If Trump follows Walker’s model, he will betray his base
Wisconsin Governor Scott Walker recently visited the White House, prompting speculation that the Trump administration might be looking to follow Walker’s model of anti-unionism. But following Walker’s model means betraying the very people who put President Trump in office: frustrated working-class Americans.
In 2011, at the urging of the billionaire Koch brothers, Walker pushed through a law that effectively eliminated the right to collective bargaining for state and local government employees. School teachers and custodians, child case workers, and road repair crews all lost the right to bargain for decent wages and benefits. Walker portrayed his action as standing up for hard-working nonunion taxpayers in the private sector who were being bled dry by the Cadillac pensions of fat and lazy public employees. In fact, however, Walker’s bill was just one more part of a playbook written by corporate lobbyists to make the rich even richer and our economy even more unequal.
Public employees are working- and middle-class, and all of them suffered dramatic health insurance cutbacks. But when the state cut people’s benefits, what did they do with the savings? They certainly didn’t give it to hard-working families struggling to make ends meet in the private sector. Instead, more than half the savings were doled out in tax cuts to the richest 20 percent of the population. While Walker gave the rich— those who needed the least help— an extra $680 per year per person, those struggling to get by in the poorest fifth of Wisconsin families got less than $50 each. Walker’s model is not taking from the haves and giving to the have-nots: it’s taking from working people and giving to the elite.
Valentine’s Day is better on the west coast (at least for restaurant servers)
Valentine’s Day is next week, and with it one of their busiest days of the year for America’s restaurant workers. For the servers and bartenders who rely on tips for the bulk of their income, the influx of couples celebrating romance with extravagant meals and expensive bills holds the promise of a nice payout. Unfortunately, for restaurant staff in most states, their windfall may not be as big as it seems. In fact, by the end of the week, their Valentine’s Day pay may turn out to have been nothing more than minimum wage. This is because in 42 states and the District of Columbia, there is a separate lower minimum wage for tipped workers, allowing restaurants (and other employers of tipped workers) to subtract a portion of their employee’s tips from the base wage paid by the house. In 18 of these states, restaurants can pay tipped workers as little as $2.13 per hour so long as—over the course of the week—the combination of tips plus the base wage averages out to at least the regular minimum wage.
Setting aside the fact that in almost every state the regular minimum wage is far too low, consider the challenges this separate lower minimum wage creates for tipped workers. The bulk of their paycheck is up to the whims of the customer, and research has shown that quality of service often has little to do with what the customer chooses to tip. Weekly, let alone monthly, income is harder to anticipate, making planning and budgeting more difficult. (Imagine trying to evaluate a mortgage offer or a car loan payment schedule if you have little ability to forecast your monthly income.) Racial bias has been shown to affect tipping, and worker advocacy groups argue that the pressure to ensure customer satisfaction, particularly in a workplace where customers are consuming alcohol, forces restaurant workers to suffer high rates of sexual harassment. Furthermore, although the law requires that employers make up the difference so that tipped workers receive at least the minimum wage, this does not always happen in practice.
Puzder hearing scheduled—now senators have an opportunity to show where they stand
President Trump’s nominee for Secretary of Labor, Andrew Puzder, has a new date for his confirmation hearing—February 16, a week from tomorrow. This marks the fifth time the Senate Committee on Health, Education, Labor, and Pensions (HELP) will attempt to consider Puzder’s nomination. While much speculation surrounds the repeated delays, today’s announcement makes one thing clear—President Trump and Senate Republicans are doubling down on a nominee whose policy positions are bad for U.S. workers. Now, senators will have an opportunity to show where they stand.
When HELP Committee members finally get a chance to question Puzder on his positions and plans for the Labor Department, they should demand that he explain his views on minimum wage. Puzder has claimed that increasing the minimum wage costs jobs; senators should ask him how he explains that California has a higher minimum wage than the federal minimum wage yet has seen faster economic growth—including in the restaurant industry—than the country as a whole. Senators should ask Puzder if he knows how many Americans were killed at work before the Occupational Safety and Health Act was enacted in 1970. Does he know how many workers are killed each year now, in an economy twice as big? Still far too many, but fewer than before—demonstrating the importance of meaningful workplace safety standards. Finally, senators should demand that he explain his own company’s record of wage and hour and OSHA violations.
President Trump’s insistence on advancing Puzder as his nominee for labor secretary reveals that his agenda is to pursue an economy that works great for corporate owners and those at top, but does not work for low-and middle- income families. After decades of wage stagnation and weakened worker protections, we need a labor secretary who will advocate for a strong minimum wage and meaningful worker protections. The Senate now has a chance to demand that workers get a secretary who will guard their rights and advance an agenda that works for them. We will see if they agree that America’s workers deserve better than Mr. Puzder.
Increased U.S. trade deficit in 2016 illustrates dangers of malign neglect of the dollar
The U.S. Census Bureau reports that the annual U.S. trade deficit in goods and services increased slightly from $500.4 billion in 2015 to $502.3 billion in 2016, an increase of $1.9 billion (0.4 percent). This reflects a $14.4 billion (5.5 percent) decline in the services trade surplus and a $12.5 billion (1.6 percent) decrease in the goods trade deficit. However, the small increase in the overall goods and services trade deficit, and its downward trend over the past decade, mask important structural shifts in U.S. trade.
Falling petroleum prices and rising domestic petroleum production and exports have obscured surging imports of nonpetroleum goods (NPGs) —the vast bulk of which are manufactured products—into the United States since 2013. The trade deficit in NPGs, which has the most impact on workers and communities, has increased sharply. The U.S. trade deficit in petroleum goods declined by $22.7 billion (32.8 percent) in 2016, while the trade deficit in NPGs increased by $16.4 billion (2.5 percent), continuing the sharp run-up in the NPG trade deficit since 2013.
The U.S. trade deficit in NPGs is now at an all-time high (shown with dark blue bars in the figure below) while the overall U.S. balance of trade in goods and services (shown with light blue bars) has fallen sharply from a peak of $761.7 billion in 2006 to $502.3 billion in 2016—obscuring the much larger (and more important) trade deficit in NPGs.
No wage thief should be labor secretary
By now, anyone following Andrew Puzder’s nomination to be the secretary of labor knows that the restaurant chain he leads has a long history of cheating its workers out of wages they earned. Not just the franchisees that own the bulk of the Carl’s Jr. and Hardees restaurants, but CKE itself, the franchisor corporation, has been found guilty of wage theft and compelled to pay back tens of thousands of dollars of wages stolen from workers earning poverty level wages. The U.S. Department of Labor, which he seeks to head, is the agency that busted Puzder’s corporation.
Today, the New York Times reports that Puzder violated immigration laws, too, not in his role as CEO of the restaurant chain, but in his private life. For years, Puzder employed a housekeeper who was not authorized to work in the United States, and also failed to pay employment taxes.
Puzder wants to be the chief enforcer of the nation’s labor laws, but his history of flouting those laws makes it clear that he is unfit for the job. Puzder’s violations of immigration law make him a strange choice to be a cabinet officer in President Donald Trump’s administration, given the president’s near hysteria about the presence of undocumented immigrant workers in the United States.
Don’t fix what isn’t broken: Why Betsy DeVos’ radical agenda for U.S. public education makes no sense
As the Senate prepares to vote on the nomination of Betsy DeVos, President Trump’s pick for secretary of education, it is critical to confront a key (but not always explicit) assumption. DeVos asserts that “U.S. schools are failing,” and many senators assume that to be the case. But is this true? And if so, in what ways? Answering these questions is very important, as strategies to fix failing schools should be very different from those designed to improve schools that are already doing well.
A new analysis of changes in U.S. student performance over the past decade strongly suggests that our nation’s schools are not failing. Rather, they have made real progress on two related issues we care deeply about: boosting student achievement and closing race-based achievement gaps. This analysis, by economists Martin Carnoy of Stanford University and EPI’s Emma Garcia, uses a reliable and valid gauge—reading and math scores on the National Assessment of Educational Progress (NAEP), commonly known as “the Nation’s Report Card.”
My alma mater has its priorities all wrong
The University of Michigan and most of its alumni long for a national champion football team, or at least a team that can beat Ohio State. What the school and its publicly-elected Regents are willing to pay to get such a team is alarming, especially when compared with its willingness to pay for scholars and researchers.
Michigan is committed to paying head coach Jim Harbaugh’s top three assistants $1 million each per year. Harbaugh got an eye-popping $7 million contract to leave the NFL and restore glory to Michigan’s wolverines. But these are millionaire assistant coaches.
The Associated Press and the Detroit Free Press report that the defensive coordinator, Don Brown, and the offensive coordinator, Tim Drevno, have been retained with contracts worth more than $10 million combined over the next five years. The passing coordinator, Pep Hamilton, was lured from the Cleveland Browns with a four-year, $4.25 million deal.
Michigan is a state whose biggest city’s infrastructure is nightmarishly bad, whose school buildings are crumbling, and which only recently emerged from bankruptcy. Another large city, Flint, is in receivership and saved money by cutting corners on the safety of its water supply, leading to the poisoning of thousands of children and other residents.
But the state can afford to make its top school’s assistant coaches millionaires.
Why can’t it then pay overtime to its postdoctoral researchers or give them raises to $47,476 as it planned to before a federal judge blocked the Department of Labor’s overtime rule from taking effect? The University of Michigan was a leader in the campaign to fight the overtime rule, claiming it couldn’t afford to pay its PhD researchers for the 15-20 hours of overtime they work in an average week. University officials claimed U of M couldn’t even afford to give the postdocs raises of $3,000-$5,000 to put them above the threshold that permits exemption from overtime pay.
But it can afford to make millionaires of the assistant coaches.
This says something appalling about how far the University of Michigan and its current leaders have strayed from the mission of the university, which is one of the oldest public research universities in the nation. They value winning football games far more than they value the core research done by the university’s young scholars. They have little respect for either the researchers or the work they do.
As an alumnus of the University of Michigan Law School, it makes me sick.
Read more on this topic: Universities oppose paying their postdocs overtime, but pay coaches millions of dollars.
What to Watch on Jobs Day: President Trump inherits a slowly but steadily recovering economy
When the January jobs numbers come out on Friday, I expect we will see an economy that is continuing to slowly, but steadily recover from the Great Recession. By all measures, the labor market is on the road to (but not yet arrived at) full employment. Further, the economy the Trump administration has inherited shows no obvious risks like a wildly overvalued stock or housing market, as such there’s no particular reason to expect it to be thrown off track.
Regardless of which party is in power, we will continue to track the state of the labor market and what it means for people across demographic and educational and socioeconomic circumstances on these pages. Up-to-date and accurate reporting is only possible through the work of the Bureau of Labor Statistics (BLS). The latest BLS commissioner, Erica Groshen, has ended her four year term, during which she continued the proud tradition of both Republican and Democrat BLS commissioners in overseeing high-quality, transparent, and independent data collection and analysis. BLS data allow researchers, policymakers, the media, and consumers to better understand and interpret the goings on of the labor market. The statistics generated by the BLS allow us to form a clear picture of the economy.
Over the recovery, we’ve continued to see confirming evidence from multiples data series that the economic recovery is widespread but incomplete. Recently, there has been talk about what the “true” unemployment rate is. The BLS has an “official” unemployment rate, which is the number of people classified as unemployed—if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work—divided by the number of people in the labor force (the sum of the employed and unemployed). If you want to get more details on this, see BLS’s very clear page of definitions. This “official” measure is also referred to as the U-3. But the BLS actually has six different measures of labor market underutilization, U-1 through U-6.
Fed likely to stand pat today on interest rates: Right call, but important to understand why
The Federal Reserve is widely expected to keep the interest rates it controls unchanged today, after raising rates at its last meeting of the Federal Open Market Committee. This decision would be welcome. It’s important, however, to not just applaud the decision, but to explain why it was the right one: Much of the commentary in the run-up to today’s meeting stresses “uncertainty” as the reason for the Fed’s expected decision. This view implicitly takes the Fed’s main job as calming jittery financial markets.
In reality, the most compelling reason for the Fed to stand pat and give the economy “room to run” (in Chair Yellen’s phrase) is not found in financial markets, but in labor markets. In these labor markets there are no signs at all that wage growth is accelerating at a rate that would spur overall price inflation over the Fed’s 2 percent target. Some measures of wage growth have seen some good pick-up in recent months, but even these remain below what wage growth should be in a healthy economy. Meanwhile, some recent measures of wage growth show continued flatness, and are putting a substantial downward drag on overall price growth. Last week’s data on gross domestic product showed that on the Fed’s key price barometers—“core” prices for consumption goods (excluding volatile food and energy)—saw inflation decelerate rapidly, to 1.3 percent over the last three months.
This is inflation far below the Fed’s stated 2 percent long-run target. Consistently missing the inflation target from below is actually a more-damaging mistake than allowing inflation to exceed the target for a short spell. And until there are signs that labor market tightening has led to genuine full employment that is generating nominal wage growth of 3.5 percent consistently, it is not time to raise interest rates.
Trump leaving LGBTQ nondiscrimination executive order in place signals approval of reasonable mandates for federal contractors
Last night, the White House said that President Trump would leave in place the Obama administration’s executive order that prohibits federal contractors and subcontractors from discriminating against employees on the basis of sexual orientation or gender identity in hiring, firing, pay, promotion, and other employment practices.
It goes without saying that not revoking workplace protections for LGBTQ workers is an extraordinarily low bar for supporting LGBTQ workers. A president who truly supported LGBTQ workers would be pushing for broader legislation that prohibits discrimination, like the 2015 Equality Act, which would provide clear, fully-inclusive non-discrimination protections for LGBTQ people.
