Posts Tagged ‘Hillary Clinton’

outsourcing

Donald Trump promised to bring back “good” manufacturing jobs to American workers. So did Hillary Clinton.

Both, as I argued back in December, were wrong.

What neither candidate was willing to acknowledge is that, while manufacturing output was already on the rebound after the Great Recession, the jobs weren’t going to come back.

They were also wrong, as I argued in November, about there being anything necessarily good about factory jobs.

But perhaps even more important, as Eduardo Porter reminds us, the focus on manufacturing deflects attention from what is really going on in U.S. workplaces.

the vast outsourcing of many tasks — including running the cafeteria, building maintenance and security — to low-margin, low-wage subcontractors within the United States.

This reorganization of employment is playing a big role in keeping a lid on wages — and in driving income inequality — across a much broader swath of the economy than globalization can account for.

contingent

And, according to a recent study by the Government Accountability Office, much of that outsourcing is taking place outside the manufacturing sector. Moreover, the growth of contingent work—for example, 17.3 percent in education services and 6.1 percent in professional/technical services—is accompanied by lower wages, fewer benefits, and more job instability.

The problem in the United States is not what workers do or what they produce. It’s how they do what they do.

Employers, not workers, are the ones who decide how labor is performed. And when they can outsource jobs to contractors—and, as a result, avoid unions, workplace regulations, and adequate pay and benefits—they can exercise even more power over their workers, including of course the ones they continue to employ.

That, and not the loss of manufacturing jobs to foreign companies, is the real problem facing the American working-class.

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fredgraph

During the recent presidential campaign, Donald Trump promised to revitalize American manufacturing—and bring back “good” manufacturing jobs. So did Hillary Clinton.

What neither candidate was willing to acknowledge is that, while manufacturing output was already on the rebound after the Great Recession, the jobs weren’t going to come back.

As is clear from the chart above, manufacturing output has grown (by about 21 percent) since the end of the recession and is now nearing pre-recession levels (although still down from its pre-crash level by about 5 percent). But employment in the manufacturing sector is only up a small amount (8 percent) since its post-crash low and is still lower, by about 1.5 million jobs (or 11 percent), than in December 2007.

So, even if manufacturing production continues to grow, manufacturing jobs won’t (at least at the same rate). That’s because productivity in manufacturing continues to increase—as employers decide to change work rules, reorganize the factories, and introduce robotics and other forms of automation. Manufacturing workers, in other words, are being forced to produce more with less.

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That trend—of employment not matching the growth in output—just represents a longer term tendency in American manufacturing. If we start back in 1990 (as in the chart above, indexed to January 1990), output has increased 75 percent while employment has actually fallen by more than 30 percent.

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And, of course, employers have made that situation work for themselves, especially in recent years. Since the crash, corporate profits in manufacturing have rebounded spectacularly.

As long as workers have no say in how production is organized—including the technologies that are used and the surplus that is created—we can expect both manufacturing production and profits to increase while leaving workers and their jobs behind.

No matter who the president is.

bottom50

There is no stronger indictment of U.S. capitalism than the fact that, over recent decades (especially since 1980), there has been almost no growth for people in the bottom 50 percent of the distribution of income.

As I showed a week ago, according to recent data by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, from 1979 through 2006, the share of pre-tax income going to the bottom 50 percent of U.S. households fell from an already-low 20.1 percent to an even-lower 13.5 percent—while the share of top 1 percent soared, from 11.1 percent to 20.1 percent.

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There’s even a large and growing gap between average (pre-tax) national income and the average of the bottom 50 percent. That ratio increased from 2.5:1 in 1979 to 4:1 in 2014.

Even in absolute terms (illustrated in the chart at the top of the post), the bottom 50 percent has gone nowhere. Their average pre-tax income actually fell from 1979 to 2014 (in real 2014 dollars)— from $16,632 to $16,197. It’s true, households that find themselves in the bottom half have been helped by tax credits and government transfers. But in 2014, that only raised their post-tax income to, on average, $25,045.

And that’s not even the whole story. If we exclude expenditures on medical care (Medicaid and Medicare, including rising prices for medical treatment), that post-tax income falls to $21,293. And if we calculate their cash income (and thus exclude in-kind transfers), it falls to $17,654—an embarrassingly small increase over their pre-tax income of $16,197.

As Piketty, Saez, and Zucman explain,

The aggregate flow of individualized government transfers has increased, but these transfers are largely targeted to the elderly and the middle-class (individuals above the median and below the 90th percentile). Transfers that go to the bottom 50% have not been large enough to lift income significantly. Given the massive changes in the pre-tax distribution of national income since 1980, there are clear limits to what redistributive policies can achieve.

The unequal distribution of income in the United States is now so obscene that, even with government transfers, the bottom 50 percent are forced to struggle to survive on incomes that, in 2014, came to less than 2.5 percent of those in the top 1 percent.

Is it any wonder that the presidential candidate who promised to continue business as usual, to do no more than maintain the existing set of programs, ended up losing?

And, by the same token, does anyone expect the winning candidate, who promised to shake things up on behalf of the working-class, will actually do anything to fundamentally improve the circumstances of those in the bottom 50 percent?

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