Deregulation can kill you
When you hear politicians singing the virtues of deregulation, remember the Grenfell Tower fire. Last month, 80 people, including young mothers and children, died in an inferno that destroyed the 24-story Grenfell Tower apartment building in London. The undisputed cause of this completely avoidable tragedy can teach us important lessons about government regulation and deregulation.
The blaze that devastated the building occurred when a faulty refrigerator near a window ignited the apartment tower’s exterior cladding, a sheath of aluminum and flammable insulation that was recently added. The cladding panels used on Grenfell Tower, which sandwich a layer of polyethylene between two aluminum sheets, are combustible. In most countries, the company that manufactures the panels recommends that they not be used on buildings taller than about 33 feet, or two stories, the reach of a firetruck’s ladder.
In most countries, including the United States, combustible panels like those installed at Grenfell Towers would be illegal. U.S. fire codes require fire testing of the cladding, and as the New York Times reports, “no aluminum cladding made with pure polyethylene – the type used at Grenfell Tower—has ever passed the test.”
Why the UN Global Compact on Migration matters
In response to the large movements of refugees and migrants around the world, including the dramatic movement of over one million Syrians, Afghans, and Africans from various countries to Europe in 2015, world leaders at a UN Summit for Refugees and Migrants in September 2016 proposed two “global compacts” to improve the governance of international migration: a Global Compact for Safe, Orderly, and Regular Migration and a Global Compact on Refugees. The Global Compact on Refugees already has a normative framework, the 1951 Geneva Convention, which has been ratified by almost every nation, and a lead UN agency in the UNHCR that can assist Member States to improve protections and more equitably share the burden of hosting refugees.
While the Global Compact on Refugees is expected to offer support to countries that host large numbers of refugees by developing a Comprehensive Refugee Response Framework and to develop a plan of action to address refugee issues, the Global Compact on Safe, Regular, and Orderly Migration (also referred to as the Global Compact on Migration or GCM) has a broader challenge. The GCM must offer a framework for protecting the human rights of migrants and integrating them in the places to which they move—often for the purposes of finding employment—while also helping combat xenophobia, racism, and discrimination toward migrants.
On labor nominations, what a difference a president makes
Tomorrow, the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) is set to consider President Trump’s nominees to the National Labor Relations Board (NLRB), as well as Trump’s pick for Deputy Secretary of Labor. Both the NLRB and the Department of Labor are critically important agencies for this nation’s workers. Senate Republicans were so concerned about President Obama’s nominees to the NLRB that they refused to allow a vote, leading to a showdown that culminated in then-Senate Majority Leader Reid threatening to use the “nuclear option” to change the Senate rules for confirmations. What a difference a president makes. Now, Senate Republicans have decided to rush the confirmation hearings by consolidating consideration of the NLRB nominees with a nominee to a senior post at the Department of Labor.
As an independent agency, the NLRB members do not report to the president, but rather, serve as neutral arbiters of our nation’s labor law (“umpires rather than advocates,” as Senator Lamar Alexander, the chair of the committee, likes to say). DOL, meanwhile, is a cabinet-level agency—and its leaders report directly to the president. The Deputy Secretary of Labor is a political position whose main role is not neutral interpretation of the law but rather to advance the administration’s policies. Considering these nominees alongside each other, given the incongruous nature of the positions and agencies they will serve, is an abdication of the committee’s responsibility to thoroughly review these nominations.
Rushing this process and consolidating what should be separate hearings on important nominations deprives senators of the opportunity to examine these nominations. Most importantly, it shortchanges U.S. workers who depend on these agencies and the officials who lead them to enforce their rights and protect their freedoms. We deserve a process that enables our representatives to meaningfully consider the nominations. At the very least, the HELP Committee should hold separate hearings on nominees who, if confirmed, would serve vastly different roles in vastly different agencies.
Steel and aluminum trade restraints are good first steps, but not nearly enough to rebuild manufacturing
The Trump administration is poised to impose broad tariffs and/or quotas on imports of steel and aluminum products. As the issues are being pondered, battles are raging between metal-producing and consuming industries, and between the United States and its trading partners. Trade restriction in these sectors could relieve near-term pressure on thousands of jobs and, if done well, could buy valuable time that could lead to global solutions to chronic dumping and overcapacity problems centered in China and a few other countries. But tariffs and quotas in a few industries will never be sufficient to structurally rebalance U.S. trade or rebuild U.S. manufacturing, goals that have been clearly identified by the president and other members of his administration. In order to achieve these goals, the United States needs to realign the dollar to reverse the effects of more than two decades of unfair trade and currency manipulation on world trade and the global economy.
The conclusions in this post are based on the following key observations:
- U.S. steel and aluminum industries have been heavily injured by massive growth of excess capacity and overproduction in China and other countries. More than 13,000 U.S. jobs have been lost in aluminum since 2000—and 14,000 steel jobs disappeared in last two years alone.
- Surging imports of steel and aluminum and diminished domestic production capacity in these industries are a threat to national security because access to reliable sources of these metals is critical to supply of military equipment and critical infrastructure. If current trends persist, in time of war or other national emergency, the United States would find itself dependent on unstable import sources.
- Tariffs and quotas will save jobs in these industries from near-term threats and help domestic producers recover from unfair trade. In the best of cases, tariffs can be used to encourage other importers to develop common policy to address overcapacity and overproduction by China and other major exporters. But trade remedies can have negative consequences too. Increasing costs of steel and aluminum may reduce the competiveness of other domestic producers (both downstream producers of steel and aluminum products, as well as other users such as automakers and aircraft manufacturers), hurting consumers and reducing exports. Imposing trade restraints can also lead to retaliation by other countries, further reducing U.S. exports.
Class action waivers rob workers of the freedom to negotiate with their employer
Yesterday, the Consumer Financial Protection Bureau (CFPB), an independent agency that serves as a watchdog for consumers, issued a rule that would ban companies from using mandatory arbitration clauses to deny Americans their day in court. The rule would restore consumers’ ability to band together in class-action suits. Without the ability to pool resources, many people are forced to abandon claims against financial institutions and other powerful companies. Consider that hundreds of millions of contracts for consumer financial products and services include mandatory arbitration clauses. Yet, the New York Times found that between 2010 and 2014, only 505 consumers went to arbitration over a dispute of $2,500 or less. By prohibiting class actions, companies have dramatically reduced consumer challenges to predatory practices.
Mandatory arbitration clauses are also used by employers. Employees are forced give up their right to sue in court and accept private arbitration as their only remedy for violations of their legal rights. Private arbitration clauses tilt the system in the business’s favor: the company is often allowed to choose the arbitrator, who will thus be inclined to side with the business; arbitration also cannot be appealed, leaving workers and consumers in much worse shape than if they had access to the courts. As such, employees who bring grievances against their employers are much less likely to win in arbitration than in federal court. Employees in arbitration win only about a fifth of the time (21.4 percent), whereas they win more than a third (36.4 percent) of the time in federal courts.
The black unemployment rate returns to historic low, but not really
Today’s report from the Bureau of Labor Statistics showed the economy added 222,000 jobs in June. If this rate of growth keeps up, we should see the economy heading faster toward full employment over the next year. Meanwhile, the overall unemployment rate ticked up slightly to 4.4 percent. This slight increase happened for the “right” reasons as the labor force participation rate rose slightly to 62.8 percent percentage points and the employment-to-population ratio also rose slightly to 60.1 percentage points. As the economy continues to inch towards full employment, we should expect the recovery to reach all corners of the where workers including young and old, and workers of all races can fully benefit from the economy.
One particularly bright finding in today’s report is the noticeable drop in the black unemployment rate. While the unemployment rate for black workers remains far higher than for white workers (7.1 percent versus 3.8 percent), the black unemployment rate has been falling faster than overall unemployment over the last year. It’s important to not put too much attention on one month’s data because it can be misleading as the black unemployment rate displays a fair amount of measurement-driven volatility. Looking at the longer term trends, black unemployment has fallen 1.5 percentage points over the last year, compared to a 0.5 percentage point drop overall. Previous estimates indicate that the black unemployment rate tends to be more volatile with respect to aggregate labor market changes than the white rate. Still, this improvement is quite a bit stronger than the historical average of roughly a 2 percentage point change in the black unemployment rate for every 1 percentage point change in the overall rate.
What to watch on jobs day? The kind of strength that will accelerate the pace of the recovery
Job growth has noticeably slowed, but slack remains
Over the last several months, the pace of job growth has noticeably slowed. May’s payroll job growth of 138,000 brought average monthly job growth down to just 121,000 jobs the past three months, and 162,000 this year so far. In comparison, payroll employment growth averaged 187,000 in 2016 and 226,000 in 2015. While the pace of job growth should be expected to slow as the economy approaches full employment, it’s not clear that we should rest easy that this is the explanation for any recent slowdown. After all, many indicators seem to be telling us that we have not yet reached full employment. For instance, the prime-age employment-to-population ratio remains significantly below its high points in previous recoveries, meaning there is likely still slack from the Great Recession and its aftermath as would-be workers sit on the sidelines and would likely get back in the game as jobs are created and wages increase.
Furthermore, gains in nominal wage growth have slowed in the past few months, with year-over-year wage growth averaging 2.5 percent over the last three months, down from 2.7 percent in the six months prior, which is still far-below the target growth rate of 3.5 percent. While the economy has been adding jobs for years now, a stronger economy would mean higher wages and faster wager growth. At the current rate of growth, it is clear that employers need to do little to attract and retain the workers they want and any significant signs of labor shortages are simply not showing up in the data.
First economic scenario: Treading water
For now, let’s return to the topline payroll numbers. With the publication of the latest CBO projections, we can assess how much job growth we need to not only keep up with population growth (which is the only job growth needed if the economy truly is at full employment), but to see lower rates of unemployment and greater participation in the labor force (assuming that we’re not yet at full employment). For those who just want the quick and dirty answer, please skip to the figure below. For those who want a bit more detail, keep reading.
DHS and DOL should focus on improving protections for H-2B and U.S. workers rather than expanding a flawed guestworker program
ProPublica recently reported that the Department of Labor (DOL) and the Department of Homeland Security (DHS) are being pressed to “find the data” to justify an interim final rule (IFR) to increase the number of visas in the H-2B guestworker program before the end of the fiscal year, as means of securing votes in the Senate for repealing the Affordable Care Act. Such an action would compromise the integrity of what should be an exhaustive and transparent rulemaking process.
There is no good reason for any increase in the H-2B annual numerical limit (also known as the “cap”), but if the administration is set on expanding a flawed guestworker program that leaves migrant workers exploitable while undercutting U.S. workers, it makes sense for DHS and DOL to promulgate an IFR. At present there is no established process or procedure set up for lifting the cap in the way it might play out in the coming weeks as a result of a legislative rider to a government spending bill that gave DHS discretion to raise the cap. Simply publishing a statement or policy directive might be questionably legal or be challenged in the courts, and an IFR will at least offer the public a more transparent process and methodology. DHS should also consider offering the public an opportunity to offer input on any published regulation or IFR on H-2B, even if it is provided after the rule goes into effect.
But first, it is important to remember that the long term labor market trends and indicators do not suggest the United States is experiencing national-level labor shortages in the top H-2B occupations. There is however, ample evidence that the H-2B program needs major reforms to protect migrant and American workers. At present, employers have an incentive to hire indentured and underpaid H-2B workers from abroad who have little power in the workplace, and who have no hope of a path to permanent residence and citizenship.
With federal inaction, states continue to step up in providing paid sick days to their workers and families
While inaction on paid sick days at the national level continues to erode families’ economic security, cities and states are stepping up for working people and serving as models for jurisdictions throughout the country. Rhode Island is the latest example—legislators there have been working to pass legislation to guarantee a minimum amount of paid time for eligible workers to care for themselves or their family when they are sick or need medical care. While there are important differences in the proposals, both the Rhode Island House and Senate have passed measures which would significantly expand the ability for workers there to earn paid sick time. If the governor signs a bill, it will be a big win for working people and their families in Rhode Island, as the state will join Connecticut, California, Massachusetts, Oregon, and Vermont in guaranteeing that working people have the ability to earn paid sick time.
In a paper released earlier this week, Jessica Schieder and I highlighted some of the costs to workers and their families when they are not given the opportunity to earn paid sick time. By examining estimated spending on essential items for families who lack paid sick days today, we quantified how this lack threatens the economic security of low- and moderate-income families.
OSHA proposes to delay recordkeeping rule
OSHA has officially announced a proposal to delay the reporting requirements of its “Improve Tracking of Workplace Injuries and Illnesses” recordkeeping rule that was issued last July.
The recordkeeping rule simply requires employers already covered by OSHA’s recordkeeping requirements to send the form 300A (Summary of Work-Related Injuries and Illnesses) to OSHA and then OSHA would publicize the information on its website. The rule also prohibits employers from retaliating against workers for reporting injuries or illnesses.
Employers were originally required to send their information in to OSHA by July 1. OSHA announced its “intention” to delay reporting last month. The non-retaliation part of the standard, which generated intense industry opposition, may not fare as well. That part of the regulation is in effect, but OSHA states in this proposal that it “intends to issue a separate proposal to reconsider, revise, or remove other provisions of the prior final rule.” So stay tuned for that.
OSHA justifies the delay by stating that it “will allow OSHA an opportunity to further review and consider the rule” and that the delay “will allow OSHA to provide employers the same four-month window for submitting data that the original rule would have provided.” OSHA had originally planned to post a website last February so that employers would have four months to submit the data to meet the original July 1 deadline, but the new administration refused to put the website up.