Posts Tagged ‘workers’

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Special mention

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Marxist economists have spent a lot of time in recent years deconstructing capitalism, showing that there are lots of spaces within modern economies in which capitalism does not prevail. The idea behind “iceberg economics” is that lots of alternatives to capitalism already exist (barter, self-help, producer cooperatives, and the like) and, once recognized, they can be fostered and further developed.

By the same token, it’s also important to focus on instances where capitalism does exist, even when—as in the case of the so-called sharing economy—it might appear that the typical relations of capitalism don’t apply.

Uber, the ride-sourcing service, is a case in point. The owners of Uber maintain their drivers are independent contractors, and all they’re doing is providing “a technology platform that helps willing drivers connect with passengers willing to pay for a ride.” Drivers, in turn, benefit “because they have complete flexibility and control.”

But the California Labor Commission has now ruled that Uber has an employer-employee relationship with its drivers. As Katy Steinmetz explains,

The growing independent-contractor workforce is a key reason that companies like Instacart and Uber have been able to grow so quickly, because the cost of organizing independent contractors is much less than hiring employees. There’s no requirement to pay unemployment tax or ensure that workers are making at least minimum wage. In many cases, the companies don’t have to pay for the smartphones or data plans workers use on the job. They don’t have to deal with the costly spools of red tape that come with federal and state withholdings and healthcare and anti-discrimination laws.

Uber’s relationship with its drivers is an essentially capitalist one, in the sense that it hires the drivers and extracts a surplus from them—without many of the rules and regulations that pertain to other capitalist employers.

Recognizing the capitalist dimension of that relationship is important, at one level, because it pushes back against the ability of Uber and other companies in the so-called sharing economy to shift many of the expenses of running a business onto their employees. Drivers and other workers will certainly benefit as a result.

But only partly. They’ll still be employees of billion-dollar companies. Recognizing the capitalist nature of much of the on-demand economy is even more important, on another level, because it means we can finally go beyond the false image of flexible and in-control independent contractors and put on the agenda the abolition of the wages-system itself.

Then we’d have the chance to build a real sharing economy.

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Sure, senior citizens are one of the only groups whose financial situation has remained relatively steady during the Second Great Depression. But that’s because many of them are being forced to have the freedom to work long into what should be their retirement.

As recently as the late 1990s, only one in five Americans in their late 60s had a job. Now, that number has jumped to almost one in three. And unlike in their parents’ generation, more women are earning paychecks than in the past, contributing to household income.

Researchers say these factors are in large part responsible for the substantial rise in median household income that seniors in their late 60s and early 70s have experienced since 1989, even as Americans in their prime working years have mostly treaded water or lost ground.

Not everyone, of course, can work later in life. Health problems and age discrimination present major hurdles. And many of those who find jobs consider them barely adequate.

Pat Cherry, 72, has been earning minimum wage at a job in the library of the city-run Waxahachie Senior Activity Center. Ms. Cherry, who is divorced, had to retire early from a bookkeeping job after an autoimmune disease caused her to miss too much work. She could barely pay her bills until she found the part-time job through a government-sponsored work program, but it expired last month.

Ms. Cherry is worried no one will hire her again. “I need the money desperately,” she said.

The nearly 30 percent of Americans ages 65 through 69 who were employed in 2012 was more than three times the European average. Among large, highly developed countries worldwide, only a few had more than 20 percent of their 65- to 69-year-olds on the job, and only Japan and Korea topped the U.S. figure.

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It’s a story that could have appeared in the pages of George Packer’s magnificent book, The Unwinding: An Inner History of the New America. Or from the pen of Molly Ivins—which is good, since Esther Kaplan was recently awarded the 2015 MOLLY National Journalism Prize for her article, “Losing Sparta: The Bitter Truth Behind the Gospel of Productivity” [ht: bn].

The fact is, while Kaplan’s writing is superb, the story she tells about a plant that made commercial lighting fixtures in Sparta, Tennessee is an all-too-familiar one in contemporary America. Philips,”a multibillion-dollar multinational firm that sells everything from healthcare equipment to home appliances across the globe,” bought the plant in 2008 and then, in 2010, announced the plant was closing, since Philips had decided to outsource most of its production to another of its plants, in Monterrey, Mexico. Unfortunately, the economic and social landscape of the United States is increasingly littered with the broken bodies and spirits of countless workers, their families, and the communities in which they live as a result of such corporate decisions.

What makes Kaplan’s essay so interesting is that it operates at two different but related levels. She tells the story of the widespread devastation caused by Philips’s precipitous decision to close the Sparta plant, especially the difficulties both individual workers and the surrounding community have had attempting to replace the lost jobs. One of the best parts is her analysis of local attempts to purchase the plant and sell the lighting fixtures to Philips.

much in the Sparta story defies the familiar political scripts: Norris, the union-avoidance expert, along with Bailey and Sullivan, of the Chamber of Commerce, joining hands with the IBEW to help save a union plant; small businessmen in Tea Party country championing community ownership. It became clear from my conversations that Philips’s actions had deeply offended people’s sense of decency, from the laid-off workers to what Donna McCurry calls “the big wheels in town,” and that this sense of corporate indecency is what had brought such politically disparate people together.

(Both Packer and Ivins would have been proud to identify such political ironies.)

But Kaplan also thinks and writes at another level, grappling with the problem of productivity at the level of the plant and of the economy as a whole. In the case of the Sparta plant, workers had increased productivity (just as they continue to do, year in and year out, in the U.S. economy) and yet Philips decided to close the plant and relocate most of its production to a plant in Mexico (which had lower productivity but where workers received much lower wages and were not represented by a union).

One might be forgiven for asking what, exactly, all this productivity is for. “We busted our butts to get where we were at,” Ricky Lack [a maintenance worker at the plant] said the first time we spoke. “We got to number one. And it didn’t matter.”

That turns out to be the key question—in individual plants (where, after workers heed the call to increase productivity, they continue to face the threat of plant closures) and in the economy as a whole (in which since the mid-1970s productivity continues to increase but workers’ pay falls increasingly far behind).

Even today, mainstream economists and politicians continue to preach the gospel of productivity. Kaplan’s story is the bitter truth behind that gospel.

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There is something fundamentally unstable—and ultimately dangerous—about the liberal critique of austerity.

Consider the recent essay on “The Economic Consequences of Austerity” by Amartya Sen. On one hand, he correctly criticizes the austerity effects associated with the deficit-cutting measures that have been imposed in Western Europe in the years following the crash of 2007-08 (and reminds readers of Keynes’s critique of the austerity measures the Allied Powers were threatening to impose on Germany in the Treaty of Versailles).

But then Sen accepts, without any further argument, the need for “real institutional reform” in Europe: “from the avoidance of tax evasion and the fixing of more reasonable retiring ages to sensible working hours and the elimination of institutional rigidities, including those in the labour markets.”

In other words, Sen is attempting to distinguish between the “antibiotic” of institutional reform and the “rat poison” of austerity.

The instability of Sen’s formulation stems from the fact that he wants to reject one part of the conservative austerity agenda (dismantling some state programs) while accepting the other (making markets, especially labor markets, more “flexible”). The danger arises because Sen takes as a common sense, without need for any kind of extended argument, that one group of workers should be protected (in the form of pensions of those who have retired) while further costs should be imposed on the other part of the working-class (by raising the age of retirement and creating more “flexible” labor markets for those still working).

Ultimately, it’s Sen’s nostalgia for a time that, in his view, was characterized by “good public services and a flourishing market economy” that leads him to such an unstable and, in my view, dangerous set of propositions. Better, it seems to me, to recognize that that period of public-private exceptionalism has come and gone, undone by the common sense that capitalist growth needs to be preserved at all costs—and to reject not only the rat poison of austerity, but also what Sen and other liberals consider to be the antibiotic of imposing further costs on European workers.

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Special mention

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Even the Wall Street Journal can’t answer the question.

When U.S. unemployment rates fall, conventional notions of supply and demand predict wages will go up as firms bid for increasingly scarce workers, and there are signs of that, for example, in building trades and restaurants. “Basic economics hasn’t gone out the window,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said in an interview. “When employment grows, wages will start to grow.”

But a Wall Street Journal analysis of Labor Department data points to persistent constraints on worker pay, even as the economy approaches full employment. The Journal found 33 U.S. metropolitan areas­­from the small to the sizable­­where unemployment rates and nonfarm payrolls last year returned to prerecession levels. In two ­thirds of those cities ­­including Columbus; Houston; Oklahoma City; Minneapolis-­St. Paul, Minn.; and Topeka, Kan.­­ wage growth trailed the prerecession pace.

So much for “basic economics”!

As is clear from the chart above, unemployment (whether measured in terms of the headline rate or the total, U6, rate) continues to fall and yet the rate of increase in nominal hourly wages has also been falling.

They throw lots of possible reasons against the proverbial wall, hoping something sticks. But here’s the one that is most compelling:

Companies tapping pools of workers who have disappeared from the U.S. unemployment tallies, creating what economists describe as hidden slack in the economy. Until this invisible labor supply is spent, these men and women, including part-­timers, temporary workers and discouraged labor ­market dropouts, could hold wages down.

The fact is, the rate of change of hourly wages was less than 2 percent in April, while the total unemployment rate in April still stood at 10.8 percent.

It’s what some of us call, without euphemism, the Reserve Army of the Unemployed and Underemployed.