Thursday, December 31, 2020

Labor Line


February 2020___________________________________

Labor line has job news and commentary with a one stop short cut for America's job markets and job related data including the latest data from the Bureau of Labor Statistics.

This month's job and employment summary data are below. This month's inflation data is below.

The Establishment Job Report and Establishment Job Details for data released February 7, 2020.

American Job Market The Chronicle

Current Job and Employment Data

Jobs
Total Non-Farm Establishment Jobs up 255,000 to 152,186,000
Total Private Jobs up 206,000 to 129,503,000
Total Government Employment up 19,000 to 22,683,000

Employment Note
Civilian Non-Institutional Population down 679,000 to 259,502,000
Civilian Labor Force up 50,000 to 164,606,000
Employed down 89,000 to 158,714,000
Employed Men down 94,000 to 83,940,000
Employed Women up 5,000 to 74,774,000
Unemployedup 139,000 to 5,892,000
Not in the Labor Force down 729,000 to 94,896,000

Unemployment Rate was up .1 % to 3.6% or 5,892/164,606
Labor Force Participation Rate was up .2% to 63.4%, or 164,606/259,502

Prices and inflation measured by the Consumer Price Index (CPI) for all Urban Consumers was up by a monthly average of 2.3 percent for 2019.

The February CPI report for the 12 months ending with January, shows the

CPI for All Items was up 2.5%
CPI for Food and Beverages was up 1.7%
CPI for Housing was up 2.7%
CPI for Apparel was down 1.3%
CPI for Transportation including gasoline was up 2.8%
CPI for Medical Care was up 4.5%
CPI for Recreation was up 1.4%
CPI for Education was up 2.2%
CPI for Communication was up .9%

This Month's Establishment Jobs Press Report

BETTER

The Bureau of Labor Statistics published its February report for jobs in January. The employed were down 89 thousand while the unemployed increased by a 139 thousand to 5.892 million. The increase in the unemployed and decrease in the employed reinforced an increase in the unemployment rate, by .1 percent to 3.6 percent for January. The labor force participation rate went up .2 percent to 63.4 percent.

The seasonally adjusted total of establishment employment was up 225 thousand for January. The increase was 174 thousand more jobs in the private service sector combined with a 32 thousand increase in jobs from goods production. The total of 206 thousand more private sector jobs combined with an increase of 19 thousand government service jobs accounts for the total increase.

Among goods production sub sectors construction had the only job gains again this month with 44 thousand new jobs. Specialty trade contractors were up 35 thousand jobs and heavy and engineering construction was up 6.1 thousand jobs. Natural resources had no change while manufacturing had another off month, down 12 thousand jobs. Durable goods were off 11 thousand jobs with non-durable goods off a thousand jobs. The biggest job loss came in motor vehicle and parts manufacturing, which dropped 10.6 thousand jobs. Among non-durable goods jobs food processing lost 3.7 thousand jobs.

Government service employment increased by a net 19 thousand jobs. The federal government had 12 thousand new jobs combined with 20 thousand new local government jobs. The increase of 32 thousand jobs was offset by a decline in state government employment of 13 thousand leaving the net gain in government employment. State and local public education combined for a net loss of 10.4 thousand jobs, but private education had an unusually large seasonally adjusted gain of 24.9 thousand jobs. The net gain in educational employment was 14.5 thousand.

Health care returned as the largest sub sector contributor to new jobs with 47 thousand more jobs for January. All four sub sectors had job gains with ambulatory care up 22.5 thousand jobs, slightly down from last month; hospital and social assistance employment combined for 21 thousand new jobs while nursing and residential care added 3.3 thousand jobs. The January growth rate in health care employment increased to 2.76 percent from December compared to the long-term average now at 2.33 percent.

Leisure and Hospitality had the second biggest increase in private sector jobs for January with 36 thousand new jobs, a third good month. Arts, entertainment and recreation had 14.2 thousand of the jobs with the amusements, gambling and recreation sub sector adding 10 thousand jobs. Restaurants added 24.4 thousand new jobs, well up from last month; accommodations had a down month for January losing 2.7 thousand jobs.

Trade, transportation and utilities had a net gain of 27 thousand jobs, down from last month. Retail returned to its declining trend with a loss of 8.3 thousand jobs, after last month's increase. Transportation made up for the decline with 28.3 thousand new jobs, 28 thousand of them in couriers and messengers and warehousing and storage employment. Among modal transportation, trucking employment was up 3.2 thousand jobs amid other small changes. Utilities were off 1.4 thousand jobs.

Professional and business services added 21 thousand private service sector jobs, a little better than last month but still a modest gain. The professional and technical sub sector had 12.8 thousand of the new jobs while the management of companies was down 8 hundred jobs. Administration and support services including waste management added a modest 8.6 thousand jobs, continuing a string of modest monthly job gains.

Among professional and technical services it was an unusual month. Computer design and related services had the biggest job gains for this sub sector, adding 8.8 thousand jobs. Management and technical consulting added 2.3 thousand jobs while legal services made an unusual job gain, adding 4.5 thousand jobs. Legal services had the largest gain in many months while both accounting and bookkeeping services and architectural and engineering services lost jobs. Among administrative and support services only services to buildings and dwellings did well adding 9.5 thousand jobs offsetting other losses. Temporary help services actually lost jobs for January, a quite unusual loss.

Information services added a net of 5 thousand jobs for January. Only publishing and data processing with Interest hosting had job gains among small losses in remaining sub sectors. Financial activities lost a thousand jobs. Finance and insurance added just 1.7 thousand jobs offset by job losses in real estate, rental and leasing. The category, other services, had 14 thousand new jobs with gains in all three sub sectors. Non profit associations had the biggest gain with 6.2 thousand jobs. Repair and maintenance service jobs added 4.1 thousand jobs; personal and laundry services added another 3.4 thousand

Establishment employment was up 225 thousand in January to 152.186 million jobs with an annual growth of rate of 1.78 percent, up from last month. Years over year changes in manufacturing continue to decline. Politically Trump touts the economy as his success, but the job trends of the last two decades continue just as they are now. Without the health care employment the unemployment rate would be much higher.

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January Details

Non Farm Total +225
The Bureau of Labor Statistics (BLS) reported Non-Farm employment for establishments increased from December by 225 thousand jobs for a(n) January total of 152.186 million. (Note 1 below) An increase of 225 thousand each month for the next 12 months represents an annual growth rate of +1.78%. The annual growth rate from a year ago beginning January 2019 was +1.37%; the average annual growth rate from 5 years ago beginning January 2015 was +1.59%; from 15 years ago beginning January 2005 it was .91%. America needs growth around 1.5 percent a year to keep itself employed.

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Sector breakdown for 12 Sectors in 000's of jobs

1. Natural Resources +0
Natural Resources jobs including logging and mining stayed the same from December at 731 thousand jobs in January. A decrease of 0 thousand jobs each month for the next 12 months would be an annual growth rate of +0 percent. Natural resource jobs are down 33 thousand for the 12 months just ended. Jobs in the 1990's totaled around 770 thousand. Job growth here will be small compared to America's job needs. This is the smallest of 12 major sectors of the economy with .5 percent of establishment jobs.

2. Construction +44
Construction jobs were up 44 thousand from December with 7.594 million jobs in January. An increase of 44 thousand jobs each month for the next 12 months would be an annual growth rate of +6.99 percent. Construction jobs are up 142 thousand for the 12 months just ended. The growth rate for the last 5 years is +3.64%. Construction jobs rank 9th among the 12 sectors with 5.0 percent of non-farm employment.

3. Manufacturing -12
Manufacturing jobs were down 12 thousand from December with 12.851 million jobs in January. A decrease of 12 thousand jobs each month for the next 12 months would be an annual growth rate of -1.12 percent. Manufacturing jobs were up for the last 12 months by 26 thousand. The growth rate for the last 5 years is +.86%; for the last 15 years
by -.69%. In 1994, manufacturing ranked 2nd but now ranks 6th among 12 major sectors in the economy with 8.5 percent of establishment jobs.

4. Trade, Transportation & Utility +27
Trade, both wholesale and retail, transportation and utility employment were up 27 thousand from December with 27.848 million jobs in January. An increase of 27 thousand jobs each month for the next 12 months would be an annual growth rate of +1.16 percent. Jobs are up by 137 thousand for the last 12 months. Growth rates for the last 5 years are +.85 percent. Jobs in these sectors rank first as the biggest sectors with combined employment of 18.3 percent of total establishment employment.

5. Information Services +5
Information Services jobs were up 5 thousand from December at 2.887 million jobs in January. An increase of 5 thousand jobs each month for the next 12 months would be an annual growth rate of +2.08 percent. No new jobs means zero growth. (Note 2 below) Jobs are up by 44 thousand for the last 12 months. Information jobs reached 3.7 million at the end of 2000, but started dropping, reaching 3 million by 2004, but has stayed in the 2.8 million range for a decade. Information Services is a small sector ranking 11th of 12 with 1.9 percent of establishment jobs.

6. Financial Activities -1
Financial Activities jobs were down 1 thousand from December at 8.808 million in January. A decrease of 1 thousand each month for the next 12 months would be an annual growth rate of -.14 percent. Jobs are up 132 thousand for the last 12 months. (Note 3 below)This sector also includes real estate as well as real estate lending. Financial Services has been growing slowly with many months of negative growth. The long term growth rates are now at a 5 year growth rate of +1.79 percent, and a 15 year growth rate of +.52 percent. Financial activities rank 8 of 12 with 5.8 percent of establishment jobs.

7. Business & Professional Services +21
Business and Professional Service jobs went up 21 thousand from December to 21.516 million in January. An increase of 21 thousand each month for the next 12 months would be an annual growth rate of +1.17 percent. Jobs are up 390 thousand for the last 12 months. Note 4 The annual growth rate for the last 5 years was 2.12 percent. It ranks as 2nd among the 12 sectors now. It was third in May 1993, when manufacturing was bigger and second rank now with 14.2 percent of establishment employment.

8. Education including public and private +15
Education jobs went up 15 thousand jobs from December at 14.324 million in January. These include public and private education. An increase of 15 thousand jobs each month for the next 12 months would be an annual growth rate of +1.22 percent. Jobs are up 124 thousand for the last 12 months. (note 5) The 15 year growth rate equals +.94 percent, slower than the national average. Education ranks 5th among 12 sectors with 9.4 percent of establishment jobs.

9. Health Care +47
Health care jobs were up 47 thousand from December to 20.701 million in January. An increase of 47 thousand each month for the next 12 months would be an annual growth rate of +2.74 percent. Jobs are up 538 thousand for the last 12 months. (note 6) The current month was above long term trends and more than growth from a year ago when the annual growth rate was +2.67 percent. Health care has been growing at +2.33 percent annual rate for the last 15 years, a rate greater than the national rate. Health care ranks 3rd of 12 with 13.6 percent of establishment jobs.

10. Leisure and hospitality +36
Leisure and hospitality jobs went up +36 thousand from December to 16.816 million in January. An increase of 36 thousand each month for the next 12 months would be an annual growth rate of +2.57 percent. Jobs are up 320 thousand for the last 12 months. (note 7) The 5 year growth rate is 2.42%. More than 80 percent of leisure and hospitality are accommodations and restaurants assuring that most of the new jobs are in restaurants. Leisure and hospitality ranks 4th of 12 with 11.0 percent of establishment jobs. It moved up from 7th in the 1990's to 5th in the last few years.

11. Other +14
Other Service jobs, which include repair, maintenance, personal services and non-profit organizations went up 14 thousand from December to 5.940 million in January. An increase of 14 thousand each month for the next 12 months would be an annual growth rate of +2.83 percent. Jobs are up 87 thousand for the last 12 months. (note 8) Other services had +.64 percent growth for the last 15 years. These sectors rank 10th of 12 with 3.9 percent of total non-farm establishment jobs.

12. Government, excluding education +29
Government service employment went up 29 thousand from December at 12.187 million jobs in January. An increase of 29 thousand each month for the next 12 months would be an annual growth rate of +2.88 percent. Jobs are up 144 thousand for the last 12 months. (note 9) Government jobs excluding education tend to increase slowly but surely with a 15 year growth rate of +.30 percent. Government, excluding education, ranks 7th of 12 with 8.0 percent of total non-farm establishment jobs.

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Sector Notes___________________________

(1) The total cited above is non-farm establishment employment that counts jobs and not people. If one person has two jobs then two jobs are counted. It excludes agricultural employment and the self employed. Out of a total of people employed agricultural employment typically has about 1.5 percent, the self employed about 6.8 percent, the rest make up wage and salary employment. Jobs and people employed are close to the same, but not identical numbers because jobs are not the same as people employed: some hold two jobs. Remember all these totals are jobs. back

(2) Information Services is part of the new North American Industry Classification System(NAICS). It includes firms or establishments in publishing, motion picture & sound recording, broadcasting, Internet publishing and broadcasting, telecommunications, ISPs, web search portals, data processing, libraries, archives and a few others.back

(3) Financial Activities includes deposit and non-deposit credit firms, most of which are still known as banks, savings and loan and credit unions, but also real estate firms and general and commercial rental and leasing.back

(4) Business and Professional services includes the professional areas such as legal services, architecture, engineering, computing, advertising and supporting services including office services, facilities support, services to buildings, security services, employment agencies and so on.back

(5) Education includes private and public education. Therefore education job totals include public schools and colleges as well as private schools and colleges. back

(6) Health care includes ambulatory care, private hospitals, nursing and residential care, and social services including child care. back

(7) Leisure and hospitality has establishment with arts, entertainment and recreation which has performing arts, spectator sports, gambling, fitness centers and others, which are the leisure part. The hospitality part has accommodations, motels, hotels, RV parks, and full service and fast food restaurants. back

(8) Other is a smorgasbord of repair and maintenance services, especially car repair, personal services and non-profit services of organizations like foundations, social advocacy and civic groups, and business, professional, labor unions, political groups and political parties. back

(9) Government job totals include federal, state, and local government administrative work but without education jobs. back

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Notes

Jobs are not the same as employment because jobs are counted once but one person could have two jobs adding one to employment but two to jobs. Also the employment numbers include agricultural workers, the self employed, unpaid family workers, household workers and those on unpaid leave. Jobs are establishment jobs and non-other. back

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Thursday, February 6, 2020

Beaten Down, Worked Up

Steven Greenhouse, Beaten Down, Worked Up: The Past, Present, and Future of American Labor, (NY: Alfred A Knopf, 2019) 340 pages

Journalist Steven Greenhouse has returned with a second book on American labor and the condition of life for the working class. This new book is partly an update of his 2008 book, the Big Squeeze, but there are also five chapters of narrative from American labor history, along with new current and emerging topics.

In the introduction Greenhouse tells readers the decline of labor unions has helped to generate income inequality, wage stagnation, declining mobility, low wage jobs and the skewing of politics to favor the wealthy. In this new book he pledges to focus far more on why so many Americans have been squeezed.

The first three chapters are part I – State of the Union - that give a warm up for the discussions to come. In Chapter one, entitled Losing Our Voice, we hear from eight people and their job experiences to show “something is fundamentally broken in the way many employers treat their workers.” After a data review readers get some quotations from corporate America and their self serving justification for what they do and believe, and then finally some news of new labor organizing. Chapter Two continues with this but has longer discussions with people and their work at Burger King, Caterpillar Inc. and General Motors. Chapter Three shifts to one of organized labor’s recent success stories, organizing the Culinary Workers Union and local 226 in Las Vegas.

Part II shifts to five significant episodes from labor history. First, there is the early 1900’s garment industry organizing, mostly in New York and mostly by women. We hear about Clare Lemlich and organizing for the International Ladies Garment Workers Union (ILGWU) and the courage of women to face assault, arrest and jail for picketing and striking. Next, in Chapter 5, we get an account of the deadly 1911 Triangle Shirtwaist fire in New York. This story introduces Francis Perkins, who was a witness to the fire. That story allows a transition to a biography of her career and work in the depression era Franklin Roosevelt administration. Greenhouse writes twelve pages of narrative of her work and life, wanting, I expect, to give her the recognition she deserves but does not usually get. Some of us argue she did more for labor and the working class than Franklin Roosevelt, anyone else.

Chapter 6 continues with the December 31, 1935 General Motors sit-down strike by the United Auto Workers (UAW) that allows an easy transition to Chapter 7 with Walter Reuther and the UAW during WWII and into the 1950’s. Chapter 8 moves on to a narrative of the 1968 Memphis Sanitation strike and the last campaign of Martin Luther King, Jr.

The history discussions in Part II ends in 1968, but Part III – Hard Times for Labor – continues with labor history’s events of the 1980’s. After accounts of the disastrous PATCO strike, and then on to the grimy Phelps-Dodge and Hormel strikes Greenhouse declares “In the 1980’s everything seemed to go wrong for labor.” He is sure right about that; it was a time of manufacturing moving abroad, demands for wage cuts, lockouts and union busting. Readers get short accounts of some of the companies and their union busting talk and tactics: T-Mobile, Menards, Staples, Amazon, and of course Walmart, or really Walmart again, since Greenhouse discussed them in his first book.

The title of chapter 12, Labor’s Self Inflicted Wounds, signals a critical look at labor leadership. This inevitably brings up the honest but opinionated George Meany and the always controversial Jimmy Hoffa and labor racketeering exposed in the 1957-59 McClellan committee hearings. Labor needs solidarity but George Meany refused to endorse the 1963 civil rights march on Washington, which represented a legacy of discrimination in the labor movement going back many decades. Unfortunately Meany was AFL-CIO president a long time: 1955 to 1979.

Greenhouse devotes the last two chapters of Part III to a narrative account of the attack on public sector unions by Wisconsin Governor Scott Walker, his union busting tactics and then a chapter to discuss the declining political influence of labor. In recent years the AFL-CIO has been unable to secure favorable legislation or prevent unfavorable legislation.

Part IV – Labor Today and Tomorrow – devotes seven chapters to current topics and trends in today’s labor. The sweatshops of the 19th and early 20th century have a new name: Gig economy. We hear about the abuses of Uber as a good example of the Gig economy although there are many others. After the Gig discussions we find some successes and a little optimism. There is a chapter devoted to raising the minimum wage. Here readers meet Adriana Alvarez, who tries to support herself and her infant child on $8.50 an hour working at McDonalds. She wants to help organize in the fight for a $15 an hour wage. She found out something legions of the oppressed and mistreated working class have learned before her: the owner of the McDonald’s franchise refused to speak with her. Management refusals to speak continue to be one of the clearest examples of class warfare in America.

Next we learn about some modestly successful farm worker organizing in Florida and the tactics applied to pressure the large vegetable purchasing fast food franchises and then move on to Los Angeles to review similar efforts there. In Los Angeles readers learn about the Los Angeles Alliance for a new economy (LAANE), an organizing group to push for social justice reforms.

Greenhouse devotes a chapter to labor relations at Kaiser-Permanente (KP), the giant, multi-state, health care provider and to the Saint Paul Federation of Teachers (SPFT) efforts to improve area public schools. KP did not always have good labor relations. From the 1970’s into the 1990’s KP had several disruptive walkouts but in the mid 1990’s management decided to work with their many unions in a Labor Management Partnership. Greenhouse reviews the workings of this Labor Management Partnership and its success.

The recent statewide teacher strikes get a whole chapter. Recall the first strike was in West Virginia, which spread to the Oklahoma teachers, to Arizona, to Los Angeles and a few more states not reviewed here. Teachers need college degrees and licensed certification, which makes them hard to replace with scabs and therefore the ideal employees to organize and strike if necessary. They make a good example for other occupations.

Author-Journalist Steven Greenhouse reports labor news for the New York Times and so has a salary, a travel budget and time to get some of the stories from the legions of under paid, over worked and over taxed Americans that slog along in America’s miserable jobs. Too often we cite and accept empirical data to show wage and price effects as a way to measure the changing fortunes of the working class. Interviews do not give a percentage change, but hearing the stories of people and their attempts to cope are empirical and valuable in every sense of the word.

The Beaten Down material in the book comes through clearly, but the Worked Up material points to more positive organizing than his previous book, the Big Squeeze. Too often labor unions start to act like the top down hierarchy of corporate America. Union officials make decisions on behalf of a barely involved rank and file, which has not worked well. The Worked Up material here shows the methods the rank and file can use to make progress organizing from the bottom up.

The last chapter makes a few suggestions for political organizing to change campaign finance laws, the National Labor Relations Act and a few more, but the book remains essentially free of legislative and party politics. It is well organized, reads easily and has detailed footnotes for those wanting to go a little deeper. Lets hope in the next book the Worked Up side will continue to show progress and a decline of the Beaten down; there are still plenty of them.


Tuesday, January 21, 2020

The Economists' Hour

Binyamin Appelbaum, The Economist’s Hour: False Prophets, Free Markets, and The Fracture of Society, (Boston: Little, Brown and Company, 2019), 332 pages, $30.00


Economics education in the United States walks a fine line between education and indoctrination. Applied economics in the United States walks a fine line between economic policy and religious faith. Author Binyamin Appelbaum understands this well. In his 2019 book the Economists’ Hour he writes a lively, clearly written narrative of the post WWII economist ideologues, their rise to influence, their one and only policy and trail of devastation.

Appelbaum defines the economist’s hour in the introduction as the period 1969-2008. Before 1969 economists struggled to be heard and economics remained the dismal science where scarce resources limit choices and opportunities. In the post WWII economists campaigned to make free markets the best way to bring annual economic growth and benefits to all. The book narrates the economist’s rise to power with brief biographies of economists and their pitch for growth and happiness via free markets, which in combination Appelbaum calls a biography of a revolution. Readers should be advised Milton Friedman’s name appears first on page six of the introduction and in every chapter and the conclusion after that.

The book has 332 pages divided into ten chapters between the introduction and a conclusion. The first chapter tells the story of the campaign to end the draft and convert the army to “volunteers” recruited by offers of pay and benefits. Here Milton Friedman leads the way in a political campaign to make troops just like hires in the private sector. This chapter includes a four page biography of Friedman, one of the longest of many more to come.

Chapters two, three and four can be called the macroeconomics chapters. Chapter two entitled Friedman v. Keynes follows the debate between monetary and fiscal policy, also known as the AM-FM debates, after economists Ando and Modigliani on the fiscal side and Friedman and Meiselman on the monetary side. The ideologue Friedman insisted the money supply set to grow at a predetermined rate should be the one and only policy. Keynes died in 1945, but his famous book the General Theory of Employment, Interest and Money lives on. The General Theory is not a general theory at all but a book of special cases. For decades Keyne’s colleagues in the economics profession counseled, wait, because they insisted an economy self corrects; prices and interest rates will fall, generating an increase in spending and production, and so depressions end automatically. Free market ideologues believe an economic system works like Newtonian physics.

In 1936 after 5 years of worldwide depression Keynes filled his book with examples where an economy might not be self-correcting, where the spending needed to restore production and employment might not recover. He was so bold as to suggest the government could help by putting funds in the spending stream to restore the economy. Since then Republicans and free enterprisers have hated Keynes as readers will find in chapter two.

Chapter three and four continue the macro debates by following the key economic advisers through the presidents of 1969 to 2008. Chapter three follows the “stagflation” debate with Nixon and Arthur Burns, Jimmy Carter and Paul Volker and on to the Alan Greenspan era. Chapter four covers the demand free enterprisers make for lower taxes and less government spending and their conviction these will be an aid to economic growth.

Chapters five, six and seven cover domestic microeconomics issues and policies. Appelbaum describes the ideologues opposition to Antitrust law, market regulation in the airline and truck transportation industries, safety and environmental regulation and their preferred arguments against them.

Chapters eight, nine and ten shift to international economic issues. Chapter eight, the longest chapter in the book, recounts the death of the gold exchange standard established in the 1944 Bretton Woods agreement and the ideologues view that nothing should be done to influence international exchange rates after the end of the fixed exchange rate era.

Chapter nine covers the ideologues advance into the economies of Chile and Taiwan. I learned that during the 1960’s a third of the graduate students in economics at the University of Chicago came from Chile; they were known there as the Chicago boys. They campaigned for the free market policies they absorbed under the tutelage of Milton Friedman. There was stout resistance at first, but with a few visits from Friedman and several colleagues the ideologues got their way, although not with the happiest results for Chile.

Chapter Ten makes a review of the people and financial concoctions of the 1990’s that brought the 2008 financial meltdown and two year recession. Those entrusted to manage the nations financial assets used their protected political status and new concoctions to gamble with the nations loanable funds. They lost the gamble, but not to worry “W” and the Republicans were there to bail them out. It was all supported by free market ideologues like Alan Greenspan and approved by the ever helpful Bill Clinton.

It turns out Republicans and their corporate allies support all of the free market arguments of the free market ideologues. Milton Friedman and some of his confreres made themselves into unpaid corporate spokesmen by effectively advocating growth while ignoring the troubles it generates, especially the inequality. Generations of economics students in the United States read Milton Friedman’s “Essay in Positive Economics” that explains so well how economics should be an empirical science where hypotheses about free markets should be proved. While “Uncle Milton” as we graduate students of the 1960’s used to call him, made a good salesman he marched along from theory to policy without the empirical proof, a still common practice, especially in microeconomics.

In each of the chapters Appelbaum names the players, often with some biography, narrates the arguments, the disagreements and the consequences when the ideologues prevail, as they inevitably did after 1969. As an example, chapter 7 gives a history of the use and abuse for cost-benefit analysis for health and safety regulations. In 1967 actress Jayne Mansfield and two others were killed when their car slid under a truck stopped in a fog of pesticide. The Johnson administration proposed a regulation to require installing a safety bar to prevent future accidents. After stalling for years President Ford killed the regulation because it would only save 180 lives a year they valued at $200,000 a life. The benefit of lives saved did not justify the cost of installation, estimated at four times the benefits.

True blue free enterprisers cite the workings of the market place as the best safety protection. Milton Friedman was adamant the health department does not need to regulate health standards in restaurants: “the quality of restaurants was assured by the availability of other restaurants” i.e. the competition. When the coast guard found 90 percent of Bayley “survival suits” were defective the ideologues at the FTC blocked recall and correction: “If deaths actually occur market forces – such as lawsuits by surviving heirs – may be adequate to remedy the problem.”

When Carter Administration economists Charles Schultze and William Nordhaus demanded to scrap “brown lung” air quality regulations in the textile industry Senator Edmund Muskie objected “that it was undemocratic for economists to substitute their own tallies of costs and benefits.”

Senator Muskie saw the problem exactly, corporate America and their economist spokesmen do not care about democracy; it can interfere with markets and hurts profits. Since the benefits of regulations go to individuals and the larger society, corporate America objects to any costs they incur from regulations. The use and abuse of benefit cost analysis lets them disguise their aims in a haze of economist’s easily manipulated cost-benefit justifications.

The chapters report many failures of free markets, which Appelbaum pulls together in a seventeen page conclusion. He suggests the broader consequences of all these failures on the economy: growing inequality of income and wealth, the dismal job prospects for the powerless working class and the threat to public civility and democratic institutions. Here he reminds readers that markets function from the constructs of property and contract rights determined in a political process. They do not come down from heaven.

The book avoids economic jargon and while it will be of special interest to economists it can be read by a much broader audience. There are 88 pages of footnotes, which give references but also include some long background discussions his editor may have convinced him to take out of the text. The more engaged reader should take a look.

Appelbaum tells readers in the introduction his father was born in 1951 while he was born in 1978. I am closer to his father’s age and went to graduate school in the 1960’s and finished a doctorate in economics in the 1970’s. Finally, I say, the younger generation has assembled a thoughtful and readable attack on doctrinaire economics. It’s about time.

Sunday, November 24, 2019

Washington Metro and the Dismal Side of Privatization


Washington Metro and the Dismal Side of Privatization

The Washington Post ran a story November 13, 2019 about an area bus strike, which perfectly and transparently illustrates the dismal side of privatization. [Justin George and Luz Lazo, “Bus Strike in N. Va. Poised to Spread”] It turns out a French company named Transdev, received privatization contracts from the Washington Metropolitan Area Transit Authority, usually referred to as Metro, to run a bus garage and a second one to Fairfax County, Virginia to operate its Fairfax Connector bus service.

Wednesday, the day the story ran, was the 20th day of a strike of 120 garage workers at the Cinder Bed Road garage. Strikers are former Metrobus employees and members of the Amalgamated Transit Workers Union local 689 on strike in protest of wage and benefit cuts by Transdev. The Fairfax Connector bus drivers and members of Amalgamated Transit Workers local 1764 voted to authorize a strike against Transdev with a likely strike date of November 30, the date the current contract expires. The strike of garage workers has shut down 15 routes in Northern Virginia affecting 8,500 riders. A strike at the Fairfax Connector would leave 30,000 without service.

All are unhappy with Transdev pay scales set below Metro employees and with cuts in health care and benefits. Transdev defends their pay as competitive because they are able to fill their positions, but not because the pay is the same. They have further issued the usual company boilerplate claiming to be negotiating in “good faith.”

The Metro director in Fairfax encourages both sides to reach agreement, but sits on the sidelines refusing to be involved. A metro spokesman Dan Stessel excused any responsibility Metro might have telling the Washington Post “This is a labor dispute between the union and Transdev, not Metro, so while we are concerned about the impact the strike has had on our customers, we are not a party to the negotiations and are limited in the role we can play as an outside party.” This transparent and disgusting evasion reflects their failure to write and enforce protections into the contract. The Metro contract calls for Transdev to have a plant to operate the routes during strikes, which they have not done.

Then we learn Metro elected to outsource bus operations to Transdev for $89 million that saves them $15 million over five years by not paying Metro pensions and benefits. They actually admit the savings are from cuts to their workforce. Striking employees complain there is no annual pay scale and they have never had a raise. Health benefits have a $6,000 deductible.

Transdev can expect to pay the same amount for equipment and fuel as Metro. As well a privatization contract adds the cost of a second bureaucracy. Any savings in a privatization contract comes from cutting pay and benefits. Metro director Paul Weidefeld defended privatization: “And there’s lots of examples of things that are run by the private sector that are good. Doesn’t mean its always good.” He did not offer examples, but Metro would not be an example of “things that are good.”



Saturday, August 24, 2019

The Amazon Effect on Jobs

The Amazon Effect on Jobs

Media coverage of the Amazon expansion keeps suggesting their growth comes at the expense of brick and mortar retail stores. The employment data suggests Amazon contributes to a decline in retail jobs that derives from more causes and long term trends.

Back in 1990 the Bureau of Labor Statistics (BLS) reported electronic shopping and electronic auctions employed a monthly average of 40.4 thousand people while 112.5 thousand worked at mail order houses. By 2016 the BLS reported 233.5 thousand employed in electronic shopping and electronic auctions, but mail order houses showed only a small increase to 127.5 thousand jobs.

As Internet access expanded to millions, the difference between the two categories faded as mail order houses doing catalog sales started using the Internet to compete. In response the BLS combined the two series after 2016. Combined employment since 1990 has an annual growth rate of 3.34 percent, more than triple the national average. The monthly average employment for 2018 came to 398.7 thousand jobs.

While the employment totals in retail trade continue to increase, jobs go up so slowly that the share of retail employment in national establishment employment declined year by year since 1990. In 1990 retail was 12.04 percent while in 2018 it was 10.62 percent. It may sound small but if retail employment retained its 1990 share in 2018, retail employment would have 2.114 million more jobs than it does.

Retail sub sectors in motor vehicle and parts dealers, furniture and home furnishing stores, electronic and appliance stores, food and beverage stores, health and personal care stores, gasoline stations, clothing and clothing accessories stores, sporting goods hobby book and music stores, general merchandise stores, office, supplies, stationery and gift stores all have a smaller share of jobs in 2018 than 1990, and smaller shares in 2018 than 2017.

In addition to electronic shopping a few other retail sub sectors have job growth that standout from the general decline. Home centers are a sub sector exception, which has a higher share of establishment employment with annual job growth of 2.89 percent since 1990. The Home Center job increase has come at the expense of job declines at paint-wallpaper stores, and hardware stores.

Employment at used car dealers has increased at nearly five times the annual growth rate for new cars since 1990: new cars .74 percent, used cars 3.59 percent. Jobs at cosmetic and beauty supply stores increased at a growth rate more than 7 times the rate for pharmacy and drug stores: .53 percent compared to 3.72 percent. Stores selling used goods such as thrift stores and consignment stores have the second highest annual rate of job growth in retail, 4.19 percent; only the electronic shopping that includes Amazon has higher job growth. Pet stores also have a high rate of job growth since 1990: 3.53 percent. These jobs combined have only 8.5 percent of 2018 retail employment, and .9 percent of national employment.
The following retail sub sectors all lost jobs from 2017 to 2018: household appliance stores, electronics stores, pharmacy and drug stores, clothing stores, shoe stores, sporting goods stores, hobby toy and game stores, sewing needle work and piece work stores, music instruments and supply stores, book periodical and music stores, department stores, warehouse clubs and super centers, office supply and stationery stores, gift, novelty and souvenir stores.

The electronic shopping total of 398.7 thousand jobs in 2018 represents 2.5 percent of retail trade employment compared to 2010 when 249.8 thousand jobs were 1.6 percent of retail jobs, a mere .9 percent gain for electronic shopping. Since the end of the last recession in early 2010, electronic shopping has added only 148.9 thousand jobs, not many jobs to replace the 2.114 million jobs there would be without such a low, average growth in retail trade. The Amazon effect is a part of the loss of retail jobs, but the expansion of electronic shopping will bring a net loss of jobs in retail and the economy.

Wednesday, August 7, 2019

Planet of the Humans – A Review

Planet of the Humans – A Review
Director Jeff Gibbs; producer Ozzie Zehner

Planet of the Humans is a documentary film just released at the Traverse City Film Festival (TCFF). The film makes two clear points. First it argues and validates the alarming growth of CO2 emissions, which continues while the country does nothing of significance to counter it. Second, the film argues the environmental movement has accepted large sums of money from the energy industry and now panders to them in their obsession with growth and profit.

The film focuses on the development of solar, wind, and bio-mass energy, and the public perception these efforts work well as alternatives to burning coal in the generation of heat and power. Viewers learn quickly these fuels generate a tiny share of power needs in the U.S. and elsewhere. We learn to doubt these alternative fuels can make a significant dent in the growth of CO2 emissions without limiting our use of fossil fuels. As one example, we meet a scientist who explains solar energy needs solar chips made from quartz and coal, requiring great sums of fossil fuel burning heat to produce, and they do not last indefinitely. We see large rectangular spaces filled with solar panels and learn they provide a year’s worth of energy for ten houses. We learn coal-burning energy must continue as a back up to cloudy days.

The filmmakers use much the same method for wind power and bio-mass. For wind we go to Lowell Mountain along the Long Trail in north central Vermont, where the now denuded ridge of the mountain has 450 foot windmill towers lined up in a row. We tend to forget constructing, installing and maintaining these towers uses great quantities of fossil fuel for creating an intermittent and indeterminate power source. Here we meet people distressed at the destruction of the forest and disruption of the solitude the Long Trail should represent.

Bio-mass advocates justify clear-cutting vast stretches of forested land with the excuse trees regenerate, except the camera gives a panorama of the worst of environmental destruction in the film with vast stretches of barren ground and not a sign of any living thing. In the village of L’Anse in Michigan’s Upper Peninsula we meet a woman distressed at the air pollution their bio-mass plant creates from burning chips made of old car tires. Management claims they need these hotter burning chips. We realize reducing coal consumption does not necessarily clean up the air.

The filmmakers cut back and forth from depressed and depressing locations around the country to corporate public relations events pitching their subsidized alternative fuel projects as the way to end our CO2 emissions worries. Two events covered in the film had outdoor concerts powered with solar panels, except the filmmakers went behind the tents and found the electricians managing the generators; they admitted solar power would not be enough. We attend an event promoting electric cars where General Motors CEO Mary Barra could not confirm savings on CO2 emissions for cars using coal powered electricity; she smiled awkwardly in her failure to do so.

Clips from these events and some separate interviews establish the sell-out of the Sierra Club and other groups we associate with environmental protection. We meet smiling white men - except one black man and Mary Barra – reading canned speeches and announcing dollars of investments in alternative fuels, but they stumble and fumble badly when confronted with conflicting questions. None wanted to address the conflict of environmental destruction their projects cause, or the few jobs they create, or their tiny effect on CO2. Mr. Inconvenient Truth himself, Al Gore, looked especially pathetic evading questions; while he evaded and avoided the film documented corporate payments to him and others as “paid consultants.” Money has transformed Gore into another member of America’s bloated gang of corporate rogues and scoundrels.

The film tells the story from what we see on the screen, as documentary films should do. The film editors cut from one place, and one scene, to another quickly, but sporadically leave a short interval with a blank screen as though we might need a few seconds to rest from their fast pace. Dialogue emphasizes scientists offering science explanations, interviews from on site victims and a sampling of corporate public relations. Viewers will not think filmmakers remain neutral in this debate, but they avoid preaching and stay in the background for the most part. In contrast we find the Koch brother owners of Georgia-Pacific sponsoring a website Treehugger.com, an especially cynical move by people with contempt for the intelligence and welfare of the larger society.

The only discussion of data for CO2 emissions comes from the numbers 350 and 416. I learned 350 stands for parts per million of carbon dioxide, a number formerly billed as an upper limit goal for carbon dioxide in the atmosphere. As of now, we learn the number is 416 just in case anyone doubts our collective failure to address global warning. Enough said.




Monday, July 29, 2019

Workers on Arrival - A Review

James William Trotter Jr, Workers on Arrival: Black Labor in the Making of America, (Oakland, CA: University of California Press, 2019)

Workers on Arrival is an unusual book, but that’s not a criticism. Trotter outlines a vast subject-matter in his nine page prologue. He hopes to restore the “broader historical context of African American workers as producers, givers, and assets.” He covers the lives and labor of black workers in the economy and politics “from the transatlantic slave trade to recent times.”

The book has only 183 pages of text, with a 25 page essay on sources and 67 pages of notes carefully documenting sources from the text. Part I has three chapters that covers the colonial period up to the twentieth century; Part II has the last four chapters covering the twentieth century, and finally a brief four page epilogue of the twenty-first century. The three opening chapters describes the work and lives of the black community of the early period, emphasizing their economic contribution, the varied status of free and enslaved blacks, the work they did, their skills and the troubles they encountered in both urban and rural settings. Troubles included the Fugitive Slave Act, colonization movements, urban segregation, mob violence and their chances and a few successes at owning property and becoming entrepreneurs.

The civil war comes and goes in chapter 3. The war gradually liberated four million blacks as many showed up in military camps or forts and northern cities like Washington. D.C. before the war ended. Some joined the northern armies and helped defeat the south, but these were dangerous times as blacks were attacked in draft rioting and pressured by colonization advocates, which black leaders firmly opposed. Trotter covers black efforts to organize protective leagues and join unions during reconstruction and after, but this was also a violent period punctuated with race riots and white efforts to find a substitute for slavery in the search for cheap labor.

Part II moves into the twentieth century. These chapters combine progress in time with topical material. Chapter 4 concentrates on the Great Migration in the early part of the century. Here Trotter takes 32 pages on a vast subject, but concentrates on the lives and work the black community found in manufacturing in northern cities, which was not nirvana. Chapter 5 looks at efforts to create safety and security in labor and social justice organizing.

Chapter 6 takes a 20 page look at Jim Crow as it evolved and changed from the 1940’s through the 1960’s and 1970’s. In these post war years the unemployment rate for blacks exceeded that for whites for the first time while the post war expansion did little for the black community. Here Trotter mentions and gives brief description from episodes of intimidation and violence and black efforts to organize against the prejudice they confront. Readers get a brief look at the Southern Christian Leadership Conference, Congress of Racial Equality, National Negro Labor Council, the Negro American Labor Council, Nation of Islam, the Black Panther Party, Dodge Revolutionary Union Movement, a.k.a. DRUM, and a few more.

Chapter 7 outlines the decline in the manufacturing sector through the end of the century, its effect on black employment and changes in urban politics as many cities started electing black mayors to cope with the economic problems of a changing economy.

The epilogue characterizes the previous chapters as a “portrait of the black working class, enslaved and later free, changed dramatically during the twentieth century, when the Modern Black Freedom Movement toppled the white supremacist order, expanded the scope of American democracy, and created a new equal opportunity regime.” However, Trotter then concludes the epilogue by suggesting some ominous signs for the future.

I read the book as an invitation for others to develop and pursue research interests in further study. Discussions do not, and cannot, go into great detail given the concise text. Sometimes a topic gets only a sentence or two that serves to whet your appetite for more detail.

The essay on sources provides a thorough assistance for historical research. Brief discussions of a topic, or an era, are followed with names of historian authors, brief synopsis of their work, and sometimes conclusions and views. Chapter footnotes provide more help. Chapters typically have 40 or as many as 80 footnotes often with a list of sources.

As a research aide the book works well either for those who know what era or topic they want to study, or for undergraduate or graduate students looking for an era or a topic. For the latter group it might be useful to start with the essay on sources and then read the book while developing a bibliography.

Otherwise the book is well organized and reads easily, but not so much as narrative history. Sometimes sentences feel like a listing rather than a story. Black history remains an important topic for further study, as Trump reminds us too often, and this book serves that purpose well.