America Can Work Better

Tuesday

Aug302011

Put America Back To Work

Bob Herbert

The biggest domestic policy failure has been the refusal of top officials in the White House and in Congress to recognize the severity of the employment crisis that has settled like a plague over American workers.

There is no longer any excuse for believing that the Great Recession and its aftermath was a more or less typical economic downturn to be followed by a robust recovery. That’s a pipedream. What we are experiencing is an economic disaster, the worst reversal to hit the U.S. since the 1930s. The human suffering is profound. Some 14 million Americans are officially counted as unemployed. Nearly half have been out of work for six months or more, and many have been jobless for a year or two or longer.

Poverty is once again on the march, moving like Patton’s Third Army through communities that had never had more than a tenuous hold on the American dream. The few jobs now being created too often pay a pittance, the minimum wage or just above, not nearly enough to pry open the doors to a middle class standard of living.

Starved of tax revenues, the federal budget is submerged in a vast ocean of red ink. One of the tragic results is that social services are under furious attack at the same time that the need for such services has grown enormously. If dramatic steps are not soon taken to put millions of jobless Americans back to work, the quality of life for much, if not most, of the population will be irreparably damaged. The American dream itself is at risk.

August 30, 2011 |

Wednesday

Aug312011

Unemployment Benefits: Lifeline for Workers and the Economy

Rakim Brooks

The United States faces the gravest unemployment crisis since the Great Depression. At least 25 million Americans, or 16.1 percent of workers, are unemployed or underemployed. The average length of unemployment is 10 months, a record high. Those who have been unemployed for just 5 weeks have only a 30 percent chance of being hired in this economy; those who have been without work for more than 27 weeks, have a 1 in 10 shot.

The federal government must do more to address this historic crisis. One essential policy response is to further extend unemployment insurance benefits (UI). For many Americans, UI has been the sole reason their families and communities have not sunk into poverty. When she loses her job, the median individual has a savings of roughly $250, not nearly enough to meet their financial obligations. UI fills the gap – or should. The unemployment rate has now been over 8 percent for 30 months, and as the jobs crisis has dragged on, more unemployed Americans have exhausted their UI benefits. In California alone, over 500,000 people have run out of benefits.

Yet instead of providing more relief to America’s unemployed – people who are broke and often desperate through no fault of their own – the federal government is on track to provide less. Under the terms of the debt ceiling deal approved by Congress in early August, funding for extended unemployment benefits will expire in January 2012. These extended benefits, which Congress began authorizing in 2009 and refunded last year, provide an additional 73 weeks of benefits to workers who have exhausted the standard 26 weeks of benefits provided by state UI programs.

Unemployment benefits are also under attack in the states. Six states have cut the period during which workers can collect benefits to below 26 weeks, which has been a standard nationally for over a half century. Among these are states with double-digit unemployment rates, including Florida, Michigan, and South Carolina. In addition, several other states have reduced unemployment benefits or made the eligibility requirements more onerous.

Lawmakers have cited financial pressures to justify these cuts. Yet one reason that unemployment insurance trust funds are running out of money is because they weren’t adequately funded during flush times. This is not the fault of the unemployed and they shouldn’t suffer for the mistakes made by the same state legislatures that are now cutting their benefits.

August 31, 2011 |

1 Comment |

Thursday

Sep012011

The Abandoned Generation: Creating Jobs and Opportunities for Young Adults

Tamara Draut

Since the Great Recession began, young people have taken it on the chin—whether they’re carrying a high school diploma or a costly college degree. The jobless rate among young adults is about double that of other age groups—with unemployment rates at Depression-era levels for young African-American and Latino men without college degrees. No previous recession comes close to this one in terms of the loss of jobs and opportunity among young people. Which helps explain why the majority of Americans now believe today’s Millennial generation will be worse off than their parents. American public opinion is simply catching up with reality; the truth is, the downward spiral for this generation was well underway before the Great Recession.

Working hard and getting an education have long been tickets to the American Dream, but that is changing. Young people are finding it harder to work their way into the middle class as blue collar jobs and trade apprenticeships disappear, while educating your way up the ladder has also become more daunting amid skyrocketing college tuition costs.

Shrinking Paychecks

Let’s look at what’s happened to young workers’ paychecks over the last generation, starting with the experience of young men. Three years before the recession, the typical earnings for all young men working full-time were down 4 percent compared to 1980. And behind those overall figures are deep drops in earnings for the majority of young men. By 2005, young men with only a high school diploma were making 82 cents for every dollar their father made back in 1980; young men with some college were making only 92 cents. The only men who made progress over a generation were those with at a least a bachelor’s degree. By 2005, they were making $1.16 for every $1.00 their dad had made at that age in 1980. Of course, that extra 16 cents per dollar gets quickly eaten away by the student loan payments and higher housing costs that also distinguish the life of a 20-something Millennial compared to Baby Boomers. What happened to men since the Great Recession is a continuation of these trends against a backdrop of a labor market that is no longer creating enough jobs to go around.

Young women, on the other hand, have made solid gains in the labor market since their moms’ 20-something days in the 1980s. The typical earnings of young women in 2005 were up 29 percent compared to 1980—with young college-educated women seeing the largest increases in their paychecks. Young women with no college education still saw gains, though they were more modest, about 5 percent. It’s not surprising that young women today have surpassed their moms in earning power—they work longer and steadier than back in 1980 and have made significant inroads into higher paying occupations. They also had a lot of catching up to do. That said, the gender gap is alive and well. Young women—at every level of education—still earn less than male counterparts.

September 1, 2011 |

Friday

Sep022011

Bad Jobs Make Bad Times Worse

Paul Osterman

America confronts a jobs crisis that has two faces. The first face is obvious and greets us every morning when we read the newspapers or talk with our friends and neighbors. There is simply not enough work to go around. Following the financial crisis and the Great Recession unemployment has remained stubbornly high with devastating consequences.

The second jobs crisis is more subtle but no less serious. Far too many jobs fall below the standard that most Americans would consider decent work. Last year 19.7 percent of working adults held jobs that would put a family of four below the poverty line even if they worked full time and full year. These people work in factories and hotels, in restaurants and hospitals, on construction sites and in day care centers. The problem spans all races and ethnic groups and includes large numbers of native born Americans as well as immigrants.

Why are there so many bad jobs? The key explanation is that working Americans have not shared in benefits of economic growth. In 2000 the median wage of adult workers was (in 2010 dollars) $17.41 and by 2010 it had barely grown to $17.60. During this same period the annual increase of productivity was over 2.5 percent. Who benefited from this growth? Between 1993 and 2008 the top 1 percent captured 52 percent of all new income in the economy. This is not just a story about dividends and stocks: the share of earnings captured by the top 1 percent nearly doubled.

Pressures also come directly from employers. Over the past several decades, firms have developed a tool kit of strategies aimed at lowering compensation and benefits. Outsourcing is just one tactic. Another is keeping employees at less than full-time status to avoid paying benefits. Aggressive union avoidance is yet another. Instead of investing in training frontline employees and creating career paths, many companies rely on a high-turnover employment model. Finally, research finds that employers often fail to comply with a host of labor laws that set standards in the workplace, ignoring rules that guarantee a minimum wage and overtime pay, as well as misclassifying workers and, in the most egregious cases, cheating workers out of pay by forcing them to work off the clock or not paying them at all (a practice known as “wage theft.”)

It is tempting to view employers simply as the enemy of good jobs and to demonize them. Some firms, it must be said, view employment law violations as just another smart business practice. However, most employers frequently feel that they have little choice but to squeeze their employees, even if they hate doing so. In an effort to survive and grow, many companies today are under tremendous competitive stress and pressure from financial markets -- and look for the path of least resistance. Unfortunately, this has often involved pushing labor costs down as far as possible.

September 2, 2011 |

1 Comment |

Tuesday

Sep062011

Wrong Culprits: What's NOT Stopping Job Growth

Ben Peck

With unemployment above 9 percent, creating more jobs is an urgent priority for the United States. But it is difficult to have a sensible debate on how to spark job growth given the myths and misinformation that surround this issue. Specifically, many political leaders and analysts wrongly point to three culprits in explaining weak job growth: government regulations, the new healthcare law, and taxes. None of these explanations hold up under closer scrutiny.

Regulation Isn’t Stopping Job Growth

Proponents of smaller government routinely argue that cutting back on regulation would create more jobs. In a recent Washington Times column about how to reduce high unemployment, Heritage Foundation president Ed Feulner wrote that “One of the biggest factors behind whether companies hire or not is regulation.” In fact, though, there is little or no connection between today’s high unemployment rate and the regulations on business.

In 2007, the average unemployment rate was 4.6 percent. That figured doubled by 2009, to 9.3 percent, not because of any major changes in regulation – since none occurred – but because of the financial crisis. Today, most economists agree that the main reason that companies aren’t hiring new workers is the lack of consumer demand. More generally, regulation is not a major determinant of employments levels – which have fluctuated over the past half century in ways divorced from regulatory trends. For instance, unemployment was higher between 1955 and 1960, before much current regulation existed, than in the second half of the 1990s.

That major economic trends, not regulation, determine hiring is underscored by companies’ own reporting on layoffs. Since 2007, companies laying off 50 or more workers have had to report to the U.S. Department of Labor whether “regulations” were the cause of layoffs. From 2007 to 2009, according to the Labor Department’s figures, a miniscule proportion of layoffs, 0.3 percent, were caused by regulations.

September 6, 2011 |

1 Comment |

Wednesday

Sep072011

Weak Unions, Weak Economy: Why the Decline of Organized Labor Makes it Harder to Revive Growth

Amy Traub

"If we had more freight to haul, we'd be doing more hiring," trucking executive Barbara Windsor explained to President Obama earlier this year. From the small businesses suffering weak sales and a shortfall of customers to the large companies now stockpiling tens of billions in cash the fundamental problem with our economy is the same: a lack of consumer demand means substantial investment and hiring in the U.S. are often irrational from a business perspective. The nation’s sky-high unemployment and underemployment rates are the biggest immediate cause of the anemic demand. But a closer look at the long-term trends underlying consumer spending power suggests another, less recognized culprit lurking in the weeds: union busting.

To understand how a decades-long legacy of union busting is making our recovery harder, consider the role that organized labor has traditionally played in ensuring that working people – who make up most consumers -- receive a larger share of the economy’s gains and thus have money to spend consuming. Unions bargain collectively for better wages and benefits for their members. But unions also raise compensation for workers they don’t represent: a recent study by professors Bruce Western and Jake Rosenfeld finds that by scaring non-union employers into raising wages to avoid unionization, promoting norms of fair pay, and lobbying for public policies that raise wages, unions substantially boost compensation for non-union employees in addition to their own members. In short, high unionization boosts the share of economic growth going to working people rather than to corporate profits or the very highest earners. That is good for consumer spending given that Americans of moderate means are more likely to spend additional money than the wealthy, who already are consuming at their desired level, or corporations, which may just pile up more cash.

Unfortunately, though, unionization rates have been in decline for decades and the share of national income going to the middle class has fallen too. Meanwhile, the proportion of pay held by the highest-income Americans has shot up dramatically: in 2007, the top ten percent of households earned 49.7 percent of the nation’s income. Factors like globalization, technological change, and especially the demand for highly skilled workers that has put a premium on the value of a college education contribute to the divergence between the middle class and the wealthy, but Western and Rosenfeld make a powerful case that the decline of union representation was also a major influence – contributing as much as third to the growth of income inequality among working men since 1973. Without unions or any other organized force to fight for workers’ share of economic gains, the middle class is dwindling – and so is its purchasing power. This trend was obscured during the early 2000s as Americans tapped credit cards and rising home equity to support their consumer spending.

September 7, 2011 |

Thursday

Sep082011

Growth Engines: Ten Ideas to Help Small Businesses Create More Jobs

Heather McGhee

Who are the real job creators? The Small Business Administration reports that businesses with under 500 employees have created two out of every three net new jobs over the past 15 years. Even smaller businesses – “microenterprises” of less than 4 employees – account for 88 percent of firms, and could get the country to full employment if just one out of every three was able to hire a single new employee. So, what’s it going to take?

Create More Customers

What small businesses need the most, of course, are customers. And what more Americans need in order to be customers again is more jobs that pay incomes above their essential costs.

1. Put Americans Back to Work: With 25 million Americans who can’t find a full-time job, it is past time to simply hire willing workers to help strengthen our country. Dēmos’ Back to Work report estimates that our government could hire 8 million people for less than the annual cost of the Bush tax cuts. Representative Jan Schakowsky has a bill to create new job corps in areas from park improvement to child care. Public jobs are cost-efficient, targetable, and stop the vicious cycle of depressed consumer demand causing private employers to shed workers and cut salaries, which in turn depresses consumer demand.

2. Pass Smaller Stimulus Ideas: Short of a full WPA-style program, there’s plenty we can do today. Raising the minimum wage would increase disposable income without costing jobs; investing in infrastructure would create new jobs,30 percent more of them if we choose mass transit over new roads. It should be obvious, but let’s first do no harm by not letting austerity hysteria summon the ghost of 1937, when FDR cut spending and we plunged back into the Depression. We should also save what meager stimulus we now have from the chopping block: the unemployment insurance extension and Obama’s payroll tax cut. Even better, we can replace the payroll tax cut with a lump-sum tax rebate targeted to more strapped consumers, for 12 percent more jobs created per dollar.

September 8, 2011 |