal Budget

The media likes to frame the limits of political struggle as between the Democratic and Republican parties, as if each side upholds a radically different political vision. However, in a number of key areas, leaders of both parties are happy to unite around an anti-worker agenda.  Support for the military and an aggressive foreign policy is one such area.

On September 18, US senators approved the National Defense Authorization Act (NDAA) of 2018.  Donald Trump had proposed increasing the military budget by $54 billion.  The Senate voted 89-9 to increase it by $37 billion more than Trump sought.  In the words of the New York Times:  “In a rare act of bipartisanship on Capitol Hill, the Senate passed a $700 billion defense policy bill on Monday that sets forth a muscular vision of America as a global power, with a Pentagon budget that far exceeds what President Trump has asked for.”

The NDAA calls for giving $640 billion to the Pentagon for its basic operations and another $60 billion for war operations in other countries, including Iraq, Syria, and Afghanistan.  The House passed its own version of the bill, which included a smaller increase over Trump’s request as well as new initiatives such as the creation of a Space Corps not supported by the Senate.  Thus, the House and Senate need to reconcile their differences before the bill goes to President Trump for his signature.

It is clear that Democratic Party opposition to Trump does not include opposition to US militarism and imperialism. As Ajamu Baraka points out:

Opposition to Trump has been framed in ways that supports the agenda of the Democratic Party—but not the anti-war agenda. Therefore, anti-Trumpism does not include a position against war and U.S. imperialism.

When the Trump administration proposed what many saw as an obscene request for an additional $54 billion in military spending, we witnessed a momentary negative response from some liberal Democrats. The thinking was that this could be highlighted as yet another one of the supposedly demonic moves by the administration and it was added to the talking points for the Democrats. That was until 117 Democrats voted with Republicans in the House—including a majority of the Congressional Black Caucus—to not only accept the administration’s proposal, but to exceed it by $18 billion. By that point, the Democrats went silent on the issue.

It is important to keep in mind that, as William D. Hartung shows, “there are hundreds of billions of dollars in ‘defense’ spending that aren’t even counted in the Pentagon budget.” Hartung goes agency by agency to show the “hidden” spending.  As he notes:

You might think that the most powerful weapons in the U.S. arsenal — nuclear warheads — would be paid for out of the Pentagon budget.   And you would, of course, be wrong.  The cost of researching, developing, maintaining, and “modernizing” the American arsenal of 6,800 nuclear warheads falls to an obscure agency located inside the Department of Energy, the National Nuclear Security Administration, or NNSA. It also works on naval nuclear reactors, pays for the environmental cleanup of nuclear weapons facilities, and funds the nation’s three nuclear weapons laboratories, at a total annual cost of more than $20 billion per year.

Hartung’s grand total, which includes, among other things, the costs of Homeland Security, foreign military aid, intelligence services, the Veterans Administration, and the interest on the debt generated by past spending on the military, is $1.09 Trillion.  In short, our political leaders are far from forthcoming about the true size of our military spending.

Militarization comes home

Opponents of this huge military budget are right to stress how it greatly increases the dangers of war and the harm our military interventions do to people in other countries, but the costs of militarism are also felt by those living in the United States.

For example, ever escalating military budgets fund ever new and more deadly weapons of destruction, and much of the outdated equipment is sold to police departments, contributing to the militarization of our police and the growing use of force on domestic opponents of administration policies, the poor, and communities of color.  As Lisa Wade explains:

In 1996, the federal government passed a law giving the military permission to donate excess equipment to local police departments. Starting in 1998, millions of dollars worth of equipment was transferred each year, as shown in the figure below. Then, after 9/11, there was a huge increase in transfers. In 2014, they amounted to the equivalent of 796.8  million dollars.

Those concerned about police violence worried that police officers in possession of military equipment would be more likely to use violence against civilians, and new research suggests that they’re right.

Political scientist Casey Delehanty and his colleagues compared the number of civilians killed by police with the monetary value of transferred military equipment across 455 counties in four states. Controlling for other factors (e.g., race, poverty, drug use), they found that killings rose along with increasing transfers. In the case of the county that received the largest transfer of military equipment, killings more than doubled.

Militarization squeezes nondefense social spending 

Growing military spending also squeezes spending on vital domestic social services, including housing, health, education, and employment protections, as critical programs and agencies are starved for funds in the name of fiscal responsibility.

The federal budget is made up of nondiscretionary and discretionary spending.  Nondiscretionary spending is mandated by existing legislation, for example, interest payments on the national debt.  Discretionary spending is not, and thus its allocation among programs clearly reveals Congressional priorities.  The biggest divide in the discretionary budget is between defense and nondefense discretionary spending.

The nondefense discretionary budget is, as explained by the Center on Budget and Policy Priorities:

the main budget area that invests in the nation’s future productivity, supporting education, basic research, job training, and infrastructure.  It also supports priorities such as providing housing and child care assistance to low- and moderate-income families, protecting against infectious diseases, enforcing laws that protect workers and consumers, and caring for national parks and other public lands.  A significant share of this funding comes in the form of grants to state and local governments.

As we see below, nondefense discretionary appropriations have fallen dramatically in real terms and could potentially fall to a low of $516 billion if Congress does not waive the sequestration caps established in 2011.

The decline is even more dramatic when measured relative to GDP.  Under the caps and sequestration currently in place, nondefense spending in 2017 equaled 3.2 percent of GDP, just 0.1 percentage point above the lowest percentage on record going back to 1962.  According to the Center on Budget and Policy Priorities, “That percentage will continue to fall if the caps and sequestration remain unchanged, equaling the previous record low of 3.1 percent in 2018 and then continuing to fall (see the figure below).”

Looking ahead

As the next figure shows, the proposed Trump budget would intensify the attack on federal domestic social programs and agencies.

If approved, it “would take nondefense discretionary spending next year to its lowest level in at least six decades as a percentage of the economy and, by 2027, to its lowest on that basis since the Hoover Administration — possibly even earlier.”  Of course, some categories of the proposed nondefense discretionary budget are slated for growth–veterans’ affairs and homeland security–which means that the squeeze on other programs would be worse than the aggregate numbers suggest.

No doubt the Democratic Party will mount a fierce struggle to resist the worst of Trump’s proposed cuts, and they are likely to succeed.  But the important point is that the trend of militarizing our federal budget and society more generally will likely continue, a trend encouraged by past Democratic as well as Republican administrations.

If we are to advance our movement for social change, we need to do a better job of building a strong grassroots movement in opposition to militarism.  Among other things, that requires us to do a better job communicating all the ways in which militarism sets us back, in particular the ways in which militarism promotes racism and social division, globalization and economic decay, and the deterioration of our environment and quality of life, as well as death abroad and at home, all in the interest of corporate profits.  In other words, we have to find more effective ways of drawing together our various struggles for peace, jobs, and justice.