Why Wall Street Hates A Healthy Labor Market
It’s simple: When workers gain some leverage, it gets a little harder to generate totally obscene profits.
It’s always such a shame when the interests of labor don’t match up with the priorities of capital. The Bureau of Labor Statistics reported on Thursday that new claims for jobless benefits fell again last week. But in a Wall Street Journal roundup of reactions to the news, one economist found reason for concern.
Deutsche Bank’s Alan Ruskin observed that the rate at which productivity — the amount of goods and services produced per worker — is growing is beginning to slow down in the United States.
We are at the point in the cycle where squeezing any more output from the existing labor force, with the current capital stock, becomes more difficult and attempts to raise output, force an increase in employment or at least employee hours. The good news is that we are closer to the point where a virtuous cycle of increased demand, driving increased employment and income, generating more demand, is in place. The flip side is that the rise in wages relative to output pushes up unit labor costs and undermines productivity, and could chip into the record profit share of income with some negative implications for equities.
In other words, stock prices could slump because an increase in the demand for labor will put upward pressure on wages. For the vast majority of Americans, this is fantastic news. For the 1 percent, not so much.
The news inspires memories of the go-go days of the dot-com boom, when the stock market greeted every new monthly release of gangbuster job growth numbers with a sharp sell-off. Wall Street doesn’t like it when American workers are in demand. That’s either the most heartening news yet about the nascent economic recovery, or the most maddening.
By: Andrew Leonard, Salon, February 2, 2012
“House Of Bain”: GOP Rallies Around Vulture Capitalism, Not Mitt Romney
I’ve got to admit it: Liberals are at a disadvantage when it comes to judging where the GOP primary is headed. Last week I was sure that conservatives were settling on Rick Santorum, and his supposed blue-collar family values, as the official not-Mitt Romney candidate after his strong Iowa showing. Not quite yet. Sunday I was sure Newt Gingrich’s slashing “King of Bain” ad, attacking Romney as a looter and a job destroyer for his Bain Capital record, would be devastating in a country where the economy is the top issue and unemployment remains high.
It was devastating, all right. To Gingrich. The former House speaker got a beatdown from fellow conservatives this week, with Rush Limbaugh mocking him as an Occupy Wall Street supporter and the National Review harrumphing at the notion that Gingrich targeted Romney’s Bain success because he “apparently expect(s) Republican voters to regard that as a liability.” By the time he made his “I’m tied for fourth place!” speech in New Hampshire Tuesday night, Gingrich looked broken. He abandoned his slashing attacks on Romney’s career and stuck to decrying the “years of decay” under President Obama, recounting his alleged successes as House speaker in the ’90s, and rambling wearily about “innovation.” A few minutes later, over on Fox, a disapproving Sean Hannity smacked sixth-place loser Rick Perry for his attacks on Romney, and echoed Limbaugh’s sneering comparison with Occupy Wall Street ideology.
It’s an interesting moment. Multiple news organizations reported that even close allies are telling Gingrich to cut out the attacks on Romney, but he’s already purchased an estimated $1.5 million in South Carolina airtime for his “House of Bain” spots, plus a nasty ad claiming Romney had “governed pro-abortion” in Massachusetts. What’s Gingrich going to do? He hates Romney, but he loves predatory capitalism as much as Limbaugh does. He doesn’t believe his own Bain Capital attacks. Can he continue to hurt Romney without damaging his own chances to return to the right-wing gravy train when he goes down to defeat? Trust me, the monied interests are not interested in hiring anti-capitalist “historians” to not-lobby for them. Gingrich is torn between vengeance and greed. Sucks to be him. Fun to watch.
It’s also fun to watch conservative Republicans rally around Romney not because they like him but because he’s become the face of the hallowed free market. As he headed to conservative South Carolina, hotbed of Tea Party radicalism, Romney got a boost from its extremist Sen. Jim DeMint, who predicted the former Massachusetts governor would win the Jan. 21 primary. DeMint is staying neutral, he told radio host Mark Steyn Tuesday night, “because Republicans are not yet united and I want to focus on the Senate.” But he praised Romney’s victory speech for “hitting a lot of the hot buttons for me about balancing the budget,” adding “Frankly, I’m a little concerned about the few Republicans who have criticized some of what I consider free market principles here.” He went on: “Some of the others who might have had an advantage here have really crossed paths, crossed ways with some Republicans as they have criticized free enterprise concepts.” DeMint’s remarks could give other Tea Party leaders an excuse to back Romney, though they don’t trust him, in the name of defending capitalism.
I still think there’s a possibility the Bain attacks will resonate with some Republican voters, and maybe in South Carolina, which has a 9.9 percent unemployment rate, compared to under 6 percent in Iowa and New Hampshire. It’s possible Gingrich and Perry’s attacks will open up political space for Santorum, who’s been careful not to attack capitalism as he sticks to his blue-collar platitudes and culture-war campaign. It was great to see New Hampshire voters chasten Santorum by repeatedly challenging his homophobia in public forums and giving him a fifth place finish. But his campaign told the Huffington Post he’ll spend at least $1 million on advertising in South Carolina. Maybe he’s still got a chance.
It’s a tiny one. Super PACs connected to Romney are set to spend $6 million in South Carolina and Florida in the next three weeks. Meanwhile, as every non-Romney candidate vows to head to South Carolina, they split the conservative vote and increase the chances that Romney gets the victory. Perry claimed he’s soldiering on. So did Jon Huntsman, despite a third-place showing that wasn’t enough to make him a serious candidate, since he bet everything on New Hampshire. “Third place is a ticket to ride, ladies and gentlemen,” Huntsman told the crowd, but nobody believes that. Late Tuesday night, Huntsman’s father and financier reportedly hadn’t decided whether to keep bankrolling his son’s bid. (And people mock Romney for his wealth.)
If it weren’t for Ron Paul’s foreign policy views, we might be talking about whether conservatives could coalesce around his candidacy. He underperformed expectations in Iowa but he came in a strong second Tuesday night. As much as I loathe his domestic politics, I enjoyed hearing the crowd chanting “Bring them home” when he promised to get troops out of Afghanistan. Paul will stay in the race and, given his caucus strategy, he could rack up delegates. I don’t know where that will take him – is he dreaming of Vice President Rand Paul? – but it’s great to think about the Ron Paul crowd heckling Mitt Romney when he doubles down on his hawkish, expansionist foreign policy promises in Tampa.
Romney’s heading into a scorched-earth South Carolina primary, but he’s got to be feeling pretty good about his first two outings. In New Hampshire, he won the ultra-rich, of course, but he also got Tea Party members and evangelicals, according to exit polls. He gave a much better victory speech than he did a week ago, because this time he used his teleprompter. He hit not only Obama but his Republican rivals for practicing “the bitter politics of envy,” which has more zing than the standard GOP class warfare line.
The private equity mogul can’t understand that criticism of his Bain career — “restructuring” companies, cutting their workforce and forcing almost a quarter into bankruptcy — isn’t about jealousy, but justice. People are starting to understand that finance capitalism works for the top 1 percent, but not the rest of us. So while Gingrich’s attacks aren’t likely to help his candidacy, they’re a boost to the man he presumably wants to defeat more than Romney. President Obama has to look forward to running against a guy his GOP rivals called a looter and a vulture capitalist. The fact that all of those rivals are fighting on after New Hampshire helps Romney win the nomination, but it could also help the Democrats hold the White House.
By: Joan Walsh, Editor at Large, Salon, January 11, 2012
Mitt Romney Contradicts Own Spokesman On 100k Jobs Claim
Mitt Romney doubled down in Saturday night’s debate on his claim that he created a 100,000 jobs while in the private sector and in the process contradicted recent remarks on the subject from his own campaign spokesperson.
Under persistent questioning from debate moderators, Romney denied that the 100,000 figure can only be reached if one does not count layoffs and other job losses he was responsible for during his time at the corporate management company, Bain Capital.
The talking point, a regular on the campaign trail for Romney, has been well-dissected in recent days. As Brian Beutler wrote last week,
Romney makes two different, but implicitly entwined claims: That while working in corporate management he created over 100,000 jobs and that — by comparison — Obama his presided over millions of job losses.This is a false juxtaposition, based on two false claims. And so far, precious few reporters have pressed Romney or his campaign about it.
That changed big time Saturday when debate moderator George Stephanopolous asked Romney to justify the claim early in the debate. Here’s the question:
There have been questions about that caluclation of the 100,000 jobs, so if you could explain a little more, I’ve read some analysts who look at it and say that you’re counting the jobs that were created, but not the jobs that were taken away. Is that accurate?
Here’s where things get a little complicated. Last week, Romney advisor Eric Ferhnstrom told the Washington Post Romney’s claim that he created 100,000 jobs “stems from the growth in jobs from three companies that Romney helped to start or grow while at Bain Capital: Staples (a gain of 89,000 jobs), The Sports Authority (15,000 jobs), and Domino’s (7,900 jobs).”
“This tally obviously does not include job losses from other companies with which Bain Capital was involved — and are based on current employment figures, not the period when Romney worked at Bain,” the Post wrote.
On the debate stage tonight, Romney said something totally different:
It includes the net of both. I’m a good enough numbers guy to make sure I got both sides of that. The simple ones, some of the biggest, for instance, there’s a steel company called Steel Dynamics in Indiana. Thousands of jobs there. Bright Horizons Childrens Centers, Sports Authority, about 15,000 jobs there. Staples alone, 90,000 employees. That’s a business we helped start from the ground up.
So Romney’s adviser told the Post the the number comes from the jobs that exist at the companies now, not the jobs that were created specifically while he was at Bain, and that they didn’t take into account the other side of the ledger. But on stage Romney said the opposite: that he actually did create 100,000 net jobs in total while at Bain, even factoring in Bain’s layoffs.
Democrats noticed the difference. While the debate was still underway, the DNC pushed out a release to reporters under the subject line, “Romney’s so-called job creation record at Bain continues to evolve.” Separately, the Associated Press went up with a fact-check article moments after the debate concluded.
So this one is going to stick around.
Update: TPM asked Romney spokesman Eric Fehrnstrom about the seeming contradiction between his and Romney’s assessment of the 100k jobs figure. He said that it holds up regardless of whether it includes layoffs at other companies.
“The Bain record has been scrutinized extensively going back to 1994 when Mitt Romney first ran for office,” he said. “You just look at Bain’s startups like Staples, Sports Authority, Bright Horizons, you come up with a jobs figure in excess of 100,000. Now there’s about five or six companies that get written about endlessly that experienced layoffs. Go ahead and deduct those from the number, you still come up with over 100,000 jobs.”
Asked whether the campaign would provide revised numbers that demonstrate that net job gains were in excess of 100,000 even with layoffs included, Fehrnstrom responded, “I just gave you my analysis.”
By: Benjy Sarlin and Evan McMorris-Santoro, Talking Points Memo, January 7, 2012
Withdrawing Unemployment Insurance Will Not Solve Job Crisis
1. The Long-Term Unemployed Are in Dire Financial Shape.
Eliminating unemployment insurance will make matters much worse for those who are already experiencing a financial disaster. In 2009, the Heldrich Center conducted a national survey of workers who lost a job during the recession. When we re-contacted them in August 2011, we found that 4 in 10 were still unemployed or working part time and looking for full-time jobs. Among that group, three quarters had been out of work for more than six months. Fully half had been jobless for more than two years. Their financial condition is dire. They have not only reduced spending on things they would like to have, like vacations and clothing, but also on things they need, such as food, transportation, and healthcare. Sixty percent have sold possessions and borrowed money from family or friends.
2. UI Benefit Support Makes Re-employment More Likely, Not Less.
Eliminating UI will lead to less job seeking, not more. Our surveys found that–compared to people without UI support–those receiving UI spent more time each week going to job interviews and job fairs, networking with friends and colleagues, and scouring the Internet and newspapers for job openings. Enrollment in UI programs keeps workers in the labor market. They get more advice, encouragement, and training. And, job seekers on UI are required to regularly report to state employment agencies about their job search activities.
3. Cutting UI Benefits will drive up the cost of other government programs.
Without UI payments, more unemployed workers will drop out of the labor market and fall into other government safety-net programs. Seven in 10 of the long-term unemployed workers in our study described their financial condition as flat-out “poor.” Yet, the average UI benefit of $1,200 per month–less than the $1,400 average monthly cost of housing in America–is often the vital source of income that enables them to pay their mortgage and feed their family. Withdrawing UI will not solve the job crisis in America, but it will drive up spending in other federal programs, such as food stamps, disability insurance, Social Security, Medicare, and Medicaid. Unemployed workers–who would much rather get a job than get a check from the government–will be driven to these programs as a last resort.
By: Carl E. Van Horn, U. S. News and World Report, December 9, 2011
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