“What We Need Now”: A National Economic Strategy For Better Jobs
Jobs are returning with depressing slowness, and most of the new jobs pay less than the jobs that were lost in the Great Recession.
Economic determinists — fatalists, really — assume that globalization and technological change must now condemn a large portion of the American workforce to under-unemployment and stagnant wages, while rewarding those with the best eductions and connections with ever higher wages and wealth. And therefore that the only way to get good jobs back and avoid widening inequality is to withdraw from the global economy and become neo-Luddites, destroying the new labor-saving technologies.
That’s dead wrong. Economic isolationism and neo-Ludditism would reduce everyone’s living standards. Most importantly, there are many ways to create good jobs and reduce inequality.
Other nations are doing it. Germany was generating higher real median wages until recently, before it was dragged down by austerity it imposed the European Union. Singapore and South Korea continue to do so. Chinese workers have been on a rapidly-rising tide of higher real wages for several decades. These nations are implementing national economic strategies to build good jobs and widespread prosperity. The United States is not.
Any why not? Both because we don’t have the political will to implement them, and we’re trapped in an ideological straightjacket that refuses to acknowledge the importance of such a strategy. The irony is we already have a national economic strategy but it’s been dictated largely by powerful global corporations and Wall Street. And, not surprisingly, rather than increase the jobs and wages of most Americans, that strategy has been increasing the global profits and stock prices of these giant corporations and Wall Street banks.
If we had a strategy designed to increase jobs and wages, what would it look like? For starters, it would focus on raising the productivity of all Americans through better education — including early-childhood education and near-free higher education. That would require a revolution in how we finance public education. It’s insane that half of K-12 budgets still come from local property taxes, for example, especially given that we’re segregating geographically by income. And it makes no sense to pay for the higher education of young people from middle and lower-income families through student debt; that’s resulted in a mountain of debt that can’t or won’t be paid off, and it assumes that higher education is a private investment rather than a public good.
It would also require greater accountability by all schools and universities for better outcomes — but not just better test results. The only sure thing standardized tests measure is the ability to take standardized tests. Yet the new economy demands problem-solving and original thinking, not standardized answers.
Better education would just be a start. We would also unionize low-wage service workers in order to give them bargaining power to get better wages. Such workers — mostly in big-box retailers, fast-food chains, hospitals, and hotel chains — aren’t exposed to global competition or endangered by labor-substituting technologies, yet their wages and working conditions are among the worst in the nation. And they represent among the fastest-growing of all job categories.
We would raise the minimum wage to half the median wage and expand the Earned Income Tax Credit. We’d also eliminate payroll taxes on the first $15,000 of income, making up the shortfall in Social Security by raising the cap on income subject to the payroll tax.
We’d also restructure the relationships between management and labor. We would require, for example, that companies give their workers shares of stock, and more voice in corporate decision making. And that companies spend at least 2% of their earnings upgrading the skills of their lower-wage workers.
We’d also condition government largesse to corporations on their agreement to help create more and better jobs. For example, we’d require that companies receiving government R&D funding do their R&D in the U.S.
We would prohibit companies from deducting the cost of executive compensation in excess of more than 100 times the median compensation of their employees or the employees of their contractors. And bar them from providing tax-free benefits to executives without providing such benefits to all their employees.
And we would turn the financial system back into a means for investing the nation’s savings rather than a casino for placing huge and risky bets that, when they go wrong, impose huge costs on everyone else.
There’s no magic bullet for regaining good jobs and no precise contours to what such a national economic strategy might be, but at the very least we should be having a robust discussion about it. Instead, economic determinists seem to have joined up with the free-market ideologues in preventing such a conversation from even beginning.
By: Robert Reich, The Robert Reich Blog, June 11, 2013
“Why Our Schools Are Segregated”: There Is Little Support For Aggressive Policies To Integrate Metropolitan Areas
In the May issue of Educational Leadership, I attempt to show how our misunderstanding of the origins of racial segregation stands in the way of efforts to narrow the black-white academic achievement gap.
Socially and economically disadvantaged children perform, on average, at lower levels of achievement than advantaged children. The achievement gap primarily results from disadvantaged children coming to school unprepared to take advantage of what schools have to offer, not primarily from inadequate teachers or schools. Children who come to school from households with poor literacy levels, who are in poor health, whose housing is unstable, whose parents are suffering the stress of unemployment, and who are themselves stressed as well in neighborhoods with high levels of crime and violence, cannot be expected to achieve, on average, as well as middle class children, even if all have high quality instruction.
Disadvantaged children’s obstacles to achievement are exacerbated when these children are concentrated in racially and economically homogeneous and isolated schools. Meaningful narrowing of the achievement gap will not be possible without breaking down these barriers and integrating black children into middle-class schools.
Otherwise informed opinion accepts that school segregation is “de facto” because schools are located in segregated neighborhoods, and that residential segregation today is also mostly “de facto,” the result of personal choices, financial means, or demographic changes.
Partly from this conviction, there is little support for aggressive policies, including race-conscious ones, to integrate metropolitan areas, a necessary precondition for meaningful school integration. The Supreme Court’s view, expressed in the Louisville-Seattle school integration case (“Parents Involved,” 2007), that there is no constitutionally mandated remedy for existing (“de facto”) segregation is also widely accepted.
Yet most Americans have forgotten that residential racial segregation, North and South, was created and perpetuated by, and continues to exist today because of, racially motivated and racially explicit federal, state and local banking regulation, mortgage guarantee, public housing, law enforcement, planning and zoning, highway and school construction, urban renewal and other policies that succeeded in their purpose of creating racially segregated metropolises. The racial segregation of major urban areas today offends the Constitution.
Familiarizing Americans with the history of state-sponsored segregation is necessary before support will be possible for policies to undo that segregation.
By: Richard Rothstein, Economic Policy Institute, June 10, 2013
“The Sorry Spectacle Continues”: Polarized Washington Ignores Long-Term Issues At Its Peril
Scandalfest continues. Official Washington is still flitting from one minor controversy to another, with the news media breathlessly reporting the latest leaked email or unsubstantiated accusation. Clearly, the chattering classes have declared the jobs crisis ended and the economic recovery complete.
While the Obama administration hasn’t popped open champagne bottles to celebrate, the air of silliness that hangs over the Beltway is a reminder that the worst is over. After all, the stock market is soaring. Consumer confidence is climbing.
The latest national unemployment number is down to 7.5 percent, the lowest level since December 2007, when the economy started its steep descent. Indeed, the sustained economic uptick may have a direct tie-in to Washington’s current obsession with less consequential matters: The economy is strong enough to have persuaded Republicans to stop blasting President Barack Obama over joblessness, so they’ve had to find other issues with which to batter him.
Here’s an update from outside the Beltway Bubble: The jobs crisis is not over. Average Americans are still struggling through an ugly economic transformation — a structural change decades in the making that jumped into overdrive with the Great Recession. Millions of Americans of working age remain unemployed, while others patch together two or three part-time jobs to keep food on the table. Still others have found full-time jobs but at far less pay than they used to earn.
A recent Quinnipiac poll provides a clear look into the minds of voters, who have little interest in the imbroglios of the moment. Rightly, 44 percent believe the revelations about the Internal Revenue Service, which singled out conservative organizations for unfair screening, as most important among the current controversies. Only 24 percent cited the deaths of four Americans at a diplomatic outpost in Benghazi, despite the GOP’s obsession with it. Far fewer, just 14 percent, listed the Justice Department’s scrutiny of reporters.
But here’s the news you may have missed: An overwhelming 73 percent said that boosting the economy and creating jobs is more important than any of the other three issues. If politicians were as poll-obsessed as they are rumored to be, they’d at least pretend to be devoting most of their time to helping middle-class Americans get back into stable jobs with good pay.
The jobs crisis has been decades in the making, an economic restructuring fueled by globalization and technology. Think about it: Those Bangladeshi textile workers killed in an April building collapse were doing work once done in the United States. No matter how many affluent Americans protest the conditions and boycott the designers who contributed to the disaster, those jobs are not coming back to these shores. Manufacturers will continue to pursue cheap labor.
As a result, the jobs that once guaranteed good wages and stable futures to generations of Americans without college degrees have all but disappeared. That transformation, which started in the 1970s, has contributed to the wage gap, the ever-widening rift between the haves and have-nots. The average American worker has been losing economic ground for decades.
Politicians ignore that growing gap at their peril. The notion of an America where everybody has an equal shot has always been more myth than reality, but there was once a time when it was not so difficult for young adults to imagine a more prosperous future than their parents had. That is no longer a likely scenario.
That’s a very difficult problem to solve, which helps explain why politicians don’t like to discuss it. It calls for a multigenerational response, the sort of bipartisan approach that is usually reserved for battles against foreign enemies.
But Washington is stuck in a period of deepening polarization, incapable, it seems, of even agreeing on the causes of our economic woes. Democrats, at least, have a language for discussing widening income inequality. Republicans haven’t yet come to terms with its existence. So the sorry spectacle continues.
By: Cynthia Tucker, The National Memo, June 6, 2013
“Taxing The Most Vulnerable”: Student Loan Debt Is Bad For Women And Congress Is Making It Worse
How bad is the wage gap for women in the workplace?
For college graduates, it’s so bad that it begins even before women begin their careers.
According to a study by AAUW, Graduating to a Pay Gap: The Earnings of Women and Men One Year After College Graduation:
Women and men pay the same amount for their college degrees, but they often do not reap the same rewards. Among 2007-08 college graduates, women and men typically borrowed similar amounts to finance their educations, about $20,000. Because women are paid less than men are paid after college, student loan repayments make up a larger part of women’s earnings. In 2009, among full-time workers repaying their loans one year after college graduation, just over half of women (53 percent) compared with 39 percent of men were paying more than what we estimate a typical woman or man could reasonably afford to pay toward student loan debt. These numbers have risen in recent years.
Outstanding student loans today total more than $1 trillion, surpassing credit card debt. Student loan debt has increased nearly 300 percent over the last eight years, according to a report by the New York Federal Reserve.
Is Congress doing anything about this problem? As a matter of fact they are. They’re making it worse.
This July, unless Congress acts, the interest rate on federally subsidized Stafford loans is set to increase from 3.4 to 6.8 percent. In another example of the Congress’ attitude of “don’t tax the rich, but tax the most vulnerable,” student loans are seen as a nice little moneymaker.
The federal government will make $34 billion this year on student loans. If Congress allows the interest rate on these loans to double, the federal government will bring in even more revenue — money that comes straight from the pockets of students who had to borrow money to go to college.
Of course, not everyone has to pay such a burdensome rate of interest on loans. Big banks can borrow money from the Federal Reserve at a rate of less than 1 percent. There’s something very wrong with this picture.
This week, I attended a breakfast meeting with Senator Elizabeth Warren (D. Mass.) where she spoke about the first piece of standalone legislation she is introducing in the United States Senate.
In a speech on the Senate floor, Sen. Warren said:
The Bank on Students Loan Fairness Act would allow students who are eligible for federally subsidized Stafford loans to borrow at the same rate that big banks get through the Federal Reserve discount window. For one year, the Federal Reserve would make funds available to the Department of Education to make loans to students at the same low rate offered to the big banks. This will give students relief from high interest rates while giving Congress time to find a long-term solution.
At our breakfast, I remembered that it was the mobilization of enormous grassroots support for the Consumer Financial Protection Bureau (then-Professor Warren’s brainchild) that kept pressure on Congress to pass the legislation that established that agency. Her fight to keep student loan interest rates low is her next big campaign, and women should pull out all the stops to support her.
AAUW’s findings tell us that women are disproportionately likely to take out loans; among 2007-2008 graduates, 68 percent of women borrowed money for college compared to 63 percent of men.
According to the AAUW report:
For many young women, the challenge of paying back student loans is their first encounter with the pay gap. “Student loan debt burden” is defined as the percentage of earnings devoted to student loan payments. A high student loan debt burden is an indicator that repayment may create hardship. Individuals with high student loan debt burden are less likely to own a home, have a car loan, or even make rent payments. High student loan debt burden is a challenge for a growing number of college graduates, men and women alike, but is particularly widespread among women, in large part because of the pay gap.
The National Organization for Women (NOW) has a long history of supporting equal pay, comparable worth and other policies that advance women’s economic security. NOW was proud to support Elizabeth Warren in her successful campaign for the U.S. Senate, and we are equally proud to support her urgently needed legislation to reduce the burden of student loan debt.
It’s hard to imagine how anyone could oppose a bill that simply requires the Fed to set interest rates for students at the same low rate the big banks get. But get this: an opponent of Sen. Warren’s bill reportedly suggested — presumably hoping we’ve all forgotten about the taxpayers’ bailout of the too-big-to-fail banks — that unlike students, the big banks deserve to pay a super-low interest rate because they never fail. And they say the 1 Percent has no sense of humor.
Elizabeth Warren has planted the flag for student loan reform by introducing her bill, and now it’s up to us to mobilize support and pressure Congress to pass it. This is grassroots democracy at its best. So, blog about this, write letters to the editor, lobby your senators and your representative.
Help ensure that a college education is a pathway to fulfillment and success for women, and not an opening to crushing debt.
By: Terry O’Neill, President, National Organization for Women, The Huffington Post, May 20, 2013
“The Alienation Of Citizens”: Political Dysfunctions Spells Trouble For Democracies
We know American politics are dysfunctional. But after a week of scandal obsession during which the nation’s capital and the media virtually ignored the problems most voters care about — jobs, incomes, growth, opportunity, education — it’s worth asking if there is something especially flawed about our democracy.
Our circumstances certainly have their own particular disabilities: a radicalization of conservative politics, over-the-top mistrust of President Obama on the right, high-tech gerrymandering in the House and a Senate snarled by non-constitutional super-majority requirements.
Still, while it may not be much of a comfort, the democratic distemper is not a peculiarly American phenomenon. Across most of the democratic world, there is an impatience bordering on exhaustion with electoral systems and political classes.
Citizen dissatisfaction is hardly surprising in the wake of a deeply damaging economic downturn. That doesn’t make the challenge any less daunting. We should consider whether democracy itself is in danger of being discredited. Politicians might usefully disentangle themselves from their day-to-day power struggles long enough to take seriously their responsibility to a noble idea and the systems that undergird it.
It’s not hard to discover that this conundrum is global and not just our own. “Has democracy had its day?” is the headline on Columbia University historian Mark Mazower’s cover story in the May issue of Prospect, a British magazine. The subhead: “Electoral politics has had a bad decade.”
Earlier this month, the Transatlantic Academy, a global partnership of think tanks led by the German Marshall Fund of the United States, issued “The Democratic Disconnect,” a sober report by a group of distinguished academics.
“Democracy is in trouble,” the report begins. “The collective engagement of a concerned citizenry for the public good — the bedrock of a healthy democracy — is eroding. Democratic governments often seem crippled in their capacity to deliver what their people want and need. They are neither as responsive nor as accountable as they need to be in an era of hard choices and rising nondemocratic powers. There is widespread concern about apparent declining rates of voter participation and about the alienation or disaffection of citizens from the political process.”
In Europe, the authors noted, “there is fear that the distance between ordinary citizens and the politicians and bureaucrats in Brussels compromises democratic legitimacy.” In the United States, “lamentations about gridlock and polarization are the order of the day.” Even our peaceable neighbor Canada is not immune. “Canadians,” they write, “worry about the tendency of their political system to place largely unaccountable power in the hands of the prime minister.”
The report does include some useful suggestions for reviving the democratic spirit and improving democratic practice. But it is not alarmist to be uneasy about democracy’s prospects. Ernst Hillebrand, the head of international policy analysis for the Friedrich Ebert Foundation, the German Social Democratic Party’s think tank, describes a chilling finding in a 2009 survey by the German polling firm Forsa: “that zero percent — yes, zero percent — of workers in Germany believe they can have a significant impact on how policy in Germany is shaped via the ballot box.”
And bear in mind that a poll released last week by the Pew Global Attitudes Project found that Germans are far more satisfied with their country’s situation than are their European neighbors.
In a conversation last week during a visit to Washington, Hillebrand pointed to two streams of discontent the world’s democracies face. One is material. The other might be called spiritual.
On the one side, large numbers of lower-middle-class and working-class voters have seen their economic standing deteriorate over two or three decades. There has been a substantial transfer of wealth and income from labor — which is how most people pay their way — to capital. Productivity gains no longer lead to wage gains. This builds justified frustration.
At the same time, he said, many citizens, especially the young, have enhanced expectations for “participation, self-realization and control over their lives.” They do not see current electoral arrangements in democracies giving them much chance to achieve any of these goals.
Since World War II, bouts of economic growth have allowed democracies to buy their way out of trouble. One can hope this will happen again — and soon. In the meantime, politicians might contemplate their obligations to stewardship of the democratic ideal. They could begin by pondering what an unemployed 28-year-old makes of a ruling elite that expends so much energy feuding over how bureaucrats rewrote a set of talking points.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, May 19, 2013
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