Our Low-Wage Nation

Of the 44 million jobs in the United States, nearly one in three of the total pays low wages—and often does not include affordable health insurance, paid sick days or retirement coverage. That eye-opening information, provided in a new report by The Mobility Agenda, finds these $11.11-an-hour-or-less jobs also tend to have inflexible or unpredictable scheduling requirements and provide little opportunity for career advancement.

So maybe that’s why when Bush touts the nation’s low unemployment rate, few people outside Wall Street cheer. They are too busy working several jobs to make ends meet.

The Mobility Agenda, a special initiative of Inclusion, a virtual think tank affiliated with the Center for Economic and Policy Research, finds that since 2001, there has been a sharp decline in wages for workers at the bottom third of the wage scale. Worse, reviewing the evidence on economic mobility, the authors of Understanding Low-Wage Work in the United States conclude:

In the U.S. labor market, it is not possible for everyone to be middle class, no matter how hard they work. Moreover, it has been getting harder to do over time.

Oh, and about that middle class. A devastating report by Robert Pear in The New York Times March 5 documents the economic fragility of the U.S. middle class when it comes to paying for health care.

Seems that more than one-third of those without health insurance—17 million of the nearly 47 million—have family incomes of $40,000 or more, according to the Employee Benefit Research Institute, a nonpartisan organization. More than two-thirds of the uninsured are in households with at least one full-time worker. As Pear writes:

It is well known that the ranks of the uninsured have been swelling; federal figures show an increase of 6.8 million since 2000.

(The AFL-CIO supports universal health care, and last week, the AFL-CIO Executive Council approved a statement saying such a system should be built upon the nation’s most successful universal health coverage plan for seniors—Medicare.)

A confluence of forces is behind the sinking of the middle class. But one big factor is the disproportionate gain by corporations in the growing global economy. So wide is the gap, in fact, that even the denizens of economic world leadership, at their annual gathering in Davos, Switzerland, this year started humming a new refrain: Globalization isn't working for everyone. According to The Wall Street Journal (subscription required):

Stagnating wages and rising job insecurity in developed countries are creating popular disenchantment with the free movement of goods, capital and people across borders.

In theory, less-developed countries win from globalization because they get jobs making low-cost products for rich countries. Rich countries win because, in addition to being able to buy inexpensive imports, they also can sell more sophisticated products like machine tools or financial services to emerging economies.

"The first win is there, but the second win is going to the owners of capital rather than labor," says Stephen Roach, chief economist at Morgan Stanley.

Ouch. There’s that capital-and-labor dichotomy again. From Morgan Stanley, no less. Guess it didn’t go away with the 20th century after all.

Several key factors are fueling the inequities in globalization. One is the rapid growth of foreign direct investment by U.S. corporations to other countries—while internal investment is decreasing. According to economist Thomas Palley:

Since investment in the U.S. is critical for future economic prosperity, these patterns are troubling and provide evidence of how globalization and flawed policy are encouraging corporations to abandon America.

With regard to outward [foreign direct investment], part of the increase is attributable to affirmative improvements in emerging market economy prospects, but part is due to bad policy. The over-valued dollar has encouraged U.S. business to shift productive investments from the U.S. to both developing and other developed economies, while the lack of global labor and environmental standards encourages shifts to developing economies where standards are lower or even absent.

Another factor is the preferential tax treatment of foreign profits of U.S. corporations, which encourages outward FDI that displaces domestic investment. This speaks to repealing that provision.

Palley notes the U.S. Commerce Department recently launched an initiative to promote such investment, promising to actively court foreign companies. But the approach, while beneficial, also is “incomplete and inadequate.”

Cheerleading cannot substitute for fundamental policy change...the exclusive focus on [internal direct investment] is like one-hand clapping and completely misses the problem of investment off-shoring by U.S. corporations.

Another factor exacerbating the gap between what the wealthy are paid and everyone else is excessive CEO pay. We’ll discuss that in a couple weeks, when the AFL-CIO releases its Executive PayWatch report in early April.



Source: http://www.inclusionist.org/files/lowwagework.pdf

America's Workers: Boxed In

Committee hearings on Capitol Hill focusing on the abuse of taxpayer funds, Iraq re-construction process and wrangling in the Senate over non-binding resolutions on Bush’s Iraq war have understandably taken center stage in recent media coverage. But there’s another set of congressional hearings under way equally as important for America’s workers.

Rep. George Miller, head of the House Committee on Education and Labor, on Jan. 23 launched hearings on Strengthening America's Middle Class: Finding Economic Solutions to Help America's Families.

The committee is considering three main items:

• Creating a competitive economy that includes good new jobs that pay well.
• Restoring workers' rights—including their freedom to bargain for better wages and benefits.
• Making health care more affordable and accessible.
  

Or, as AFL-CIO Secretary-Treasurer Richard Trumka summarized when the hearings reconvened Feb. 7:

Why, in the richest country in the world, is it so difficult for so many families to make a living by working?

It’s safe to say that in the Republican-controlled Congress of recent years, this committee—which under Republicans was renamed the Committee on Education and Economic Opportunities, in a deliberate slap at unions—never considered the growing economic distress of the middle class.

When hearings opened Jan. 23, William Spriggs, an economics professor at Howard University in Washington, D.C., told committee members the economic recovery, which began six years ago, has not benefited working families. Instead it has meant more money for the rich while working people and the poor have seen their standard of living stall or drop.

One cause of the widening gap, says Spriggs, is the failure to raise the minimum wage for 10 years. But that’s only one source of the problem. Says Spriggs:

The other source is the redistribution of corporate income, from wages to capital income. The latest data from the Bureau of Economic Analysis shows that the share of corporate-sector income going to wages is down to its lowest share in over 25 years….The latest CBO [Congressional Budget Office] figures show that almost 60 percent of capital income goes to the top 1 percent in the U.S. income distribution.

Behind the unequal distribution of the nation’s wealth is a much more fundamental change in our country’s economic policies, according to Trumka. He told the committee:

The shift in economic policies in the late 1970s from a “Keynesian consensus” to what George Soros has called “free market fundamentalism” explains much, in my view, about changing corporate behavior, the imbalance of power between workers and their employers, stagnating wages and the growing divide between productivity and wages.

Describing “free market fundamentalism” policies as a box that systematically weakens the bargaining power of America’s workers and drives the growing inequality of income and wealth in our country, Trumka continued:

On one side of the box is “globalization,” unbalanced trade agreements that force American workers into direct competition with the most impoverished and oppressed workers in the world, destroy millions of good manufacturing jobs and shift bargaining power toward employers who demand concessions under the threat of off-shoring jobs.

On the opposite side of the box are “small government” policies that privatize and de-regulate public services and provide tax cuts for corporations and the wealthy, all to “get government off our backs.”

The bottom of the box is “price stability.” Unbalanced macro-economic policies that focus exclusively on inflation and ignore the federal government’s responsibility to “maximize employment,” even out the business cycle and assure rapid economic growth.

The top of the box is “labor market flexibility,” policies that erode the minimum wage and other labor standards, fail to enforce workers’ right to organize and bargain collectively and strip workers of social protection, particularly in the areas of health care and retirement security.

Climbing out of this box won’t be easy.

Bottom line, Trumka told committee members: We need to follow three important economic values that resonate powerfully with all Americans:

• Anyone who wants to work in America should have a job.
• Anyone who works every day should not live in poverty, should have access to quality health care for themselves and their family and should be able to stop working at some point in their lives and enjoy a dignified and secure retirement.
• American workers should enjoy the fundamental freedom to associate with their fellow workers and, if they wish, organize unions at their workplace and bargain collectively for dignity at work and a fair share in the value they help create.
  

We took a step in recent days toward achieving the last goal with the introduction of the Employee Free Choice Act in the House, which I discussed here in detail last week.

And in coming weeks, we are looking forward to a robust discussion on creating policies that encourage family-supporting jobs stay in this country and developing new strategies for ensuring working families have access to quality, affordable health care. Economists in a new progressive network, the Agenda for Shared Prosperity, will publish issue papers on these and other critical topics for America’s working families.

In its debut media conference, the Agenda for Shared Prosperity, a project spearheaded by the Economic Policy Institute (EPI), highlighted a paper by EPI economist Jeff Faux on globalization and economist Jacob Hacker’s plan for health care reform. The next series of papers will be released Feb. 22 in an event that may include New York Times columnist Paul Krugman, and we’ll be back here with the details.

America’s Workers Need the Employee Free Choice Act

If your employer tries to cut your health care and pension by 98 percent, what do you do?

As a rule, not much.

Unless you’re in a union.

When 2,800 workers at the Harley-Davidson plant in York, Pa., were faced with that appalling ultimatum last week, the members of Machinists Local 175 knew they didn’t have to keep their mouths closed and swallow whatever the employer dictated. As union members, they spoke with their feet and now are walking the picket line. The company closed the plant after the last shift Friday.

Analysts disagree on the cost of the strike for Harley. One predicts the walkout could cost $11 million a day; another estimates $3 million per day. The York plant assembles the most profitable Harley-Davidson models. Other plants in the Milwaukee area and Kansas City make parts for assembly in York.

But let’s face it. Most workers aren’t in unions. In fact, the percentage of U.S. workers in unions declined last year, from 12.5 percent in 2005 to 12 percent in 2006. Yet some 60 million workers say they would join a union if they could.

So why don’t they? The primary reason is that our nation’s labor laws are outdated and so full of holes some employers get away with illegal actions like firing workers who express an interest in joining unions. U.S. labor laws, which date back to the 1930s, are skewed in favor of corporate giants who spend big bucks to harass and intimidate workers. And their techniques work—after all, how many people want to lose their jobs? (Although, as I noted, it’s illegal to fire workers for forming unions, management does it anyway, counting on the fact that it often takes years for a worker’s appeal to wind its way through the regional and national labor boards and even the courts.)



Workers represented by unions earn, on average, 30 percent more than nonunion workers: $833 in median earnings a week compared with $642. Some 80 percent of union members have employer-provided health insurance, compared with 49 percent of nonunion workers.

And as for those pensions, 68 percent of union members have guaranteed (defined-benefit) pensions—and only 14 percent of nonunion workers.

I noted here last week how the nation’s middle class—and increasingly, professional and technical workers—worry about their economic future as jobs become less stable or more difficult to attain and the quality of work life slides downhill. A growing number of professionals find their middle-class life threatened by economic forces that, without a union voice at work, they can’t control.

Yet when they try to form unions, the deck is stacked against them. Why is Harley- Davidson willing to lose millions of dollars in profits instead of trying to negotiate a contract that doesn’t decimate pension and health benefits?

AFL-CIO Organizing Director Stewart Acuff puts it this way:

[There is a] direct correlation between 25 years of stagnant, flat-lined wages and the assault on unions. Forty-seven million of us are without health care and 40 million with inadequate health care, [and] 20 percent more of us [live] in poverty now than when this decade started.

A few years ago, we in the union movement began pushing for a bill called the Employee Free Choice Act that would level the playing field for workers and help rebuild America’s middle class and restore the freedom of workers to choose a union. It would restore workers’ freedom to choose a union by:

• Establishing stronger penalties for violation of employee rights when workers seek to form a union and during first-contract negotiations.
• Providing mediation and arbitration for first-contract disputes.
• Allowing employees to form unions by signing cards authorizing union representation.
  

Even in the unpleasant 109th Congress, we got 215 co-sponsors in the House and 44 in the Senate. But with a new, worker-friendly Congress, we now have 231 House co-sponsors—and the bill, H.R. 800, was introduced Monday night.

The last time legislation to change U.S. labor laws was introduced was in the late 1970s, and it didn’t get very far.

We have a list of the House co-sponsors here. Check it to see if your lawmakers have signed on. E-mail them and ask them to support the bill, H.R. 800.

The Employee Free Choice Act isn’t just about unions. It’s about raising the standard of living for all of us in this nation. By leveling the playing field for workers seeking to form unions, the Employee Free Choice Act will improve the wages, working conditions and job security for workers who want to sign on. By ensuring that workers who want to join unions don’t experience employer harassment, the Employee Free Choice Act can replicate the experience of workers like Asela Espiritu, a registered nurse at Kaiser Permanente who didn’t have to endure harassment and intimidation to win a voice on the job through her union.

Espiritu works at the Kaiser Permanente Medical Center-Orange County in Anaheim, Calif., which was the only hospital—out of Kaiser’s 13 hospitals in Southern California—in which the workers didn’t have a union.

She and her co-workers formed a union in 2000 with United Nurses Associations of California/Union of Health Care Professionals-AFSCME at Kaiser under their company’s national neutrality and majority sign-up agreement. Requiring employers to follow a code of conduct in union campaigns and allowing more workers to use the majority sign-up process are both part of the Employee Free Choice Act.

The employees formed a union quickly—three months after they had started their organizing effort. Under the current National Labor Relations Board process, it can literally take years for workers who want to join a union to do so. Says Espiritu:

The 2000 negotiations gave us a lot of power and the voice to speak up on behalf of our patients. It’s not perfect, but we are on the road to solving the issues that affect the rank and file day in and day out. We have stability, and we have become a very desirable workplace.

Everyone wants to work here now. Nurses say, ‘I want to be a nurse at Kaiser.’ Our vacancy rate is at an all-time low. We are the highest-paid nurses in the county. It’s not just about the benefits either; it’s about the nurse-to-patient ratio we were able to get through Kaiser and the union working together.

We stand a good chance to get the Employee Free Choice Act passed in the House. The harder part will come in the Senate. But we’re making progress getting co-sponsors there as well, and when we get a firm list, you’ll see it here.

State of the Union: A Nation Off Track

So, we’re all eagerly awaiting President Bush’s State of the Union address to hear the honest facts about the nation’s economy, among other key issues.

OK, not.

Looks like we’ll have to dig up the real deal on our own by taking a gander at some of the recent data and what they portend for us working types.

Tonight, Bush likely will talk about the great economic recovery we’ve seen in the past couple of years. But newly released data from two separate sources reveal just how skewed the distribution of economic growth has been in the current recovery, according to the Economic Policy Institute.

Data from the Bureau of Economic Analysis through the third quarter of 2006 show that a historically high share of corporate income is going into profits and interest (i.e., capital income) rather than employee compensation. And a newly released Congressional Budget Office (CBO) analysis of household incomes shows that a greater share of this capital income goes to the richest households than at any time since the CBO began tracking such trends. In other words, our economy is producing more capital income and that type of income is more likely to go to those at the very top of the income scale. Together, these dynamics are contributing to a uniquely skewed recovery.

That means those in the top 1 percent of the income scale received 59.4 percent of all the capital income in 2004 (CBO's latest data), up from 49.1 percent in 2000 and just 37.8 percent in 1979. The increase in the concentration of capital income to the upper 1 percent grew as quickly over the four-year period from 2000 to 2004 as over the preceding 11 years (1989–2000).

So, the economic recovery Bush will tout is mostly about the rich getting richer. And those tax cuts that Bush will call the shining star of his economic acumen? Guess what. They’re helping the rich more than the economy. As Citizens for Tax Justice puts it:

First, the tax breaks enacted since 2001 are heavily skewed toward the very wealthiest few. Second, because the tax cuts are being paid for with borrowed money, the cost of paying the added national debt more than wipes out any benefits from the tax cuts for 99 percent of residents in each state. Only the best-off one percent are net winners from the president’s fiscal policies.

But those tax cuts for the wealthy must do something for the overall economy, right? Indeed. According to the Center on Budget and Policy Priorities:

Congressional Budget Office data show that the tax cuts have been the single largest contributor to the reemergence of substantial budget deficits in recent years. Legislation enacted since 2001 has added about $2.3 trillion to deficits between 2001 and 2006, with half of this deterioration in the budget due to the tax cuts (about a third was due to increases in security spending, and about a sixth to increases in domestic spending). Yet the president and some Congressional leaders decline to acknowledge the tax cuts’ role in the nation’s budget problems, falling back instead on the discredited nostrum that tax cuts “pay for themselves.”

As the Center on Budget and Policy Priorities sums up:

A study by the president’s own Treasury Department recently confirmed the common-sense view shared by economists across the political spectrum: Cutting taxes decreases revenues.

The Bush administration ran the Clinton budget surplus into the ground after less than a year in office—and has kept adding to the national tab so that the United States is now more than $8 trillion in debt (that’s nearly $29,000 for every man, woman and child in the nation). Yet after all these years of draining the federal budget into oblivion, administration cronies now suddenly are sounding the alarm.

And they’re offering solutions. But they’re not suggesting the nation cut back on the $255 million a day Bush is spending on the Iraq war or back off those tax cut payoffs to wealthy donors. Instead, in a recent speech, Ben Bernanke, Federal Reserve chairman, used a warning about the growing deficit as the opening salvo to attack on what’s left of our country’s successful heath and retirement programs.

Warning against complacency over the federal deficit, Ben S. Bernanke, the Federal Reserve chairman, said Thursday that recent positive trends on the budget were a “calm before the storm” masking a long-term danger posed by looming deficits in Social Security and Medicare.

snip

Bernanke’s comments were consistent with his past warnings, and those of his predecessor, Alan Greenspan, about the unfunded cost of the postwar generation’s retirement. But his tone was more urgent, and it seemed aimed at the arrival of a new Democratic-led Congress that is just now setting its priorities.

Let’s see. The budget deficit is in the dumpster and the Bush administration wants to salvage it by cutting back on retirement and health care. Let’s look at retirement. Without Social Security, millions of retired Americans would struggle in poverty. Between 1960 and 2004, Social Security helped cut the poverty rate among seniors by more than two-thirds, from 35 percent to 10 percent. Social Security takes on more, not less, importance as we go forward, with fewer and fewer workers getting retirement benefits on the job. As AFL-CIO Secretary-Treasurer Richard Trumka said in testimony today before the House Ways and Means Committee:

Only half of American families have an employer-provided retirement plan of any sort, a proportion largely unchanged for decades. However, whereas 40 percent of workers participated in employer guaranteed “defined-benefit” pension plans in 1980, today only 20 percent have such plans. In substituting “defined-contribution” for defined benefit plans, employers are shifting the risk of retirement onto workers. And American workers are ill prepared to carry this risk.

There are a lot of reasons why Bush’s approval rating has tanked, according to recent polls. And it’s pretty clear that Iraq isn’t the only reason 71 percent are saying the country is seriously off track.