Monday, December 31, 2018

Labor Line

September 2018___________________________________

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 September 7, 2018.

American Job Market The Chronicle

Current Job and Employment Data

Jobs
Total Non-Farm Establishment Jobs up 201,000 to 149,279,000
Total Private Jobs up 204,000 to 126,939,000
Total Government Employment down 3,000 to 22,340,000

Employment Note
Civilian Non-Institutional Population up 223,000 to 258,066,000
Civilian Labor Force down 469,000 to 161,776,000
Employed down 423,000 to 155,542,000
Employed Men down 139,000 to 82,545,000
Employed Women down 284,000 to 73,281,000
Unemployed down 46,000 to 6,234,000
Not in the Labor Force up 692,000 to 96,290,000

Unemployment Rate stayed the same at 3.9% or 6,234/161,776
Labor Force Participation Rate decreased by .2 percent to 62.7%, or 161,776/258,066

Prices and inflation measured by the Consumer Price Index (CPI) for all Urban Consumers was up by a monthly average of 2.13 percent for 2017.

The August CPI report for the 12 months ending with July, shows the

CPI for All Items was up 3.0%
CPI for Food and Beverages was up 1.4%
CPI for Housing was up 2.9%
CPI for Apparel was up .3%
CPI for Transportation including gasoline was up 7.3%
CPI for Medical Care was up 1.9%
CPI for Recreation was up .3%
CPI for Education was up 2.1%
CPI for Communication was up .1%

This Month's Establishment Jobs Press Report

A LITTLE BETTER THAN A MODEST GAIN

The Bureau of Labor Statistics published its September report for jobs in August. The labor force dropped 469 thousand, the employed dropped 423 thousand and the unemployed dropped 46 thousand. The monthly increase in the civilian population combined with the decline in the labor force equals the 692 thousand that left the labor force. The big decrease in the employed and small decrease in the unemployed offset each other to leave the unemployment rate unchanged at 3.9 percent. The labor force participation rate dropped .2 percent to 62.7 percent, as a result of the labor force decline.

The seasonally adjusted total of establishment employment was up 201 thousand for August. The increase was 178 thousand more jobs in the private service sector combined with a 26 thousand increase in jobs from goods production. The total of 204 thousand more private sector jobs combined with a decrease of 3 thousand government service jobs accounts for the total increase.

The three goods production sub sectors had 26 thousand new jobs. Natural resources had 6 thousand more jobs after a month of decline. Small mining losses were offset by a 5.3 thousand job gain in support activities for mining. Construction added 23 thousand jobs that included 15.3 thousand more jobs in specialty trade contractors and 7.4 thousand new jobs in construction to buildings. Manufacturing had its first monthly job loss in a year with a drop of 3 thousand jobs for August. An unusual decline in durable goods of 4 thousand jobs combined with a gain of a thousand jobs in non-durable goods. Among durable goods motor vehicle and parts manufacturing lead the decline with a loss of 4.9 thousand jobs; machinery, computer and electronic products had small losses.

Government service employment was down a net of 3 thousand jobs for August. The federal government remained unchanged while local government employment dropped two thousand jobs and state government another thousand. Gains in state public education offset losses in local government education for a net gain of 400 jobs. Private schools had especially big increase of 11.9 thousand seasonally adjusted jobs, another good month for private school jobs after last month's big increase. The combined change in public and private education was just over 12 thousand jobs.

Professional and business services took first place for a second month for new private sector jobs in August with 53 thousand more jobs. The professional and technical service sub sector added 27.6 thousand of the jobs. Management of companies added another 4.7 thousand while administration and support services including waste management added another 20.9 thousand jobs, down from last month.

Among professional and technical services management and technical consulting services added 6.4 thousand jobs; architecture and engineering services added another 6.0 thousand jobs; computer design and related services added 3.9 thousand jobs, more than last month, but still a small increase. The administrative and support services job gains were 20.9 thousand jobs, temporary help services had 10 thousand of the job gains; services to buildings and dwellings another 9.1 thousand.

Health care added 40.7 thousand new jobs in August with job gains in all four sub sectors. Ambulatory care added 21.1 thousand of the new jobs; hospital jobs added another 8.2 thousand. Nursing and residential care added 3.9 thousand after remaining the same last month; social assistance, especially childcare services, added another 7.5 thousand new jobs for August, a relatively good month for health care. The growth rate in health care employment this month was 2.45 percent, above the long-term trend of 2.31 percent.

Trade, transportation and utilities continued its modest recovery with 37 thousand new jobs in August. Wholesale trade had most of the gain, 22.4 thousand jobs, while retail trade was off with a loss of 5.9 thousand jobs. Transportation and warehousing did well with 20.2 thousand new jobs. Job gains did not come in modal transportation, but in courier and messenger services, warehousing and storage services and support activities for transportation. Utilities were off .3 thousand jobs, a larger than usual change.

Leisure and hospitality had just 17 thousand new jobs for August, down from the last month. The arts, entertainment and recreation sub sector lost 3.0 thousand jobs with the biggest lost in performing arts and spectator sports, down 5.2 thousand jobs. Accommodation had a small increase with 2.5 thousand new jobs; restaurants had a modest gain of 17.5 thousand jobs, well down from last month and below normal job gains.

Information services dropped 6 thousand jobs, a larger than usual loss. Financial activities picked up 11 thousand jobs with continuing job gains over the last several months. Finance and insurance and real estate and rental services split the gain. The category, other services, had a good month after last months losses, picking up 13 thousand jobs across all three sub sectors. Personal and laundry services had the biggest gains, up 8.7 thousand jobs; repair and maintenance service jobs were up 3.8 thousand jobs with non-profit associations up slightly with 600 more jobs.

Establishment employment in August increased by 201 thousand to 148.279 million at a 1.62 percent annual growth rate, up from last month. The first job decline in manufacturing in a year suggests a cause for caution given the tariffs now in full effect and more threatened. Manufacturing has provided some replacement jobs in the last year, but this month health care and business and professional services picked up the slack. Higher wages are a good way to get people into the labor force and avoid this month's decline. Trends in new jobs are the same as they have been since the second quarter of 2010 when the recession recovery got underway.

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August Details

Non Farm Total +201
The Bureau of Labor Statistics (BLS) reported Non-Farm employment for establishments increased from July by 201 thousand jobs for a(n) August total of 149.279 million. (Note 1 below) An increase of 201 thousand each month for the next 12 months represents an annual growth rate of +1.62%. The annual growth rate from a year ago beginning August 2017 was +1.59%; the average annual growth rate from 5 years ago beginning August 2013 was +1.78%; from 15 years ago beginning August 2003 it was .92%. 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 +6
Natural Resources jobs including logging and mining were up 6 thousand from July at 746 thousand jobs in August. An increase of 6 thousand jobs each month for the next 12 months would be an annual growth rate of +9.73 percent. Natural resource jobs are up 56 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 +23
Construction jobs were up 23 thousand from July with 7.259 million jobs in August. An increase of 23 thousand jobs each month for the next 12 months would be an annual growth rate of +3.18 percent. Construction jobs are up 297 thousand for the 12 months just ended. The growth rate for the last 5 years is +4.33%. Construction jobs rank 9th among the 12 sectors with 4.9 percent of non-farm employment.

3. Manufacturing -3
Manufacturing jobs were down 3 thousand from July with 12.717 million jobs in August. A decrease of 3 thousand jobs each month for the next 12 months would be an annual growth rate of -.28 percent. Manufacturing jobs were up for the last 12 months by 254 thousand. The growth rate for the last 5 years is +1.14%; for the last 15 years by
-.81%. 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 +37
Trade, both wholesale and retail, transportation and utility employment was up 37 thousand from July at 27.820 million jobs in August. An increase of 37 thousand each month for the next 12 months would be an annual growth rate of +1.60 percent. Jobs are up by 330 thousand for the last 12 months. Growth rates for the last 5 years are +1.43 percent. Jobs in these sectors rank first as the biggest sectors with combined employment of 18.6 percent of total establishment employment.

5. Information Services -6
Information Services employment was down 6 thousand from July at 2.762 million jobs in August. A decrease of 6 thousand each month for the next 12 months would be an annual growth rate of -2.60 percent. (Note 2 below) Jobs are down by 30 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 2.7 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 +11
Financial Activities jobs were up 11 thousand from July at 8.588 million in August. An increase of 11 thousand each month for the next 12 months would be an annual growth rate of +1.54 percent. Jobs are up 111 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 +1.68 percent, and a 15 year growth rate of +.39 percent. Financial activities rank 8 of 12 with 5.8 percent of establishment jobs.

7. Business & Professional Services +53
Business and Professional Service jobs went up 53 thousand from July to 21.062 million in August. An increase of 53 thousand each month for the next 12 months would be an annual growth rate of +3.03 percent. Jobs are up 519 thousand for the last 12 months. Note 4 The annual growth rate for the last 5 years was 2.51 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 14.1 percent of establishment employment.

8. Education including public and private +12
Education jobs went down 12 thousand jobs from July at 14.162 million in August. These include public and private education. An increase of 12 thousand jobs each month for the next 12 months would be an annual growth rate of +1.04 percent. Jobs are up 52 thousand for the last 12 months. (note 5) The 15 year growth rate equals +.75 percent, slower than the national average. Education ranks 4th among 12 sectors with 9.5 percent of establishment jobs.

9. Health Care +41
Health care jobs were up 41 thousand from July to 19.967 million in August. An increase of 41 thousand each month for the next 12 months would be an annual growth rate of +2.45 percent. Jobs are up 387 thousand for the last 12 months. (note 6) The current month was above long term trends and greater than growth from a year ago when the annual growth rate was +1.97 percent. Health care has been growing at +2.31 percent annual rate for the last 15 years, a rate greater than the national rate. Health care ranks 3rd of 12 with 13.4 percent of establishment jobs.

10. Leisure and hospitality +17
Leisure and hospitality jobs went up 17 thousand from July to 16.374 million in August. An increase of 17 thousand each month for the next 12 months would be an annual growth rate of +2.66 percent. Jobs are up 253 thousand for the last 12 months. (note 7) The 5 year growth rate is 2.70%. 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 +13
Other Service jobs, which include repair, maintenance, personal services and non-profit organizations went up 13 thousand from July to 5.879 million jobs in August. An increase of 13 thousand each month for the next 12 months would be an annual growth rate of +2.66 percent. Jobs are up 90 thousand for the last 12 months. (note 8) Other services had +.57 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 -3
Government service employment was down 3 thousand from July to 11.944 million jobs in August. A decrease of 3 thousand each month for the next 12 months would be an annual growth rate of -.29 percent. Jobs are up 12 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 +.20 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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Friday, August 10, 2018

Grown Up Anger

Daniel Wolff, Grown Up Anger: The Connected Mysteries of Bob Dylan, Woody Guthrie and the Calumet Massacre of 1913, (NY: Harper-Collins, 2017), $26.99

In Grown Up Anger author Daniel Wolff connects a labor history narrative with the evolution of mid 20th century protest music. As the title suggests, the labor history emphasizes the 1913 copper strike in Keweenaw County in Michigan’s Upper Peninsula, and the protest music discussion emphasizes the work of Woody Guthrie and Bob Dylan. Woody Guthrie was born in 1912 while Bob Dylan was born in 1941, and so the music covers the depression era in the 1930’s into the modern era. There are 14 chapters with 259 pages.

It was not obvious to me how the title, Grown Up Anger, relates to labor history and protest music but Wolff uses the opening pages to explain his choice. “History happens in a classroom. I didn’t (voluntarily) approach the world that way.” Instead he connected through anger, “Specifically, the voice of Bob Dylan.” Wolff explains his feeling that Dylan’s “Like A Rolling Stone” was the sound of unresolved anger, which “didn’t seem to need to justify itself.”

Since it was July 1965 and Wolff was thirteen years old, he felt adolescent anger that could not be discussed with dismissive adults; “If you did, you got a look that meant, ‘Oh, yes, you’re a child.’’ By now, 52 years later, looking back generates Grown Up Anger, which can be written down in articulate prose.

The remainder of Chapter One provides a reminiscence for 1960’s music and the Bob Dylan and Woody Guthrie place in it. Wolff introduces the Guthrie song “1913 Massacre” that makes an early connection to the Keweenaw copper strike, a song I did not previously know about. Chapter 2 introduces more Bob Dylan biography; chapter 3 introduces more Woody Guthrie biography. Both chapters relate their early interest in music.

Chapter 4 narrates the early history of Keweenaw County, Michigan copper mining and union organizing, which picks up again and continues in chapters 7, 9, and 12. The history moves along to the December 24, 1913 Christmas party and the infamous “Massacre” that took place at Italian Hall in Calumet. I reviewed a book length account of the 1913 Keweenaw strike by Steve Lehto, Death’s Door on this blog. Death's Door Death's Door Lehto, Ella Reeve Bloor and Arthur Thurner are also important sources used in Wolff’s account.

The other chapters - 5, 6, 8, 10, 11, and 13 - return to narrate and analyze the music and careers of Guthrie and Dylan. We find out “both Guthrie and Dylan spent their childhoods in relatively prosperous, supportive, Middle American families.” Woody Guthrie and his cousin Jack Guthrie left Oklahoma for California looking for music careers. They succeeded getting a radio show and confronted the great “Okie” migration in John Steinbeck’s Grapes of Wrath and In Dubious Battle in the process.

Dylan was 14 in 1955 when Emmett Till was murdered in Mississippi and was already trying to express himself through music. He graduated from Hibbing High in 1959 and recalled “I just turned my back on it. It couldn’t give me anything.” He went to the University of Minnesota and then to New York to pursue music as a career.

While Dylan and Guthrie remain the central theme of the music narrative it wanders and weaves its way into a variety of related historical events and musical figures. There are composer-musicians, Earl Robinson, Paul Robeson, Lead Belly, Alan Lomax, Pete Seeger, Joan Baez; music groups, the Kingston Trio, Peter, Paul and Mary, the Weavers; agitators and activists, Upton Sinclair, Bill Haywood, Elizabeth Gurley Flynn.; one composer-musician-activist Joe Hill. There are music titles and discussion of lyrics for many songs, especially Dylan and Guthrie songs and the songs of others that influenced them and of their influence on each other.

As the discussion moves along it mixes more with politics and political events; the House Un-American Activities Committee and the Communist purges of the 1940’s and early 1950’s. Suddenly lyrics were subversive and folk singers like Guthrie and the Weavers were denounced as Communists. Wolff describes the post 1955 folk revival and the Guthrie and Dylan part in it. The Dylan song “Like a Rolling Stone” has a suspicious connection to a doggerel poem composed by Joe Hill on the eve of his execution, or assassination as I would see it. The first stanza in his twelve line poem reads “My will is easy to decide. For there is nothing to divide. My kind don’t need to fuss and moan. Moss don’t grow to a rolling stone.”

A final chapter takes a driving tour through present day Keweenaw where copper mining ceased in 1968, fifty years ago. Wolff gives inequality data from 1913 and today and finds nothing has changed. The book ends with a brief allegory where the landscape beneath the surface in the world’s shell remains a molten core in a “kind of rage.” Enough said.

I cannot think of a comparable book, but that’s not a criticism. The narrative reads easily and chapter titles and divisions help move the story along. There are footnotes although they are not numbered but appear by the page rather than by number, which I don’t like. A bibliography includes some standard labor history books like Philip Foner, Jeremy Brecher, Melvin Dubofsky and Foster Rhea Dulles. I wonder about the audience that reads the book since I am guessing people interested in Guthrie and Dylan would not know much about strikes like the Keweenaw strike. In that way people interested in the music could get a first introduction to labor history. America would be better off if it knows more of its labor history. I predict it would create more Grown Up Anger.

Friday, June 29, 2018

Harley-Davidson Motor Cycles, Trade Wars and our Obsolete Constitution

Harley-Davidson Motor Cycles, Trade Wars and our Obsolete Constitution

Harley-Davidson Motor Cycles recently announced it will be moving some production to Europe to avoid new tariffs made in retaliation to unilateral increases in United States tariffs. Harley officials reported a $2,200 price penalty from the Trump tariff war. In spite of the abuse and ridicule from Trump, Harley-Davidson Motor Cycles did what any business has to do week in and week out; they adjusted to a change in economic circumstance. In this case Trump made a significant change in their market condition imposing tariffs with a guaranteed retaliation.

For at least 50 years the United States sent representatives to repeated meetings of the General Agreement on Tariffs and Trade(GATT) with instructions to negotiate lower tariffs and trade barriers. The world economy and companies like Harley-Davidson have adjusted completely to the lower tariffs. The Trump tariffs make American companies especially vulnerable because retaliation only affects American products made in America; every other company from every other country now has a price advantage over American companies like Harley-Davidson.

More companies will have to do what Harley-Davidson does, which will accelerate job loss in the United States. Trump remains immune to economic forecasts and market conditions while his conduct continues to be so erratic no one can predict how bad things might get.

Congress?

Congress granted Presidents the dictatorial power to impose tariffs for national security reasons, but has allowed Trump to define national security as anything he wants. Congress can take the power back anytime it wants. As Trump threats and bluster translate into retaliation by other countries a weak and plaintive protest of corporate America has appeared in the media, but nothing happens about the tariffs. Corporate America appears powerless to challenge Trump, a Republican no less.

Congress can be obnoxious and threatening and make life a misery for administrators; it can stall and obstruct, but it can’t make a simple decision to stop an idiotic policy that guarantees economic loss as Harley-Davidson officials so clearly understand.

The current Trump tariff abuses highlight the workings of an obsolete constitution. The founding fathers designed a Congress with machinery designed for obstruction; very small numbers can obstruct majorities in a bicameral Congress filled with rules to block decisions. No balance of power remains among the three branches of government we all learned about in high school. The initiative and power have all passed to the President and his executive branch machinery. Anyone who doubts that should ask why corporate America with all its money bags looks at economic loss as a spectator in a brewing trade war?

Thursday, June 28, 2018

DC Initiative 77 and the Tip wars

On June 19, 2018 District of Columbia voters had a chance to vote on Initiative 77 to do away with the sub minimum wage and the tip credit for tipped employees like waiters, waitresses, and bartenders. They did so by a 55 percent to 44 percent margin. [D.C. voters approve initiative to raise minimum wage for tipped workers to $15, Washington Post, June 20, 2018]

The minimum wage in Washington, DC is $12.50 an hour in 2018, but as with the Federal minimum wage the District of Columbia has a sub minimum wage for businesses with employees who customarily receive tips. The sub minimum wage in DC is $3.33 an hour. Under rules governing the sub minimum wage those restaurants that pay a sub minimum wage must verify the additional amount from tips are enough to bring an employee up to at least the minimum wage, a practice known as taking the tip credit. If tips are not enough to equal the minimum wage then the employer is expected to keep track of the short fall and make up the difference. Notice that means all tips paid above $3.33 an hour up to $9.17 an hour, or $12.50 minus $3.33, are in lieu of normal wage obligations and become a subsidy to the restaurant.

Initiative 77 eliminates the sub minimum wage gradually by raising the current $3.33 cash wage plus tips to be a $15.00 an hour cash wage by 2025. After 2025 any tips will be the property of servers in addition to their cash wage; the business subsidy will gradually disappear.

The subsidy from the sub minimum wage dates from 1942 and a decision by the U.S. Supreme Court to ratify a private scheme to use tips as wages. The wage data reported by the Bureau of Labor Statistics in its Occupational Employment Survey suggest the restaurant subsidy scheme in the sub minimum wage does not ensure employees are paid the minimum wage. In DC the median wage reported for waiters and waitresses in 2017 was only $11.86, not $12.50, which means something over half of waiters and waitresses earn less than the minimum wage including tips.

California, Oregon and Washington are three states that abandoned the sub minimum wage for tipped employees. California and Oregon have a minimum wage of $10.5 an hour and Washington $11.50 an hour for all industries. The Bureau of Labor Statistics reports all 31 of California metropolitan areas and 5 sub state non-metropolitan regions have a median wage for waiters and waitresses above their minimum wage; and for Oregon’s 8 metropolitan areas and 4 sub state non-metropolitan regions; and for Washington’s 13 metropolitan areas and 4 sub state non-metropolitan regions.

The effect in these three states suggests it pays for the working class waiter and waitress to get rid of the sub minimum wage subsidy for restaurants. If, or when, restaurants confront much higher food prices they have to experiment with a combination of cost cutting and price increases. They might serve smaller portions, or change the menu to save costs while experimenting with higher prices. I’m hard pressed to understand why they expect to avoid doing that when wage costs rise. They have had this favor since 1942 and judging from their publicity campaign against changing it they think it as their inalienable right.

The Washington Post article mentioned above goes on to discuss the grimy politics of DC voter initiatives because apparently the city council and always the U.S. Congress can overrule a voter initiative. To justify throwing out a District wide election opponents of the working class debase democracy by complaining only 18 percent voted in the election as an excuse to ignore voters. They act as though they know the other 82 percent would have defeated the measure, and we all should respect the lethargy of no shows. If it was Trump talking I could understand it, but the DC city Council?

Strike! Strike?

Thursday, June 14, 2018

GOP Repeals Michigan Wage Law

In Michigan the Republican controlled legislature repealed the prevailing wage law that applied to public construction projects. Supporters cited by the Detroit Free Press [Det. FP, June 7, 2018] claim repeal will save taxpayers money as projects paying prevailing wages “cost 10-15 percent more than if it was built by the private sector.” State representative Gary Glenn called prevailing wages a “discriminatory relic of the past.” He claims it will save “hundreds of millions of dollars.”

No one quoted in the Free Press mentions a dollar wage when speaking of a prevailing wage, but if repeal will save money then wages must fall and for wages to fall there must be a big surplus of labor. Since business keeps whining about labor shortages, they contradict themselves.

The U.S. Bureau of Labor Statistics reports the median wage for 50 construction and extraction occupations, which in Michigan is $22.67 an hour, or $47,167 a year. That puts Michigan 19th among the fifty states and the District of Columbia. A 10 percent cut would be $4,717 and leave $42,438 a year.

If, as seems likely, business contractors bid on public projects then there can be no guarantee the contractors will bid lower in response to repeal of a prevailing wage law. Unless there is vigorous competition among many contractors they maybe able to bid as usual and pocket the wage savings themselves. It appears quite likely taxpayers will get nothing from this repeal.

The Free Press reported that all Democrats in the House voted against the measure and therefore Republicans take the entire responsibility for repeal, which makes the whole episode another in string of examples of politics in a divided society. Saving taxpayers was just the excuse. Democrats will have to figure out why so many in the working class vote for Republican pickpockets who lower their standard of living.

Monday, June 11, 2018

The Birth of a New American Aristocracy - Review

Matthew Stewart, “The Birth of a New American Aristocracy: The gilded future of the top 10 percent – and the end of opportunity for everyone else” Atlantic Monthly, June 2018, 48-63

In his ten part cover story for the June 2018 Atlantic author Matthew Stewart begins dividing United States wealth into three classes: the top .1 percent, the next 9.9 percent and the 90 percent at the bottom. He defines the 9.9 percent as the new aristocracy in order to argue their self-deception makes them a cause of our growing inequality, destabilizing politics and eroding democracy.

Readers get financial information to help define the groups. The .1 percent have 160,000 households and 22 percent of American wealth in 2012, up from 10 percent in 1963. Assets of $1.2 million in 2016 puts a household in the 9.9 percent and the assets of the 9.9 percent exceed the combined assets of the top .1 percent and the lower 90 percent.

In the mass media mobility justifies inequality, but Stewart reports several research efforts that show the average income of children correlates significantly with the average income of parents. In other words, the wealth of the current generation depends very much on having wealthy parents. Comparisons with other countries show the correlation of wealth between generations gets higher in countries with higher inequality. Since the United States has the highest inequality, a parent’s wealth does a better job predicting their children’s wealth than other developed countries. Mobility today requires winning the mega-millions jackpot.

That finishes part 2, part 3 through part 6 describes some ways the 9.9 percent game the system. Those in the 9.9 percent tend to be people of “good family, good health, good schools, good neighborhoods and good jobs.” They meet and marry in process of “assortative mating.”

Part 4 outlines the game in education. Matthews reports 2.2 percent of America’s high school students graduate from private high schools and make up 26 percent of Harvard students. Education for the “sake of society” has given way to a private benefit measured by higher salary, which helps the financial benefit of the college premium correlate with a decrease in social mobility. Part 5 takes up tax subsides that favor the 9.9 percent and the .1 percent who then fill the media whining about food stamps and welfare cheats. In part 6 readers learn the returns to real estate in the “right places” may account for essentially all of the increase in the concentration of wealth over the last 50 years and coincidentally much of the isolation of the 9.9 percent from the 90 percent.

These first six parts establish a platform to discuss the politics of resentment. Part 7 confronts and scoffs at the 9.9 percent’s delusions of a meritocracy, which Stewart argues has evolved into a class of aristocracy over only a few decades. In part 8 – the Politics of Resentment – inequality provokes a chain of consequences: resentment, political division, instability. Here Stewart lets Trump make his case by citing examples of Trump stoking the fires of resentment for political gain. Stewart concedes the .1 percent delight in their manipulations, but blames the 9.9 percent for taking “our cut of the spoils” while looking “on with smug disdain” and taking it all for granted. Stewart reminds readers that resentment breeds an increase in inequality as every change made by Trump so well demonstrates: the new tax law to wit. At the end of part 8 Stewart warns the 9.9 percent they will soon find themselves the target of economic attack.

Part 9 provides a sobering reminder: reform seldom relieves inequality. History suggests it takes depression, violence, or warfare to bring change and Stewart gives the American Civil War as one example. Remember slavery is a system of cheap labor that guarantees inequality. Lincoln in his famous house divided speech addressed that issue before the civil war: “A house divided against itself cannot stand. I believe this government cannot endure permanently half slave and half free. . . . It will become all one thing, or all the other.” Free labor in competition with slave labor generated poverty, inequality and a violent political instability. Our high school textbooks emphasize the stance of the abolitionists and their ethical and moral objections to slavery. They were a factor, but the civil war started much more for economic reasons: inequality and the depressing effects of a dual wage system.

Part 10 offers a tiny bit of optimism by suggesting the 9.9 percent could get hold of themselves and offer the country some leadership. Leaders should support the larger social order and help direct resources to causes in the common good like health care. Many people of my acquaintance have wondered why so many of the 90 percent keep voting for people like Trump and the Republican pickpockets. I thought of that when Stewart mentioned the poor, southern white boys in butternut and gray that died by the tens of thousands to save the wealth and life of the southern planter class that so crudely exploited them. The United States has had one civil war and I get the feeling Stewart believes the Trump base could bring another. We can hope not, but if it comes to pass the Trump base will join the .1 percent on the one side, and the 9.9 percent will be the other; the resentful always join the authoritarians. Mr. Stewart has warned you.

Monday, May 14, 2018

Jobs and Telework

The U.S. Department of Agriculture (USDA) changed telework rules for thousands of its employees. The Washington Post [March 18, 2018] quoted a USDA spokesperson that “USDA’s telework policy is designed to be responsible to the taxpayers and responsive to the customers who depend on our services. It is also respectful of our fellow employees who come to work each day.” The change in policy promotes “USDA as one family working together as a single team to serve the American people.” House Representative Gerald Connolly from a nearby Virginia House District co-sponsored the telecommuting rules back in 2010; he called the changes a retrograde move.

The Office of Personnel Management reported a steady increase in the share of Federal Workers who telecommute, which now stands at 20 to 22 percent. Telecommuting helps relieve serious traffic congestion for commuters. I-95 into the District has an average of 23 traffic jams a day. Based on telecommuting data from USDA around Washington the new rules will add 42,000 trips a week to area commuters.

The March 18 article in the Washington Post spawned several letters to the editor. One claimed “Teleworking is a scam” because employees on site are far more productive working together and there should be no special privileges allowing employees to make the same income as those who show up everyday. Another person wrote in that working at home increased his productivity because office distractions made it hard to work. He wore head phones with piped in music to minimize “working together.”

Weary commuters spending hours a day sitting on a cement slab lookin’ up some guy’s tail pipe will recognize a subplot here. Work could be about getting work done, accomplishing necessary tasks, rather than how and where the work gets done. For authoritarian bosses work should be suffering and so they want to see all their underlings dutifully sitting in their office warming up a chair. The authoritarian boss always thinks other people cheat; no one can be trusted to do what they’re supposed to do. They have rules: no reading newspapers, no personal emails, no breaks. Anyone not in their plasterboard cubicle must be malingering, or possibly having fun.

Somehow it fits right in for the Trump people where authority and form counts and substance does not.