Media clips
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The United Auto Workers’ failure to organize the employees at Volkswagen’s plant in Chattanooga, Tenn., has been greeted with predictable hosannas from the sworn enemies of American unions. Survey their celebratory columns, though, and you won’t find the slightest consideration of most Americans’ primary economic problem: How do workers get a raise in today’s economy? With the rate of unionization so low that even unionized employees have trouble winning good contracts, how can workers profit from the gains in their productivity? What will it take for workers to regain the power to reap what they sow?
In recent decades, they’ve reaped precious little. Between 1947 and 1973 — roughly the one period of union strength in U.S. history — productivity increased by 97 percent and workers’ compensation (that’s wages plus benefits) by 95 percent. Since 1973, however, as unions have weakened, productivity has increased by 80 percent and compensation by just 11 percent, according to the Economic Policy Institute.
The Washington Post February 21, 2014 -
But that’s all water under the bridge. The important point is that U.S. fiscal policy went completely in the wrong direction after 2010. With the stimulus perceived as a failure, job creation almost disappeared from inside-the-Beltway discourse, replaced with obsessive concern over budget deficits. Government spending, which had been temporarily boosted both by the Recovery Act and by safety-net programs like food stamps and unemployment benefits, began falling, with public investment hit worst. And this anti-stimulus has destroyed millions of jobs.
The New York Times February 21, 2014 -
A new non-partisan report has set off a storm of dueling arguments over the perennially testy question of raising the minimum hourly wage.
The proposal, by Democrats, to raise the minimum wage to $10.10 per hour would bring some 900,000 families above the poverty line and boost the income of an additional 16.5 million workers, but any such pay increase could also cost the jobs of as many as 500,000 workers, an analysis by the Congressional Budget Office found.
Almost as soon as the report was released Tuesday, opponents began to cite the report in an effort to torpedo any Congressional vote to hike the federal minimum from $7.25 per hour to $10.10 by 2016.
CNNMoney February 21, 2014 -
Further, some teens need to work to help earn their way through college. When jobs become scarce, education can become inaccessible, said Heidi Shierholz, an economist at the Economic Policy Institute, a Washington research group funded in part by labor unions.
“Teen jobs matter a lot less if you go to college, but having a work history may be the difference between putting yourself through school or not,” she said.
Carnevale, former chairman of the National Commission on Employment Policy, said as entry-level jobs have become higher-skilled and harder for teens to get, it has most disadvantaged those in lower-income households.
“It’s a Catch-22: You can’t get the job because you don’t have the skills, and if you can’t get the job, you can’t get the skills,” he said. “The work experience issue gets more and more severe as you move down the income distribution.”
Bloomberg Politics February 20, 2014 -
Wal-Mart has a total of 1.3 million U.S. employees. About 300,000 of those employees earn an average of $8.75 an hour, according to Berkeley’s Labor Research Center. Boosting the federal minimum to $10.10 an hour from the current $7.25, which is the proposal from President Obama and Senate Democrats, could have a big impact just from the store’s own employees.
Some economists are on board with the idea. “If suddenly all these low-wage workers have more income, they are likely to spend that money right away,” David Cooper of the left-leaning Economic Policy Institute told The Huffington Post last fall. “If an employee at McDonald’s or Pizza Hut suddenly has additional income,” he said, “they could spend it at Walmart.”
National Journal February 20, 2014 -
It’s a two-part problem. First, there is opportunity hoarding at the top, wherein the wealthy invest heavily in their children’s education and job prospects, while also passing their wealth on to their children. Then there is stagnation at the bottom, caused largely by reverse trends, economic and racial segregation, awful schools, and poor parents without much money to invest in children.
Why does the “land of opportunity” have such low mobility? Laissez-faire economic policies—massive tax breaks, untrammeled free markets, unregulated free trade, deep cuts to the safety net—have widened the income gap. While Republicans have tried to sever the link between mobility and inequality, research shows that the two issues are intimately connected: Societies and communities with high inequality have low levels of upward mobility. Josh Bivens of the Economic Policy Institute estimates that had income growth risen proportionally between 1979 and 2007, the median income would be $19,000 higher.
The New Republic February 20, 2014 -
It hasn’t always been the case, though. As the GIF above and graph below both show, the top 1 percent saw its share of all income shrink between 1928 and 1979. Over that half-century, the income pie was shared a little more equally. But since 1979, that trend reversed in every state, according to a new study from the Economic Policy Institute, a think tank that focuses on the needs of low- and middle-income workers.
The Washington Post February 20, 2014 -
While the report didn’t delve into why income inequality has increased, it more than hinted at the reasons for the gap.
“Today, unionization and collective bargaining levels are at historic lows not seen since before 1928,” the report said. “The federal minimum wage purchases fewer goods and services than it did in 1968. And executives in (some) companies … think nothing of demanding bonuses after bankrupting their companies and receiving multi-billion dollar taxpayer bailouts.”
The report indirectly singles out the financial sector for helping to fueling rising inequality. It says that four of the 10 states with the steepest in incomes among the one percent between 1979 and 2007 had large financial sectors, including New York, Connecticut, New Jersey and Illinois.
The liberal, Washington, D.C.-based Economic Policy Institute published the report for EARN. Conservative groups often disagree with EPI’s views on income inequality.
The Plain Dealer February 19, 2014 -
On the other end, however, are the 16.5 million Americans who would receive higher wages as a result of an increase to the minimum wage, as well as the 900,000 Americans (out of 45 million) who would be lifted out of poverty. What’s more, it’s possible that—by increasing the income of so many workers—you offset the immediate job losses. To wit, here is the Economic Policy Institute with an analysis of the minimum wage and its impact on employment:
Based on the economic multiplier effect that results from putting additional income in the hands of lower-income workers, raising the minimum wage will likely have a modest but positive impact on job creation, leading to an additional 85,000 net new jobs when fully phased in.
Lower-income earners spend their income more immediately, more completely, and more locally, than do higher income earners, and therefore generate more economic activity. Increasing the wages of 27.8 million workers by $35 billion over the phase-in period generates an additional GDP impact of $22 billion.
The Daily Beast February 19, 2014 -
According to Economic Policy Institute research cited by living-wage backers, Los Angeles stands to gain more than $70 million in economic activity from raising the pay of hotel workers, giving them more disposable income to spend.
“Study after study tells us that poverty, unemployment, and income disparity are plaguing Los Angeles,” said Price, who chairs the Economic Development Committee, which will vote next week on the motion for a study.
“The folks who are going to be earning these additional wages aren’t going to be investing them on Wall Street,” Price said. “They’re going to be getting groceries and shoes and furniture, their tires repaired.”
Reuters February 19, 2014