Ratio of Job Seekers Remains Extremely Elevated—No Time to Cut Unemployment Benefits
The Job Openings and Labor Turnover data released this morning by the Bureau of Labor Statistics showed that the ratio of job seekers to job openings remained unchanged in October at 2.9-to-1, which is equal to the worst month of the early 2000s downturn. A ratio of 2.9-to-1 means that for nearly two out of every three job seekers, there are no jobs available, no matter what they do.
The Emergency Unemployment Compensation program, which has provided support to millions of Americans who lost their job through no fault of their own during the Great Recession and its aftermath, should not be allowed to expire on December 28, 2013, as it is set to do. Allowing these benefits to expire would cut a crucial lifeline to millions of unemployed workers and their families at a time when job opportunities remain historically weak.
More Than Three-Quarters of Workers Missing from the Labor Force Are Under Age 55
A blog post by Pedro Nicolaci da Costa in the Wall Street Journal highlights findings from a paper from the Federal Reserve Bank of Philadelphia that much of the shrinking of the U.S. workforce has been due to workers retiring early, and that given that people who retire early are less likely to reenter the labor force when job opportunities improve, improving economic conditions may not draw these workers back in.
I’ve looked at the breakdown by age of the 5.6 million “missing workers”—potential workers who, because of weak job opportunities in the aftermath of the Great Recession, are neither employed nor actively seeking work. More than three-quarters of missing workers are under age 55 and are therefore unlikely to be early retirees. That means that even if all of the missing workers age 55 and over are early retirees who will never reenter the labor force no matter how strong job opportunities are (a very strong assumption), that still leaves 4.3 million missing workers under the age of 55 who are likely to re-enter the labor force when job opportunities strengthen. In other words, weak labor force participation rate remains a key component of the total slack in the labor market.
Roughly half of missing workers are of prime working age: Missing workers,* by age and gender, July 2014
| Missing workers | |
|---|---|
| Men under 25 | 630,000 |
| Women under 25 | 420,000 |
| Men 25–54 | 1,850,000 |
| Women 25–54 | 1,380,000 |
| Men 55+ | 580,000 |
| Women 55+ | 1,000,000 |
* Potential workers who, due to weak job opportunities, are neither employed nor actively seeking work
Source: EPI analysis of Mitra Toossi, “Labor Force Projections to 2016: More Workers in Their Golden Years,” Bureau of Labor Statistics Monthly Labor Review, November 2007; and Current Population Survey public data series
NAFTA’s Impact on U.S. Workers
The North American Free Trade Agreement (NATFA) was the door through which American workers were shoved into the neoliberal global labor market.
By establishing the principle that U.S. corporations could relocate production elsewhere and sell back into the United States, NAFTA undercut the bargaining power of American workers, which had driven the expansion of the middle class since the end of World War II. The result has been 20 years of stagnant wages and the upward redistribution of income, wealth and political power.
NAFTA affected U.S. workers in four principal ways. First, it caused the loss of some 700,000 jobs as production moved to Mexico. Most of these losses came in California, Texas, Michigan, and other states where manufacturing is concentrated. To be sure, there were some job gains along the border in service and retail sectors resulting from increased trucking activity, but these gains are small in relation to the loses, and are in lower paying occupations. The vast majority of workers who lost jobs from NAFTA suffered a permanent loss of income.
Lies, Damn Lies, and Retirement Savings
The American Benefits Council, the American Council of Life Insurers, and the Investment Company Institute released a study this week entitled (no joke): Our Strong Retirement System: An American Success Story (pdf). College professors may want to bookmark this study for textbook examples of cherry-picked data, outdated findings, and hypothetical scenarios contradicted by real-world outcomes. To cite one example: the authors tout the fact that 401(k) participants with at least 30 years’ tenure with the same employer (an unrepresentative group to say the least) have significant savings in their accounts. The authors devote a later section of the report to the unsubstantiated claim that “the 401(k) is a good fit for America’s mobile workforce.”
Mostly, though, the report simply ignores the biggest economic challenge of our time: inequality. As Natalie Sabadish and I note in our Retirement Inequality Chartbook, it doesn’t matter if the “average” household has $86,000 saved in retirement accounts (pdf) if the median (50th percentile) household has only $2,500 while the 99th percentile household has $1.3 million (pdf). Simply put, Mitt Romney’s gargantuan IRA doesn’t make up for the fact that most families have virtually nothing saved for retirement, any more than Romney’s lavish Bain Capital compensation made up for the fact that most workers haven’t seen a real raise in years.
What to Watch on Jobs Day: Even Without Furloughed Workers, Government Employment is Still Too Low
Much of the focus last jobs day was on the government shutdown and its impact on the employment data for October. The November job numbers will likely show at least some reversal of October’s trends in the household survey data, including the increase in unemployment, decline in employment, and decline in labor force participation, as these movements were in part driven by the temporary furlough of government workers (while the BLS stated, and we reported, that the shutdown did not affect the labor force participation rate, further analysis suggests that it likely had some impact). Because of these distortions in the October household survey, the change from October to November will provide little information about the underlying labor market trend. Instead, it’s important to focus on shifts over longer time periods.
The talk about the government shutdown is largely a distraction from the larger issue, namely just how many jobs the economy needs to create to return to pre-recession levels of employment.
In addition to the economic ramifications of the 800,000 furloughed government employees in October, we still face a 1.43 million jobs shortfall in public sector employment. The graph below illustrates the public sector jobs gap from January 2000 through September 2013. In an effort to not overstate the jobs gap which may have temporarily occurred because of the government shutdown, we are omitting October’s numbers. On Friday, this will be updated through November 2013.
Overall, it’s clear that austerity driven job losses in the public sector have been an enormous drain on the recovery.
The Courts Deny the Rights of Workers to Collective Action
No one should be surprised that the 5th U.S. Circuit Court of Appeals reversed the National Labor Relations Board’s decision in D.R. Horton, Inc. v. NLRB and sided with the corporation against the interests of its employees. (The decision lets employers refuse to hire employees unless they agree to give up any right to file a lawsuit in court or to file a class action or joint grievance before an arbitrator when their employment rights are violated.)
By and large, that is what courts do when they are presented a choice between corporate interests and the rights of workers—especially their rights to unionize or act collectively. The history of American law is an almost unbroken train of cases where courts have trampled the rights of workers to organize against more powerful employers. Even when Congress or state governments act explicitly to protect working families and equalize the balance of power in the workplace, the courts usually take the side of the corporations (they’re people, too, after all). In the 19th century, the courts treated unions as conspiracies in restraint of trade and applied the anti-trust laws against them. When Congress amended the anti-trust laws in 1914 to free unions from anti-trust regulation, the courts nevertheless found ways to outlaw boycotts, strikes, and picketing. Congress had to pass a new law in 1932 that barred federal courts from issuing injunctions in peaceful labor disputes.
Economic Populism Still the Right—and the Winning—Choice
In yesterday’s Wall Street Journal, the centrist think tank Third Way’s Jon Cowan and Jim Kessler call economic populism a “dead end for Democrats,” pointing to one lonely data point—Coloradans’ vote against raising taxes to increase education funding—to call into question the entirety of progressives’ economic policy agenda.
Call me crazy, but I’m not prepared to cede the direction of American politics to the 1.3 million people who turned out to vote on a school-tax measure—just 36 percent of registered Colorado voters. For one thing, a similar school-tax measure was defeated by an almost identical margin in the state just two years ago, and yet this result didn’t portend doom to Democrats running state-wide in 2012. And for another, aside from living in a swing state, I’m not sure why these voters are more representative of America than the New Yorkers who on the same day as the Colorado vote elected Bill de Blasio mayor in a landslide, or the Californians who in 2012 voted to increase their income taxes to fund public education.
In any event, Colorado’s vote against a tax increase has very little to do with Americans’ attitudes toward Social Security and Medicare, as Cowan and Kessler presume, and even less in common with the reality of these programs’ fiscal future.
President Obama Hits the Right Notes
President Obama hit all the right notes in his speech today addressing income inequality. I was pretty tough on him last July in a similar speech where I said he was better at the diagnosis of the problem than in proposing solutions. In particular, I pointed out he failed to acknowledge that to generate expanded opportunity and a broader middle class requires broad-based wage growth. After all, a good working definition of the middle class is people and families that rely almost exclusively on the income from work—wages and benefits. They don’t have income from owning stocks or other financial assets and don’t receive much ‘transfer income’ from the government.
Today, the president did better; he said “growth alone does not guarantee higher wages and incomes” and said, “the third part of this middle-class economics is empowering our workers.” He followed this with recommendations to strengthen collective bargaining, achieve pay equity for women, rebuild manufacturing and raise the minimum wage. I appreciate that. He noted the need to continue to combat racial discrimination while also asserting the increased prominence of class as a determinant of well-being. Providing more skills and better education is always critical for social mobility and improved productivity. He urged a strengthening of our social safety net, including retirement savings and Social Security. He called for maintaining the unemployment benefits needed to protect the long-term unemployed. And, he said that the Affordable Care Act was an important cornerstone in providing economic security, which it surely is. These are the basic ingredients needed to generate a different set of outcomes than the disheartening ones produced over the last few decades. Bravo!
It was nice to see the President use our research on the pay disparity between CEOs and typical workers (273:1) and the wealth disparity between the top one percent and the median household (288:1).
Sure, there are a few misguided distractions in the speech—more exports, but nothing about trade deficits which involves imports, the need for corporate tax reform—but no reason to dwell on those items at this moment. You always want to see improvement and this speech definitely improves on the July speech. It’s great that he said ”our number one priority is to restore opportunity and broad-based growth for all Americans” and an A+ speech would have inserted ‘wage’ before growth.
The Stem, the Flower, and Corporate Greed
In his New York Times column this morning, David Brooks uses a garden metaphor to instruct us on the different functions of the public and private sector. He writes that the government is like the “stem,” providing us with the essential but rather uninteresting infrastructure to allow the “flower” of private life to bloom. Thus, we need parks, public transportation and public safety, but people can provide their own picnic.
Putting aside that there might be other things we need for a picnic—such as safe food and a job with a day off—Brooks’ division of responsibility is reasonable. But the political context of his column is nonsense. What we face today is not some theoretical ignorance of the right balance between things that are private and things that are public; all but the most libertarian understand the public’s role in providing “stem” functions. The reality is that everywhere we look, essential public functions are being undermined, if not destroyed, by privatization.
Apple Ignores Code of Conduct as Factory Workers in China Work Illegal, Excessive Overtime
Apple’s ugly labor problems aren’t limited to its Foxconn factories, and they aren’t going away.
The labor rights group Students and Scholars Against Corporate Misbehaviour (SACOM) first exposed the wave of employee suicides at Apple’s Chinese contractor, Foxconn, and the grueling conditions in which hundreds of thousands of employees work. SACOM has regularly revealed Apple’s failure to abide by its so-called code of conduct, and along with another watchdog group, China Labor Watch, has monitored Apple’s failure to live up to its announced intention to clean up sweatshop conditions at its factories in China and to stop the use of indentured student labor.
In April, China Labor Watch reported that two more Apple/Foxconn workers had committed suicide by jumping from buildings to their death. China Labor Watch also found labor law violations at ten other Apple suppliers, including Pegatron.
Now SACOM has released a new report that details the serious labor rights violations at another Apple supplier, Biel Crystal, which reportedly makes 60 percent of Apple’s touch screens. SACOM reports that five Biel Crystal workers employed at its Huizhou factory have killed themselves since 2011. One possible cause is the stress of working horrific hours—11 hours a day, seven days a week, with only a day off in a month. This is a gross violation of Chinese labor law, which limits overtime to 39 hours a month. The Biel Crystal employees work more than twice as much overtime as the law allows.
When will American consumers wake up to Apple’s crushing exploitation of Chinese workers?