Posts Tagged ‘workers’

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Academic freedom is under assault within the new corporate university.

No, the problem is not the much-publicized kerfuffle surrounding recent talks by Charles Murray and other right-wing speakers on U.S. college campuses. That’s what students do: they try to be provocative. Small conservative student groups, emboldened by Donald Trump’s victory and with financing from off-campus groups, invite incendiary speakers to their campuses—and then other students protest those visits. It’s much ado about nothing, except of course when official academic units and administrators lend their names to the invitations and events.

The most disturbing challenge to academic freedom right now is something else: the unilateral decisions by academic administrators to curtail the speech of faculty members.

Just yesterday morning, the Washington Post reported that two professors were fired for expressing controversial views. One, at the University of Delaware, was an adjunct professor who suggested that Otto Warmbier, the American student whose death last week after being imprisoned in North Korea drew worldwide attention, was a “clueless white male” who “got exactly what he deserved.” Another adjunct professor, at Essex County College in Newark, was first suspended and then fired for defending a Black Lives Matter chapter’s decision to host a Memorial Day event exclusively for black people.

In both instances, adjunct professors—who, with other other members of the academic precariat, now make up close to two-thirds of the faculty employed in U.S. colleges and universities—were fired for making public comments academic administrators deemed unsuitable.

And then there’s the case of a tenured professor in the University of North Carolina-Chapel Hill’s [ht: mfa] History Department who found out that his dean made his chair cancel a class he had been scheduled to teach.

It so happens that [Jay] Smith’s class dealt with a topic that unsettled powerful forces on campus: the place of “big-time athletics” in higher education. This issue is a sore spot for UNC-Chapel Hill, which is still recovering from a major “athletics-academics” scandal first revealed several years ago—about which, it so happens, Smith had been particularly outspoken.

In the new academy, faculty governance has been replaced by top-down decision-making and academic administrators treat everything—from employment contracts to course offerings—just like the executives of any other corporation. If they add to the bottom-line, faculty members are rewarded; if they don’t, contracts are terminated and courses are cancelled.

That’s how the new corporate university operates in the United States. It’s not student protests but academic administrators that are creating a chilling effect, by circumscribing faculty speech and ultimately undermining academic freedom.

unions

When I ask my students that question, they don’t really have an answer. That’s because, like much of the rest of the U.S. population, they don’t have much experience with unions, either directly or indirectly—not when the union membership rate has fallen to below 11 percent nationwide and is only 6.4 percent in the private sector.

And if you pose that question to neoclassical economists, the response is: labor unions cause unemployment, by setting a wage rate that exceeds the equilibrium price for labor. According to the neoclassical story,

while union workers (“insiders”) may benefit, unemployed non-union workers (“outsiders”) lose out. So, their overall conclusion is, unions ultimately hurt workers and cause increased inequality. Unions should therefore be discouraged.

For my students who have taken a course in mainstream economics, that’s pretty much the only answer that will be offered to them.*

But what if we look back to the heyday of unions—to the period that begins during the first Great Depression (when the Wagner Act was passed and unionization rates once again began to rise) and extends through the 1950s?

According to a new study by Brantly Callaway and William J. Collins, who utilize a novel dataset compiled from archival records of a survey of male workers in five non-Southern cities conducted in 1951, unions played an important role in reducing inequality, especially at the bottom of the wage scale.

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Thus, for example, at the 10th percentile, union workers earned 20.3 log points more than comparable non-union workers—while the difference at the median was smaller and, at the 80th, the difference turns negative.

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For less-educated workers (those with less than a high-school education), the premium at the bottom was similar (at 19.1 log points) but the advantage persisted across all percentiles. And the union wage premium was relatively large, and it remained so, throughout the Black income distribution. The clear indication is that the emergence of industrial unions after 1935, which sought to unionize production workers along industry rather than craft lines, opened more better-paying union job opportunities for both less-educated and Black workers.

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Callaway and Collins also conduct some counterfactual estimations concerning wage inequality, by looking at what would happen if union workers had been paid according to the non-union wage schedule. Their Table 4 (Panel A), shows that in terms of all measures—overall inequality (the difference between the 80th percentile and the 10th percentile), lower-tail inequality (the difference between the 50th percentile and the 10th percentile), and upper-tail inequality (the difference between the 80th percentile and 50th percentile)—inequality is significantly higher in the counterfactual “no union” scenario than in reality. In other words, the overall wage distribution was considerably narrower in 1950 than it would have been if union members had been paid like non-union members with similar characteristics.

As I see it, there are two lessons that can be drawn from the Callaway and Collins study. First, in terms of U.S. history, unions played a significant role in mitigating the effects of competition among workers, both raising workers’ wages and reducing inequality among workers. Second, with respect to economic theory, their research shows that simple supply-and-demand stories (which neoclassical economists use to attempt to explain inequality in terms of skills and levels of education) are profoundly misleading precisely because they leave out institutions.

One of the most important institutions in the postwar period in the United States, when economic inequality was much lower than today, were labor unions.

 

*If students were exposed to something other than neoclassical economics, they’d learn that unions do many other things, including helping non-union workers, through: (1) the threat of unionization (nonunion employers worried about a possible unionization drive may match union pay scales to reduce the demand for organization), (2) the ripple effect (like minimum-wage increases, union wage rates for production workers can lead to increases in wages for those above them, e.g., their managers), and (3) the moral economy (unions help institute norms of fairness regarding pay, benefits, and worker treatment that can extend beyond the unionized core of the workforce). They might also learn that, historically and by examining the experience in other countries, unions have often defended and promoted the larger interests of workers—in their enterprises (by demanding a say in decisions about such things as safety and jobs), nationally (by contributing time and money to political parties and campaigns), and internationally (by cooperating with and assisting unionization efforts in other countries).

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Mainstream economists and politicians have answers for everything.

Lose your job? Well, that’s just globalization and technology at work. Not much that can be done about that.

And if you still want a job? Then just move to where the jobs are—and make sure your children go to college in order to prepare themselves for the jobs that will be available in the future.

The fact is, they’re not particularly good answers. And people know it. That’s why working-class voters are questioning business as usual and registering their protest by supporting—in the case of Brexit, the 2016 U.S. presidential election, the 2017 snap election in Britain, and so on—alternative positions and politicians.

On the first point, it’s not simply globalization and technology. Large corporations, which employ most people, are the ones that decide—in the context of a global economy and by developing and adopting new technologies—when and where some jobs will be destroyed and new ones created. They use the surplus they appropriate from their existing workers and utilize it to determine the pattern of job destruction and creation, in order to get even more surplus.

Thus, in April 2017 (according to the data in the chart at the top of the post), employers eliminated 1.6 million jobs in the United States. In January 2009, things were even worse: corporations destroyed 2.6 million jobs across the U.S. economy. Of course, they also create new jobs—often in different companies, industries, regions, and countries. That leaves individual workers with the sole decision of whether or not to chase those jobs, since as a group they have absolutely no say in when or where old jobs are destroyed and new ones created.

What about their children and the advice to go to college? We already know the idea that higher education successfully levels the playing field across students with different backgrounds is a myth (and sending more kids to college doesn’t do much, if anything, to lower inequality).

Now we’re learning that, when states suffer a widespread loss of jobs, the damage extends to the next generation, where college attendance drops among the poorest students.

That’s the conclusion of new research Elizabeth O. Ananat and her coauthors, just published in Science (unfortunately behind a paywall). What they found is that

local job losses can both worsen adolescent mental health and lower academic performance and, thus, can increase income inequality in college attendance, particularly among African-American students and those from the poorest families.

Their argument is that macro-level job losses are best understood as “community-level traumas” that negatively affect the learning ability and the mental health not only of young people who experience job loss within their own families, but also of the other children in states where the destruction of jobs is widespread.

So, the problem can’t be solved by forcing individual workers to have the freedom to chase after jobs and send their children to college. Nor is the predicament confined to the white working-class. In fact, the effects of job losses are similar, but even worse, among African-American youth.

That’s why Ananat argues that

white working class people and African-American working class people are in the same boat due to job destruction. Imagine the policies we could have if folks found common ground over that.

And, I would add, those policies need to go beyond the “active labor market policies”—such as “rigorous job training and active matching of worker skills to employer needs”—the authors, along with mainstream economists and politicians, put forward.*

We also need to reconsider the fact that, within existing economic institutions, employers are the only ones who get to decide when and where jobs are destroyed and created. Giving workers the ability to participate as a group in the decisions about jobs—within existing enterprises and by assisting them to form their own enterprises, would improve their own mental health and that of the members of the wider community.

Such a change would also transform young people’s decisions about whether or not to go to college. It’s not just about jobs in the new economy. It would allow them to demand, as women in Lawrence, Massachusetts did over a century ago, both “bread and roses.”

 

*Policies to help “disadvantaged workers, especially African Americans, Hispanics and rural residents,” also need to go beyond encouraging the Fed to keep interest-rates low. That still leaves job decisions in the hands of employers.

That Awkward Moment When You Discover That Wall Street's Insanit

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OOR_2017_Min-Wage-Map_County-Metro

A minimum-wage job should be enough to satisfy workers’ minimum needs, which of course includes putting a roof over their heads.

In reality, it doesn’t. A person working a full-time minimum-wage job will find it virtually impossible to rent an affordable home anywhere in the United States, according to a new study by the National Low Income Housing Coalition.

The report reveals that in fact there is not a single county or metropolitan area in which a minimum-wage worker can afford a two-bedroom home, which the federal government defines as paying less than 30 percent of a household’s income for rent and utilities. And in only 12 counties in the entire country is a one-bedroom rental home affordable.

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On average, a full-time worker in the United States must earn $21.21 per hour to afford a modest two-bedroom apartment and $17.14 to afford a one-bedroom apartment—figures that roughly correspond to the mean and median hourly wages in the country. As for everyone who earns less than that—the millions of low-wage workers, seniors and people with disabilities living on fixed incomes, and other low-income households—housing costs are simply “out of reach.”

Another way of seeing the problem is to calculate how many hours a minimum-wage employee would have to work to afford a one-bedroom rental home. Even Puerto Rico, which would require the fewest number of hours (45), exceeds the normal 40-hour workweek. At the other end, a minimum-wage worker in New Jersey would have toil more than two and a half times the normal week (106 hours) to afford a one-bedroom rental home.

It’s clear that private markets—in labor and housing—have failed American workers. They can provide neither decent-paying jobs nor the affordable housing for millions of members of the U.S. working-class to put a roof over their heads.

labor shares

When I first began studying economics, the conventional wisdom was that “factor shares”—the shares of national income paid to labor and capital—were relatively constant.

So, there really was no need to worry about the problem of inequality. Poverty, maybe, but not the gap between wages and profits.

Now, of course, all of that has changed. Not only is there increasing recognition that the labor share changed, it’s been declining for more than four decades.

Even Stephen Cecchetti and Kim Schoenholtz, the authors of the textbook Money, Banking and Financial Markets, have acknowledged that

For at least the past 15 years, and possibly for several decades, labor’s share of national income has been declining and capital’s share has been rising in most advanced and many emerging economies.

Thus, for example, the labor share of national income in the United States has fallen by about 12 percent from 1970 to 2014 (as indicated by the index scale on the left side of the chart above).

But, as it turns out, that’s only part of the story. The share of national income going to workers has declined by even more than that.

There are two main reasons why the “labor share” doesn’t give an accurate picture of the “workers’ share” of national income. First, as Michael D. Giandrea and Shawn A. Sprague explain, the labor share (as calculated by the Bureau of Labor Statistics) includes both employee compensation and the labor compensation of proprietors (and thus a portion, minus the capital share, of the income going to proprietors). Second, the labor share does not account for inequality between the different groups who receive what is officially measured as labor compensation:

the compensation of a highly paid CEO and a low-wage worker would both be included in the labor share.

So, in order to get an accurate picture of workers’ share of national income, we need to turn to other data.

What I’ve done in the chart above is measure (on the right side of the chart) the shares of income going to the bottom 90 percent and the bottom 50 percent of Americans. And, not surprisingly, the declines are even more dramatic: 20 percent for the bottom 90 percent (falling from 66 percent of total factor income in 1970 to 53 percent in 2014) and even more, 45.8 percent, for the bottom 50 percent (from 19 to 10.3 percent between 1970 and 2014). Those are the shares actual workers—not proprietors or CEOs—take home.

Finally, the conventional wisdom has begun to change. Under existing economic institutions, factor shares do in fact change—and they’ve been turning against labor for decades now.

The bottom line, though, is the situation of workers is even worse than what is indicated by the declining labor share. The workers’ share has fallen even more dramatically in recent decades.

It’s time, then, for the old models—the old theoretical models as well as the models for organizing the economy—to be thrown out and replaced in order to create an economy that actually works for American workers.