September 5, 2010, 7:58 a.m.
Former Labor Secretary Reich Has Economic Solution
(bought to you by FromDC2Iowa.blogspot.com*)
Reducing the unnecessarily high numbers of workplace deaths, injuries and disease is always high on labor's wish list -- as we were recently reminded in Iowa City. "Danger in the Workplace; Honoring Those Who Built and Build America," September 1, 2010.
But ranking right up there for labor, especially during this "jobless recovery" (or "jobless stagnation") economy, is finding jobs at which one can both labor and support a family.
Even "unemployment" is inching up. But the much more relevant measure is "underemployment."
"Underemployment" is the total number of those (1) who have recently been "laid off," plus (2) those who have given up looking, plus (3) those working part time who want and need full time work. So far as I know even that number excludes those who are working full or part time, but at jobs, and for pay, far below the level warranted by their professional training, skills and experience (not to mention financial need).
And according to the Gallup Chief Economist, the company's latest survey finds that number, at 18.6%, is now roughly two times the rate of "unemployment." Dennis Jacobe, "U.S. Underemployment at 18.6% in August," September 2, 2010 ("Underemployment, as measured by Gallup, was 18.6% in August, up from 18.4% at the end of July. Underemployment peaked at 20.4% in April and has yet to break below 18.3% this year.")
And of course, even these average numbers presume boiling water comfort. You know the line, "If your foot's in a bucket of ice water, and your hand is in a pan of boiling water, on average you're comfortable."
For professional men and women with advanced university degrees and some years of experience, unemployment, while always devastating for those experiencing it, now affects almost no larger a percentage than in economic boom times, and when it does it tends to last a shorter time for them than the "average time" for others.
For African-American high school dropouts it's a different story. And this is a goodly number of Americans. "In the inner cities, more than half of all black men do not finish high school." Erik Eckholm, "Plight Deepens for Black Men, Studies Warn," New York Times, March 20, 2006.
Eckholm reports, "Black men in the United States face a far more dire situation than is portrayed by common employment and education statistics, a flurry of new scholarly studies warn . . ..
"In 2000, 65 percent of black male high school dropouts in their 20's were jobless — that is, unable to find work, not seeking it or incarcerated. By 2004, the share had grown to 72 percent, compared with . . . 19 percent of Hispanic dropouts. Even when high school graduates were included, half of black men in their 20's were jobless in 2004, up from 46 percent in 2000."
And bear in mind, this is a report from 2006, the "good old days" compared with the worst of the current downturn.
I have repeatedly argued in this blog for a federal jobs program, like those President Roosevelt created in the 1930s. If you want to jump start an economy that is 80% driven by consumer spending, and you're willing to invest trillions of dollars to do it, getting everyone employed is what seems to me to be the no-brainer solution (however politically unpopular in some quarters).
For example, when the car dealers' lots are filled with cars, because consumers either don't have the money to buy them or are too concerned about their future to risk doing so, it makes little sense to give money to corporate CEOs to build more plants and hire more workers. Why would a rational automobile CEO do that; to stack the newly manufactured cars on top of the ones already sitting out on the dealers' lots? One could have easily predicted (as I and a great many others did) that this kind of "stimulus" was not going to work for any sector of our economy (manufacturing, service, or retail). And it hasn't.
(Which is not to say that it has not had any, even very limited, short-term effect whatsoever. It is only to say that it has, rather obviously, not solved our problem -- as, I contend, putting everyone to work with those trillions of dollars would have done, and rather promptly and permanently.)
While that approach is certainly consistent with former Secretary of Labor Robert Reich's understanding of our challenge, I'll be the first to acknowledge that his analysis is far more sophisticated than my own. Robert B. Reich, "How to End the Great Recession," New York Times, September 3, 2010, p. A21.
Organized labor is down to about 7 percent of the private work force.. . .
None of the standard booster rockets are working: near-zero short-term interest rates from the Fed, almost record-low borrowing costs in the bond market, a giant stimulus package and tax credits for small businesses that hire the long-term unemployed have all failed to do enough.
That’s because the real problem has to do with the structure of the economy, not the business cycle. No booster rocket can work unless consumers are able, at some point, to keep the economy moving on their own. . . .
But consumers no longer have the purchasing power to buy the goods and services they produce as workers; for some time now, their means haven’t kept up with what the growing economy could and should have been able to provide them.
This crisis began decades ago when a new wave of technology — things like satellite communications, container ships, computers and eventually the Internet — made it cheaper for American employers to use low-wage labor abroad . . .. The median male worker earns less today, adjusted for inflation, than he did 30 years ago.
But for years American families kept spending . . .. How did families manage this trick? First, women streamed into the paid work force. . . .
Second, everyone put in more hours. . . .
[T]third: going ever deeper into debt. . . . From 2002 to 2007, American households extracted $2.3 trillion from their homes. . . .
Now we’re left to deal with the underlying problem that we’ve avoided for decades. Even if nearly everyone was employed, the vast middle class still wouldn’t have enough money to buy what the economy is capable of producing.
Where have all the economic gains gone? . . . In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income.
It’s no coincidence that the last time income was this concentrated was in 1928. . . .
The rich spend a much smaller proportion of their incomes than the rest of us. . . . [T]he economy is robbed of the demand it needs to keep growing and creating jobs. . . .
[T]he rich . . . invest their earnings . . . anywhere around the globe where they’ll summon the highest returns — . . . often it’s the Cayman Islands, China or elsewhere. . . .
Meanwhile, as the economy grows, the [middle class] spending fuels continued growth . . .. But because this situation can’t be sustained, at some point — 1929 and 2008 offer ready examples — the bill comes due.
This time around, . . . averting another Great Depression-like calamity removed political pressure for more fundamental reform. We’re left instead with a long and seemingly endless Great Jobs Recession.
[T]here is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field.
In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes. And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs.
By contrast, little has been done since 2008 to widen the circle of prosperity. . . .
[Comparable] measures would not enlarge the budget deficit because they would be paid for. In fact, such moves would help reduce the long-term deficits by getting more Americans back to work and the economy growing again.
Policies that generate more widely shared prosperity lead to stronger and more sustainable economic growth — and that’s good for everyone. The rich are better off with a smaller percentage of a fast-growing economy than a larger share of an economy that’s barely moving. That’s the Labor Day lesson we learned decades ago; until we remember it again, we’ll be stuck in the Great Recession.
Clearly, turning trillions of dollars over to our wealthiest one percent has not helped the poor, the working poor, the underemployed, the working class and the middle class.
It is said that "a rising tide lifts all boats." Whether or not that's true, the absence of any tide at all moves no one's boat. Thus, it turns out that while the rich (and the politicians they control) have been doing in the rest of us, they have been shooting themselves in the wallet as well.
_______________
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
# # #
November 27, 2009, 11:00 a.m.
I Can CCC Our Way Out of Recession
(brought to you by FromDC2Iowa.blogspot.com*)
Today we transition from the poverty, and generosity, of Thanksgiving Day, e.g., Lee Hermiston, "Sharing food, lives; Church serves meal as a gift to community," Iowa City Press-Citizen, November 27, 2009, p. A1, to the profligacy of the Black Friday Stampede -- America's equivalent to Pamplona, Spain's running of the bulls -- on our corporatized, computerized, commercialized way to many religions' winter holidays.
It's a time for those of us who are still employed, more or less, to reflect upon the impact of the recession on those who aren't . . .
[. . . but first, know that at the bottom of this blog entry there are links to earlier entries on some of the hot topics from the past week or so that are now getting the most direct hits, along with links to "updates" in the form of subsequent news articles, among which may be the entries you came here looking for.]
Unemployment statistics are a classic example of the old definition of averages: A man with one hand in a pan of boiling water, and one foot in a bucket of ice water is, on average, comfortable.
During the past year no one has become 10.2% unemployed (unless you count "underemployment, of which more in a moment). It's binary; you're either employed or you're not.
The New York Times provides one of its "multimedia interactive graphics" that makes the point: "The Unemployment Rate for People Like You," New York Times, November 6, 2009. As it shows, the percentages of unemployment for various demographic groups that have been averaged into that 10.2% are widely disparate.
For example, the unemployment rate for white, college educated women, 45 and over is 3.7% -- a number well within the normal range for a fully functioning economy. (For white, college educated men over 45 it's an equally acceptable 4.1%.)
On the other hand, the unemployment rate for Black, high school dropouts, aged 15 to 24 is 48.5% -- equal to the worst numbers in third world countries with virtually no economy. For Hispanic men 25 to 44, with a high school diploma, it's 9.9%. For more of the combinations click on the link above and select the demographic characteristics that interest you.
Moreover, even that 10.2% increases to 17.5% if you include, along with the recently unemployed, those unemployed for over six months, part time workers who would rather be working full time, and those too discouraged to continue looking (and even that number does not include, so far as I know, those working full time but at jobs well below their skill, education, and experience level). Presumably that near doubling of the numbers would apply to the percentages within various demographic groups as well.
Since 1948 it has never reached this level except for a time in 1982 -- following which it took five years to return to pre-recession numbers. Kevin Quealy, "Behind the Jobless Rate; a multimedia interactive graphic," New York Times, November 6, 2009.
My point, for now, is that just as we have a growing gap between rich and poor in this country (including "information rich" and "information poor"), so we have enormous gaps in the impact of the recession on various demographic groups.
And from that truth come some serious questions about what we're doing about it.
So far we're applying the same "trickle down economics" that President Reagan taught us. In an economy 70% driven by consumer spending, the money and a sense of economic security are not reaching the middle-to-lower class consumers who make up the majority of Americans. When auto dealers lots are full of unsold cars, giving billions of dollars to General Motors (taxpayers' money that has little prospect of ever being repaid), does little to benefit either workers or consumers -- or to boost the economy. (And don't get me started on the trillions of dollars to Wall Street investment bankers and AIG.)
Providing up to $4500 "cash for clunkers" to clear out that inventory of new cars boosts the income of auto dealers (and provides a false sense of "jobless recovery" with a brief and insignificant blip in GDP as a result), but does little for those who are either too smart, or unable, to borrow more money for any purchase, let alone a new car. It's a gift to those 96.3% of white, college-educated women over 45 who are employed, and in a market for a new car -- but they would and could have made the purchase without the subsidy. Ditto for the $8500 subsidy for "new home buyers." That may help those of the relatively wealthy employed who are able to be in the market for a new home, but neither program does anything for the unemployed or the newly homeless who are unable to pay mortgages on their old homes.
The one program that Washington seems unwilling to try is the no-brainer solution that did work in the last Great Depression and would work now: federal employment.
One of those programs was called the "Civilian Conservation Corps." Opposed at the time by President Roosevelt's Department of Labor, Department of the Interior, and the U.S. Army (responsible for some of its administration), that President was willing to take the leadership, and the heat, to push it through to reality -- and great success.
Here is a description from "Scout Report" regarding an online PBS video documentary about the CCC:
American Experience: Civilian Conservation Corps
The excellent film from the WBGH website, The Civilian Conservation Corps (CCC), is offered in its entirety on this site. "Heal the man, heal the land," was the philosophy of the CCC, and they engaged in some of the first environmental conservation work in the country. Since many academics, politicians, and lay people compare the current troubled times with what was seen in the 1930s, this film is particularly pertinent and visitors can decide if it's an apt comparison or not. Regardless, the stories of the three million young men who benefited from the regular meals, healthcare, clothing, diversity and hard work are fascinating. The trailer for the film starts playing right upon entering the website, but can be stopped just by clicking on the screen. Visitors can scroll over the "The 1930s Collection" logo to the right hand side of the film's screen to see the playlist for the film, but watching the whole film is recommended, as it is truly a treat. [KMG]
As you can read from the "Timeline" on that site, the contrasts between the response of the Roosevelt and Obama Administrations is dramatic.
FDR was sworn in on March 4 of 1933. By March 31 the CCC legislation had been passed and signed. Five days later there were already 25,000 employed in the program -- soon to reach 250,000 and then 3 million. And not incidentally, the benefits to the participants in literacy training and health care paid national dividends for decades more.
"By mid-1933, sixteen CCC camps and thirty-two projects had been approved for Iowa. . . . By the time the CCC ended in 1942, the number of CCC enrollees in Iowa camps would total nearly 46,000. They would contribute to the development of more than eighty state parks, and leave a tangible legacy that still numbers more than seven hundred state park structures" -- including Johnson County's own Lake MacBride State Park. Rebecca Conard, "The Legacy of Hope from an Era of Despair: The CCC and Iowa State Parks," Books at Iowa 64 (April 1996). [Photo credit: the Iowa DNR CCC Web site.]
How far we have fallen from our once proud compassion for our fellow Americans in distress. Nor is that distress limited to homelessness and hunger. See Reid Forgrave, "Worry rises with suicide rate," Des Moines Register, November 28, 2009.
But hunger is still a very real problem. And yet some are even seemingly reluctant to provide the underemployed 17% with unemployment compensation and Food Stamps -- those who are suffering from an economic collapse brought on, through no fault of their own, by greedy, multi-million-dollar Wall Street bankers and those in Washington who've been blessed with their generous campaign contributions. See Jason DeParle and Robert Gebeloff, "Across U.S., Food Stamp Use Soars and Stigma Fades," New York Times, November 29, 2009, p. A1 (More than 36 million receive Food Stamps, a program that "now helps feed one in eight Americans and one in four children. . . . Under Secretary of Agriculture Kevin Concannon says 'there are another 15, 16 million who could benefit.' . . . [T]he program is now expanding at a pace of about 20,000 people a day. . . . In more than 750 counties, the program helps feed one in three blacks. In more than 800 counties, it helps feed one in three children. In the Mississippi River cities of St. Louis, Memphis and New Orleans, half of the children or more receive food stamps. [H]alf of Americans receive food stamps, at least briefly, by the time they turn 20. Among black children, the figure was 90 percent. . . . [During] the 1990s . . . some conservatives tried to abolish the program . . ..").
Notwithstanding the fact that many, if not most, of these recipients would prefer the self-esteem that comes from work, and the ability to support oneself financially, we have yet to see the first federal job created by the current Administration.
As a result, we all fail to receive the benefits -- for ourselves as well as the participants in a modern-day CCC -- if only we were willing to pay for their work rather than their unemployment.
_______________
Here are links to earlier entries on some of the other hot topics from the past week or so that are now getting the most direct hits, along with links to "updates" in the form of subsequent news articles, among which may be the entries you came here looking for:
UIHC, Regents and UI.
"UI's Basketball Fees Self-Defeating," November 23, 2009
I'll drink to that: "UI Has A Drinking Problem," November 18, 2009 [see "Updates," below];
If UI has become a for-profit corporation . . .: "Corporatizing the University of Iowa; If We're Going to Do It, Let's Do It Right," November 17, 2009
Strategic Communications VP position: "Strategic Communications a Failed Strategy; Actions Speak Louder," November 13, 2009 [See "Updates," below]
Executives trip to Disney World: "Mickey Mouse Patient Satisfaction; UIHC's Troubles: Is Orlando the Answer?" November 8, 2009
"Contributions from patients" proposal: "UIHC: 'Sick Brother, Can You Spare a Dime?'; A Check-In and a Check," October 31, 2009, 7:00 a.m. (with numerous updates through November 4, links to additional, related material -- and now with over 30 of the Press-Citizen readers' comments on B.A. Morelli's stories) [see "Updates," below]
Board of Regents and State universities' budget cutting: "Cutting Slack, Cutting Budgets; Regents, University Presidents, Deserve Some Thanks and Credit," October 30, 2009, 8:30 a.m. (with links to prior, related blog entries)
Spence break-in grand jury proceedings: "UI Spence Break-In: Gazette Scoop Illustrates Issues," October 27, 2009 [See "Updates," below]
School boundaries, school boards, and the ICCSD.
"School Board Election: Now Work Begins; It's Swisher, Dorau, Cooper; Old Board 'Starting Off Backing Up' With Consultant and Tough Decisions," September 9, 2009, 7:00 a.m. (with its links to 11 prior and related blog entries including, for example, "School Boundaries Consultant Folly; Tough Boundary Questions Are for Board, Not Consultants or Superintendent, Plus: What Consultant Could Do," and "Cluster Schools: Potential for IC District?")
Nicholas Johnson, "School Board Has Work to Do," Iowa City Press-Citizen, November 2, 2009 (and reproduced in blog)
"Boundaries: Only Board Can Do Board's Job; Drawing School Boundaries Made Easy," November 2, 2009
And Updates: UI VP Medical Jean Robillard says patient-donation-dunning plan "canceled a week ago"; spokesperson "clarifies," says "canceled" means "under review," B.A. Morelli, "Leaders Address Employee Concerns; UI Officials: No Decision on Job Issues," Iowa City Press-Citizen, November 20, 2009, p. A3; Ashley Oerman, "UI Cancels Asking Patients for Money," The Daily Iowan, November 20, 2009, p. A1; UI's Funded Retirement Insurance Committee asks President Mason to "abolish rather than just delay" UIHC's "patient donation plan," B.A. Morelli, "Group Wants UIHC Patient Donation Plan Nixed," Iowa City Press-Citizen, November 19, 2009, p. A1;
Two Spence break-in grand jury witnesses jailed for refusal to testify, one now indicted, "UI Spence Break-In: Gazette Scoop Illustrates Issues," October 27, 2009; Anonymous, "Davenport Grand Jury Subpoena for Scott DeMuth," Nov. 11, 2009; "Two jailed for refusing to testify before grand jury," Iowa City Press-Citizen, November 17, 2009; Carrie Feldman's Web site and the new "Support Carrie and Scott!"; "Activist indicted for alleged role in Spence Labs vandalism," Iowa City Press-Citizen, November 19, 2009 [in hard copy as "Man Indicted for Animal Terrorism," Iowa City Press-Citizen, November 20, 2009, p. A1]; Ann McGlynn, "Activist who refused grand jury testimony now charged with conspiracy," Quad City Times, November 19, 2009; Ann McGlynn and Diane Heldt, "Lab Break-in Charge Pleases UI Officials," The Gazette, November 20, 2009, p. A1; Regina Zilbermints, "Man Charged in Spence Action," The Daily Iowan, November 20, 2009, p. A1; Ann McGlynn, "Animal rights activist pleads not guilty in University of Iowa vandalism," Quad City Times, November 20, 2009; Zack Kucharski, "Judge Orders Animal Rights Activist Held," Quad City Times, November 26, 2009;
Press-Citizen editorial: Hold off on VP for Strategic Communications: Editorial, "Stakes Have Risen for UI's Strategic Communication," Iowa City Press-Citizen, November 20, 2009, p. A7 ("it's wrong when UI seems to care more about finding the right way to spin its decisions than about making the right decisions in the first place. The best strategy for UI communication is for officials to be more forthright and to show more common sense.");
Press-Citizen editorializes for 21-only, Editorial, "21-Only Still an Option for Bars with PAULAs," Iowa City Press-Citizen, November 19, 2009, p. A7;
Hancher Relocation: Rachel Gallegos, "Property owner for Hancher site won't sell land," Iowa City Press-Citizen, November 26, 2009, p. A1 (and see related five-part series, "Hancher - Part V," September 18, 2009, with links to prior four).
_______________
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source, even if I have to embed it myself. -- Nicholas Johnson
# # #
