Posts Tagged ‘workers’


There is no federal protection for women workers who are pregnant. Such as Angelica Valencia [ht: sm], who was fired after she requested permission from her employer not to be forced to work overtime.

The United States did pass The Pregnancy Discrimination Act of 1978, which prohibits discrimination “on the basis of pregnancy, childbirth, or related medical conditions.” But the Act does not require employers to do anything to accommodate the needs of pregnant workers (although the Supreme Court is set to hear a case, Young v. United Parcel Service, on “whether, and in what circumstances, the Pregnancy Discrimination Act. . .requires an employer that provides work accommodations to non-pregnant employees with work limitations to provide work accommodations to pregnant employees who are ‘similar in their ability or inability to work'”).  And the Pregnant Women’s Fairness Act, H.R. 1975 and S. 942 [pdf], which was referred to Committee on 14 May 14 2013, has no chance of being enacted anytime soon.

So, seventeen separate states and cities, such Illinois and New York City, have had to pass their own legislative protections. Still, many workers don’t know their rights, and often don’t have the means to demand compliance. And their employers often disregard the laws that do exist.

Respecting a woman’s pregnancy at work is also a social and racial equity issue. According to the National Women’s Law Center, low-wage women workers, many of them primary income-earners, often have more physically demanding duties, such as lifting boxes or prolonged standing. Pregnancy-related discrimination complaints have been concentrated in the highly gendered service sectors, like retail sales and hospitality. Many physically strenuous jobs like domestic work and home healthcare services are disproportionately done by immigrant and black women.

A female executive of the Lean In class probably wouldn’t be reprimanded for wanting to lean back a bit with a foot rest at board meetings. But women workers at Walmart had to wage a national campaign for months before the company changed its policies to ensure reasonable pregnancy accommodations (and many say the policy remains only spottily enforced).


There’s good news. And bad news.

The good: Angela Valencia’s bosses [ht: sm] have offered her job back. The bad: the United States still doesn’t have a Pregnant Workers Fairness Act (see original post).

A recent paycheck for Delores Leonard shows her hourly wage of $8.25 for working at a McDonald's Restaurant, the minimum wage in Illinois, in Chicago

Delores Leonard lives with her two daughters in Chicago and has worked for seven years at McDonald’s.

Her Illinois minimum wage is $8.25 an hour. Assuming she works the same number of hours each week (and gets two weeks of unpaid vacation), her annual income after taxes is $14,626.

McDonald’s reported $7.2 billion in second quarter sales, which generated a net income of $1.39 billion. That’s a profit margin of 19.31 percent.

McDonald’s CEO Don Thompson took home total compensation of $9.5 million in 2013.





The other day, I reported that Fed chair Janet Yellen said a great deal about existing levels of economic inequality at the Conference on Economic Opportunity and Inequality in Boston.

Neil Irwin [ht: ra] reminds us there’s a great deal Yellen didn’t say. She didn’t, for example, say anything about the aspects of the inequality puzzle that have a close tie-in to the policies of the Federal Reserve.

there is a growing body of evidence — far from proven, but certainly gaining traction — that income inequality could be a significant force behind disappointing overall economic growth over the last 15 years.

The story goes like this: The wealthy tend to save a large proportion of their income, whereas middle and lower-income people spend almost all of what they earn. Because a rising share of income is going to the wealthy, spending — and hence aggregate demand — is rising more slowly than it would if there were more even distribution of income. Skyrocketing debt levels papered over this disconnect in the mid-2000s, but now we could be feeling its effect.

If true, this would help account for why the economy has notched mediocre growth since the turn of the century, with the exception being a brief period of the housing bubble.

Yellen also didn’t have anything to say about the economic opportunities that have allowed the gains of a tiny minority at the top to be captured in the first place. Top 1 percent incomes and corporate profits have to come from somewhere. They’re created during the course of producing goods and services—in the United States and around the world. But the workers who did all that producing only get to keep part of the value they create, in the form of wages and salaries; the rest—call it the surplus—is appropriated by their employers, who keep some in the form of corporate profits and then distribute the rest to their owners and top managers. Those employers, owners, and managers spend some of that income and plow the rest into the ownership of various forms of wealth. It’s no wonder, then, that—given the economic opportunities they’ve been provided within current economic arrangements—the distribution of both income and wealth has been getting more and more unequal.

That’s what Janet Yellen didn’t say.


Once again, as in 2010, a specter is haunting the United States—the specter of deflation.

That’s certainly the fear registered by Jon Hilsenrath and Brian Blackstone, writing for the Wall Street Journal.

Behind the spate of market turmoil lurks a worry that top policy makers thought they had beaten back a few years ago: the specter of deflation.

A general fall in consumer prices emerged as a big concern after the 2008 financial crisis because it summoned memories of deep and lingering downturns like the Great Depression and two decades of lost growth in Japan. The world’s central banks in recent years have used a variety of easy-money policies to fight its debilitating effects.

Now, fresh signs of slow global economic growth, falling commodities prices, sagging stock markets and declining bond yields suggest the deflation risk hasn’t gone away, particularly in the often-frenetic eyes of investors. These emerging threats come as the Federal Reserve is on track this month to end a bond-buying program that has been one of the main tools in its fight against falling prices.

The deflation concern is particularly pronounced in Europe and Japan, two economies where policy makers are struggling to come up with solutions to counter especially slow economic growth.

Actually, what we’re seeing right now is disinflation, a slowing of the rate of price increases. But the fear is that disinflation may collapse into deflation, a Japan-style decline in the overall level of prices, in Europe and eventually in the United States.

And why is it a specter? Not because a decrease in prices hurts ordinary workers—who, of course, facing stagnant wages and bad job prospects, would welcome some relief from inflation. No, the fear is that deflation will cut into corporate profits, since it’s a symptom of extremely weak demand. This leads to a slowdown in economic activity and less production and investment by companies. It’s also a sign that the real value of the debt overhang—especially the private debt of households and businesses—will remain high, thus undermining any further increase in lending, and reinforcing the uneven and faltering rate of growth of production and investment.

Thus far, the specter of deflation has not caused all the powers of old United States and Europe to enter into a holy alliance to exorcise this specter. There are still too many antigovernment, inflation-fear-mongers out there for such an alliance to form. But the longer those powers continue on their current trajectory, the higher the risk the current recovery will collapse into deflation.


As in the classic Prisoner’s Dilemma, retailers could “cooperate” with one another—paying higher wages and enjoying higher sales—but they don’t. Instead, they “defect”—and, as a result, pay low wages and undermine consumer spending for all retailers, including themselves.*

That’s one way of interpreting the new report by the Center for American Progress [pdf]:

While many of these companies’ lobbyists and trade associations continue to pro- mote a low-wage agenda, their 10-K statements reveal how low consumer spend- ing levels undermine their stock prices. In fact, 88 percent of top retailers explicitly cite weak consumer spending as a risk factor.

That retailers depend on consumer spending is not a revelation, but that many retailers see flat or declining incomes as a risk factor is: 68 percent of companies point to flat or falling disposable incomes as a risk. Sixty-four percent of these companies that filed 10-Ks in 2006 cited incomes as a risk factor in their most recent 10-K, compared to just 32 percent in 2006.

Joan Robinson—who should have won the Nobel Prize in Economics but didn’t (because, of course, she was a non-neoclassical, woman economist) and can’t (because she’s dead)—understood this “essential paradox of capitalism”:

Each entrepreneur individually gains from a low real wage in terms of his own product, but all suffer from the limited market for commodities which a low real-wage rate entails.

And, of course, Old Nick before her:

Every capitalist knows this about his worker, that he does not relate to him as producer to consumer, and [he therefore] wishes to restrict his consumption, i.e. his ability to exchange, his wage, as much as possible. Of course he would like the workers of other capitalists to be the greatest consumers possible of his own commodity. But the relation of every capitalist to his own workers is the relation as such of capital and labour, the essential relation. But this is just how the illusion arises — true for the individual capitalist as distinct from all the others — that apart from his workers the whole remaining working class confronts him as consumer and participant in exchange, as money-spender, and not as worker.


*In the old days, when I taught Principles of Economics, I used to illustrate the Prisoner’s Dilemma with Puccini’s opera Tosca. You know: Scarpia kills Cavaradossi, Tosca in turn kills Scarpia, and then Tosca kills herself.


Special mention



One story that can be told about today’s announcement is the Royal Swedish Academy of Sciences’ own explanation: that French economist Jean Tirole has been awarded the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2014 because he “has clarified how to understand and regulate industries with a few powerful firms.”

The other story is: Tirole has shown how much the real world of capitalism—industries that are dominated by a few firms that have extensive market power, which can charge prices much higher than costs and block the entry of other firms—differs from the fantasy taught in countless introductory courses in economics: a world of perfectly competitive firms, which have no negative effects on society and which therefore don’t need to be regulated.

In addition, Tirole (in “Intrinsic and Extrinsic Motivation,” an article with Roland Bénabou, published in the Review of Economic Studies) has challenged a central tenet of neoclassical economics, that individuals always respond positively to managerial supervision and incentives. He has demonstrated, instead, that both close supervision and monetary rewards can often times backfire, especially in the long run: they can undermine intrinsic motivations, thus explaining why workers find behavioral punishments and rewards both alienating and dehumanizing.

Last year, the Academy tried to have it both ways, offering the Prize to both Eugene Fama and Robert Schiller. This year, the message is both clearer and yet unspoken: the neoclassical model of perfect competition and individual incentives bears no relation to the kinds of capitalism that exist anywhere in the world.

And the policy implication: we’ll all be better off if we take over the large firms and let workers run them for society’s benefit.