Tag: Congress

THE EMPLOYMENT PROBLEM: IT’S ABOUT THE PAY, NOT THE NUMBER OF JOBS

My New Year’s wish for serious policy makers is that they abandon the illusion that the economic problems of the middle class can be fixed by the right jobs program. The simple truth is that technology has wiped out millions of good-paying jobs, and millions more are on the chopping block. Most are not coming back, and those that do will be at a much lower pay rate. The result has been a severe widening of the income gap between workers and investors, between capital and labor. In the space that follows, I will outline the current employment problem and show how it resulted from deep structural economic changes, as opposed to cyclical alterations that might well be modified by a federal job creation effort. Later this week, I will take up the matter of what to do about it.

Our elected leaders are still in deep denial over the seismic structural shift that has profoundly altered the nature of employment in this country. In their view, the job market took a severe jolt from the 2008 recession and a couple bad trade agreements. They see that unemployment is down now and pretend that everything will be fine once we bring those lost jobs back to our shores. As hopeful as the premise is, there is absolutely no evidence to support it.

The Wall Street Journal reported Sunday that manufacturing output is now close to the prerecession level, but 1.5 million factory jobs appear to be lost for good. Compounding the problem is the fact that a large number of the jobs that did come back pay significantly less than they once did. As the Journal put it, automation technology now allows manufacturers to “function, and even thrive with fewer employees than ever before.”

Here is just one example of how this playing out, as reported by the Los Angeles Times: A Michigan company called Ranir moved its electric toothbrush manufacturing plant to China. A few years later, in an attempt to lower labor costs even further, it retuned one-fifth of that production to Grand Rapids. This is precisely the kind of move that Donald Trump has made the cornerstone of his job creation pledge in his effort to make America Great Again. In fact, Ranir is cranking out 13,000 American made toothbrush heads a day for Wal-Mart and other retailers. The work, however, entails only four actual humans whose jobs involve monitoring the computers that control the robots that are doing the actual work. This is the new industrial food chain: from well-paid American workers, to low-paid Chinese workers, to no-pay robots. Clearly, the days of $25-an-hour manufacturing jobs as a mainstay of our economy have ended. The plants may return from off-shore, but the jobs aren’t coming with them.

The nation’s 1.7 million truck drivers, many making $70,000 a year or more with full medical benefits, will likely be the next large group to be replaced by technology. In another decade, perhaps sooner, the trucking industry is banking on having employee-free fleets of driverless vehicles. High on the Bureau of Labor Statistics’ list of jobs endangered by technology is that of mail carrier, once a highly sought lifetime guarantee of economic security. Also vulnerable, says the BLS, are radio announcers and disc jockeys who are being replaced by automated playlists. Same goes for newspaper reporters, a job class already reduced by more than 30% due to the product’s digital platform. The BLS sees further reductions as a result of the ability of computers to generate stories, a process currently in limited use by the Associated Press. Even insurance underwriters are going the way of the dinosaur, replaced by software programs. These, and many more good middle class jobs like them, are heading for extinction, with no apparent successor in sight.

What does that mean for our economy? Try wrapping your head around this statistic: The average annual pre-tax salary for the bottom half of American workers (by income) is $16,197. That’s only $1,000 a year above what a teenager working 40 hours a week at McDonalds makes, based on the current federal minimum wage of $7.25 an hour. In other words, our problem is not an absence of jobs; it’s the lack of jobs that pay well. Unrestrained, free market capitalism has run amok. Corporations are making gigantic profits with minimal labor costs, thanks to mechanized, non-human production.

Statistically, we are now approaching full employment. Yet, the average worker on the bottom half of the income range is paid close to the poverty level, an amount almost identical to what it was 40 years ago. Meanwhile, those in the top 10% of that pay range saw their income increase by 231% over the same period. There isn’t a jobs program proposed by Donald Trump or anyone else that even pretends to close that gap. On Wednesday, I will discuss a potential solution for this dilemma. Please stay tuned.

PROTECTING WORKERS FROM A NEW FOXX IN THE HOUSE OF LABOR

In keeping with what headline writers are calling our new “post-factual” world, Rep. Virginia Foxx, R-NC, the incoming chair of the House labor committee told Reuters this week that unions are no longer needed because there are so many laws in place to protect workers. Her assertion approximates the level of accuracy in the absurd and discredited claim that Hillary Clinton was running a child sex slave ring out of a D.C. pizza joint.

The way things are going right now, it would not be a surprise if some disgruntled worker marched into the district with an AK-47, demanding that Fox’s committee enforce his right to a dental plan and paid vacation. The truth of the matter is that those rights don’t exist without a union contract. As they used to say in this town during the days of civility, the Distinguished Committee Chair from the Great State of North Carolina is badly mistaken.

The United States has always taken a minimalist approach with respect to protective labor legislation, giving wide berth to market forces (also known as managerial discretion) and collective bargaining in determining an employer’s workplace practices. Since union penetration in the private sector is hovering between six and seven percent, that means the vast majority of the country’s workers are pretty much at their bosses’ mercy when it comes to pay, working conditions and job security.

Yes, there are some minimal guarantees and protections imposed by law, but they are a drop in the bucket compared to what most other industrialized countries have done to protect workers. For example, the last major piece of protective labor legislation in the United States was the Family and Medical Leave Act. Adopted in 1993, it required employers to give their workers up to 12 weeks of unpaid leave a year to care for sick family members or themselves. Most other countries mandate more than 12 weeks of fully paid leave for the same purpose.

Throughout Europe, employees are protected by law from unfair discharges. A worker is able to contest a firing before a government tribunal or an appointed neutral third party. Discharged European employees are entitled to severance pay by law. The United States is the only country adhering to the common law principle of “employment at will,” meaning that, absent a union contract or a claim of discrimination, workers can be fired for any reason or for no reason. There is no law mandating severance pay.

The new House labor chair certainly can’t be talking about pay when suggesting that legal protections for workers have eliminated a need for unions. The current federal minimum wage is an utterly unlivable $7.25 an hour. The battle for a $15 an hour minimum has been spearheaded by organized labor and has had success in a limited number of very progressive blue states and municipalities. Ironically, two days after Rep. Foxx talked about the abundance of legal protections for workers, President-elect Donald Trump nominated as his labor secretary a fast food company CEO opposed to increasing the minimum wage.

As the head of the Carl’s Jr hamburger chain, Labor Secretary-to-be Andy Puzder found himself on the receiving end of countless DOL complaints over the firm’s alleged failure to comply with the country’s exceedingly low standards on pay and work hours. This is not a guy who is apt to obliterate the need for unions by forcing companies to treat their workers fairly. He has already indicated he wants nothing to do with the Obama labor department’s move to nearly double the wage threshold for overtime eligibility. A new rule was set to take effect Dec. 1 requiring employers to pay time-and-a-half for more than 40 hours in a week to nearly everyone making under $47,476 a year. That would have meant a raise for more than 4.2 million employees. However, the rule change was held up by a last-minute injunction from a federal judge in Texas. Nobody expects the Trump administration to pursue an appeal.

On the other end of the spectrum from those forced to work more than 40 hours a week is a growing contingency of part-time workers who toil below the safety net of most government regulations. A recent study showed that the number of people involuntarily working part time because they could find no other work has increased by 44.6 percent since the pre-recession level of 2007. In most cases, this means lower pay, no benefits and a constantly shifting work schedule that makes it almost impossible for these employees to hold a second part-time job to make ends meet. With the exception of a few cities like Seattle and San Francisco, no government entity has seriously attempted to protect these folks.

Despite the false campaign-induced hopes of many in the beleaguered working class, it is abundantly clear that the Trump-Puzder-Foxx team is not about to enact new protections for workers. Instead, they will attempt to weaken or eliminate the few that are now in place. That means, with all due respect to Congresswoman Foxx, the only real protections for employees will be those they and their unions manage to negotiate. With this corporate crowd in charge, the need for labor unions and collective bargaining has never been stronger.