“Keeping Their Eyes On The Prize”: Democrats’ No. 1 Job; Remind Voters That American Wages Have Flatlined
For the moment, the Democrats have resumed their time-honored posture of arguing about trade policy. It’s an important issue, and one on which I’m not sure where I come down. But as they prepare to rip each other’s flesh, they might bear in mind it isn’t the issue. The issue, as I wrote two weeks ago in urging Hillary Clinton to go big, is wage stagnation. I offer this up as a timely public-service reminder: Remember, folks, what you agree on.
As I noted in the go big column, wages have been in essence flat for earners—up 6 percent (adjusted for inflation)—in the middle of the income scale since 1979. For the top 1 percent, compensation has risen about 140 percent since the fateful year. This needs to be the issue of this campaign. If American voters don’t know these 6 percent and 140 percent figures November 8 next year, Hillary Clinton and the Democrats will have done something very wrong.
Economists choose 1979 as the cutoff year because, looking back over the numbers, that’s when the flattening started. It’s also about when compensation at the top started soaring (a little later, actually). Until the early to mid-1980s, Wall Streeters and corporate lawyers and actors and university presidents and star athletes made more than the rest of us, but they didn’t make gobs more.
For example, the average baseball salary doubled, up to around $370,000, from 1981 to 1985. The average wage in that same time frame went from $13,773 in 1981 to $16,822 in 1985, an 18 percent increase. Not bad, better than average; but not double by a long shot. I’m not saying the juxtaposition of these numbers proves anything more than it proves. But it is certainly representative of what was happening to American wages then and has been happening since.
Another way of looking at it: The average ballplayer went from making about 12 times the average American to 22 times. Today, incidentally, it’s 108 times, $4.25 million to around $39,000.
So what we’re gonna do right here is go back, way back, as an old song had it, to the year of Apocalypse Now and Get the Knack and those hideous Pittsburgh Pirates uniforms that so offended my aesthetic sensibilities that I had no choice but to cheer against the team I’d grown up worshipping. Let’s ask: What if the wage structure in the United States today were the same as it was in 1979?
Larry Summers asked the question in the Financial Times back in January. The bottom 80 percent of earners, he wrote, would have $11,000 more per family, and the top 1 percent would have $750,000 less. In the wake of Summers’s column, the folks at NPR’s Planet Money took it one step further and calculated the increased (or decreased) income for households at several points along the wage structure. It’ll pop your little eyes.
The poorest wage-earners, at $12,000, would be making $3,282 more. That’s a 27 percent increase. Those at $30,000 would be making $6,928 more (23 percent). Those at $52,000 would be getting $8,752 more (16.8 percent). For those at $84,000, the increase drops off, to $5,834 more (7 percent). But it kicks back up for those at $122,000, to $17,311 (14.2 percent). And finally, those in the top 1 percent, at $1.41 million, would see a decrease in earnings of $824,844, or a whopping 58 percent.
Now before we go any further—no, no one today is talking about anything as confiscatory as wiping out 58 percent of the top 1 percent’s earnings. That isn’t how it’s going to work anymore, with top marginal tax rates of 76 percent (which does not mean that the government took three-quarters of someone’s money; go look up the concept of “marginal” if you don’t get this).
But the wage structure is a function of a whole host of other policies and practices that have nothing to do with marginal tax rates. It has to do, yes, with the minimum wage. It was $2.90 in 1979. Adjusted for inflation, that would be $9.38 today instead of the actual $7.25, which is a 23 percent decline for those workers, and minimum wage is generally thought to have knock-on effects at least a third of the way up the wage chain. It has a lot to do with corporate culture: In 1979, CEOs at the top few hundred corporations made about 28 times the average worker’s salary; now they make more than 200 times. There were 15.1 million private-sector union workers in the United States in 1979; last year, there were 7.35 million. And in 1979, Washington oversaw a lot more in public investment than it does today, and those dollars by and large went into real things, from bridges to scientific research, instead of swaps and derivatives.
Now, 1979 was a bad year in some important ways—inflation, hostage crisis—so I’m not saying I think it would be the world’s greatest idea for the Democrats to campaign on bringing back 1979. It’s not about the year per se. That just happens to be the year the thing started happening. And the thing is flat wages for most people who work for a living.
The trade fight has to be played out, and it seems that the unions and the Warren wing are probably going to lose, because the president will get enough votes from Republicans and moderate Democrats. And of course it’ll be interesting to see how Clinton plays it. Whichever position she takes, we can be sure she’ll do it cautiously.
So dust will be kicked up over that. It has to be. The differences are real. But comparatively, the differences are small. Democrats must keep their eyes on the prize. “Who cares more about increasing the wages of working Americans?” is a debate question the Republicans can never win. The Democrats have to make sure the election is about that question.
By: Michael Tomasky, The Daily Beast, April 24, 2015
“An Ad-Hoc Fallback Position”: Immigration; The Only Time The GOP Cares About The Working Class
Last Monday, Scott Walker, Wisconsin’s Republican governor and a presumed GOP presidential hopeful, kicked the hornets’ nest that is the immigration debate.
He told Glenn Beck’s radio show that America needs to “make decisions about a legal immigration system that’s based on, first and foremost, protecting American workers and American wages,” and that this concern should be “at the forefront of our discussion going forward.”
Walker’s comments are significant because they’re something of a reversal for him, but also because they break with the “legal-immigration-good, illegal-immigration-bad” orthodoxy of the GOP establishment.
Lumping both forms of immigration together as equally questionable makes sense from an economic perspective; market forces don’t care about legal formalities like borders. But it takes near-cosmic chutzpah for Walker to say our first concern should be American wages and workers, given that pretty much every policy move by the Republican Party and the conservative movement seems designed to keep lower class incomes as depressed as possible.
By now, the battle lines on this issue should be familiar. First you get the argument from the center left and right that whenever immigrants, documented or undocumented, come to America, they bring added demand to the economy: They gotta eat, drink, put a roof over their head, get health care, and entertain themselves, just like everyone else. Even as they take on work, they increase the economy’s overall ability to create jobs. So claiming immigrants “take jobs from Americans” is wrong.
This is the view of the economics of immigration from 30,000 feet, and it’s right as far as it goes.
But closer to the ground, the terrain becomes more complicated. The U.S. economy isn’t one big market. It’s actually lots of overlapping markets, with different types of businesses and workers participating in each. And sometimes movement between these markets is easy for those workers, and sometimes it isn’t. So it’s possible for big influxes of low-skill, low-education immigrants to decrease wages and jobs for low-skill, low-education natives. You get more workers in particular markets, so wages go down. Meanwhile, the wealth created by those new entrants flows to other parts of the economy, so jobs in that market don’t increase all that much. And the native workers in those markets can’t easily hop to other markets, so they’re stuck with depressed wages and fewer jobs.
You can click through the links for a fuller examination of this phenomenon. But the short version is that it’s possible the second story is true, even if concrete evidence has been hard to tease out.
What this all boils down to is a problem of bargaining power. If you increase the number of workers in a market, but don’t increase the number of jobs proportionally, employers can play workers off one another, driving wages down. That’s why some Republicans like Alabama Sen. Jeff Sessions — whom Walker is apparently taking his cues from — are opposed to increasing legal avenues for high-skill immigrants. Tech workers, doctors, lawyers, and other professionals don’t like seeing their incomes reduced either.
But immigration policy doesn’t occur in a vacuum. There are lots of ways we could increase worker bargaining power, especially for low-skill Americans, while still taking in many more immigrants than we do now.
We could break up the work the economy already provides into smaller chunks that can be distributed to more workers, through things like national paid leave mandates, paid vacation, strengthened overtime laws, and a shortened work week. We could get the Federal Reserve to run much more aggressive monetary stimulus, or even fundamentally reform the way that policy operates, so that the boost the Fed pumps into the economy goes straight to the Americans hardest hit by bad economic times. We could ramp up government stimulus spending, the generosity of the social safety net, or both, which would also create jobs. And we could change laws to make unions more powerful, so they’d be ready and waiting to take on new immigrants as members and fight on their behalf.
Full employment should really be the top line goal, and it’s what the first four of those five policy options aim at. (With an expanded social safety net and stronger unions also acting as a backstop for wages when full employment isn’t reached.) When there are more workers than jobs available, bargaining power is going to go down across the economy. But at full employment, the first story about immigration — about how it just grows the size of the pie, and everyone benefits — is most likely to be true, because employers aren’t able to play the new workers off the old ones.
Fundamentally, the U.S. economy faces a two-stage problem: First, the share of national income going to labor is getting smaller, as more and more is gobbled up by people who own capital. Second, of that share going to labor, a bigger portion is going to elite workers, leaving the working class with less and less. That’s the context in which the question of immigration has to be understood. Full employment and increased bargaining power for all workers would solve both these problems — equalizing shares between workers, and getting them a bigger slice of the pie vis-a-vis capital.
In a sane and decent world, we would open our borders as wide as humanly possible. Because letting other people immigrate to America makes their lives better; much better in many cases. And we would rely on all those other policy levers to keep the wages and jobs of immigrant and native-born Americans alike healthy and robust.
The perversity of the whole immigration discussion amongst conservatives and Republicans is that they’ve already rejected all these other options for increasing worker bargaining power. That the elite GOP establishment still wants more immigration even after that rejection should make their goal plain as day: keep capital’s share as high as possible!
But for anyone on the right that still wants to claim they give a damn about working class Americans, trying to limit immigration is a kind of ad-hoc fallback position to keep wages up.
By: Jeff Spross, The Week, April 28, 2015
“Police Morale Can Wait”: How The Baltimore Riots Should Reshape Attorney General Loretta Lynch’s Agenda
Out of the many invisible and all-powerful forces that govern our universe, the cruelest must be Time. Whether you’re asking it to slow down for selfish reasons or to speed up for someone else, it doesn’t make a difference. Time is relentless and uncaring; it does not listen and it will not stop.
But even though it is ultimately an egalitarian ruler, wreaking havoc on the old, young, good and bad alike, Time seems to hold a special grudge against Loretta Lynch, the woman who, after an unprecedented delay, was finally sworn in on Monday as the 83rd attorney general in the history of the United States.
The first indication that Time has it in for Lynch was also the most obvious: the Senate’s 167-day-long dawdle. But while it was obviously wrong to make the first African-American woman ever nominated for the post wait so absurdly long to be confirmed (only two of Lynch’s 82 predecessors waited longer), I’m hesitant to throw the fault entirely on Time’s shoulders. The attack was launched by Republicans, after all; Time was merely their weapon.
But the second piece of evidence that Time may be holding a particular grudge against the attorney general was more palpable: the riots that convulsed Baltimore this weekend and paralyzed the city on Monday. Because although Lynch obviously had nothing to do with the disorder, the riots’ fires show with blinding clarity that Lynch’s first goal — which is “improving police morale,” according to the Times — is entirely premature. The wanton destruction of property cannot be legitimated; but simply criticizing anarchy and praising law enforcement won’t bring the mayhem to an end. And it won’t provide justice.
In many ways, the chaos in Baltimore is just the latest iteration of one of America’s saddest and longest-running stories. It is another example of what Martin Luther King once called “the language of the unheard.” King was speaking then of the riots that traumatized much of the country during the summer of 1966. But the social ills he described as kindling for the riot’s fire — poverty, police brutality and malign neglect — are, despite the nearly 49 years that followed, still powerful forces in America today.
For this particular moment, though, it’s Baltimore Police Department’s documented history of lawless violence that’s been identified as the riots’ inspiration. Protestors and rioters — who, it’s worth noting, are usually not the same — cite as their catalyst the death of Freddie Gray, a 25-year-old African-American man and Baltimorean. On April 12, Gray was arrested by officers from the BPD. When police detained Gray and put him in a van for transportation, he was walking; by the time the trip was over, he had a broken neck. He died on April 19th.
No one yet knows for sure exactly what happened to Gray during that trip and in that van. There are reports that he was taken out at one point and beaten, but an autopsy showed no injuries except for those to his spinal cord and neck. The BPD has already admitted that its officers did not provide Gray with the necessary medical care. But the main question — Why was he able to run from the police in the morning, but struggling to breathe by nightfall? — has gone unanswered, though an increasing number suspect the widespread, grotesque practice of giving “a rough ride” is to blame.
Yet the fact that such a thing could happen, and only become a major story after the activism of peaceful protesters (and the destructive hijacking of violent rioters), is exactly the problem. The fact that the BPD’s reputation is such that many Baltimoreans heard Gray’s story with weary outrage rather than shock or indignation is exactly the problem. The fact that the BPD rank-and-file evidently feels so comfortable with extralegal brutality, and are so accustomed to wielding it, that demands for accountability has left them panicking — that, too, is exactly the problem.
I’m quite certain that, at least to some extent, Attorney General Lynch would agree. But that’s why it’s so unfortunate that news of her interest in “finding common ground between law enforcement and minority communities” came when it did. Because once the last stone is thrown, the fires are put out, and the state of emergency in Maryland is lifted, what Baltimore and the countless places in the U.S. like it will need is not another conversation. And finding “common ground” won’t be what America needs from its attorney general or its Department of Justice.
What will be needed instead is for the authorities in Baltimore, Maryland and D.C. to stop pandering to the police unions who demand carte blanche in the field and an endless line of officials singing about their valor. What will be needed instead are signs that the authorities take fears of the rise of the “warrior cop” and police militarization seriously, and that they will no longer see the deaths of people like Gray as “tragic.” Because they’re not cosmic acts of injustice; they’re crimes. To suspend (with pay) the officers who may be responsible is not enough — and Lynch needs to make clear that she understands that, and that her predecessor’s groundbreaking report on Ferguson, Missouri, was no aberration.
What will be needed, in short, is for the people most apt to use “the language of the unheard” to feel that someone who matters is finally listening. And that those in public office prove with actions that they believe it when they say an African-American life is worth no less than a cop’s. Now is not the time for Lynch to focus on making law enforcement happy. Now is the time for her to promote equal justice. Improving police morale can wait.
By: Elias Isquith, Salon, April 28, 2015
“Lots Of Minority People Are Already Voting”: Top Senate Republican Rejects Call For Voting-Rights Fix
It was just last month when much of the nation’s attention turned to Selma, Alabama, where Americans saw former President George W. Bush stand and applaud a call for Congress to restore the Voting Rights Act with a bipartisan bill. Many wondered if, maybe sometime soon, Congress’ Republican majority might agree to tackle the issue.
Voting-rights advocates probably shouldn’t hold their breath. Soon after the event honoring those who marched at the Edmund Pettus Bridge a half-century ago, Senate Majority Whip John Cornyn (R-Texas) dismissed the very idea of working on the issue. “I think Eric Holder and this administration have trumped up and created an issue where there really isn’t one,” the Texas Republican said.
Asked if Congress should repair the Voting Rights Act formula struck down by the Supreme Court, Cornyn replied, simply, “No.”
Yesterday at the National Press Club, another key GOP senator echoed the sentiment.
Sen. Chuck Grassley (R-Iowa), chairman of the Judiciary Committee, said Monday he doesn’t expect to bring up legislation to restore the Voting Rights Act, because lots of minority people are already voting. […]
“It depends on what you want to fix,” he said. “If you want to fix more minorities voting, more minorities are already voting.”
The Iowa Republican said the “original intent” of the Voting Rights Act is no longer applicable because “in the last 50 years, it’s made great progress.”
As a factual matter, it’s true that lots of voters from minority communities vote. It’s also true that the nation has made “great progress” as compared to a half-century ago.
But given every relevant detail, Grassley’s posture is tough to defend.
Between the Supreme Court’s ruling on the Voting Rights Act and a coordinated Republican campaign, half the nation’s states “have adopted measures making it harder to vote” since 2011. Ari Berman recently added that from 2011 to 2015, “395 new voting restrictions have been introduced” in 49 states.
To see the Voting Rights Act as some kind of quaint relic, no longer needed or valuable in today’s society, is to deny the basics of recent events. The organized assault on voting rights in recent years is unlike anything Americans have seen since the Jim Crow era, making the Voting Rights Act critically important.
What’s more, the Supreme Court’s ruling on the VRA came with a call from the majority justices for lawmakers to craft a new formula for federal scrutiny. There was, in other words, an expectation that Congress, which reauthorized the VRA repeatedly and easily over the decades, would respond to the court ruling with a revised policy.
And yet, here are leading Senate Republicans effectively responding, two years later, “Nah, let’s not bother to do anything at all.”
By: Steve Benen, The Maddow Blog, April 28, 2015
“Doesn’t Remotely Comport With The Evidence”: Why The GOP’s War Against Welfare Programs Is Both Cruel And Pointless
Why do people work?
That question is at the center of the conservative case against anti-poverty programs. Republicans like Rand Paul conclude that policies like disability insurance or the Earned Income Tax Credit take away a key motivation — putting food on the table — that propels people to look for work. Thus these policies must be reducing labor supply and economic growth.
Liberals often don’t confront this point head-on, arguing instead that it’s unjust for people to starve because they’re out of work. It’s an inevitability, given that conventional understandings of market capitalism require around one out of 20 people to be unemployed at all times.
This is a good point, but the conservative argument is worth confronting on the merits. While there is an inherent trade-off between work and economic output, the story is not so simple as conservatives make out. Austerity — which often requires cutting anti-poverty programs — also kills labor supply.
For an example of the conservative position, let’s go to Daniel Mitchell, who wrote up some new findings from the National Bureau of Economic Research:
The mid-1990s welfare reform apparently helped labor supply by pushing recipients to get a job. Disability programs, by contrast, strongly discourage productive behavior, while wage subsidies such as the earned-income credit ostensibly encourage work but also can discourage workforce participation for secondary earners in a household. [The Federalist]
There is some surface plausibility to this argument. Social Security reduced poverty among the elderly by 71 percent, but in so doing probably also reduced the number of old people working. On some margin, there is a trade-off between work and poverty reduction, because a lot of jobs suck and people will quit them if they can.
However, it leaves a great deal out. Most critically, it doesn’t consider the business cycle. At the bottom of the Great Recession, for instance, the ratio of job seekers to job openings was nearly seven to one. That means it was mechanically impossible for six out of seven unemployed people to get jobs then. In order for “pro-work” welfare reform to have a prayer of working, the jobs you’re pushing people into actually have to exist.
In other words, when there is a recession, fiscal and monetary stimulus is the way to preserve labor supply, and austerity is the way to destroy it. But if you refuse to accept the logic of aggregate demand, as Mitchell did back in the very pit of the Great Recession, you’re stuck arguing that soup kitchens caused the Great Depression.
The international context presents an even more obvious problem. The conservative account of anti-poverty programs straightforwardly implies that the larger the welfare state, the lower the labor force participation rate (that is, the fraction of people who are working or actively looking for a job). If people don’t have to work due to generous government benefits, then they won’t work.
This doesn’t remotely comport with the evidence. In point of fact, by developed world standards, the U.S. welfare state is extremely stingy and our labor force participation rate is quite low. Take Sweden, for instance. It boasts the welfare benefits of Ayn Rand’s deepest nightmares: universal health and dental insurance, 480 days of paid parental leave per child, a monthly child benefit of about $120 up through age 16, two weeks sick leave, government pension at age 65, and so on.
Overall, if we look just at market incomes, then Sweden has about the same market poverty rate as the U.S. — but its welfare benefits cut the actual poverty rate down to half that of the U.S. That’s the scale of transfers we’re talking about, and other Nordic nations do even better. Yet Sweden’s labor force participation rate was 64.1 percent as of two years ago, more than a percentage point better than the U.S. rate, which has been hovering below 63 percent for the last couple years.
Again, at some point there has to be a trade-off between work and output. In decades previous, the U.S. beat European nations in labor force participation, because those nations chose relatively more free time as they became richer, instead of maniacally ratcheting up GDP for its own sake.
But correct macroeconomic policy also matters a great deal. If there is a catastrophic collapse in aggregate demand that is not fixed for years and years, that’s also going to burn up labor supply — in a way that is both cruel and pointless.
By: Ryan Cooper, The Week, April 28, 2015
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