“Deregulation And Worker’s Bargaining Power”: New Insight Into The Decline Of The Middle Class
The recently released 2012 Organisation for Economic Co-operation and Development Employment Outlook provides new insights into the decline of the middle class. The report documents the global shift from labor income to profits. Across the Organisation for Economic Co-operation and Development, known as OECD, the share of income going to wages, salaries, and benefits—labor’s share—declined over the last 20 years. The median labor share in OECD countries fell from 66.1 percent to 61.7 percent of national income. However, the decline in labor compensation was not equally shared by all employees; the wage share of top income earners increased while low-paid workers were hardest hit. On average, the wage share of the top 1 percent of income earners increased by 20 percent over the past two decades.
In the United States, where labor’s share began its decline in the 1980s, it fell a further 2.5 percentage points over the past 20 years. Excluding top earners’ income, the decline in the adjusted labor share was 4.5 percentage points.
The decline in labor’s share of national income did not result from a shift away from labor intensive industries to industries that employ a low share of labor. The OECD’s analysis found overwhelmingly that it is within-industry declines in labor’s share of industry value added that explains the fall in labor’s share. On average, the OECD found, real wage growth within industries did not keep pace with productivity growth.
Examining the causes of the decline in labor’s share, the OECD found that labor-saving technical change across most industries was associated with greater investment in capital and higher productivity growth as machines replaced workers in some jobs. The OECD found a strong association between technical change and the decline in labor’s share. It is important not to be hasty and jump to the conclusion that technological unemployment is to blame for the decline in labor’s share. In fact, the OECD did not find fewer jobs overall for less-educated workers.
Rather, what they found is not a decline in low-skill jobs, but a decline in jobs that pay middle-class wages. The share of the high-skilled in occupations such as manager or IT engineer increased as did jobs at the bottom of the wage distribution, typically low-paid precarious jobs. Unfortunately, this increase in demand and employment of workers in low-paying occupations did not improve the earnings of these workers. Increasingly, better-educated workers who in the past would have found middle-class jobs ended up low-paid employment. The OECD found that educational requirements increased quickly in low-pay occupations and that “workers in these jobs tend to be overqualified” (p. 124). A recent report from the Center for Economic and Policy Research found this to be true in the United States, where 43 percent of low-wage workers have some college or a college degree, 27 percent have a high school degree, and only 20 percent did not graduate from high school.
What, then, explains the failure of real wages to grow in line with productivity growth, and for increased educational attainment to translate into middle-class earnings? The evidence points to the negative effects of deregulation of some industries and increased globalization on workers’ bargaining power.
Deregulation of industries such as energy, transportation, and communication in which union density had traditionally been high opened these industries to new enterprises staffed by non-union workers. Increasing globalization—the delocalization of some parts of the supply chain as well as import competition from low-wage countries for blue-collar workers (but, notably, not for doctors, lawyers, and other high-paid workers) has led to the loss of well-paid unionized jobs. Both of these developments have led to a reduction in workers’ bargaining power vis a vis employers and have weakened unions, leaving workers to fend for themselves and employers to fix wages individually. The result according to the OECD has been to “decrease the bargaining power of workers, particularly those who are low-skilled, and thus their ability to appropriate their share [of productivity gains].”
The unequal distribution of labor income—with nearly all the gains in wages going to the top 1 percent while earnings stagnated or declined for the 99 percent—has gone hand-in-hand with the decrease in the share of national income going to labor and the shift from labor income to profits. Absent a countervailing force that enables workers to share fairly in the economy’s productivity gains, the decline in labor’s share appears likely to continue.
By: Eileen Appelbaum, Washington Whispers, U. S. News and World Report, August 25, 2012
“Limousine Jerks”: The Rise Of The “Drawbridge Republicans”
As Republicans head toward next week’s convention something extraordinary has come into view now that their ticket is complete.
Mitt Romney came from wealth and went on to build his own quarter-of-a-billion dollar fortune. Paul Ryan, who has never worked a day in the private sector (outside a few months in the family firm) reports a net worth of as much as $7 million, thanks to trusts and inheritances from his and his wife’s family.
Wealthy political candidates are nothing new, of course. But we’ve never had two wealthy candidates on a national ticket whose top priority is to reduce already low taxes on the well-to-do while raising taxes on everyone else — even as they propose to slash programs that serve the poor, or that (like college aid) create chances for the lowly born to rise.
Call them the Drawbridge Republicans. As the moniker implies, these are wealthy Republicans who have no qualms about pulling up the drawbridge behind them. Such sentiments used to be reserved for the political fringe. The most prominent example was Steve Forbes, whose twin obsessions during his vanity presidential runs in 1996 and 2000 — marginal tax rates and inflation — were precisely what you’d expect from an heir in a cocoon.
(In case you were wondering, Ronald Reagan wasn’t a Drawbridge because he entered office when marginal rates, at 70 percent, were truly damaging to the economy. But as GOP business leaders now tell me privately, the Clinton-era top rate of 39.6 percent, let alone today’s 35 percent, are hardly a barrier to work or investment).
Most rich Republicans who champion regressive tax plans find it necessary to at least pretend they’re doing something to help average folks. John McCain, who’s lived large for decades thanks to his wife’s inheritance, famously had trouble keeping track of how many homes he owned — but McCain also tried bravely to create a path to citizenship for illegal immigrants. George W. Bush campaigned as a “compassionate conservative,” and touted education initiatives that made this claim plausible.
Today’s Drawbridge Republicans can’t be bothered. Yes, when their political back is to the wall — as Romney’s increasingly is — they’ll slap together a page of bullet points and dub it “a plan for the middle class.” But this is only under duress. The rest of the time they seem blissfully unaware of how off-key they sound. As the humorist Andy Borowitz tweeted the other day, “As a general matter, it’s a bad idea to talk about austerity if you just had a horse lose in the Olympics.”
Contrast conservative Prime Minister (and heir) David Cameron’s decision to defer his plans to lower the top 50 percent marginal rate in the UK. “When you’re taking the country through difficult times and difficult decisions,” Cameron said, “you’ve got to take the country with you. That means permanently trying to make the argument that what you’re doing is fair and seen to be fair.” As his spokesman added: “We need to ask those with the broadest shoulders to contribute the most.”
Now that’s a conservative ruling class with a conscience! Can anyone imagine Romney and Ryan saying the same?
The interesting question concerns psychology. Drawbridge Republicans are flesh and blood human beings peddling indefensible priorities. How do they manage it and still feel good about themselves? One possibility is that they’re simply missing the genes for empathy and self-awareness. (Steve Forbes always did seem a bit like a bubble boy whose inheritance left him impervious).
But for today’s GOP ticket that explanation feels off. Romney, for all his awkwardness, campaigned and governed in a liberal state, and he enacted a pioneering universal health care law that’s helped many of modest means achieve health security. Ryan is equally mysterious — the boy-next-door who pays lip service to “upward mobility” yet seems to have no notion his plans would likely produce what liberal analyst Robert Greenstein calls “the largest redistribution of income from the bottom to the top in modern U.S. history.”
My hunch is that extreme forms of rationalization and other defense mechanisms help Drawbridge Republicans cope with the cognitive dissonance. The growth of partisan media makes it easy to tune out disquieting dissenting views.
Whatever lies behind it, the rise of the Drawbridge Republicans makes the stakes of this election even higher. If Romney and Ryan actually win on their Drawbridge agenda, the United States will have crossed a scary new Rubicon for a supposedly advanced democracy. For years, whenever I’ve heard people criticize “limousine liberals,” I’ve always thought, well, at least that’s better than being a “limousine jerk.” Now it turns out that’s exactly what a Drawbridge Republican is.
By: Matt Miller, Opinion Writer, The Washington Post, August 21, 2012
“Serious As A Snakebit”: The Ryan-Romney Flim-Flam Ticket
Let’s talk budget! Yes, the wonky wonderland of the federal budget, with page after page of numbers — what fun, eh?
No. Most people would prefer a root canal to a budget discussion (indeed, I’ve heard that some dentists use a recording of budget numbers to anesthetize their root-canal patients — everything from the neck up quickly goes numb). But Paul Ryan is different.
The GOP’s vice presidential nominee is touted as Mr. Budget, a guy who gets excited by running his fingers through fiscal things. That’s why the Washington cognoscenti have declared him to be “serious,” rather than just another political opportunist riding the right-wing wave of tea party ridiculousness.
Being branded as “serious” means never having to admit you’re a flim-flam man. Thus, the widely ballyhooed Ryan Budget is called “honest” and “responsible” by insiders who obviously haven’t run the numbers on it.
The nonpartisan Tax Policy Center, however, has tallied Ryan’s budgetary giveaways to the rich and take-backs from the middle-class and the poor. Far from balancing the federal budget, as the self-proclaimed deficit hawk claims, the analysts found that Ryan’s plan increases the federal deficit. And not by a little, but by about $2.5 trillion! So, yes, he is serious — serious as a snakebite.
Then there was Ryan’s explosive admission recently that the budget plan of his presidential partner, Mitt Romney, is also a con game. Despite Romney’s repeated assertion that — by golly — his nifty plan will balance the federal budget in only eight years, Ryan confessed that they don’t really know that, because “we haven’t run the numbers on that specific plan.”
Say what? What? Hello — a budget is nothing but numbers — numbers that have, in fact, been run! Otherwise, it’s just a political hoax.
During his run in the presidential primaries this spring, when he was trolling for votes in the shallow waters of the Republican fringe, Romney embraced the Ryan budget, calling it a “bold and exciting effort” that is “very much needed.” And, hoping to glom onto Ryan’s “wow” appeal to the hyper-energized right wing, Romney brought Mr. Budget onboard for the fall run — with one interesting condition: The veep candidate has had to jettison his budget.
That document, which Ryan had rammed through the U.S. House in 2011, would have provided another gold mine for the one-percenters, with millionaires-and-up averaging around $300,000 a year in tax breaks. The rest of us would’ve gotten the shaft, including tax increases, privatization of Medicare, deep cuts in student aid and job training programs, and federal abandonment of food stamps and health care for the poor.
Yet Ryan is on the Republican presidential ticket specifically because his budget whackery has enthralled the GOP’s far right. Anti-government guru Grover Norquist, for example, has gushed that the six-term Wisconsin congress-critter would be the Dick Cheney of economic policy. Sheesh — that’s not a threat to be taken lightly!
But the very bauble that got him to the GOP’s No. 2 political slot turns out to be so widely and wildly unpopular with voters in the deeper waters of the general election that it’s already been trashed by the party’s No. 1. “I have my own budget plan,” Romney backpedaled the day after he knighted Sir Ryan, “and that’s the budget plan we’re going to run on.” Yes, the budget with no numbers.
That aside, it’s kind of strange (and a bit unsettling) to see a candidate for president straining to explain that he’s the one in charge, not the young ideologue. Romney even went on national TV to tell us that, while Ryan would certainly be among the people he asks for advice, “I have to make the final call in important decisions.” Sure, Mitt — you da man! But was he trying to convince us … or himself? Or Ryan?
Embarrassingly, at the staged event where Romney introduced his VP selectee, he bungled his line, presenting Ryan as “the next president of the United States.” Was that just another Romney gaffe? A Freudian slip? Or an eerie moment of candor?
After all, Romney has no unwavering principles or solid commitment to any policy except, “Elect me, and I’ll lower my taxes.” Republican leaders are now trying to downplay Ryan’s extremism, but if they were honest with voters, their bumper sticker would read: “Ryan-Romney in 2012.”
BY: Jim Hightower, The National Memo, August 22, 2012
“Mitt’s 13% Tax”: Romney’s Embodiment Of The Principle Of Equal Sacrifice
Mitt Romney says “every year I’ve paid at least 13 percent [of my income in taxes] and if you add in addition the amount that goes to charity, why the number gets well above 20 percent.”
This is supposed to be in defense of not releasing his tax returns.
Assume, for the sake of the argument, he’s telling the truth. Since when are charitable contributions added to income taxes when judging whether someone has paid his fair share?
More to the point, Romney admits to an income of over $20 million a year for the last several decades. Which makes his 13 percent — or even 20 percent — violate the principle of equal sacrifice that lies at the core of our notion of tax fairness.
Even Adam Smith, the 18th century guru of free-market conservatives, saw the wisdom of a graduated tax embodying the principle of equal sacrifice. “The rich should contribute to the public expense,” he wrote, “not only in proportion to their revenue, but something more in proportion.”
Equal sacrifice means that in paying taxes people ought to feel about the same degree of pain regardless of whether they’re wealthy or poor. Logically, this means someone earning $20 million a year should pay a much larger proportion of his income in taxes than someone earning $200,000, who in turn should pay a larger proportion than someone earning $50,000.
But Romney’s alleged 13 percent tax rate is lower than that of most middle class Americans who earn a tiny fraction of what he earns.
At a time when poverty is increasing, when public parks and public libraries are being closed and when public schools are shrinking their offerings and their hours, when the nation’s debt is immense, and when the 400 richest Americans have more wealth than the bottom 150 million of us put together — Romney’s 13 percent is shameful.
By: Robert Reich, Robert Reich Blog, August 17, 2012
“Oh So Good, But Oh So Wrong”: A Well Respected Man For Those Who Are Already Wealthy
Whenever I hear about U.S. Rep. Paul Ryan (R-Wis.), I can’t help thinking of the lyrics from the old Kinks song “A Well Respected Man.” Yes, a number of people seem to think that Ryan is “oh so good, and he’s oh so fine and oh so healthy in his body and his mind.” Indeed, Mitt Romney must have chosen Ryan as his running mate because “he’s a well respected man about town, doing the best things so conservatively.”
Ryan certainly looks the part, doesn’t he? What’s not to love about this kind-looking, young man, with the warm smile, twinkling blue eyes and thick head of hair? His serious demeanor at just the right photo moment shows us how much he cares for all of those struggling middle-class families. He even looks the part of the working-class man when he rolls up his sleeves.
Sadly, this nice-looking and apparently very respectable guy is getting it all wrong when it comes to his vision for the United States. He draws from the same old, worn-out Republican playbook. How many times do we have to hear about reducing taxes on the wealthy so they can be “job creators” before it just becomes a joke? Honestly, we already have lower taxes for the wealthy, so why haven’t the jobs been created?
The only jobs that seem to be created are the ones for the accountants and the attorneys as they broker deals so the wealthy can buy up even more oceanfront property. Seriously, people, how out of control are the tax laws in this country when someone like Romney can pay $12 million in cash for a home, demolish that home, rebuild on the site and then insist on having his property taxes reduced? Is anyone buying this “job creator” lunacy anymore?
Of course, if wouldn’t be the good old Republican Party line if Ryan didn’t redirect the public’s attention away from the wealthy and directly onto some poor, single parent just trying to get by. Oh, no, we can’t have any “entitlements” for the working poor.
I mean, Ryan wants people to pull themselves up by their bootstraps. It doesn’t matter if they don’t have any boots; that’s just too bad for them. I’ve always thought it was odd that even though Republicans are notorious for their suspicions about evolution, they do seem to embrace that whole survival-of-the-fittest thing.
Even if you worked all of your life, paid into Social Security and expect to get on Medicare, you’re just asking too much of America, according to Ryan. Balancing the budget on the backs of working-class men and women is the overriding philosophy behind Ryan’s plan for America.
The bottom line is that Ryan is the choice for those who are already wealthy. I guess he is “A Well Respected Man” for that crowd. For everyone else, he’s oh so wrong.
By: Rose Locander, JSOnline, August 13, 2012
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