Farmworkers in New York deserve overtime pay
After decades of advocacy, New York stands at the brink of potentially passing the Farmworker Fair Labor Practices Act, a bill that would extend to the agricultural sector the right to organize and the right to overtime pay that most workers in other industries enjoy. Governor Cuomo has said he will sign the measure if it passes.
Democrats recently took leadership of the state senate and have a longstanding majority in the state assembly. Both chambers have an opportunity to take advantage of those majorities in a way that results in a historic improvement for the lives of workers who toil in difficult conditions for low pay in New York’s fields and dairies.
But victory is far from certain: plenty could happen between now and June 19, when New York’s legislative session ends. The New York Farm Bureau, unsurprisingly, is saying the bill “could dramatically change agriculture and hurt our rural economy.”
A new report from the Fiscal Policy Institute (FPI) shows how the bill will help farmworkers, be manageable for farm owners, and offer tangible benefits to local communities.
The bill will most obviously be a gain for farmworkers in New York. On average, it will increase weekly earnings by between $34 and $95 per week. That’s money that will also be spent in the local economy, helping boost local businesses (and adding to sales tax revenues).
Other states have enacted laws requiring that at least some overtime be paid to farmworkers after a certain number of hours. In California—the largest agricultural state by far with over $50 billion in cash receipts going to farms and ranches—the legislature and governor enacted a law in late 2016 that gradually phases in overtime pay for farmworkers beginning this year.
The law will eventually require that farmworkers be paid overtime after eight hours per day or 40 hours per week in 2022. While agribusiness has complained and fought against passage of the law for years, after five months of being the law in the state, there have not been any major negative impacts on business or production reported in California. If overtime for farmworkers can work in California, it can work in New York.
Farm owners have had some tough years, to be sure. But treating workers properly is a way of aligning interests so that legislators and New Yorkers can all feel good about supporting New York farms. The cost of providing overtime to farmworkers in New York is manageable. It would amount to 9 percent of net farm income if all of the costs came out of the bottom line. And, that’s not what would happen. In fact, the farm owners would see some benefits that would offset the costs, including decreased training and recruiting costs, and higher productivity.
A few people have worried that this would push up prices. Not so. In fact, FPI is not predicting that costs will go up at all: Farm owners say they can’t control prices, and we accept that idea in general, even if it may be an overstatement. But even if all of the costs were passed along to consumers, prices would increase just 2 percent.
And for those who do worry about price increases—even if there are no savings from increased productivity and even if the farm owners take no loss in profit—the increase in prices would be the equivalent of raising the price of apples at the farmer’s market from $1.50 to $1.53 per pound. Hardly a devastating difference.
It’s worth taking a moment to think about why farmworkers are currently exempted from the labor regulations that apply to other workers in the state. The history goes back to Jim Crow, and a time when most hired farmworkers were African American, as a recent report from the National Employment Law Project explains.
Today, the workers hired are also predominantly people of color, often immigrants, many are Latinos and Latinas, and some work without documentation. Increasing numbers are also temporary migrant “guest” workers in the H-2A visa program: in New York H-2A jobs certified went from 4,699 in 2013 up to 7,634 in 2018, accounting for about 14 percent of the 56,000 hired farm laborers in the state.
Why was it, again, that the rules that apply to other workers in New York State shouldn’t also apply to people who work on farms?
There are only two weeks left in New York’s legislative session and the living standards and labor standards of the state’s farmworkers hang in the balance. The legislature and governor should enact the Farmworker Fair Labor Practices Act, so New Yorkers can all feel good about buying local and supporting New York’s farms.
What to Watch on Jobs Day: Continued strength or more labor market hiccups?
This week, ADP estimated that private sector employment increased by only 27,000 in May. The Bureau of Labor Statistics (BLS) will release their estimates of May job growth this Friday morning, and the extremely slow pace of hiring reported by ADP will have many people paying attention. The obvious question following the ADP numbers is just how worried should we be that a substantial economic slowdown is upon us?
While any single monthly data indicator should be taken with a large grain of salt, there are some real signs that the economy may be slowing a bit. The weak ADP report isn’t the first big hiccup in employment estimates in recent months. The BLS estimated just 56,000 jobs were created in February (46,000 for the private sector). The last three months of payroll employment showed an average increase of only 169,000 (154,000 private) compared to a much stronger 245,000 (240,000 private) in the previous three months.
EPI’s nominal wage tracker shows a distinct leveling off as well in very recent months. After pretty sharp and steady improvements in year-over-year wage growth between 2017 and 2018, wage growth gains seem to have tapered off. On average, wages grew 2.6 percent in both 2016 and 2017. In 2018, they grew an average of 3.0 percent over the year. Wages continued to rise in the latter half of 2018, and averaged 3.3 percent in the last quarter of the year. Wage growth has remained at 3.3 percent for the first four months of this year. In a stronger economy wage growth would be above 3.5 percent and if the recovery continues on course, I expect we will get there. To be at genuine full employment, wage growth would have to be at least 3.5 percent for a consistent period of time to allow labor share of corporate sector income to recover.
MIT economist Simon Johnson wants to ramp up federal investment on science and technology—and make sure taxpayers get a cash dividend in return
There is no shortage of creativity in the American economy—as long as we get away from the myth that denigrates public investments and puts private business on a pedestal.
That’s the message from MIT Sloan Economist Simon Johnson’s new book, “Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream,” which he presented during a talk and Q&A here at EPI this week.
Johnson, in a book co-authored with his colleague Jonathan Gruber, traces the history of America’s rapid economic ascent after World War II in part to heavy doses of public spending and incentives for scientific discovery and technological innovation.
He says the government’s abandonment of this commitment has not only chipped away at America’s economic and cultural leadership globally but also cost workers and firms enormously in terms of lost productivity, wages, and profits.
Johnson highlighted a decline in federal spending on research and development from a 1964 peak of 2 percent of gross domestic product (GDP) to just 0.7 percent today.
“Converted to the same fraction of GDP today, that decline represents roughly $240 billion per year that we no longer spend on creating the next generation of good jobs,” Gruber and Johnson write in the book.
Teaching—an important job, but a challenging work environment
We received some useful comments on the first reports of the teacher shortage series, both by email and through social media. One was particularly surprising—aside from slightly premonitory at that time (as its contents were related to a “to be released” report).
Ms. Whisler, a teacher herself according to her profile, wrote: “After 6 years of teaching high school social studies, my son is changing careers to become a firefighter. Less stressful he says.”
YES! after 6 years of teaching high school social studies my son is changing careers to become a firefighter. Less stressful he says
— Karen Whisler (@Kndrgrtn) March 28, 2019
Of course anecdotal evidence is not scientific evidence, but Ms. Whisler’s case felt enlightening. What could make teaching so stressful that would expel teachers out? How can teaching rank higher in stress than working as a firefighter? Regardless, would it matter if this were not a problem at a larger scale?
EPI released a report this week—Challenging working environments (“school climate”), especially in high-poverty schools, play a role in the teacher shortage—that describes the school climate and the scale for the shares of teachers facing such challenges. The school climate is shaped by multiple factors, including: the presence of barriers to teaching and learning, the stress and threats to safety, the relationships between teachers, administrators, and colleagues, the dismissal of teachers’ voices and knowledge, and teachers’ satisfaction and motivation. In short, the patters we describe for most of these indicators are tough in manners that would lead most of us to consider switching jobs, were we to face them. This is also seen, descriptively, for teachers, which implicates tough school climates in the teacher shortage. Some of the findings of our 4th report in our series examining the teacher shortage are as follows (see Figure A).
School climate indicators are tough across the board
| Quit | |
|---|---|
| Parents struggle to be involved | 21.5% |
| Students are not prepared to learn | 27.3% |
| Have been threatened | 21.8% |
| Have been physically attacked | 12.4% |
| Stress and disappointments outweigh positives | 4.9% |
| Staff cooperation is not great | 61.6% |
| No significant role in setting curriculum | 79.6% |
| No significant say over what I teach in class | 71.3% |
| Not fully satisfied with teaching here | 48.7% |
| Plan to quit teaching at some point | 27.4% |
Note: Data are for teachers in public noncharter schools. See notes to Tables 1–6 for full definitions of the given indicators.
Source: 2015–2016 National Teacher and Principal Survey (NTPS) microdata from the U.S. Department of Education's National Center for Education Statistics (NCES)
Many teachers face the learning barriers their students arrive at school with. Just like these barriers impede children’s learning, they are also obstacles for teachers to do their jobs well. Between two and three in ten teachers see that students coming to school unprepared to learn (27.3 percent) or that parents struggle to be involved (21.5 percent) are serious problems for the school, and even a small share see students’ poor health as a problem (5.1 percent). The relationships between teachers, administrators, colleagues, and parents are described by teachers as being not fully supportive, and their voices and influence over school policy and in their classrooms as being often quieted or ignored. Significantly, even though most would think teachers have full autonomy in their classrooms, in tasks such as selecting content, topics or skills to be taught, textbooks and other instructional materials, less than 30 percent recognize they have a great deal of control of such aspects. About 12 percent teachers have been physically attacked by a student from that school and almost twice that have been threatened. These previous statistics may make the following data point look small—that about 5.9 percent of teachers strongly agree that the stress and disappointments in teaching are not worth it. However, it is not to be dismissed, because of its meaning and repercussions—for Ms. Whisler’s son and for everybody else. . We see that about half of the teachers express some level of dissatisfaction with being a teacher in their school (48.7 percent), more than one-quarter think about leaving teaching at some point (27.4 percent), and 57.5 percent are not certain that they would become teachers again if they could go back to their college days and make a decision again.
The time to prepare for the next recession is now
The Republican-controlled Senate has accomplished what it wished with a one sided tax giveaway to corporations and the super-rich—it has no interest in a legislative agenda left. Yet, while the economy continues to grow, there are sharp warning signs because of the exacerbation of income inequality in the United States that threaten the expansion’s sustainability. These yellow flags point to an economy that has little resiliency and so is very vulnerable to shocks.
Now is the time to create legislative markers, set legislative records and flesh out details of fixes that could be quickly passed should the political dynamics change in 2020. I would argue that, in this climate, it is necessary to triage such efforts, so as not to detract from other important legislative markers that must be passed by the Democratic controlled House of Representatives, so that in 2020 a clear set of programs is also ready to address ever-expanding inequality.
The urgency comes after the historic 2007-2009 downturn showed just how much the divide between Democrats and Republicans turned economic misfortune into a game of political opportunity. Americans found out it was a lie when they had repeatedly been told that Social Security privatization was a fine idea because if the stock market tanked, home prices dove and jobs disappeared Congress would respond to the needs of ordinary Americans. Instead, no consensus could be reached on policies to help workers. Income relief, to compensate for lost job opportunities, lost retirement savings, or devalued housing assets, became political fodder for a larger ideological battle aimed at narrow political victories.
The other problem we face is that the 2008 downturn was likely unique in its size. Because of the size of the housing market, a financial crisis rooted in the decline of the primary household asset is not likely to re-occur. Consequently, the economy is more likely to face a downturn the size of the one that took place in 2001. It should be noted, however, that the downturn in 2001 was accompanied by a huge tax cut, initially targeted at the wealthy, but balanced by a Democratic-controlled Senate to also benefit middle-income households for its initial years.
Still, with the tail winds of easing monetary policy following the stock market bubble burst from the dotcom calamity and the economic malaise following September 11 and the huge stimulus of a large tax cut, and a deficit propelled by massive expenditures for the Iraq War, it still took until March 2007 to get payroll numbers back up to their February 2001 level. So, if an unprecedented job loss in 2008-2009 could not generate a consensus to address a downturn, there is little chance a milder downturn will generate better behaviors.
Recession or not, there will be pain: Coping with corporate bonds
If the current economic expansion which began in June 2009 makes it to this July, it will set a record for the longest period of U.S. economic growth—beating the 1991 to 2001 boom. Economic expansions don’t die of old age, however, so what might bring this one to an end?
With memories of 2008-2009 still fresh, some observers have focused on corporate debt as the likely culprit. It’s true that corporate debt has risen rapidly during the expansion, both in absolute terms and in relation to corporate profits. But low interest rates mean that debt service—interest payments on this debt relative to after-tax profit—is about 25 percent, where it usually is during periods of expansion and not a cause for worry. Bank regulators are concerned about the rapid growth of leveraged loans and weaker lender protections. But they appear to be correct in their assessment that leveraged lending, despite a 20 percent growth since last year to almost $1.2 trillion, “isn’t a current threat to the financial system.”
Still, recession or no recession, there will be pain.
A large and growing share of corporate debt is “speculative debt”—either leveraged loans used to acquire target companies and burden them with high debt levels or high risk junk bonds. Many companies with high levels of speculative debt on their books were acquired by private equity in a leveraged buyout, meaning the PE firm used high amounts of debt to buy them. This is debt the target companies, not their private equity owners, are obligated to repay.
Often, these PE-owned companies are required to issue junk bonds and further increase their indebtedness in order to pay dividends to their owners. A 100-day plan imposed on company managers at the time of the buyout lays out the steps that the company will need to take to service this mountain of debt. Reducing labor costs is a big part of these plans, whether by closing less profitable stores and establishments, laying off workers at those it continues to operate, or cutting pay and benefits. After it takes these steps to manage its debt, the company is on a knife-edge.
If all the assumptions made by the private equity firm when it persuaded creditors to lend it boatloads of money hold up, the company will avoid defaulting on its loans and going bankrupt. But if these assumptions are upended—say, by a slowdown in the economy, defaults and bankruptcies will spike. Creditors who have loaned billions of dollars to finance private equity-sponsored leverage buyouts will experience losses. Establishments will be shuttered, some companies will be liquidated, workers will lose their jobs, and communities will lose businesses that have played a key role in the local economy.
‘Forced’ is never fair: What labor arbitration teaches us about arbitration done right—and wrong
As of September 2017, more than 60 million American workers were subject to predispute arbitration “agreements” with their employers. This means that in exchange for the right to get or keep their job, they are forced to agree that if a dispute comes up in the future involving their employment, they won’t bring that dispute in court but will instead take it to a private arbitrator—usually in secret proceedings conducted behind closed doors, under terms dictated by the employer.
The percentage of workers whose employers require them to give up the right to go to court in exchange for their jobs has increased dramatically over the past 25 years, from just 2 percent in 1992 to over 55 percent in 2017. And that figure is climbing even higher in the wake of the Supreme Court’s 5-4 opinion in 2018 in Epic Systems Corp. v. Lewis, which said that employers can impose arbitration contracts on their workers even when one of the terms of the contract is that workers must bring their disputes one at a time and may not join forces with their colleagues to pursue claims collectively. A new report from EPI and the Center for Popular Democracy projects that by 2024, over 80 percent of private-sector, nonunionized workers will be subject to forced arbitration regimes that ban class or collective actions.
Despite its growing prevalence, many American workers still don’t know what arbitration is and don’t realize what rights they’re giving up when they sign the document (or click the button on a computer screen) saying they will resolve future disputes in this manner. But for the 14.7 million workers who belonged to a union in 2018, arbitration may not be such a foreign concept, because arbitration has been a fixture in most unionized workplaces for decades.
‘Schools are no longer just institutions of learning—we are the primary hub of care outside the family’
My colleague Elaine Weiss launched her new book Broader, Bolder, Better on the challenges facing teachers around the country at an EPI event this week by emphasizing the need for policymakers and researchers to listen to educators themselves rather than imposing their biases on the pros.
Truly moving remarks from guest of honor Joy Kirk, a middle-school teacher from Fredrick County, Va., made quite clear why that’s a sound strategy.
Kirk described the transition she has witnessed in the role of teachers and schools as anchors in the community over her 24 years of teaching, which began in urban Philadelphia before she moved to a more rural setting.
“Schools are no longer just institutions of learning. We are the primary hub of care outside the family,” she said, a stark reality considering the deeply under-resourced state of so many of the country’s schools.
“And for some of our students, we are their only safe place, because if you’re suffering violence at home, if you’re suffering upheaval, if your parents are constantly moving because they can’t hold a steady job—for whatever that reason is—your one safe place is your teacher’s classroom,” she said.
Weiss’s book is the culmination of years of research into how schools can proactively help to counter some of the social strains in various communities, by promoting innovative and targeted approaches to solve every day problems.
“Our book is grounded in community voice and celebrates teacher activism,” Weiss explains in a blog post. “It calls out the consequences of structural racism and urges community leaders to translate their daily witnessing of the impacts of poverty into partnerships with the schools that are on the front lines of combating it. It thanks the local and community leaders who are already walking this walk and asks all of us to find ways to further support them.”
A progressive strategy for addressing the next recession must include a deliberate, strategic focus on states and localities
No one can say with any certainty when the next recession will come, yet it’s clear that progressive advocates and policymakers should begin preparing now so they are ready to confront the challenges—and opportunities—a downturn presents.
As advocates, we should mobilize around two key strategies to respond to the next recession. The first strategy is to build demand at the state and local level for a large federal stimulus package that includes significant, lasting aid to the states. We should campaign actively against the notion advanced by the right wing and even moderate Democrats that there isn’t enough “fiscal space” to bail out workers and their communities during a recession. (Saying there’s not enough fiscal space is econ-speak for pretending the federal government doesn’t have the ability to run a deficit to support important programs in times of crisis).
The second strategy—which I will focus on here—is to ensure the progressive community has a strategic plan to mobilize communities and progressive state policymakers to develop a state-specific program for addressing the next recession. Governors and state legislators play an enormous role during a recession, and the policy and political choices they make in preparation for, during, and after a recession help determine how well communities weather a slump, and how quickly their state bounces back once the recession is officially over.
Ohio’s economy no longer fully recovers after recessions
I can’t tell you when or whether a recession is coming. But I can tell you what it means for a place like Ohio when one arrives and what Ohio needs from policymakers, state and federal, to be ready and to recover. After a generation of underinvestment in families, communities and sustainability, the upcoming downturn is a crucial moment to fix the economy by addressing gaping societal needs.
Four points are clear for Ohio and other places. First, recessions are much harder on some economies than on others—this goes for states, like Ohio, that are hit harder, and for communities, like manufacturing communities, poor rural communities, and much of the black community. Second, recessions start earlier and end later in America than in the financial press, in terms of pain they visit on people. In Ohio, we no longer fully recover from recessions, so each new downturn leaves permanent setback. Third, states have insufficient capacity to take on the challenges of a recession. Federal action is essential to get the recovery we need. Finally, recessions are not only economic challenges cured the instant unemployment creeps downward or some jobs come back. In fact, recessions cause long-term damage—to savings and earnings, yes—but also to children’s development, family stability, and long-term physical and psychological well-being.
Job loss and unemployment
First and most importantly, a recession means large scale job losses. This is often particularly severe in manufacturing states like Ohio. As many as 30 million Americans lost jobs during the Great Recession. In Ohio, we actually had not recovered jobs lost in the early 2000s recession by the time the Great Recession hit in 2007. More than 415,000 more jobs were slashed by February 2010 and the 2018 data revisions showed we again haven’t fully recovered—we need 16,300 jobs to reach pre-recession employment levels (reflecting population growth).