Posts Tagged ‘wage-labor’

modern-slavery

Special mention

02  a_symphony_of_racism__mahmoud_abbas

BureauofLaborStatistics-0a868acbc1dd4b67a4f0dcfcb2bf040b

There are lies, there are outrageous lies, and there are statistics.

— Robert Giffen, Economic Journal (1892)

Are U.S. unemployment numbers rigged? Sure, they are!

They’re not rigged in the way Paul Krugman implied last Friday (“This being the Trump era, you can’t completely discount the possibility that they’ve gotten to the BLS”). Or in the way former General Electric CEO Jack Welch suggested back in 2012 (when he asserted that the Obama White House had manipulated the job figures for political gains). Or in the way Donald Trump used to say the unemployment rate was “phony” (“The number is probably 28, 29, as high as 35 [percent]. In fact, I even heard recently 42 percent.”) until, of course, he became president and declared the rising jobs numbers a “blowout” (even though he and his economic advisers used some questionable math) and, most recently, the falling unemployment rate a “great day” (for George Floyd, whom Trump said was “looking down right now and saying this is a great thing that’s happening for our country,” and “for everybody”).

No, the jobs numbers are not manipulated in those ways. They’re rigged—in my view, much more seriously—in terms of the ways the various categories are defined and measured and the manner in which the data are collected. And, of course, the ways values are imputed to the rising and falling numbers.

Let’s start with the last point: why should we believe, as most news outlets and Trump himself proclaimed (including FiveThirtyEight, which declared it “shockingly good”), that the much-publicized recent fall in the official unemployment rate (from 14.7 percent in April to 13.3 percent in May) is a good thing? We’re still in the midst of the COVID-19 pandemic, when workers should be paid to stay home. Instead, they’re being forced to have the freedom to return to selling their ability to work—because their employers want to make profits by hiring them and workers themselves are finding it difficult to get by on unemployment benefits (when, that is, they’ve been able to obtain them). Why is that something we should applaud?

Moreover, even according to the unadjusted numbers, there were still 21 million unemployed American workers in May. Let’s remember that, at the worst point of the Second Great Depression (in October 2009), the highest unemployment rate was 10 percent and the largest number of unemployed workers was 15.4 million.

As for the rest, the first sign there may be a problem with the unemployment numbers is the admission, in the text of the official report from the Bureau of Labor Statistics, that many workers may have been misclassified. Workers who were “employed but absent from work” were supposed to be counted as “unemployed on temporary layoff” but many, it seems, were not.

If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a not seasonally adjusted basis).

Fixing that error would raise the official unemployment rate in May to 16.3 percent.

Now, let’s consider what the official statistics mean and don’t mean. This is an exercise I used to do with all of my students, most of whom had no idea how the unemployment numbers were defined and calculated, even after taking many mainstream economics courses.

The official or headline unemployment rate is actually one of 6 rates reported by the Bureau of Labor Statistics, referred to as U-3. To be counted as unemployed according to the U-3 rate, a worker has to (a) have had a job, (b) been laid off from a job, and (c) be actively looking for a new job. (In addition, they’re not counted if they’re in the armed forces, in prison, or undocumented.)

The rates and total numbers of officially unemployed workers, from January 2007 to May 2020, are illustrated in the two charts below.

LNS14000000_390681_1591454536897 LNS13000000_390681_1591454536844

So, who is not included in these numbers? The headline unemployment rate doesn’t include workers (such as high school and college graduates) who are looking for their first jobs. It doesn’t include workers who are involuntarily working at part-time jobs (working any number of hours, including 1 hour a week, counts as “employed”). And it doesn’t include workers who want a job but are “discouraged” and therefore have given up actively looking for a job.

The so-called U-6 rate includes two of those groups, in addition to the unemployed workers that form the U-3 rate: workers who are employed part-time for “economic reasons” and workers who are considered “marginally attached” to the labor force.

rates

As readers can see, the U-6 rate (the green line in the chart above) is always much higher than the U-3 rate (the blue line). In May, it was 21.2 percent, compared to the rate of 13.3 percent that was widely reported in news outlets.

And then there’s the group of 4.8 million workers who were considered misclassified in the most report. Add them all together and the United States actually had a total of 45.4 million workers who were either unemployed or underemployed in May. That’s exactly one-third the size of the entire employed population in the United States.

But that U-6 plus misclassified total still doesn’t adequately capture the dire straits of American workers. In addition to first-time job-seekers who have unable to find a job (some unknown portion of an estimated 3.8 million high-school graduates, 1 million who graduated with associate’s degrees, and 2 million with bachelor’s degrees), it doesn’t include any of the estimated 8 million undocumented workers who have lost their jobs.

The only conclusion is that the official unemployment figures are in fact rigged—not by any particular malfeasance or corrupt intervention into the Bureau of Labor Statistics, but by the way the unemployed are defined, measured, and counted. The reserve army of unemployed and underemployed workers is actually much larger than the figures cited by the White House and widely reported in news outlets.

In the end, what matters for American workers is less that the statistics are biased. It’s more that the prevailing economic institutions in the United States—which use and abuse them as wage-slaves, no more so than during the current pandemic—are rigged against them.

Operating-Costs_1024

Special mention

BM-26-2

3782631801_d413a10a89_o1

Banksy, “Untitled” (2009)

On first glance, liberals and conservatives agree on very little these days, especially now that we find ourselves in the era of Donald Trump. But they do seem to find common ground on one thing: the so-called dignity of labor.

Let me explain. In the article I referred to yesterday, conservative Arthur Brooks invokes the “dignity of labor” as the reason anything and everything should be done to stem the fall in the labor-force participation rate of white men and get them back to work.

If its goal is to instill dignity, the U.S. government does not need to find more innovative ways to “help” people; rather, it must find better ways to make them more necessary. The question for leaders, no matter where they sit on the political spectrum, must be, Does this policy make people more or less needed—in their families, their communities, and the broader economy?

Some may ask whether making people necessary is an appropriate role for government. The answer is yes: indeed, it represents a catastrophic failure of government that millions of Americans depend on the state instead of creating value for themselves and others. However, it’s not enough to merely make people feel that they are needed; they must become more authentically, objectively necessary.

The single most important part of a “neededness agenda” is putting more people to work.

Well, as it turns out, one of Brooks’s liberal critics, Lane Kenworthy, actually agrees that working for someone else and producing more than one needs has “significant virtues”:*

It imposes regularity and discipline on people’s lives. It can be a source o mental stimulation. It helps to fulfill the widespread desire to contribute to, and be integrated in, the larger society. It shapes identity and can boost self-­esteem. With neighborhood and family ties weakening, the office or factory can be a key site of social interaction. Lack of employment tends to be associated with feelings of social exclusion, discouragement, boredom, and unhappiness. Societies also need a significant majority of people in paid work to help fund government programs.

No matter the fundamental differences in the policies they advocate, Brooks and Kenworthy are in fundamental agreement that people should believe in the dignity of work and government policy should be redesigned to make sure people—especially the members of the white working-class—get back to work.

I have already dealt numerous times (e.g, here, here, and here) with the argument that participating in wage-labor is intrinsically dignified. But the question remains, why should the government be brought in—in the eyes of by both conservatives and liberals—to make sure people are forced to have the freedom to acquire that dignity?

The answer actually lies in an unexpected source. According to Friedrich Nietzsche (in his 1871 preface to an unwritten book, “The Greek State”), the dignity of labor was invented as one of the “needy products of slavedom hiding itself from itself.” That’s because, in Nietzsche’s view (following the Greeks), labor is only a “painful means” for existence and existence (as against art) has no value in itself. Therefore, “labour is a disgrace.”

Accordingly we must accept this cruel sounding truth, that slavery is of the essence of Culture; a truth of course, which leaves no doubt as to the absolute value of Existence.  This truth is the vulture, that gnaws at the liver of the Promethean promoter of Culture.  The misery of toiling men must still increase in order to make the production of the world of art possible to a small number of Olympian men.

And if slaves—or, today, wage-workers—no longer believe in the “dignity of labour,” it falls to the likes of both conservatives and liberals to ignore the “disgraced disgrace” of labor and create the necessary “conceptual hallucinations.” And then, on that basis, to suggest the appropriate government policies such that the “enormous majority [will], in the service of a minority be slavishly subjected to life’s struggle, to a greater degree than their own wants necessitate.”

Nietzsche believed that, in the modern world, the so-called dignity of labor was one of the “transparent lies recognizable to every one of deeper insight.” Apparently, neither Brooks nor Kenworthy can count himself among those with such insight.

*This is even after Kenworthy admits “employment is not always a good thing.”

The need for a paycheck can trap people in careers that divert them from more productive or rewarding pursuits. Paid work can be physically or emotionally stressful. It can be monotonous, boring, alienating. Some jobs require a degree of indiference, meanness, or dishonesty toward customers or subordinates that eats away at one’s humanity. And work can interfere with family life.

ubi-colombo

Fred Block and Frances Fox Piven make a convincing case, from the Left, for a universal basic income.

In particular, they demonstrate an understanding that wage work has become one of the most elemental pillars of our civic religion,” past relief efforts (going back to Poor Laws) were mostly punitive, and employers will likely resist any attempt to undermine the so-called work ethic.

Not everyone will be on board to sever the age-old ties between poverty relief and tough demands on the poor. The basic-income approach will be resisted by employer interests because it violates that venerable principle, and will make workers more powerful over time by reducing their dependence on any one employer. A generous basic-income policy could, in other words, transform class relations.

There are however other obstacles, particularly problems of political language, that need to be overcome in any attempt to expand the “entitlement society” (a term that itself needs to be recaptured from the Right) through a universal basic income.

As I wrote back in 2012 (at the early stages of the previous presidential campaign), there are at least two issues we need to confront:

First, we need to contest the meaning of dependence. In particular, why is selling one’s ability to work for a wage or salary any less a form of dependence than receiving some form of government assistance? It certainly is a different kind of dependence—on employers rather than on one’s fellow citizens—and probably a form of dependence that is more arbitrary and capricious—since employers have the freedom to hire people when and where they want, while government assistance is governed by clear rules.

Second,. . .corporations have been successful in shifting the financing of government assistance programs from their surpluses to workers’ incomes. But the solution to the pressure on current workers’ standard of living is not to cut government programs but to change how they’re financed.

The campaign for a universal basic income will only be successful when we effectively contest the meaning of dependence (such that wage-labor is no longer viewed as a sign of independence) and change the way government programs are financed (such that the social surplus, not workers’ wages, can be utilized to satisfy social needs.)

Ultimately, then, a universal basic income points toward a new realm of freedom, including freedom from the need to work for the benefit of someone else and from the need to hand over a growing portion of one’s already-low individual income to finance a program that benefits society as a whole.

Politics 0333

Capitalism is an economic system in which most people receive a wage or salary working in corporations for a small number of people who run those corporations and appropriate the resulting surplus in the form of profits.

That’s not a definition you’ll find in mainstream economics textbooks or most political debates these days. But it does capture what is distinctive about capitalism compared to other economic systems.

In particular, it focuses our attention on the tension between profits and workers’ compensation, and therefore on the relationship between capital and wage-labor.

And, it’s clear, capital is winning.

fredgraph-3

 

They dipped in 2105 but, over the long haul (especially since the mid-1980s), corporate profits in the United States have continued to climb to record levels.

fredgraph-1

And, as a share of national income, corporate profits have more than doubled—from about 7 percent in 1986 to 14.7 percent in 2015. Capital’s share of the economic pie has clearly been growing.

In other words, capital has been gaining during the current recovery and, with some short-term downturns, it’s been gaining for decades. (As an aside, when capital is not gaining, when the profit share does fall, as it has done periodically over the course of capitalism’s history, we get recessions and depressions—which persist until the conditions for corporate profitability are restored.)

fredgraph-2

Capital has been gaining—and workers have been losing. Labor’s share of the economic pie has been declining for decades, falling from about 59 percent in 1970 to just under 50 percent in 2014.

The fact that capital is winning actually has some commentators worried. Larry Summers is concerned that high corporate profitability is incompatible with his secular stagnation thesis. The best he can do, though, is focus on “increased monopoly power” to account for the divergence between the profit rate and the behavior of real interest rates and investment.

Justin Fox, in contrast, is looking in the right direction:

Starting in the early 1990s, then, employees lost ground to corporations and, to a lesser extent, sole proprietors and landlords. In other words, capital gained at labor’s expense. In the high-growth 1990s one could argue that this was still a good deal, because everybody was making more money. After 2000, though, slow economic growth and a declining share of that growth going to workers combined to put much of the country in a long funk. . .

Faster economic growth would make this question less pressing — as in the 1990s, a growing pie would make the relative size of one’s slice less important. But if continued slowish growth is what the future has in store for us, and lots of economists think it is, it seems clear that it would be better for the country — if not necessarily its investors — for corporations and other capitalists to ease up and let employees have more of the pie. It’s less clear that the capitalists would do this voluntarily.

Capital has indeed gained at labor’s expense. But, within capitalism, there are simply no mechanisms that can resolve the tension between profits and wages.

The fact is, the conflict between capital and wage-labor can only be eliminated by moving beyond capitalism.

self-sufficiency

The folks who run the “Building Human Capital and Economic Potential” project [ht: db] are right: the current recovery has not been broadly shared. Far from it.

Low-income families are still dealing with job losses, benefit cuts, depressed wage growth, a lack of affordable child care, and a shift toward part-time, variable-hours jobs that hamper efforts to find full-time work.

But the idea that new training and education systems is a movement in the direction of economic self-sufficiency makes no sense. It merely accepts and reinforces the idea that wage-labor is the only “pathway out of poverty for most non-elderly adults.”

That’s not self-sufficiency. It’s merely a different kind of dependence—not on government regulations (like a higher minimum wage) and programs (such as food stamps and tax credits) but on the whims and wishes of private employers. And the entire program is built around making members of low-income families more attractive to those employers, by improving their “human capital.”

There is no such thing as self-sufficiency in an economic system based on private property. Private property (and, with it, markets and wage-labor) merely makes one large group of people dependent on the decisions of another, much smaller group. Economic self-sufficiency is therefore a myth. It’s a false, narrow and restricted, promise of freedom—the freedom to sell one’s ability to work to someone else, who then gets to walk away with the profits, thereby strengthening the continued dependence of workers on their employers.

iwdrm_modern_times_1935

One way of dealing with the problem of growing inequality is to establish a maximum wage. That’s what Franklin Delano Roosevelt proposed back in the early 1940s—a 100 percent marginal tax rate on incomes over$25,000 a year (roughly $350,000 in today’s dollars)—in order to “provide for greater equality in contributing to the war effort.”

Infuriated conservatives saw red, literally. The “only logical stopping place for this movement,” fumed Princeton economist Harley Lutz, would be “a completely communistic equalization of incomes.”

Simon Wren-Lewis reports his own recent suggestion for a maximum wage was greeted in much the same manner.

Well, if mainstream economists are going to howl about tinkering with tax rates, why not make them howl about a real change in the system whereby incomes are distributed? Like Filip Spagnoli’s suggestion to get rid of wage-labor entirely.

Spagnoli’s proposal is to combine a universal basic income (“to cover the costs of the necessities of life”) with an outright prohibition on wage-labor (in order to promote more cooperative, democratic forms of economic organization).

Would a UBI not be sufficient to allow people to pursue their goals? Why also prohibit wage labor? A UBI indeed loosens us from the system of wage labor – it provides a financial cushion that removes the risks inherent in abandoning a job and pursuing our “true destiny” – but it doesn’t go far enough. It gives us the freedom to turn down unattractive work but the pursuit of life’s goals often requires cooperation. Only the prohibition on wage labor makes cooperative ventures more common. A UBI by itself only pushes us towards more satisfying jobs and leaves some of the drawbacks of wage labor intact.

Makes sense to me. Guarantee a basic income for everyone and then, on top of that, encourage the formation of new kinds of enterprises, based on the idea that those who work in the enterprises decide how they should be organized (including, of course, how much they should be paid, what should be done with the surplus, and so on).

One of Spagnoli’s concerns is, “If people can’t work for a wage, many of the ‘dirty jobs’ may not get done anymore.” The fact is, we already have Cooperative Home Care Associates in New York City, which is the largest worker-owned cooperative in the country. It’s relatively easy then to imagine a system of such cooperatives, in which democratically organized workers do everything from toilet cleaning, waste disposal, and mining to teaching, healthcare, and software design.

The time is ripe to open up the debate about proposals like establishing a maximum wage, guaranteeing a basic income, and prohibiting any and all forms of wage-labor. The only price of admission is to listen to the howling of mainstream economists.

surplusvalue

We’ve been over this before but, like a bad penny, it just keeps coming back. . .

Conservatives and liberals seem not to agree about anything these days (as my students often complain). But there is one idea they do share: the wages-system needs to be protected at all costs.

Economists, politicians, and columnists from the two ends of the political spectrum do have different starting points: conservatives believe that workers are at bottom shirkers, and therefore need to be forced off their “dependency” on government programs in order to lower the reward for non-work, while liberals start with the idea that workers today are not being paid enough, at least those at the bottom, and the minimum wage should be raised in order to raise the reward to work.

Yet, while conservatives and liberals have different starting-points, they agree that there is a fundamental dignity in working for someone else. Here’s the liberal version, from Charles Blow:

No one should ever endure the kind of economic humiliation that comes with working a full-time job and making a less-than-living wage.

There is dignity in all work, but that dignity grows dim when the checks are cashed and the coins are counted and still the bills rise higher than the wages.

Most people want to work. It is a basic human desire: to make a way, to provide for one’s self and one’s loved ones, to advance. It is that great hope of tomorrow, better and brighter, in which we can be happy and secure, able to sleep without hunger and wake without worry.

But it is easy to see how people can have that hope thrashed out of them, by having to wrestle with the most wrenching of questions: how to make do when you work for less than you can live on?

Really? A “basic human desire”? We all warn our students about making such sweeping, universal statements—especially when not a shred of evidence is presented. But the problem here is worse. It’s the presumption that people want to work (instead of being forced to work) and that working is somehow making one’s own way (instead of being dependent on the whims and wishes of private employers).

In other words, it’s the same argument conservatives make: everyone wants (and at least should want) to be a worker. Except, of course, for those at the very top, who are dependent on getting a cut of what workers produce.

Dignify this!

Posted: 14 February 2014 in Uncategorized
Tags: , , , ,

wage-slave-3

source

The idea that Obamacare might reduce the dependence of workers on their employers even slightly is driving right-wing politicians and economists crazy. Paul Ryan says he’s worried about “adding insult to injury” because the “incentive to work declines.” Among the economists, there’s Casey Mulligan (expressing his concern about wiping away “the reward to work for millions of people), John Taylor (who accuses the Congressional Budget Office of malfeasance for delaying publication of information on “the disincentive effects on labor supply and demand”), and Greg Mankiw (who invokes the steady-state conditions of the Solow growth model to argue that, against all expectations, workers’ wages won’t really rise).

I understand that. All of them (and the list of like-minded politicians and economists could go on) will do or say anything in order to preserve the sanctity of the current wages system. Anything that lessens, however slightly, workers’ dependence on their employers must be opposed.

But what is Kevin Drum doing in attacking others for disparaging the “dignity of work”?

Even people who hate their jobs take satisfaction in the knowledge that they’re paying their way and providing for their families. People who lose their jobs usually report intense stress and feelings of inadequacy even if money per se isn’t an imminent problem (perhaps because a spouse works, perhaps because they’re drawing an unemployment check). Most people want to work, and most people also want to believe that their fellow citizens are working. It’s part of the social contract. As corrosive as inequality can be, a sense of other people living off the dole can be equally corrosive.m

How much dignity is there in working for the minimum wage washing dishes or slinging hamburgers? Where’s the dignity in earning more (say $24.21 an hour, the average for private nonfarm workers in American industry) and having your job shipped abroad? Or even taking home much more (say $950 a week, the average for union workers, which is $200 more than for nonunion workers) if you have absolutely no say in how decisions are made in the enterprise where you work?

The fact is, we’re not talking about the dignity of work. The question is, what’s the dignity of a particular kind of work, wage-labor? What’s the dignity of being forced to have the freedom to sell one’s ability to work in order to purchase the necessities of life? What’s the dignity of being locked into a job in order to have access to healthcare? What’s the dignity of working more and more, of competing with other workers for the available jobs, and of watching everyone in that position fall further and further behind their employers?

Talk to me about the so-called dignity of work when you can successfully answer those questions.