HardWork

Great Release on San Diego Fires

2007-10-26T11:16:00.000-07:00

From our friends at Center for Policy Iniatives, just a great piece about the public failings that may be exacerbating the fires in San Diego

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Center for Policy Initiatives
For Immediate Release October 26, 2007
Contact: Susan Duerksen (619) 804-1950
Donald Cohen (619) 708-3367
Murtaza Baxamusa (619) 358-3805

Chronically Underfunded Safety Services Heighten San Diego's Fire Risk

Emergency Responders Perform Heroically Despite Official Neglect

San Diego— As wildfires devastated San Diego neighborhoods this week, chronic and systematic underfunding of public safety services left the region needlessly vulnerable to the destruction. That is the conclusion of the Center on Policy Initiatives (CPI), a non-profit research organization based in San Diego.

“Although this is a region with extreme natural fire hazards, anti-tax politics have led to an undersupply of fire stations, equipment and personnel to adequately fight fires,” said CPI president Donald Cohen. “Our 2005 study, The Bottom Line, documented that San Diego's per capita spending on fire protection is the third lowest among large California cities, and the number of firefighters per 1,000 residents is the lowest.”

The full text of the report is available online here.

Then-San Diego Fire Chief Jeff Bowman resigned last year because the city refused to fund additional firefighters and equipment he said were needed after the disastrous Cedar fire of 2003. For the city's size, Bowman said, San Diego is short 22 fire stations and hundreds of firefighters.

The city has failed to implement many of the recommendations for increased funding in reports following the 2003 fire by both the city's own staff and a state Blue Ribbon Fire Commission. The city budget in 2005 identified a long-term need for $478 million in new funding for public safety services -- a need that remains unfilled. Only one station and seven firefighters were added to the city budget this year.
Just this spring, Mayor of Jerry Sanders refused to give firefighters any pay raise while giving all other city employees cost of living increases.

"San Diego firefighters were beginning to look for jobs elsewhere because of low morale and inadequate resources," Cohen said. “They have performed heroically despite repeated failures by the City to invest in public safety. Together with other emergency responders, they have done an outstanding job in responding with new systems, efficient coordination between agencies, orderly evacuations and round-the-clock shifts.”

San Diego County does not have a countywide fire department, but depends on a patchwork of 17 municipal fire departments, 28 special fire districts and many volunteer agencies. A 2003 report from the San Diego Local Agency Formation Commission detailed the funding difficulties faced by these agencies because of Proposition 13 restrictions and voter reluctance to approve tax measures.

Sunday nugget

2007-10-21T19:05:00.000-07:00

Good story in today's times about potential economic slowdown in New York, yields this nugget:

http://www.nytimes.com/2007/10/22/nyregion/22economy.html?_r=1&hp&oref=slogin
"All told, financial-services firms based in New York have announced job cuts of 42,404 this year, according to Challenger, Gray & Christmas, a job-placement consulting firm in Chicago."

Creeping Unemployment Rate Points to Still Unsure Job Market as Manufacturing, Construction and Credit Sectors Still Lagging

2007-10-05T07:14:00.000-07:00

Today’s Labor Department figures show payrolls turning around from August, as the economy added 110,000 jobs in September.

There are still plenty of reasons to worry about trends in the labor market, and hardship they are causing for workers in key parts of the economy. Even with the up tick last month, job growth has slowed. The economy added an average of 97,000 jobs a month in the 3rd quarter of 2007 as compared to 202,000 jobs a month last year at this time.

The slowdown is in large part due to a contraction in construction and manufacturing, which continued to shed jobs in September and have each dropped more than 100,000 jobs since January. The housing crunch has also sliced payrolls by 30,000 in the lending and mortgage sector since July. With new housing construction stalled, employment in these sectors is unlikely to recover soon.

The slowdown in growth is now showing up in the unemployment rate, which has creeped back up to 4.7%., the highest rate since August of last year. If job growth does not pick up steam, the unemployment rate will continue to increase and cut off demand needed to keep the US out of a recession.

The increase in unemployment so far has occurred among workers with a high school degree or less, as college educated worker’s employment has held steady overall. For example, the unemployment rate for workers without a high school degree now stands at 7.4% up from 6.5% a year.

This steep increase is particularly troubling given recent data from the GAO, which found that such low-earning workers were only a third as likely to receive unemployment benefits as high wage workers. Congress is currently considering legislation (S. 1871) to spur major improvements to unemployment program that would close these gaps.

Fighting Out of a Tough Spot

2007-10-04T19:40:00.000-07:00

Last week, the UAW struck General Motors. The first thing I did when I got home was to checkout my hometown papers from Detroit. Naively, I thought I’d find some sympathy. Rather, all I witnessed were some familiar old saws about how the union was harking back to the 1970s (the last national GM strike) and how GM was just trying to do those things it needed to do to compete in today’s marketplace. In the articles and comments, there was a lot of schadenfreude (why should auto workers have it so good, when so many other blue collar workers have been forced to accept such bad conditions) and a general sense of worker powerlessness that casts strikes as things of the past.

The strike is over and the details are coming out. The UAW appears to have done pretty damn good by going on strike, thank you very much.

There’s relentless pressure for the US automakers to slash labor costs and offshore assembly to Mexico and Brazil for the US market. Wall Street, with allies in the intelligentsia and media, had browbeaten the union and demanded that they accept massive cuts in their pay and security. In the face of that, the UAW negotiated cash bonuses for its core workers over the life of the contract and agreements to hire temporary workers as union members (insourcing not outsourcing), and only accepted reduced wages for new workers in some non-core positions. There are some small plant closings in the deal, but the contract also includes several new important investments like a new engine plant in Flint (many engine plants have been closed in the US) and a commitment to build a new electric car in the United States.

The UAW has agreed to establish a Voluntary Employee Benefit Agreement (VEBA) trust fund. This would allow GM to offload all its retiree health costs from its books with a one-time cash payment to an organization run by the union and trustees. The VEBA is a risk to the union, but the bottom line is that UAW retirees have a mechanism to keep their health care when they retire.

So, the naysayers should apologize to the UAW for dismissing them so easily. GM seemed to be playing cat and mouse, asking for the VEBA and trying to string the UAW along on other issues. Maybe they thought the UAW wouldn't go on strike. There was risk in doing so - GM could have jammed the UAW and fought them on job security and wages to the bitter end. Instead, the UAW used the strike to wake GM up and get a workable deal done. With it workers could go back to work on reasonable terms, and put the pressure on management to design marketable cars and rebuild ceded market share.

The focus was on the core fight – keeping decently paid middle class jobs in the United States, while making compromises that need to be done when negotiating with a struggling company. Given the role of the auto sector in defining the middle class, it was a bigger fight than just the UAW. Lets give credit to a modern labor union that balanced confrontation and pragmatic compromise.

No Mexican Trucks - Score One For Living Wages and Public Safety

2007-09-19T07:08:00.000-07:00

Hope folks caught the really significant victory for living wage jobs won by the Teamsters and their allies. The Bush Administration had proposed allowing Mexican trucks to make long hauls across the border and across country, but the Senate and House handily overturned the proposals by denying funds to implement the rules.

I was especially ticked by conventional wisdom that chided the Teamsters and the Sierra Club as protectionists and self-serving for opposing the change, and called on Congress to fulfill the promise of NAFTA by allowing long haulers to drop off goods in all three countries.

There was no real promise of NAFTA for workers in Mexico, the U.S. or Canada. On the Mexican side, such a real promise would have to included massive economic development aid and freer borders for labor to migrate. Never happened. What we got was a one sided deal, that allowed companies to place production in Mexico when it was profitable (without making long-term investment) and for U.S. imports to snuff out traditional agriculture and other native grown Mexican businesses. The other ‘promise’ of NAFTA was that their would be meaningful labor and environmental standards, so that companies couldn’t reap massive profits by simply bringing US-banned union-busting and hazardous environment practices to Mexico. Never happened.

That’s why it was so heartening to see Congress just say no to the further NAFTA-ization of the economy. If the Mexican truck rules had gone through, we would have lost one more source of good blue collar living wage jobs that are unlikely to come back. Moreover, it would be one more example where the NAFTA regime would have been allowed to over-rule decades of hard fought regulations that protected American drivers (including truckers) from accidents and poor emissions. When all the world order gives us is half-baked globalization (termed second-best globalization in a brilliant article by Daniel Rodrik), sometimes all we can do is just say no.

Wages - It's All About the Leverage

2007-09-19T07:00:00.000-07:00

Last week, the New York Times’ David Leonhardt presents an article talking about the all-too-real disconnect between family bottom lines and the growth in the economy. The story is familiar, real wages have stood still from 2003 to the second quarter of 2007 as the economy has grown gangbusters. What little gains we’ve since then are likely to be erased if job growth continues to slow. This astounds economists like Lawrence Katz who throw up their hands and say that we just need white hot growth and truly full employment to get higher wages. I don’t disagree with the need to have macroeconomic policies geared towards full employment – and that full employment in today’s super deregulated workplace is something at 4.0% or below.

While I really like David’s reporting, what disappointed me about the article was the lack of perspective on why this has happened and potential solutions – with the article meekly pointing to a potential decline in the number of college degrees in the country. In my mind, its not really a mystery why economic growth is not going to workers. The disconnect has occured through a precipitous decline in wage-setting power of US workers and the government through wage floors.

On one hand, you have the precipitous drop in unionization rates in the economy which allows firms to attract employees at lower prices at lower and middle ends of the spectrum. On the other hand, you have a tremendous weakening of the wage floor. Not only do workers face a declining value of the minimum wage but the watering down of overtime rules. To make matters worse, one in ten companies misclassify their workforce as independent contractors which totally exempts them from any kind of wage rules. But perhaps most importantly, you have the impact of fear. Companies of all stripes can point to globalization and the availability of cheaper workers overseas to instill an omnipresent anxiety that parallelizes workers from demanding pay raises. NAFTA and the WTO have aided and abetted the destruction of living wage jobs to the benefit of the very top of the economic spectrum.

We need sympathetic reporters to start identifying these causes—because they lead to potential prominent solutions that can rebalance the economy, rather than pointing to more nebulous economic forces. There are proposals all over Congress that would get us on the right traack-- Employee Free Choice Act, the increase in the minimum wage, various proposals to cut off scofflaw employers, and tough stands on unfair trade deals could start to rebalance the economy to give workers the leverage to turn their productivity into real gains in their paycheck. But, we still have a long way to go in convincing the media and the public that these solutions can start to reverse the tide. Editorial after editorial talks about the decline in the middle class but rarely mention even big ticket items like EFCA. When liberal pundits pine for the ‘natural economic gains’ produced when the economy becomes red hot like it did in the late 1990s, we are going to be sorely disappointed. Today’s workforce needs the tools to fight for its fair share of the pie in all stages of the business cycle.

Recession on the Horizon?

2007-09-07T17:58:00.001-07:00

Today, for the first time in four years the economy has experienced negative job growth. In August 2007 the economy reportedly lost approximately 4,000 private sector jobs. Of greater concern is the ob creation trend over the past few monthsin January of 2007 the economy created 162,000 jobs, dropping quickly to only 69,000 in June, 68,000 in July, and finally to negative 4,000 in August, the lowest since August 2003.

The recent job creation patterns, working in tandem with troubles in the housing market, wide-spread fluctuations in the stock market, are raising a real possibility that the job market expansion may be nearing the end. Economists are still divided about the risk of a full-blown recession, but today's numbers seem to be pushing many over the edge as reported here in the New York Times. The US economy is in a tight balancing act--with the rest of the world's growth pull the US out of the hangover in the housing and credit markets. I think there is a real chance that world demand could inject enough stimulus into the US to pull us along in a state of slow growht versus recesson. However, Louis Uchitelle and others have written about the danger of an economy based on leveraged buyouts and re-organizations and short-term profits versus innovation. That's the kind of an economy that could short circuit when the credit bubble bursts.

If we do dip into recession, it will be one of the most disappointing expansion on record. For example, the nation’s factories have lost 215,000 jobs over the year and is still down 1.8 million jobs from the end of the last recession. By this point in the last recovery, manufacturing employment had completely recovered all of its losses.

We'll see in the next few months. Should job creation remain stagnant, decrease even further, or fail to keep pace with individuals seeking employment, the national unemployment level and unemployment rate will increase in the months to come (they were stagnant in August). I've noticed an uptick in the unemployment insurance figures in many states and the nation as well, there are already 2.55 million people collecting unemployment checks, which is 100,000 more than last year at the same time. One bright spot, as stated below, Congress has some real chances to take action while the storm clouds are gathering but the thunder has yet to begin.

Thoughts on Labor Day 2007

2007-08-31T07:12:00.000-07:00

Ah, Labor Day. The last chance for families like mine to grab the last bites of summer.

But, maybe for the first time in years, more people might be thinking about the Labor in Labor Day.

That’s because nearly a decade in, the rules of the 21st century economy are disturbing. Those at the very top of the economic pyramid with capital to invest are making billions—and I’m talking about single people, like private equity leaders Stephen Schwartzman of the Blackstone Group and Henry Kravis who are worth more than $2 billion each. Yes, the world is flat. Corporations can reap great profits by moving money and labor around the globe—but it’s increasingly clear that these gains are not reaching average Americans.

The rest of us are stuck with stagnant incomes and ever seeming increasing costs for the goods that bring a quality life like health care and education. To be exact, a recent report from the Economic Policy Institute shows that the average worker's wages have been stagnant for seven years. Hard working Americans are being tossed from good jobs in factories and computer rooms by the global economic regime. The fastest growing occupations are at the bottom of the service sector, where living wages and job security are hard to find.

This gilded age may be reaching a tipping point. Average Americans, and even some leading economists, are no longer buying the conventional wisdom that the invisible hand of capitalism can be trusted to guard the nation’s promise of economic opportunity.

The last time in American history when incomes grew so far apart was the 1920s—a period whose collapse spurred sweeping legislation like the Fair Labor Standards Act (which established the minimum wage), the Social Security Act and the National Labor Relations Act which set up structures that gave working people a chance a shot at sharing the wealth of the nation. Will today’s inequality lead to a similar see change for policies addressing the conditions of working people?

Both in States and in Congress, we are seeing the first signs of a new wave of policies that can deliver opportunity to Americans in today’s workforce.

We are getting serious about policies that improve the quality of jobs, like increases to the federal minimum wage and even better standards in some states. What’s more heartening is states are taking action in key sectors of the economy. According to the Department of Labor, the single fastest growing occupation in the next ten years is projected to be home health aides, but the average home health aid makes less than $9 per hour and don’t have the right to overtime pay under federal law. But in Iowa, California and Illinois, changes in employment law have given these workers the right to join a union and aides in these states are making progress towards living wages and benefits.

Moreover, Congress is seriously considering legislation that would give laid off workers a serious chance to return to the middle class. Key proposals would transform the limited Trade Adjustment Assistance program (started in 1974) into a new powerful program of assistance that allows far greater numbers of workers impacted by globalization to maintain their health benefits and income while they retrain for new careers, and provides federal new economic aid to communities and firms suffering as a result of trade losses. Another similar bill would modernize the unemployment benefit program, which currently only covers a third of the jobless.

Ten years ago, such policy changes might have been derided as caves to unions or special interests. But today, they might be just what are needed to save the economy.

Underemployment Quantified

2006-12-13T13:26:00.000-08:00

When Barbara Ehrenreich's Bait and Switch came out, the reviews said it was not quite as good as Nickeled & Dimed. So, I did not read it until I had nothing to read on a plane last night from Chicago. But for those of us interested in tracking the American dream, I found it quite useful.

I had tracked long-term unemployment in the last recession, and found that white-collar workers were disproportionately impacted by spells of jobless greater than six months. I always had wondered what had happened to these workers. In Bait & Switch, Ehrenreich changes her name and tries to find a white collar job in PR. She meets tons of jobseekers along the way, and in the end most end up taking a huge pay cut and working in a survival job in retail or another sector.

Courtesy of EPI's Jared Bernstein, she gives us a great new stat on underemployment among these workers. 17 percent of jobs that don't require a college degree are held by individuals with a college degree.

Her biggest finding is that in support group after support group, jobless professionals are told that the cause and solution to their problems is themselves. All they need to do to get back on the right track is to get a positive attitude and the job will come. Its just one way that the unemployed are consistently disempowered, even when the causes of job loss such as the consistent pattern of companies laying off experienced workers for younger and cheaper replacement are structural. The atomization of the unemployed also forecloses policy solutions like extended unemployment benefits and health care protections.

To her credit, Ehrenreich has started www.unitedprofessionals.org to start organizing this sector. Buy the book.

Can I say woo-hoo?

2006-11-08T06:57:00.000-08:00

I work for a non-partisan organization, so I am not supposed to get too overly excited at election returns. But, let me just say this, a Congressional leadership that helped the administration gut overtime laws, presided over a precipitous drop in the minimum wage, cut off hundreds of thousands of workers from unemployment insurance, smiled while the National Labor Relations Board stripped down the right to organize and passed sweetheart trade deals for multinational corporations while the nation hemorrhaged good paying factory jobs has been defeated. So I think I can officially say woo-hoo!

The spin, at least, is that most people (40% according to today's times) said they cast their vote against Bush and that Iraq topped people's concerns. But, as Bill Clinton and George Lakoff both say so well in their books, people can hold more than one idea in their mind at the same time. I haven't seen the polling data about how important bread-and-butter concerns (like health insurance and increasing the minimum wages) were to voters this year.

But I was so heartened by the capsules of the new Senators in Today's New York Times. You have Sherrod Brown described as "a close friend of organized labor who campaigned against free trade and for universal health insurance." Bob Casey "a lunch bucket liberal promising action on affordable health care and stemming job losses. Bernie Sanders, "the first socialist elected to the Senate." Sheldon Whitehouse who campaigned to "pass health care reform." How about that for some fresh air. It sure sounds better than what I remember reading about Jim Demint, Tom Coburn and the class of 2004.

Something about these campaigns worked and spoke to the electorate. So even if the election was mostly decided on Iraq and anti-Bush, lets use the opportunity to take on the anxiety facing working families across the country. "Anti" sentiments don't last long, but they give a new Congressional leadership a chance to show that they can deliver policy solutions that will effect a wide swath of families. Freed from the terrible corporate cronyism that infected most legislation in the last 2 congresses (think about the massive giveaways to health care insurers in Medicare Part D), we can advance bold and pragmatic solution in health care, workplace laws, education and job training. We can't expect to get everything we want right away--but advocates should press for federal action that shows Washington can give a hand up and not a push in the face to working folks.

Notes on the Disincentive Effects of UI Benefits

2006-10-19T10:13:00.000-07:00

By Rick McHugh, National Employment Law Project
(guest blogger)

A significant number of mainstream economists have joined with long-standing opponents of unemployment insurance (UI), all obsessing over the so-called "disincentive effects" of UI. Those raising concerns about disincentive effects of UI range from former Clinton Secretary of Labor Robert Reich to Heritage Foundation's Timothy Kane. A recent initiative from the Hamilton Project of the Brookings Institution brought further attention to this issue, in particular a paper by Jeffrey Kling. Faced with these criticisms, all focusing on disincentive effects of UI (and some promoting "rapid reemployment" as a priority solution for UI), it's worth looking at the disincentive effects issue more closely.

UI critics are unified in their concern about disincentive effects, but they present a range of solutions, including wage insurance, reemployment bonuses, and individual unemployment accounts. Most mainstream critics have proposed "wage insurance" as the best means to promote faster return to work by jobless workers. In essence, wage insurance provides a time-limited, partial wage subsidy to jobless workers accepting lower paying jobs in order to shorten the duration of UI benefit payments. In other words, wage insurance replaces part of wage losses experienced because the unemployed worker takes a lower paying job, rather than remaining on UI benefits and looking for a job paying wages closer to his or her former salary and benefits.

How Big Is the Impact of UI Benefits on Duration of Unemployment?

Economics assumes that paying UI benefits to jobless workers increases unemployment because UI benefits furnish an incentive for workers to remain unemployed longer than they would if they were out of work with no income support. This assumption is reasonable as far as it goes. In fact, disincentive effects are a deliberate feature of UI and not something that needs apologized for--UI benefits are designed to prevent the worst impacts of rapid loss of income due to job loss.

A key point in any discussion about disincentive effects should be that UI benefits in the U.S. are pretty low overall. In 2005, average weekly UI benefits in the U.S. were only $269 (or less than $1200 a month). This translates to $13,998 annually, or $1098 below the 2005 annual HHS poverty level for a two-person family. A March 2004 study of longer-term jobless workers by the Congressional Budget Office found that when UI recipients lost their jobs, household income—including UI benefits—dropped by about 40 percent. The CBO found that one-quarter of UI recipients who remained without work for four months or more fell into poverty despite the receipt of UI benefits. In other words, unemployed workers getting UI benefits are under intense financial pressure to return to work.

There are many studies that confirm the disincentive effect of UI on recipients, but the magnitude of the impact found in economists' simulations is far from uniform. In a 1997 summary of studies on the impact of receipt of UI benefits on duration of unemployment, Paul Decker wrote:

Although the exact magnitude of the response is uncertain, the lengthening in average unemployment spells is likely to be in the range of 0.5 weeks to 1.5 weeks for every 10 percentage-point increase in replacement rates.

Replacement rates refer to the portion of pre-layoff wages replaced by UI benefits. Note that Decker is speaking of a "10 percentage point increase," not a "10 percent increase." So, this generalization translates in current terms to a finding that if UI benefits were raised enough to increase replacement rates 10 percentage points, then the duration of unemployment last year would have been somewhere from 15.9 weeks to 16.9 weeks, instead of its observed duration of 15.4 weeks. Other studies have found that extending UI benefits by 13 weeks (as is commonly done during recessions) lengthens the duration of unemployment of recipients by roughly 2 weeks.

Some of UI's newer critics say their concerns about wage disincentive effects of UI arise because our labor market is producing more permanent layoffs and longer spells of joblessness than in the past. Now that more unemployed workers must find new jobs, rather than return to their prior employers, paying UI recipients makes less sense to these economists. While this observation about our labor markets is true enough, economists must be wrong if they believe wage disincentives of UI are explaining these labor market changes. That's because the generosity of UI benefits in terms of wage replacement hasn't really changed over recent decades. What's changed is the underlying labor market, which is producing greater economic insecurity in terms of longer-term unemployment and higher rates of permanent layoffs.

To sum up so far then, in terms of today's UI programs, we can say that poverty-level UI benefits in the U.S. undoubtedly have some impact on the length of unemployment for those getting benefits. Whether that impact is significant or modest, as Decker noted, seems to be in the eyes of the beholder. But, when viewed in the context of real world UI benefit levels and durations, the claim that the disincentive effects of UI benefits on recipients poses a major problem for UI programs (or our economy) is implausible, even if considered within the narrow terms of debate set by wage insurance proponents.

Impacts of UI on Workers Not Getting UI

A further point noted by several researchers is that most studies of duration focus on benefit recipients and do not consider impact of UI on non-recipients. Many critics focused on disincentive effects of UI likewise discuss only the impact of UI benefits on recipients. They don't take into account that the majority of unemployed workers (6 out of 10 in the U.S.) do not get UI benefits. Of course, these non-recipients are under even more economic pressure to look for and accept work than recipients. So, when the overall impact on both recipients and non-recipients of UI benefits is considered, the negative impact of UI benefits on unemployment is reduced.

Economists that have looked at the impact of UI have confirmed that UI affects both recipients and non-recipients. That is, the increase in weeks of unemployment on the part of UI recipients is offset to a greater or lesser degree by shorter unemployment spells on the part of non-recipients. These findings are consistent with the disincentive impacts of UI found for recipients, in the sense that if we assume that UI benefits lengthen unemployment durations for recipients, we should likewise assume that non-recipients have greater incentives to return to work more quickly. To paraphrase Decker's observation about this phenomena, when a group of unemployed individuals compete for a limited number of jobs, longer unemployment on the part of UI recipients should be roughly matched by shorter spells of unemployment on the part of non-recipients.

To date, economists have not studied these effects on non-recipients sufficiently to have a consensus on their impact, but their existence should be taken into account if the overall impact of UI on duration of unemployment is the economic problem we wish to solve. And, while their precise magnitude is not determined, the existence of these effects on non-recipients certainly means that the problem posed by UI's disincentive effects is smaller than some rhetoric directed at the UI program by its critics.

UI Has Positive Impacts on Overall Economy

Critics focusing on unemployment benefit durations also fail to fully acknowledge the positive impact of UI on the overall U.S. economy. A 1999 study by the prominent economist Lawrence Chimerine demonstrated that our UI program has moderated the impact of five post-World War II recessions. Chimerine's study found that over these five recessions (basically the five proceeding the 2001 recession), UI saved an average of 131,000 jobs in each downturn and reduced the drop in production (as measured by Gross Domestic Product) by 15 percent. Moreover, when jobless workers spent their UI benefits, the money created additional economic growth. Chimerine and his colleagues estimated that each one dollar of UI benefits led to $2.15 in increased domestic product. Surely, these sorts of positive economic impacts should be taken into account before we accept a judgment that our UI program's disincentive effects are a significant problem for the U.S. economy.

On a more microeconomic level, some economists have studied the question of whether permitting jobless workers a modestly more extensive job search has economic benefits. For example, if jobless workers find work that is more in line with their prior job experiences, skills, and aptitudes, this increases their productivity in their next job, not to mention that they might receive higher wages upon reemployment. Again, there has not been enough attention to these considerations by economists, but many fair-minded observers would at least concede that these positive economic impacts probably exist alongside the more generally acknowledged positive macroeconomic impacts of UI.

In short, a balanced consideration of the impact of UI programs requires more than a dismissive characterization of UI as a disincentive to employment. UI has a broader role to play in our economy, and its overall impact is positive, something you wouldn't know when reading some papers extolling wage insurance, reemployment bonuses, or individual accounts.

Is Wage Insurance Really the Best We Can Do?

Despite overall economic growth, most people in the U.S. remain concerned about the nation's economic future. A Labor Day 2006 poll by Pew Foundation found that "Americans believe that workers in this country are worse off now than a generation ago—toiling longer and harder for less in wages and benefits, for employers who aren't as loyal as they once were, in jobs that aren't as secure, and in a global economy that might very well send their work overseas." Wage insurance proposals fall far short of addressing the economic trends producing the anxieties reflected in this and other polls.

A big theme of the Bush Administration's Labor Department is "rapid reemployment." This idea is also advocated by some UI critics, including most proponents of wage insurance. A big reason for having wage insurance in the view of proponents is to get jobless workers to accept work more quickly by cushioning the impact when they accept worse jobs than they had prior to layoff. Rapid reemployment is assumed to be a good thing by its proponents, but this assumption needs closer examination. Encouraging rapid reemployment will have a direct impact on reducing UI payroll tax costs for employers, but it is much less clear that rapid reemployment will benefit jobless workers accepting worse jobs. And the impact on the overall economy is debatable. Before we get on the wage insurance train, we should at least consider that there is good evidence that better reemployment services and job search assistance would have an equivalent impact on duration of unemployment to that of wage insurance. And, providing more assistance to jobless workers might even cost less than wage insurance.

Is wage insurance really the best that mainstream economics can offer our nation's increasingly anxious middle class? In contrast to the timidity of wage insurance proponents, Jeff Madrick makes a broad claim for progressive policies in his book Why Economies Grow. Madrick called for a redefined social contract that will promote inclusiveness and adaptation to change by providing income protection, health care, and early childcare for all. Without this type of expanded social contract, Madrick argues that our economy will not grow as fast as it might, because income inequality, lack of child care and support for working parents, poor health care, and inadequate education impose costs on those that experience them--hidden costs that impede economic growth. Others have made similar arguments. Madrick's perspective challenges government, corporations, and other stakeholders to build a growing economy that supports middle class jobs where families have health care and can afford to send their kids to college.

In contrast, advocates of wage insurance are resigned to the fact that jobs paying adequate wages with health insurance and pensions are in decline. Wage insurance lets employers and government off the hook on key questions regarding job quality and economic growth in our global economy. Instead, wage insurance focuses its concern on the fact that some jobless workers resist accepting reduced living standards and lower-quality jobs by remaining on UI benefits for an extra week or two.

Rather than challenging the global economy's shortcomings, wage insurance's response is to pay a wage subsidy to promote rapid reemployment. Rather than changing the trade and government policies that underlie these troubling job quality developments, wage insurance provides an incentive to jobless workers to take worse jobs than they would otherwise accept. Surely, it's worth carefully examining whether this sort of incentive structure is the innovative policy its proponents claim, or simply an acceptance of the limitations imposed by mainstream economics and related public policies.

References

Chimerine, Lawrence, et al. "Unemployment Insurance as an Economic Stabilizer: Evidence of Effectiveness Over Three Decades," U.S. Department of Labor, UI Occasional Paper 99-8 (1999).

Congressional Budget Office. "Family Income of Unemployment Insurance Recipients: A CBO Paper." (March 2004)

Decker, Paul T. "Work Incentives and Disincentives" in Christopher J. O'Leary and Stephen A. Wandner, eds., Unemployment Insurance in the United States: Analysis of Policy Issues (1997).

Madrick, Jeff. Why Economies Grow: The Forces That Shape Prosperity and How We Can Get Them Working Again (2002).

Words of Wisdom

2006-09-11T19:58:00.000-07:00

"Equality of opportunity for youth and for others.
Jobs for those who can work.
Security for those who need it.
The ending of special privilege for the few.
The preservation of civil liberties for all.
The enjoyment -- The enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living.

These are the simple, the basic things that must never be lost sight of in the turmoil and unbelievable complexity of our modern world. The inner and abiding strength of our economic and political systems is dependent upon the degree to which they fulfill these expectations."

With a few edits, doesn't this sound like a poll-tested progressive message on the economy--something Barack Obama might say? Many will know that it is an excerpt from FDR's four freedoms speech to Congress in 1941. What's striking is how the message demands mutual responsibility between citizens and government, but is realistic enough to appreciate the need for a back up system of aid. And it embraces progress - advancement into the future but reminds us that there is no economic development if human development falls short. Put this in your bookmarks.

Weighing In on Wage Inequality

2006-08-28T05:41:00.000-07:00

Today's New York Times leads off with a good story by David Leonhardt and Steve Greenhouse on the failure of wages to keep up with productivity. Or in other words, corporations are reaping record profits but an all-time low percentage of these gains are going to workers. In years past, some economists had pointed to the fact that overall compensation (including increasing health care costs) was still beating inflation. But now even this is not true.

The question is whether any of this will translate to a change in power in Washington. For that to happen, voters will have to think that Democrats would take action to reverse the trend. On this count, can voters really be sure? In the global economy, it's not easy for governments to help workers take on the so-called "China price." The challenge is to point out the things that the federal government could do to give workers all through the bottom and middle the economic ladder a fairer share of the pie

Raise the minimum wage
Rollback the Bush Administration's reduction of overtime protections for middle and higher wage workers
Support fairer trade policies
Pass legislation allowing for card-check neutrality in union elections
Use moral suasion and the bully pulpit to bolster efforts to unionize growing service industries like private security, building services and hospitality
Vigorously enforce wage and hours laws, including frequent violations of people being forced to work off the clock
Provide immigrants with a pathway to legalization, so employers can't abuse their undocumented status to drive down wages

Most Democrats could be counted on to vote the right way on all of the above. But, how often do they talk about them? It does not help when Moveon.org members don't even vote on a "living wage for all Americans" as one of their top 5 issues. Sure, I hear Democrats trying to hard to tie Republicans to "corporate interests." But just yesterday, I heard the great Bernie Sanders (not even a Democrat I now, but for this purpose he is) talk in generalities about what a new Congress might mean for coroporate power in Washington rather than specifics. Bolstering America's middle class in a cutthroat global economy with rules stacked towards corporations isn't easy -- so the blue team needs to start talking some specifics quick.

Low Income Women - "Do We Still Have Their Back"

2006-07-25T05:43:00.000-07:00

Last month, I attended the national welfare research conference held by the U.S. Department of Health and Human Services. My friends and I noted how fewer people there were than in years past – and how there seemed to be a declining interest in women on welfare.

It should not be unfamiliar. That was the status quo for about twenty years – let’s say 1975-1991. That’s when welfare reform started hitting in the 1992 presidential election. All of a sudden everyone was studying and talking about welfare. Another such moment is about to hit – but with a lot less fanfare.

In its rhetoric, welfare reform has been about moving people off of welfare into work—with each state being required to have half of their “caseload” working. But the law included a huge out – every person who left the welfare rolls since 1996 was counted as “working.” Once states got half of their welfare population off, they could ease up on whoever remained and much of the remaining caseload was not engaged in any so-called “work activities.”

All this is about change this fall. In 2005, the welfare law was reauthorized through the obscure Deficit Reduction Act. While conservatives failed to make major changes to the law – they did two things that will further squeeze low-income women with children. First, they ended the 1996 based credit – switching the reference year to 2005. Second, they told the Department of Health & Human Services to tighten the rules for what is considered a work activity.

2 million families now receiving assistance through TANF are going to be in the cross hairs of these new rules—hundreds of thousands of families will have to be “engaged” or moved off the rolls over the next year. The path of least resistance will be to use the Kafkaesquely named strategy of “grant diversion” – a fancy word for stopping people from getting on TANF in the first place by making it a hassle to receive assistance. The more enlightened way to achieve the goals is to enroll people in work activities. But HHS has made the rules so tight, that it will be very difficult for states to provide families the services they need to make a positive transition into the labor market (substance use treatment, job search assistance, training).

Rather, we may see a surge in workfare programs – where families work off their meager welfare checks by filling in for depleted state and local bureaucracies in dead-end positions that provide none of the benefits of regular employment. Not only are these programs bad for women on welfare – they threaten to displace good wage paying jobs.

In many important ways, this second round of welfare reform could be even worse. Take low-income moms who are trying to achieve a college degree while on welfare. People like my friend Diane Reese. She calculated how much she would need to earn to be self-sufficient with multiple children and no spouse and have realized the only way to achieve those wages is to go to college. Under the old law, states could pay these families welfare through state dollars – and keep them out of the calculation. HHS's new rules specifically target college education as a program that was out-of-bounds for women on welfare—and the state only loop hole has been largely closed.

There’s another reason the second round of welfare reform could be worse. After welfare reform passed in 1996, the whole progressive infrastructure (foundations, labor, advocacy groups, community organizers) woke up to their slumber regarding poor women. By targeting the state implementation of the federal law and creating political coalitions more powerful than anti-poverty groups alone, meaningful changes were made. State campaigns fought to keep women on welfare in college; enacting protections for workfare workers; creating transitional jobs program and more.

We have not seen such a groundswell yet. With state flexibility further limited by the DRA, advocacy will have to be focused quickly and coalitions will have to be rebuilt. Organizing can develop the low-income women’s power – and they need allies to “have their back” to ensure the new regulations don’t come down with a boom.

Manufacturing - Why We All Should Care

2006-05-28T06:25:00.000-07:00

In the May American Prospect, Michael Tomasky talks about the failure of liberals to talk about the “common good,” and instead being relegated to defending the interests of its diverse constituencies. Along his litany of suggestions is for progressives to defend manufacturing jobs—not to be seen as pandering to the interests of its union donors—but because it is related to the nation’s overall good. Anyone who has defended the manufacturing sector has confronted some kind of overt or covert skepticism – like you are nostalgically defending the old economy and going against the tide.

These issues are growing in importance. Manufacturing is at a turning point. Despite an increase of 19,000 jobs in April 2006, manufacturing employment (roughly 1 in 9 jobs in the US) has been left out of the meager jobs recovery of the last two years. While overall employment is up by 3.5% since January 2004, total jobs in the nation’s factories have not budged and employment is still down by 10% since the end of the last recession. The Chicago Federal Reserve Board points out that the current recovery is out of character with past experience. Even in the 1990s jobless recovery, the nation’s manufacturers recovered ahead of the rest of the economy in terms of output and jobs. In contrast, manufacturing output did not recover into 2003, 2 years after the end of the most recent recession.

Why should those of us who don’t work in factories? Is this just a natural transformation of our economy from manufacturing to services, information and finance? Here’s a few reasons:

1) Manufacturing outpaces the rest of the economy in productivity growth. Productivity growth among manufacturers – the amount of output per hour – has averaged 5.67% per year over the past four years, more than 1.5 times overall productivity growth in the rest of the economy. Inequality effects aside, productivity growth is related to the overall prosperity per nation. The more wealth per hour that the nation can produce, the more there is to go around. To the extent that our economy continues to lose productive jobs, our relative prosperity will shrink.

2) Manufacturing has been a source of well paying jobs for Americans with less than a college degree. The hourly wage premium earned by manufacturers compared to other workers has faded away in recent years as the sector has become less unionized and foreign competition has pushed down wages. However, these are still the largest source of decent jobs for lesser educated Americans. The three biggest employing sectors of high school graduates in 2004 were Manufacturing, Retail & Wholesale Trade (think Walmart) & Educational / Health Services (think your local nursing home). Wages in factories allow families to approach something closely to middle class ($35,000 a year) while major service sector industries do not.

Average Weekly Earnings of High School Graduates, Age 18-64, 2004[i]

Finally, there is the piece about politics. Liberals complain how the middle of the country has turned conservative. Clearly some Democrats care about manufacturing jobs. But when the rubber has hit the road – as in the case of NAFTA – Democratic leadership or key individual Democrats have went the way of polices that lead to manufacturing job losses. And its more than just specific policies (which include currency issues, education & training, economic development, employee ownership laws & other layoff aversion strategies, research & development, as well)—it’s image too. I remember watching a 2004 South Carolina senatorial debate between Inez Tennenbaum and Jim Demint, where she was speaking out against devastating trade policies for textile workers. His quick retort was to link her to John Kerry – outwardly changing the subject to social issues but effectively linking her to a national party that has not clearly stood firm on economic issues.

The liberal elite are clearly bi-coastal – and just don’t feel this issue in its gut – the way those of us who are from the Midwest and have seen communities gutted by closed factories do. Most recently, I have been struck by how little media coverage there has been about the potential disastrous effects of auto restructuring on families and communities in the Ohio, Michigan and Indiana. For fun, I decided to match the states with the highest concentration of manufacturing jobs with recent election results. Despite the CW, manufacturing states are no longer blue states. Instead a solid manufacturing policy could tilt the political balance in at least one crucial battle ground state (Ohio) and provide an entrée into making border or Southern states competitive. Such a policy won’t be easy given the changing nature of manufacturing employment – but it is an area where progressives could have an advantage if we spend the time getting it righ.

States with more than 15% Manufacturing Jobs and Recent
Presidential Elections

[i] National Employment Law Project calculations of Current Population Survey Data

South of the Border - The Other Side of the Immigration Debate

2006-05-01T10:40:00.000-07:00

By Becki Smith, National Employment Law Project Staff Attorney

In the past few weeks, the massive mobilizations organized by immigrants around the country have brought hope to the movement for comprehensive immigration reform. However, as immigrants’ voices nationwide have been raised for true reform that respects human rights and workers’ rights, conservatives have pulled out an old argument – Mexico-bashing.[1] Recently, press stories have circulated about Mexico’s human rights record related to immigrants, as if this gives license to the U.S. to treat workers into felons, further militarize its border, and deny basic rights to six million working people in our country. These arguments miss the point.

First, no one would argue that Mexico has a stellar record when it comes to protecting the basic human rights of immigrant workers in that country. But Mexico has made efforts to analyze its own human rights record and improve upon it. In November, it became the first migrant-receiving country in the world to submit a lengthy report analyzing its own compliance with the United Nation’s International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families. This week, in Geneva, the UN Committee charged with oversight of the Convention began reviewing that report. Community groups from Mexico and around the world provided additional data and questions about Mexico’s report, which will be further examined in the fall. The US, on the other hand, hasn’t even ratified the Convention.

Second, human rights standards are principles by which all countries in the world should live. They are not intended as excuses for countries to point fingers and smugly declare that as long as conditions in one country in the world are worse, no effort is needed. In fact, the US would do well to consider the internationally-protected right to life as it further militarizes the border, forcing unsafe border crossings that result in 400 deaths a year. Congress should consider human rights standards as it contemplates denying basic due process rights to immigrants. Finally, Congress should take into account basic labor rights standards as we continue to deny full labor protections to undocumented immigrants.

Finally, the immigration debate in the US could be furthered by a better understanding of the effects of globalization in Mexico. It has been 12 years since Mexico joined the United States and Canada to create a huge single market for goods and services under the North American Free Trade Agreement. While globalization has been good for the rich in both countries, it has wrought more poverty and more pressure for Mexicans, especially the rural and urban poor, to migrate north.

American workers understand the grim job loss picture here at home. We have less understanding of globalization’s effects in Mexico, where in the first year of NAFTA, more than a million jobs were lost. In the Mexican countryside, more than 1.5 million farmers have been driven off their land by heavily subsidized U.S. corn and other agricultural products. Tens of thousands of small businesses have also been driven out as products they once made are outsourced to even-cheaper Asian countries.

The maquiladora factories along the border, once touted as a means to bring wealth to the Mexican poor, have not made up for the job loss. When U.S. consumers stopped buying as the recession hit in 2001, maquiladoras also began shedding workers. The Mexican government estimates that more than 400,000 jobs disappeared in the process.

As unemployment and economic desperation in Mexico have increased, immigration to the United States has been the only hope of survival for millions of Mexicans. Unless we roll up our sleeves and address these root causes of migration, human rights records in all of the Americas will deteriorate, while migration increases. On May 1, and every day, workers have a chance to stand together for the advancement of just, fair and humane immigration, trade and labor policies.

[1] See, J. Michael Waller, “Mexico’s Immigration Law: Let’s Try it Here at Home,” providence Journal (April 24, 2006),; Mark Stevenson, ‘Mexico Harsh to Undocumented Migrants,” Associated Press (April 18, 2006); “Mexico asks US to do as it says, not as it does,” Arizona Star, (April 20, 2006).

Employment for Katrina Victims is Still Elusive

2006-04-07T11:31:00.000-07:00

The headlines from today's Labor Department report hail big improvements in the labor market. the overall the employment situation appears to continue to make modest improvements, the reverse trend appears to be occurring among evacuees from Hurricane Katrina.

The Labor Department has been releasing monthly figures on the employment fortunes of Hurricane Katrina evacuees. In recent months, the situation had seemed to be improving. The overall unemployment rate among Katrina evacuees had fallen from 20.5 percent in November to 12.6 percent in February, largely because those families who had returned home were able to find jobs at a reasonable rate (60%), as were about 40% of those who were still evacuated.

The trend turned quite negative in March, however.

The overall unemployment rate among Hurricane Katrina evacuees jumped from 12.6 to 16.5%.
Among the 45 percent of Hurricane Katrina evacuees who have yet to return home 7 months after the storm, 34.7 percent were unemployed – meaning they were looking for work and unable to find any.

Who are those that have not returned home 7 months after the Hurricane--a near plurality of evacuees according to an official government survey that does not even include those living in shelters? For sure, it includes all of those whose homes have been destroyed and have not been able to return home (even in a trailer, I assume). As we know, this is a predominantly low-income group and in New Orleans, largely people of color. The 34 percent employment rate indicates that a first tentative step towards personal recovery remains elusive for evacuees--even when the overall labor market is tightening. The ongoing tragedy is that job opportunities exist in New Orleans and in other parts of Louisiana--but the federal government's unwillingness to act and local government snafus are stopping people from getting housed.

Thankfully, wherever they are Katrina evacuees can apply for amd receive Disaster Unemployment Assistance (DUA) benefits. As of now, these workers can collect DUA for 39 weeks, an additional 13 weeks of jobless benefits beyond what is normally provided because of action taken by Congress in March. Workers unemployed as a result from Hurricane Katrina, the DUA program ends June 3rd and the program ends June 24th for those families unemployed by Hurricane Rita. If you know anyone still displaced by the Hurricane, please pass along information on the DUA program from the NELP fact sheet by visiting: http://www.nelp.org

Immigrants and Our Future

2006-04-03T05:44:00.000-07:00

The current immigration debate has gotten under my skin. It is one thing when the anti-immigrant think tank, Center for Immigration Studies is given time on NPR. But it is another thing when even liberals like Paul Krugman are bemoaning the impact of immigrants on the American economy – citing studies that show that immigrants reduce the wages of Americans with less than a high school degree by 8 percent.

Hundreds of thousands of immigrants marching in streets across the country, as well as numerous human rights advocates and scholars, have given voice to the inalienable human rights of immigrants and the contributions immigrants make to US communities every day. NELP's Immigrant Worker Project asserts that protecting of rights of all who work in the United States regardless of their immigration status upgrades the working conditions of us all. These arguments should be sufficient to turn the tide for immigration reform, but to make matters worse those who say that immigrants will weaken U.S. prosperity have it wrong.

From my perspective, immigrants are crucial to the future of the U.S. economy. President Bush has skewed the debate by stating that immigration reform is needed to “match willing workers with willing employer on a job Americans won't do.” It has caused some progressives to claim that more Americans would do entry level jobs if the wage were higher or if employers were forced to hire people with criminal records and others on the margins if immigrants were not available.

I think we need to look at a reframing the question. “Immigrants are needed so the U.S. will continue to have a vibrant workforce to continue robust growth and support an aging society.” What do I mean? The demographic changes in the U.S. are staggering. In 2000, just 12 percent of the U.S. population was 65 and over. Because of the impact of the baby boom generation, by 2010 this figure rises to 19 percent and by 2030, it doubles to 25 percent. Everyone knows what this means – declining payroll tax revenue for social security and Medicaid and strains on our healthcare system.

According to the population reference board, fertility for white non-Hispanics in the U.S. is just 1.86—meaning that this segment of the population is currently failing to replace itself and won’t provide a workforce equivalent to its current generation.. In this context, immigration is the key counterweight. An aging generation will require health care workers, building service workers, retail workers and many other types of places where an aging generation can spend its accumulated wealth. Legal immigrants with a clear pathway to citizenship will be eager to fill these jobs.

Brought above the table, the wages of immigrant workers will be properly taxed and invested in the infrastructure of the nation. If labor laws and employment protections are very clearly extended to immigrants and are agressively enforced, employers won't be able to take advantage of immigrants to lower working standards and wages. (Which makes it important not to create two-tier guest worker programs). With opportunities to become citizens, immigrants will be able to climb a ladder from entry level and use the talents they have to become entrepreneurs or professionals and enhance economic growth. With opportunities for education, a second generation of immigrants will further add to the human capital of the economy. In a climate of growth, native born Americans (especially those with access to education) will benefit from opportunities to provide value-added goods and services to a working population eager to spend their wages.

In essence, immigration can help turn an economic challenge into an economic opportunity. It is wrong to view economy as a fixed pie, with immigrants only taking from native-born workers. The economy is a vibrant and changing system needing inputs – and immigrants will provide the people power the nation desperately needs.

What is the alternative? Other industrialized nation’s (Japan and Germany) have already been experiencing declining fertility – Japan’s fertility rate is below 1.3. Declining fertility hampers economic growth. Until recently, Japan’s real GDP was growing at less than 1% and Germany was pleased to be growing at a 1% rate. What do people with money do when the economy is not growing? They save it instead of spend it – because they are worried about their pensions not being there fully for them. With less economic activity, young people struggle to find good jobs and parents have to invest more of their wealth in caring for their families. Once you imagine a scenario in the U.S. with cuts to Social Security and Medicare caused by decreasing payroll tax revenue and coming on top of already reduced private pensions, it is not hard to foresee such a down cycle in the U.S. mid century.

Germany has addressed some of its workforce needs through immigration – largely through guest worker programs. However, because such programs have not provided pathways to citizenship, immigrants have not been integrated well into society. In economic terms, the human capital has not developed and Germany has not gotten the new generation of innovators and consumers it needs. In social terms, the results have been social stratification.

Given our history, the argument for comprehensive immigration reform and opportunities for citizenship for undocumented immigrants already her should not be hard to make. Despite dire predictions by the nativists of the time, Irish, Jews, Italians and numerous other immigrants provided a large surge to the working class of the early 20th century and eventually the middle class mid-century. Living in New York City, it is easy to see that Asians, Caribbeans, Latinos and numerous other groups are striking forward on that same path despite major obstacles. If we could all see the plain truth, we’d be closer to enjoying shared prosperity.

Resources:
Several reports have documented the economic benefits provided by immigrants

Principles for an Immigration Policy to Strengthen and Expand the American Middle Class: A Primer for Policymakers and Advocates, Drum Major Institute outlines how labor protections and immigration reform work together to expand the middle class.
Undocumented Immigrants in Georgia:Tax Contribution and Fiscal Concerns, Georgia Budget and Policy Institute, articulates a methodology for demonstrating the value in other states
Undocumented workers are taxpayers too, Oregon Center for Public Policy
Immigrants in the economy, resources compiled by the National Immigration Forum
The Changing Face of Massachusetts, MassINC and the Center for Labor Market Studies

New Orleans: Will Recovery Work?

2006-01-29T18:36:00.000-08:00

I just came back from three days in New Orleans; my first trip to the Big Easy since Hurricane Katrina. NELP has been closely monitoring the plight of jobless Gulf Coast residents since the Hurricane, estimated at half a million people. We were there not only to help jobless residents get the jobless benefits they’ve earned, but to access the overall employment situation.

Impressions

That New Orleans is battling back was clear from the first few minutes of our late night arrival. While many buildings are still damaged, the French Quarter has been transformed to an extended construction site. Pick-up trucks dotted the U-shape drives of seemingly every hotel large and small. Beyond the bars of Bourbon Street (long-reported as open by the media) “Now Open” signs dotted smaller restaurants and bars along Decatur and other portions of the Quarter.

This progress has not yet shown up in the employment situation. The state of Louisiana only added 12,000 jobs in the month of December, with payrolls down from 1.7 million from the pre-Hurricane level of 1.9 million. As measured by “Help Wanted” signs, there does seem to be many front-line employment opportunities. Numerous restaurants were desperate for staff. A day labor site at the Shell station on St. Charles and Claiborne had a hundred-plus day-laborers looking for work but the pace of reconstruction seems slow at best.

These two sectors – leisure/hospitality and rebuilding work – are at the heart of New Orleans’ ability to recover its economy as a commercial and tourist hub. Dishwashers, cooks, maids, bellhops, waiters, musicians were the cog of the service sector ‘assembly line of New Orleans.’

Working Class Neighborhoods

A quick drive out to the Upper and Lower Ninth Wards on the east side of New Orleans points to the major challenges that New Orleans face as they seek to rebuild this workforce. The lower ninth ward, east of the Industrial Canal, is devastating. How can I describe it? Picture a large, humble, working class neighborhood with modest houses stretching block after a block condemned to a terribly flawed and half-completed urban renewal plan. Many blocks are completely demolished, while other houses are shells of themselves with a lifetime of clothes and furniture spread everywhere.

To me, the upper ninth ward is more tragic. It too is almost completely devoid of humanity. But, there, most houses seem to have passed the structural test of the Hurricane. I know many of the houses are inhabitable because of severe mold damage and damaged roofs and windows. But, there are houses with 4 walls and a roof and functioning streets, just minutes from downtown. If the government was anywhere to be found, rebuilding seems within reach.

New Orleans’ economy can’t recover without working class neighborhoods being to house the essential workers of the service sector industry. But, when you drive around the ninth ward, there is barely a recovery operation in sight. Where one would hope there were would be construction crews and redevelopment authorities, the only presence of rebuilding appear to be those by brave homeowners and the donated hands of activists at the Common Ground relief center. It was more than ironic that the most vibrant place we visited was the commercial Magazine street in the well-to-do Garden District – a place that mostly houses the kind of folks (accountants, lawyers, business people, real estate brokers) for whom there are relatively few job openings.

So, where is the rebuilding of working class New Orleans? Homeowners (aided by the Advancement Project) are fighting government bulldozing that threatens to destroy the main asset of working families and the potential viability of these neighborhoods. On the other hand, President Bush’s Hurricane Recovery Chief Donald Powell publicly rejected the plan of Rep. Richard Baker (R-LA) to establish a recovery corporation to buy out homeowners and redevelop neighborhoods under a unified approach (see the New Orleans Times-Picayune story). While, there are many trailers scattered throughout the city, but not nearly enough to restock the population as many workers are shockingly making due in substandard tent cities.

Somehow to me it is symbolic of the whole approach from the Bush Administration towards economic development. They have stood idly by while the nation lost thousands of manufacturing jobs during the recession, all the while claiming that their tax cuts had revived the economy. As soon as the media attention died down and the natural gas started flowing again, the recovery was complete as far at they were concerned. They claim to be playing tough love with families that did not have flood insurance - but they are missing the point. With no working class neighborhoods, New Orleans is sunk. Will they realize until its too late?

Activists, Workers and Bureaucrats

I couldn’t close my account of my trip without mentioning some of the resilient people we met. There is a passionate commitment to bring a new sense of worker’s rights and livable wages to a rebuilt economy, especially to confront the abuses facing immigrant day laborers and the greater economic needs that returning families will have. Among returning workers we met at the unemployment office, I found the same de vivre that I had come to know in my pre-Katrina visit to the city. Among bureaucrats, there was a deep commitment to public service in the midst of great demands. I only hope that progressive won’t forget New Orleans to demand that the Federal government keep its commitments and keep directing donations to the People’s Hurricane Relief Fund, ACORN and other activist groups.

Striking for the Middle Class

2006-01-03T05:54:00.000-08:00

by Andrew Stettner, December 24, 2005

For 3 days, the Transit Workers Union strike shut down New York City’s subways and buses, grinding the city to a near standstill. The media coverage focused on the inconveniences of stranded straphangers and a war of words between politicians and union leaders. However, the media missed the true meaning of this contract debate: the future of the middle class in New York City, and more broadly in the United States.

New York’s Republican mayor, Michael Bloomberg, perfectly framed this meaning in the New York Times (December 20th).

Mr. Bloomberg said that a walkout would hurt many workers in the hotel, restaurant and garment industries who earn less than the transit workers. The transit workers average $55,000 a year with overtime.

"You've got people making $50,000 and $60,000 a year - are keeping the people who are making $20,000 and $30,000 a year from being able to earn a living," Mr. Bloomberg said. "That's just not acceptable."

Here you have the ‘unacceptable’ vision of our Mayor for working class New Yorkers – jobs that pay less than $30,000. New York City’s economy is growing strongly – but it is growing unevenly, with high paying jobs and lower paying jobs increasing at the same time. From 2000 to 2004, New York City’s middle class (families earning between $35,000 and $150,000 per year) declined at a rate that was four times the national average according to New York’s Fiscal Policy Institute.

The problem is that a family cannot really live on $30,000 in the New York City, with housing and other costs skyrocketing. For example, according to a detailed analysis prepared for the Women’s Center for Education and Career Advancement, a family of one child and one adult needs to earn $42,000 to be self-sufficient in Queens, while a family of four would need $58,000.

Middle Class Life at Stake In New York City

That’s what makes jobs like those at New York City Transit so vital to the city’s health. According to most media reports, the average New York City Transit worker earns between $47,000 and $55,000. While the earnings are modest, the job comes with good health care and retirement benefits.

What do middle class jobs provide our city? At these wages, working families don’t have to depend on publicly funded work supports like Medicaid or Child Health plus that are being stretched by a shrinking tax base. MTA jobs are giving Caribbean and Latino families the kind of opportunities that made Irish-Americans and other European newcomers a mainstay of the region’s middle class. Low-wage workers support the existence of better paying jobs because they provide an attainable ladder to the middle class.

What Wages Do Transit Workers “Deserve”?

Do transit workers deserve these wages? Transit workers do thankless and dangerous work. Bus drivers face hostile customers and murderous traffic all day. Subway workers toil in dark, vermin-infested, century-old subway tunnels. A mistake by a New York City transit worker can meant life or death mistake for riders or the worker. Since World War II, 132 track workers have been electrocuted or killed by trains in the New York subways, 21 in the last two decades.i

Basic necessities, like the ability to go to the bathroom, are a luxury for transit workers. Not only do they deserve these wages, but Transit workers should be exactly the kind of workers who should be able to hold on to a middle class way of life in the 21st century, unlike manufacturing workers threatened by globalization.

Knowledge-driven, high-wage, service-sector economies like that of New York City depend on a web of effective mass transit. Indeed, the recovery of the subway from its graffiti-ridden past was crucial to New York City’s rebirth from the fiscal crisis of the 1970s. Because of a surge in population and public transit usage, the MTA now has a nearly $1 billion surplus this year. The MTA can afford to sustain a fair living wage for the workers that operate the system, and competitive pressures are in favor of this continued middle class niche.

The Contract on the Table and Its Repercussions

The strike was triggered by MTA’s final offer of wage increases 3 percent, 4 percent and 3.5 percent. This represented an improvement over an initial deal of 2 percent, the media reported this as a better deal than what was initially presented. This “raise” proposal is really no raise at all. Inflation is running at 3.5 percent in Northeastern cities, so this salary increase would leave workers treading water. In exchange for a zero percent real raise, TWU had been asked to take a big cut in retirement security by lowering the retirement age from 62 to 55. It was a final offer that was really no offer at all.

But, my guess is that the MTA thought that the TWU might blink and take the deal. There had not been a transit strike in 25 years, and the union and its workers faced huge fines for carrying out a strike that violated the state’s Taylor Law. But if the TWU had simply accepted the deal it have would set the scale downward for all upcoming New York municipal contracts. And, such deal could have caused race to the bottom to spread to service sector jobs like health care and building services that have a chance to pay decent wages to working people in a globalized age.

Striking for the Middle Class

In the face of a bad deal, the TWU decided to draw a line in the sand for middle class New Yorkers--not just for dollars and cents. Transit worker members talked about striking for dignity and respect, as workers who have gotten little as compared other public servants. TWU President Roger Toussaint refused to “sacrifice the TWU’s unborn” by agreeing to a two-tier contract that would cut benefits for new workers while keeping them intact for the current workforce. The battle lines of the strike were most clearly drawn when Toussaint responded to the Mayor’s racially tinged characterization of the TWU as thugs and lawbreakers by invoking Rosa Parks and declaring “There is a higher calling than the law. That is justice and equality."

But, the end of this story has not been written, as the contract has not been settled. At worst, the union seems to have fought the MTA to a draw. The final wage deal will certainly be better than the 2 percent initially presented by the MTA. And, while the MTA did not drop pension security from the talks, reports are that they agreed to back down as a condition of the ending the strike.

The headlines of Friday’s New York Daily News is “Nobody Wins.” They too missed the boat. The Transit Workers Union took a great risk—and we all feared that they would have to go back with a terrible deal or no deal at all in sight. But, regardless of the final outcome, TWU members have won what they sought out to get—respect. They proved that even in the 21st century, working people cannot always be pushed around by their bosses and bought off by their immediate self-interest. The TWU members were willing to give up nine days of pay to win that victory for the middle class, and it is one that we all should cherish.

[i] New York Times, November 26, 2002