Posts Tagged ‘jobs’

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David Howell is right: attempts to raise the federal minimum wage in the United States (from the current $7.25 to, say, $12 or $15 an hour) have been stymied by a no-job-losses rule—the idea (promoted by mainstream economists and employers alike) that the minimum wage should be set so that there are no job losses for anyone anywhere in the country.

Determining a suitable federal minimum wage based solely on a zero job loss rule is a public policy straightjacket that would effectively rule out any significant raise of the wage floor above that which already exists. Yet from a historical perspective, strict adherence to such policymaking criteria would have also made it impossible to ban child labor (job losses!), as well as many critical environmental and occupational health and safety regulations. It would also foreclose any consideration of policies like paid family leave, which exists in every other affluent country.

As Howell correctly explains, the possibility of some job losses—for some workers, in some places—as a result of significantly raising the minimum wage can be countered by a combination of “emergency relief” (like extended unemployment benefits) and creating new jobs (e.g., through expansionary fiscal policy and public works programs).

So, what stands in the way? Howell focuses on methodological problems (“because the identification of the wage at which there is expected to be zero job loss must be evidence-based, there is no way to establish the higher nationwide wage floors necessary for empirical tests”) and misplaced priorities (such as forgetting about “the moral, social, economic, and political benefits of a much higher standard of living from work for tens of millions of workers”).

Both are valid points. But I’d point to a third: profits. The fact is, when employers threaten to let workers go (or not hire additional workers) if the minimum wage is increased (or mainstream economists make the argument for them), they’re attempting to protect their bottom line. If they kept their existing workers, so the argument goes, their profits would fall; and if they wanted to maintain their current level of profits, they’d have to fire some of their workers and replace them with one or another form of automation. It’s all about pumping out the maximum profits from their employees.

Profits also enter the story in a second way. Private employers see the possibility of compensating for minimum-wage-related job losses—by offering workers public relief and by creating new jobs through public programs—as a challenge to their existing control over workers, jobs, and ultimately profits. That’s the second reason they oppose an increase in minimum wage, because they know full well society has the means to make up for their willingness to eliminate jobs. But then their own role in the economy and the profits that come from that role are called into question.

For both those reasons—the threat to fire workers and the threat to their monopoly as employers—profits are the real obstacle to raising the minimum wage.

There’s no getting around it. We have to challenge the sanctity of private profits, presumed and promoted by both employers and mainstream economists, in order to guarantee American workers a decent minimum wage.

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Joan Robinson famously quipped, “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.”

In the United States right now, workers with a college degree, with an unemployment rate of only 2.8 percent, are forced to endure the misery of being exploited by capitalists; while workers with a high-school diploma or less, with an unemployment rate between 5.4 and 8 percent, have it even worse: many of them confront the misery of not being exploited at all.

That’s because, as a new report from Georgetown University’s Center on Education and the Workforce [ht: ja] makes clear, of the 11.6 million jobs created in the United States after the Great Recession, 8.4 million (72 percent) went to those with at least a bachelor’s degree. Those with associate’s degrees or some college education got 3.1 million (27 percent) of the jobs. The remainder, 80,000 jobs (less than 1 percent), were left for workers with a high-school diploma or less.

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Now, it’s true, Americans with only high-school diplomas represent a shrinking share of the workforce. This year, for the first time, college grads made up a larger slice of the labor market than those without higher education, by 36 percent to 34 percent, respectively. Including workers with an Associate’s degree or some college, workers with postsecondary education now make up 65 percent of total employment.

But the divided nature of the current recovery for American workers among themselves is even more stark.

Workers with a graduate degree (Master’s degree or higher) experienced no decline in jobs in the recession and maintained a stable employment growth throughout the recovery. Workers with a Bachelor’s degree struggled until the second half of 2011, but have since seen fast job growth, and in fact have exceeded the gains of graduate degree holders. . .Workers with a graduate degree have gained 3.8 million jobs since January 2010. Over the same period, workers with a Bachelor’s degree have gained 4.6 million jobs.

Workers with some college or an Associate’s degree have experienced a lot of volatility since 2007. They rode the recession to its depths, losing 1.8 million jobs. Those workers have now ridden the recovery back up; the economy recovered all those jobs by mid-2012. Over the next three and a half years, this group of workers experienced decent job growth, with a net gain of 1.3 million jobs since the beginning of the recession. Overall, this group of workers has added 3.1 million jobs since January 2010.

The workers who have suffered the most are those with a high school diploma or less. They lost the most jobs in the recession and have seen almost no growth in the job market during the recovery. They remain 5.5 million jobs short of their pre-recession employment level. Further, the current economic trends fail to provide any sign that those lost jobs will be returning in the near future.

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The growing gap in the job situations of college haves and have-nots is certainly part of a long-term trend, based on structural changes in the U.S. economy beginning especially in the 1980s. But their diverging trajectories since the crash of 2007-08 have only exacerbated the previous trends. That’s due in part to the precipitous decline in the construction and manufacturing sectors of the economy (which have still not recovered) and the fact that workers with college degrees or at least some postsecondary education have taken most of the new jobs at all skill levels: high, middle, and low. For workers with a high school diploma or less, low-skill jobs have been just about the only jobs available—and, even in those occupations, they’ve been forced to compete with workers with higher levels of education.

Here’s the problem: while would-be workers may be able to exercise some choice in obtaining more education (and thus jump over the gap between college haves and have-nots), they still don’t have any say in determining either the quality or quantity of jobs. Those decisions are still in the hands of the small group of employers at the top.

That means all workers—with or without college degrees—are forced to endure a choice between the misery of being exploited by capitalists or the misery of not being exploited at all. And that’s no choice at all.

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Special mention

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It’s all going according to plan, at least as mainstream economists and politicians see things. Private enterprises, both large and small, on Main Street and Wall Street, were given every condition to lead the economic recovery from the spectacular crash of 2007-08.*

And, according to today’s job report, it worked: the official unemployment fell in May to 4.7 percent, the lowest it’s been since November 2007. That’s basically the full-employment target they’ve been aiming at since the recovery began.

But from the perspective of people who actually work for a living, the situation doesn’t appear as rosy. They’ve been the victims of the plan. They know the only reason the official unemployment rate has dropped is because many workers have dropped out of the labor force (technically, the civilian labor force participation rate decreased by 0.2 percentage point to 62.6 percent). That still left 7.4 million workers who wanted a job but couldn’t find one. In addition, the number of persons employed part time for economic reasons (often referred to as involuntary part-time workers) increased by 468,000 to 6.4 million, and another 1.7 million people remained marginally attached to the labor force (meaning they were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months).

The result was that workers (production and nonsupervisory employees) have seen their incomes barely budge: their hourly wages only increased by 3 cents (to $21.49), while their weekly earnings only rose by 1 dollar (to $722.06). In comparison to a year ago, both hourly wages and weekly earnings have increased by a meager 2.4 percent.

As I explained a month ago, that’s exactly how the reserve army works: even as the official unemployment rate falls, workers’ wages continue to stagnate and their employers’ profits continue to grow.

Exactly, it would seem, according to plan.

 

*A recovery from the crash that the same private sector created, lest we forget.

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All three remaining presidential candidates—Donald Trump, Hillary Clinton, and Bernie Sanders—have decried the loss of manufacturing jobs in the United States and have promised, in one way or another, to bring those jobs back.

However, as readers know, I hold no nostalgia for industry or for the supposedly good manufacturing jobs that were the mainstay of the American Dream in the postwar period.

to the extent that manufacturing jobs were “good jobs” (and, in my view, we do need to dispute that idea that they really were “good jobs”), it wasn’t because workers produced real, tangible goods; it’s because the workers were unionized and were able (with the aid of higher real minimum wages, better-financed government supervision of worker safety, and so on) to bargain over their pay and working conditions. They aren’t able to do that now in most of the private-sector service-producing industries. In other words, it’s not what workers produce but under what conditions they produce.

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I continue to believe we need to puncture the myth that all those manufacturing jobs were good jobs. We also need to look at what’s happened with those jobs in recent decades. As you can see from the chart above, while U.S. manufacturing wages (for production and nonsupervisory workers) were higher than the hourly wages for all private-sector workers until a decade ago, they’re now less (by more than a dollar an hour). That’s why, as the National Employment Law Project (pdf) has shown, manufacturing production wages now rank in the bottom half of all jobs in the United States.*

So, Ben Casselman is right:

For all of the glow that surrounds manufacturing jobs in political rhetoric, there is nothing inherently special about them. Some pay well; others don’t. They are not immune from the forces that have led to slow wage growth in other sectors of the economy. When politicians pledge to protect manufacturing jobs, they really mean a certain kind of job: well-paid, long-lasting, with opportunities for advancement.

The problem is, we’re not seeing those kinds of decently paid, secure jobs anywhere across the landscape of the U.S. economy—in manufacturing, services, or anywhere else.

The precipitous decline in unions is one part of the explanation. At a more general level, however, at least as significant (even when unions were stronger) is the fact that workers have little say in the main institutions governing the economy—in the enterprises where they work, the communities in which they live, and the governments they vote for and to which they pay taxes.

Until that changes—until workers are able to participate in making key decisions about their lives and livelihoods—the promise of creating more jobs in one sector or another is merely a pipe dream that is being manufactured to keep things just as they are.

 

*However, while many analysts overlook this, it is still the case that weekly earnings for manufacturing workers (the red line in the chart below) remain higher than those for other workers in the private sector (the blue line):

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jobs

Everyone knows that most of the jobs created during the so-called recovery are not particularly good. Most of them are for very low pay and offer few if any benefits.

Not so, according to the Wall Street Journal:

were all the jobs we created since the recession bad? Well, yes and no. It’s true that many low-wage industries have been growing, many middle-wage industries have shrunk, and more people work part time or for minimum wage than did a decade ago. But it’s also true many middle- and high-wage industries are growing too, and the number of minimum wage and part-time workers has gradually been declining over the past five years.

Well, let’s see, according to the data they themselves provide. But let’s do it not in terms of percentage increases (because, obviously, a high percentage increase on a small basis doesn’t generate a lot of jobs) but, instead, in terms of the total number of employees (in the private sector).

Here’s what we end up with for the top ten economic sub-sectors:

 

Consider that the average weekly pay (in April 2016) for all private-sector workers was $880.79.

Obviously, then, the two largest sub-sectors, in which there has been double-digit growth since December 2007, are Leisure and Hospitality and Food Services and Drinking Places. both of which have weekly earnings less than half the average for the entire private sector. You can add to that pattern of low-wage growth Employment Services and Food and Beverage Stores.

Meanwhile, three sectors that have traditionally paid middle-class wages—Construction, Speciality Trade Contractors, and Durable Goods—have seen declines in the number of jobs since the crash.

So, what are we left with? Hospitals, whose average is inflated by high-earning physicians and managers, which has seen job growth, and Credit Intermediation and Related Activities, which also has a high average, raised by well-compensated brokers and managers, which has actually seen a decline in the total number of jobs.*

The only possible conclusion is, that’s not a mixed picture. The current recovery can only be characterized as follows: the creation of plenty of low-wage jobs, the destruction of many formerly middle-income jobs, and an increase in jobs in one sector characterized by obscene levels of inequality.

Needless to say, workers are justifiably angry about the so-called economic recovery. Therefore, like the crew of the fabled ship, they’d have every right to hang a metaphorical albatross around the necks of the real-life descendants of the Ancyent Marinere.

 

*That just leaves Membership Associations and Organizations—and I have no idea what that is.