Posts Tagged ‘Labor’

The 1% and the 99%: Links & comments 8/11/14

August 11, 2014

Corporate 1% in U.S. Gets Wealthier While Cash Piles Up by Lorraine Woellert for Bloomberg.  (via Naked Capitalism).

In the Future, We’ll All Be Renters: America’s Disappearing Middle Class by Joel Kotkin from his new book, The New Class Conflict.  (via Naked Capitalism)

During the Gilded Age of the late 19th century, U.S. politics was at least as corrupt as it is now, and a tiny oligarchy of wealth had as much power as it does now.   Yet these oligarchs also built railroads, steel mills, grain elevators—what we call physical capital—that was of ultimate benefit to the nation as a whole.  The same is true of the oligarchs of China and Russia today.

In contrast, the super-rich class in the USA today can’t seem to find anything useful to do with their money.  And that’s not because there is nothing useful to be done.  American roads, bridges and water and sewerage systems, as one example, need upgrade and repair.  But, no, I don’t think selling off American public infrastructure to private interests would be the answer.

Going Postal by Peter Byrne from his new book of the same name.  (via Corrente)

A corporation headed by Senator Dianne Feinstein’s husband, Richard C. Blum, has an exclusive contract to sell U.S. post offices as the Postal Service downsizes.   He is selling them to his friends, cheap.

Is ‘shareholder value’ bad for business? by Leon Neyfakh for the Boston Globe (via Mike the Mad Biologist)

Market Basket, a supermarket chain based in New Hampshire,  is an example of how a CEO can run a profitable business that pays good wages and serves customers well, and still be kicked out for failing to “maximize shareholder value”.

Now Is a Critical Moment to Stop Some Scary Global Corporate Deals That Are in the Works by Kevin Zeese and Margaret Flowers for AlterNet.

The Obama administration is pushing Congress to enact the Trans-Pacific Partnership and the Trans-Atlantic Free Trade Agreement, but the public is beginning to catch on that these are schemes to establish corporate power in international law.

People vs. money: the playing field is tilted

June 9, 2014

A labor union is a group of working people working together for a common purpose.   A corporation is a pool of money which has been combined for a common purpose.

In American history, going back to when Thomas Jefferson was Secretary of State and Alexander Hamilton was Secretary of the Treasury in George Washington’s cabinet. there have been two sources of power—people and money.

People power is irresistible when it has been mobilized, but people are prone to be apathetic and short-sighted.   Money power is constant.   It never is bored and never is blind to its own interests.  It is able to tilt the playing field.

Public opinion polls show that a majority of Americans want policies that are the opposite of what millionaires want, yet Washington officials and pundits accept the corporate agenda and treat those who represent public opinion as a lunatic fringe.

minimum_wage_onpageGovernment strictly regulates the internal workings of labor unions to make sure that they are operated honestly and democratically.   No such regulation applies to corporations.

Attorney-General Eric Holder has admitted that the Obama administration has not investigated financial fraud in the biggest banks and Wall Street investment firms because they are too important to the economy.   Imagine someone in the Kennedy administration saying this of Jimmy Hoffa and the Teamsters!

Right now a battle is going on for the rights of low-wage workers who frequently are, among other things, victims of wage theft.  Owners of fast-food restaurants commonly withhold pay for hours worked.  This is illegal.  Progressives are trying to put a stop to it.   Corporate executives are trying to change the laws to make it more difficult to sue.

The big problem for organized workers is that their immediate employer is not always the source of the problem.  Fast-food franchisees operate on extremely narrow profit margins, because of the conditions set by the franchising companies, and (arguably – I don’t really know) may not be able to afford to pay more than they do.  But the battle of the unions is with the franchisees, not with the real decision-maker.

Contract manufacturers in Asia operate under the same conditions.  Their profit margins, as set by their customers in North America and Europe, are so small that (arguably – I don’t really know) they may not be able to pay more than they do.   This is another way that the playing field is tilted against workers and their unions.

Another corporate abuse is the use of private equity to loot corporations at the expense of workers.  The basic idea of private equity is that investors buy out a company’s stockholders and operate it themselves.  In principle, there is nothing wrong with this, if they think they can manage the company better than the previous owners.   Sometimes they succeed in doing this, which is fine.

In practice, private equity investors frequently are looters.  The investors have the company pay themselves or their other companies big fees for management services, consulting services and other fees.  Typically they buy the company with borrowed money, so their own cost is small.  They sell off assets for a quick profit, lay off employees and pocket quick profits while leaving the company a mere shell.   Jimmy Hoffa would never have been allowed to get away with stuff like this.


Poverty-wage professors and higher education

September 24, 2013

Hat tip to corrente.

The passing scene: Links & comments 9/18/13

September 18, 2013

Longshore Union Got a Raw Deal from AFL-CIO by Carl Finamore for Counterpunch.

Labor Leaders, Obamacare and the Fate of the Unions by Shamus Cooke for TruthOut.

I was disappointed that President Obama did not support a public opinion for health insurance, as he promised during the 2008 campaign. But for a long time I hoped that the Affordable Care Act, aka Obamacare, would be an improvement, despite its flaws. I now think my hope was misplaced.

Many labor union members are turning against Obamacare, but AFL-CIO President Richard Trumka is trying to soften criticism because he is committed to supporting the Democratic Party. This is one of the reasons (not the only one) that the International Longshore and Warehouse Union decided to leave the AFL-CIO.

Larry Summers: Goldman Sacked by Greg Palast.

When Larry Summers was Deputy Secretary of the Treasury in the Clinton administration, one of his common questions was, “What would Goldman think of that?”—referring to Goldman Sachs, possibly the most predatory and dishonest of the Wall Street financial firms. Summers’ boss, then Treasury Secretary Robert Rubin, came out of Goldman Sachs.

So it’s no wonder that there was a public outcry against his appointment as chair of the Federal Reserve Board, and that, as a result, he withdrew his name from consideration. The wonder is that President Obama considered him in the first place.  In the article above, Greg Palast reviews Summers entire record of negative accomplishment.

Banks Are Manipulating Gold and Silver Markets by Washington’s Blog for The Big Picture.

A lot of people acquire gold and silver because they believe it has intrinsic value, unlike stocks and bonds.  But writers for The Guardian and The Telegraph in London report that the prices of gold and silver are manipulated by the big banks and trading companies, just like interest rates.

 The post provides a link to that article and links to other articles detailing just about every way the big financial firms rip off the public.

How Detroit went broke: The answers may surprise you—and don’t blame Coleman Young by the Detroit Free Press.

The Detroit Free Press ran a good article about the history of the Detroit city government’s financial mismanagement.  But the key reason Detroit went broke is that the auto industry abandoned the city, and the city’s political and business leaders never developed a strategy for diversifying the city’s economy.  Detroit’s location at the junction of two Great Lakes and a land bridge between the United States and Canada ought to give it some comparative economic advantage.


U.S. corporate profits and Chinese sweatshops

September 17, 2013



Costs and profits for Apple’s i-Phone

Defenders of sweatshop conditions in China say that low wages are the result of the impersonal workers of a hypothetical free market.  But a recent study (links are below) shows the real cause is the structure of the supply chain linking components producers such as Foxconn to customers such as Apple Computer.

When I hire a painter to paint my house, and he hires a helper, the free market works the way it ought to work because there is a rough equality of buying power.  But no such equality exists when individual workers are dealing not just with corporations, but with networks of corporations.

The corporate supply chain represents a concentration of power and a diffusion of responsibility.   When workers try to negotiate with Foxconn, managers can say that there is as limit to what they can do based on Apple’s requirements.   But Apple managers have no direct responsibility.  They can say there is a limit to what they can do based on their fiduciary responsibility to maximize return to stockholders.

You could say government should step in and set minimum wages and labor standards, but at the present time the governments of China and the USA are aligned with management, not workers.  Governments will not heed workers until they organize and create a base of power that governments must heed.  The workers of the world should unite.

Click on A Suicide Survivor: The Life of a Chinese Migrant Worker at Foxconn for a picture of working conditions at Foxconn by Jenny Chan.

Click on The politics of global production: Apple, Foxconn and China’s new working class for the text of the study by Jenny Chan, Ngai Punan and Mark Selden for their full paper.

Click on Apple et al create new working class for a duplicate copy of the study in Asia Times.  This is where I first came across the study.


Who are the real makers and takers?

September 12, 2013


Hat tip to Jobsanger.

The future of labor unions

September 3, 2013

I think workers will always need to organize to protect their own interests.  Labor unions are a structure that exists for that purpose, but it is nothing more than a structure, just as a corporation, a government agency, a charitable organization or a church is a structure.  The people within the structure may or may not be faithful to carrying out the organization’s purpose.

Labor unions are much more democratic and much less corrupt than other institutions in American society, partly because corruption is much less tolerated in unions than in other institutions.  Corrupt labor leaders go to prison; corrupt bankers retire to enjoy their ill-gotten gains.  Under law, the government can, and has, appointed trustees to take over corrupt labor unions and clean house.  Nothing of the sort exists for labor unions.

I think there always will be a need for labor unions, but future labor unions may not be like those of the present day.  In the 1930s, the American Federation of Labor, consisting predominantly of skilled workers organized by craft, did not respond to the discontent of workers in great industries.  Workers acted on their own, and the CIO (Committee for Industrial Organization, later Congress of Industrial Organizations) was formed in response.

The Wagner Act of 1935 recognized the right of unions to exist and to make contracts through collective bargaining, but imposed on them the obligation not to strike for the duration of the contract.  Further restrictions on labor unions were imposed by the Taft-Hartley Act of 1947 and the Landrum-Griffin Act of 1959.

The one-day work stoppages by Wal-Mart and fast-food workers remind me of what I read about the history of the 1930s, with workers taking their fate into their own hands and the recognized labor unions rushing to keep up with them.  These actions could represent a new direction for American workers.  I hope they do.


Those were the good old days

September 2, 2013


Hat tip to Mike the Mad Biologist.

The labor scene: Links and comments 8/30/13

August 30, 2013

graph-the-1-percents-jobless-recovery-01Here are some good articles for reading on Labor Day weekend.

Our Sad, Misunderstood Labor Unions by David Macaray for Counterpunch.

Labor unions are the only organizations whose purpose is to defend the rights of working people.  Why, then, have they gotten such a bad name?

Reversing the Labor Movement’s Free Fall by Stanley Aronowitz in Logos.

Aronowitz argues that labor unions must go beyond collective bargaining and champion the interests of working people across the board.

The AFL-CIO’s New Strategy by Shamus Cooke for Counterpunch.

While the AFL-CIO leadership recognizes the need for new strategy and tactics, it is limited by its commitment to the Democratic Party and the anti-union Obama administration.

unionincomeProductivity Rose 7.7 Percent Post-Recession; Workers Have Seen None of It by David Dayen for Naked Capitalism.

The decline of labor unions is turning the United States into a low-wage nation.

Workers Greatest Power Over Owners and Bosses? The Ability to Stop Work and Walk Out by James Cersonski for AlterNet.

Largest fast food strike ever: 58 cities will be affected by Joseph Eidelson for Salon.

Workers in the fast-food industry use strikes to protest unfair treatment and low wages rather than waiting until they can negotiate contracts.

Fast Food, Retail Worker Strikes Do Honor to King Legacy by David Dayen for Naked Capitalism.

Martin Luther King’s 1963 speech was given for the March on Washington for Jobs and Freedom, and he was murdered while in Memphis, Tenn., to support a strike by municipal garbage collectors.   If he were alive, he would support union organizers of low-wage workers and strikers against low-wage companies.

Click to view

Five reasons for optimism about labor unions this Labor Day by John Logan for The Hill.

The economic scene: Links & comments 8/23/13

August 23, 2013

Here are links to articles I found interesting and you might find interesting, too.

On the Phenomenon of Bullshit Jobs by David Graeber for Britain’s Strike! magazine.

Some 80 years ago the great economist John Maynard Keynes predicted that advances in technology would make it possible to do all the necessary work of society without people having to work long hours at low pay.

David Graeber said that this, in fact, has happened, but the necessary work of society is being crowded out by unnecessary work.  He knows people who say frankly that their work serves no useful purpose, and they do it only to earn an income.

How do you distinguish between necessary and unnecessary work?  Simply imagine what would happen if all the people doing a particular job went on strike?  Society would be seriously inconvenienced if nobody taught school or staffed fast-food restaurants.  But if all tele-marketers ceased work, most people would be glad.

Graeber wrote that it is the people who are doing the meaningful work—teachers, factory workers, health care workers—who are under attack in the current economic struggle, and that they are targets of resentment by people trapped in meaningless work.   This is a good instrument of social control, he thinks.

An Open Letter to President Barack Obama by Ani McHugh, a high school English teacher in New Jersey.

Ani McHugh appealed to President Obama to abandon corporate school “reform” which, she says, prevents teachers from doing their jobs.  She would be an example of people with meaningful and important jobs who are under attack.

How to Become a Part-Time Worker Without Really Trying by Barbara Garson for TomDispatch.

The trend to part-time work is not just a result of fewer factories and more fast-food restaurants.  Barbara Garson described how companies are switching from full-time to part-time work, with the same work requiring the same skills and sometimes by the same people, but with less pay, fewer benefits and no job security.


Chris Hedges on the failure of the liberal elite

August 21, 2013

Click on Death of the Liberal Class (and scroll down through breaks in the text) for more from Chris Hedges.

Why subsidize the job-killer, Wal-mart?

August 16, 2013

Walmart has been given $4 million in financial incentives by the city of Darien, Conn., to convert its store there into a Super Walmart.

walmart-logoThe usual justification for tax abatements and other subisidies for new industry is that they create local jobs.   But, as Kathleen Geier of The Washington Monthly wrote in a recent Salon article, there is no evidence of any net economic benefit to a Walmart moving in.

What Walmart does is to put local mom-and-pop stores out of business.  Some studies indicate that Walmart kills more jobs than it creates; others that it is a standoff.

walmart_moralitySam Walton, the founder of Walmart, was an innovator whose just-in-time system of inventory management reduced costs and enabled his company to reduce prices.   But now the company’s strategy for reducing prices is to use its market power to hold down wages and the prices it pays suppliers.  This does not benefit the areas the stores serve.

It is not just Walmart.   I think it is a mistake for any local government to offer subsidies for a new business to come in and compete with existing businesses.  I say let the businesses compete on a level playing field.

I’ll go further.  If it were up to me, the only business subsidy by American local governments would be free job training.

American businesses complain of lack of skills by new hires, but say they can’t provide training because there’s no way to stop the employees from taking their upgraded skills elsewhere.  Very well.  Let community colleges take over the responsibility for job training.

This is a form of aid that does not discriminate between existing business and new business.   It is not something the business owners can pocket and move elsewhere.  It creates value which benefits the people of the community and stays in the community.

Click on Wal-mart’s big lie: No, it doesn’t create jobs for Kathleen Geier’s complete article in Salon.

Re-shoring: the U.S. manufacturing comeback

August 12, 2013

Last year about a third of U.S. corporations with manufacturing in China told the Boston Consulting Group that they are bringing or plan to bring operations back to the United States.

The trend is called “re-shoring,” and all indications are that it is real.  What’s driving it, according to an article in the Paris Tech Review, are falling U.S. energy costs due to hydrofracking for natural gas, closeness to world’s largest consumer market, a shorter supply chain and, especially, U.S. expertise in automation technology.

Manufacturing Employment

Click to enlarge

There’s the catch.  Automation lowers the cost of U.S. labor compared to other countries, but it also eliminates jobs.  Professor Tim Leunig of the London School of Economics estimated that if 10 percent of the Chinese electronics industry relocated to the United States, it would eliminate 300,000 Chinese jobs but only create 40,000 American jobs.

This doesn’t mean that re-shoring is of no benefit.   It is of great benefit.  The hollowing out of the U.S. manufacturing economy has reached a limit.  Manufacturing jobs are increasing only modestly, but they are no longer declining.

The mere fact that more wealth is being generated in the United States should be of benefit for all American workers, whether they work for suppliers and subcontractors of the manufacturing companies, for providers of goods and services who benefit from a bigger consumer market, or for local governments that benefit from an increased tax base.  But to the extent that the U.S. work force consists of temporary, part-time, low-wage workers, the wealth won’t be spread around.


When inequality rises, well-being declines

August 8, 2013


I am not an envious person.  All my life I have had enough for health and happiness, and I never was bothered that some people had more.  I never worried about the Gini coefficient, which measures inequality.  So long as the vast majority of the population was doing well, and nobody was actually starving, what difference did it make how many houses or race horses rich people owned?

I now think I was wrong,  and the reasons are shown in the above chart, created by economic historian Peter Turchin.  The chart is a historical record of two things.

One is inequality, as measured by the ratio of the size of the largest American fortunes to the median wealth of all Americans.

The other is well-being, a composite of : (1) average life expectancy, (2) the height of the average person, a measure of health, (3) the percentage of American economic growth that goes to wages and (4) the average age of couples getting married the first time, with early marriages a proxy for economic optimism.

The chart shows a cycle of growing inequality and diminishing well-being from about 1830 to 1920, lessening inequality and improving well-being from 1920 to 1980, and a reverse of the cycle from 1980 to the present.  Why would this be?

One reason is that free-market society gives priority to the people with the greatest buying power.  When economic inequality is extreme, the desires of the elite take precedence over the needs of the majority.  Currently 1 percent of the American population has 20 percent of the income and 40 percent of the wealth, so we’re in such a situation now.

The other is that economic power is political power.  Sometimes wealthy families become political dynasties, like the Kennedy and Bush families; sometimes they work behind the scenes, like the Koch brothers or President Obama’s Wall Street golfing partners.   Influential rich people, with few exceptions, veto policies that would make them less rich or less influential.

What brought the first cycle of concentration of wealth to an end, according to Turchin, was literally the threat of revolution—battles of armed labor union members with strikebreakers and sheriff’s deputies.   The upper classes decided it was better to spread wealth around than to risk revolution.

If things keep going the way they are, he wrote, the United States in the near future will likely face another cycle of violent social unrest.  I think he’s right.


A new way to nickel-and-dime low-wage workers

July 18, 2013


This is from a report by the New York Times.

A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee.

For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers.  Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay.

But in the overwhelming majority of cases, using the card involves a fee.  And those fees can quickly add up: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.’s, $2.95 for a paper statement and $6 to replace a card. Some users even have to pay $7 inactivity fees for not using their cards.

These fees can take such a big bite out of paychecks that some employees end up making less than the minimum wage once the charges are taken into account, according to interviews with consumer lawyers, employees, and state and federal regulators.

Devonte Yates, 21, who earns $7.25 an hour working a drive-through station at a McDonald’s in Milwaukee, says he spends $40 to $50 a month on fees associated with his JPMorgan Chase payroll card.

Click on Paid via Card, Workers Feel the Sting of Fees for the full New York Times article.

Click on More Than 286K People Ask McDonald’s Franchisees to Stop Paying Employees With Debit Cards for more.


McDonalds tells employees to budget better

July 17, 2013


McDonalds has teamed up with Visa to advise restaurant employees on how to lead a good life on a McDonalds wage.

mcdonalds.employeesSome of the things the employees would have to do are (1) hold two jobs, (2) pay nothing for heat or air conditioning and (3) get health insurance for $20 a month.

What were McDonalds’ executives thinking?  Did they actually think their advice was realistic?  Or was this an ill-conceived public relations ploy and, if so, who was it aimed at?

Click on Practical Money Skills Budget for the McDonalds-Visa financial planning web page.

Click on McDonalds Tells Workers to Toil 70 Hours a Week, Use Ripoff Payroll Cards as Part of “Financial Literacy” for Yves Smith’s detailed breakdown and analysis on naked capitalism.

Click on A Model World for Jim Henley’s briefer breakdown and analysis on Unqualified Offerings.


Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well-warmed and well-fed.
    ==Herman Melville (1819-1892)


[Update 7/19/13]  Click on Minimum wage workers teach economics to the economists for what it means to live on minimum wages.

Recommended reading 7/17/2013

July 17, 2013

Here are things I read recently that I found interesting.  Maybe you will, too.

Chalmers M. Johnson reviews ‘Gold Warriors’ by Sterling Seagrave and Peggy Seagrave in the London Review of Books (2003).

Gold WarriorsThis 10-year-old book review is utterly fascinating.  Gold Warriors: America’s Secret Recovery of Yamashita’s Gold tells the story of how the Japanese military looted the whole of eastern Asia of its treasure and buried it in hidden underground vaults in the Philippines, much as described in Neal Stephenson’s great thriller Cryptonomicon, and how some of it was discovered and used to fund top-secret activities of the Central Intelligence Agency.   Weird, but evidently true, according to Chalmers Johnson, an expert on China, Japan and U.S. policy in the Far East.

Are Corporations Trying to Distract Us With Social Issues While They Take Control of Our Economy? by R.J. Eskow on AlterNet.

Robert Frank, in What’s The Matter With Kansas? wrote about how Republicans persuaded “values voters” to base their vote on issues such as abortion, gay marriage and gun control rather than on their economic self-interest.  R.J. Eskow argues that the Democrats are doing just the same thing, except using the reverse side of these issues.   The problem for American voters is that the only meaningful choices the Democratic and Republican parties offer us are on issues that don’t threaten the holders of economic and political power.

Time to Fight for Something Better Than Obamacare by Alejandro Reuss for The Washington Spectator.

The Affordable Care Act will leave the United States with a certain number of people with good individual or employer-provided private insurance, a lot of people with bad private insurance, some people helped by Medicare or Medicaid and some with no insurance at all.  Should we be satisfied with that?  Alejandro Reuss argues that Americans should demand a single-payer system (Medicare for all).

Why the City of Miami Is Doomed to Drown by Jeff Goodell in Rolling Stone.

Miami might well be doomed even if its leaders face up to the threat of rising sea levels and worsening tropical storms.  Which they aren’t.

The Expendables: How the Temps Who Power Corporate Giants Are Getting Crushed by Michael Grabel in ProPublica.  (Hat tip to Daniel Brandt)

Taken for a Ride: Temp Agencies and ‘Raiteros’ in Immigrant Chicago by Michael Grabel in ProPublica.  (Hat tip to Daniel Brandt)

It’s tough to be a temporary worker.  It’s infinitely worse to be an immigrant temporary worker.

What’s next – indentured servitude?

July 12, 2013

The Los Angeles Times reported:

Emboldened by a series of Supreme Court decisions and an employers’ job market, many companies are starting to require workers to sign away their rights in return for a job.  It is a trend that experts worry could further wear away employees’ power in the workplace. 

The contracts make it harder for employees to join class-action lawsuits, take their employers to court, or leave to go work somewhere else.  […]

Non-compete clauses, once a staple of the high-tech world, are being extended to cover hairdressers, auto mechanics, exterminators and other professions that courts would traditionally not uphold them for, lawyers say.  They essentially mean an employee can’t leave a job to take another one nearby, unless he or she wants to stop working for a year or so.


As Justice Oliver Wendell Holmes Jr. wrote, freedom of contract begins where equality of bargaining power begins.   I don’t see how these kinds of contracts can be regarded as voluntary except in an extremely narrow and technical sense.

New hires were once required to sign “yellow dog contracts” giving up the right to union representation.   The Wagner Act of 1935 declared these contracts unenforceable.   I think any contract should be regarded as unenforceable if the weaker party is required to sign away a basic right.  If the courts don’t recognize this principle, it should be spelled out in legislation.

Click on Contracts, court rulings giving employers legal upper hand for the full article in the Los Angeles Times.

Why I don’t look down on poor people

July 11, 2013

I’ve never been poor.   I’ve never been in fear of poverty.   I’ve never been laid off or fired from a job.  I’ve never been unemployed.  If I had been a drug addict or an alcoholic, if I had dropped out of high school before graduating, if I had a criminal record, if I had messed up in my work (more than I actually did), if … a lot of other things … I almost certainly would be poor.

I attribute my relative success in life to making good choices of (1) the year I was born, 1936, and (2) my mother and father, who were both committed to giving me better opportunities than they ever had in life.

Click to enlarge.

Click to enlarge.

During my life I have known poor people (including some who thought of themselves as middle class) who had as good or better work ethic as I did, who were are careful or more careful about making economic decisions as I was, and still were poor.  I’ve known people who made a bad decision early in life, such as getting pregnant by a no-good father, and spent years with the consequences of that.

As U.S. wages decline, as more and more people are forced into low-paying temporary jobs, I don’t see how you can argue that increase poverty is mainly due a decline in moral character.


Yes, there is such a thing as a culture of poverty.  Yes, there are neighborhoods and communities where young people grow up with no concept of bettering their condition through education or hard work. If you take drugs, have children out of wedlock, drop out of school and see no point in thinking about the future, you will be poor no matter what.

Even so, it was a lot less hard to overcome these attitudes back in the 1950s and 1960s when the United States had a high-wage, full-employment economy, and the payoff of education and a good work ethic was obvious and immediate.   It is hard to sell the value of a college education when so many college graduates are tending bar and serving fast food.


Return on investment (of labor) is falling

July 11, 2013


The United States officially has been in economic recovery in 2009.  Economic output, as measured by Gross Domestic Product, is up.  Corporate profits are up.  The stock market has reached new highs.  So, according to the law of supply and demand, wages should be rising, too.  Right?  Wrong.

Economics writer Felix Salmon has the figures.

NELP, the National Employment Law Project, has taken a detailed look at what happened to wages during the recovery — specifically, between 2009 and 2012.  They looked at the annual Occupational and Employment Statistics for three years — 2007, 2009 and 2012 — and created a list of wages for 785 different occupations.  They then split those occupations into five quintiles, according to income; the lowest quintile made $9.49/hr, on average, last year, while the highest quintile averaged $40.23/hr.  […]

The big-picture lesson that NELP draws is that between 2009 and 2012, real median hourly wages fell by 2.8% — and that the poorer you were to start with, the more your wages fell.  The top quintile didn’t do well: their wages dropped by 1.8%, in real terms.  But the fourth quintile did particularly badly: its wages fell by 4.1%, on average. 

To take one example, occupation 39-5012 — that’s Hairdressers, Hairstylists, and Cosmetologists — was earning $12.00 an hour, in 2012 dollars, in 2009.  But by 2012 they were earning just $10.91 per hour: a drop of more than 9%. 

Or look at occupation 51-6042 (“Shoe Machine Operators and Tenders”): that job saw wages fall 14%, in real terms, in just three years, with nominal wages falling from $12.69 to $11.69 per hour.

The charts show the large range of outcomes: some occupations are doing great.  At the top end, the highest-paid profession on the list, Psychiatrists, went from earning $69.48 per hour in 2007, to $83.33 per hour in 2012.  That’s a real increase of 8.3%.  But overall, everybody is doing pretty badly.

So what’s going on?


Click on Wage deflation charts of the day for Felix Salmon’s full article.

Click on The 1 Percent’s Jobless Recovery for the Century Foundation’s article.

How I would change things if I could

June 27, 2013

Here are ways to push back against the USA’s slippery slide into autocracy and oligarchy.

Rescind the Authorization for Use of Military Force resolution.

Repeal the USA Patriot Act.

Repeal the Espionage Act.

Pass a Constitutional amendment creating an affirmative right to vote for all mentally-competent adults.

Have nonpartisan commissions draw legislative and congressional districts.

Pass a Constitutional amendment stating that only individual human beings (not corporations) have the rights of persons.

Prosecute financial fraud.

Restore the Glass-Steagall Act.

Break up the “too big to fail” banks.

Enact the Employee Free Choice Act aka Card Check.

Repeal the Taft-Hartley Act.

Raise the mimium wage and index it to inflation.

End the “war on drugs”.

Allow re-financing of student loans by the Federal Reserve at the same rates it gives to big banks.

Allow Bankruptcy Courts to modify mortgage loans of underwater homeowners to fair market value.

Disapprove the Keystone XL Pipeline border crossing.

Break off negotiations for the Trans Pacific Partnership Agreement.


Each proposal is also a link that will provide more information.

What have I overlooked?  What have I got wrong?


Why do so many U.S. workers hate their jobs?

June 26, 2013
Gallup Poll Engaged Disengaged Unhappy Workers

Double click to enlarge.

With workloads increasing, wages and salaries stagnant or worse and the gap between workers and management ever-increasing, it shouldn’t be surprising that a recent Gallup poll finds 70 percent of American workers are unhappy in their jobs.

What is surprising, at least to me, is the reason—not wages, hours or benefits, but the way they are treated by their bosses.  Also surprising is how discontent is spread up and down the economic scale.  Corporate managers and professionals are almost as unhappy as low-level factory and service workers.

Gallup estimated that out of the 100 million Americans with full time jobs, about 30 million are “engaged,” meaning that they are actively trying to do a good job; 50 million are “not engaged,” meaning they are doing what they are asked to do and nothing more; and 20 million are “disengaged,” meaning they are actively hostile and costing their employers money.

As Timothy Egan wrote in the New York Times, it doesn’t cost much to praise good work, provide opportunities for learning and growth and be open to suggestions.  Companies such as Costco that value their employees frequently outperform companies such as Walmart that don’t.  So why don’t they?

I think part of the explanation lies in what a couple of management scholars called “stupidity management.”   The top management in such an organization sets a narrow, usually quantifiable, goal and insists that it not be questioned.  A low-level manager in such an organization is required to push people to achieve unreasonable goals.  Being in that kind of position certainly would not improve my disposition.

Click on Why most Americans hate their jobs (or are just ‘checked out’) for details about Gallup’s findings in The Week.

Click on Checking Out for comment by Timothy Egan in the New York Times.

Click on ON MOTIVATION for comment on Gin and Tacos.

Click on Costco: doing well by acting decently for the benefit of being a good boss.

Click on The stupidity theory of organizations for a possible explanation of why more companies aren’t like Costco.

Hat tips to Eschaton and Balloon Juice.


The worst thing about work: the boss

June 26, 2013


The infographic is from Inc. magazine for November, 2012.

Costco: doing well by acting decently

June 12, 2013


Retail store chains face tough times because of the slow economy and competition from Amazon and other on-line sellers.  But Costco Wholesale’s sales are up, its profits are up and its stock price is up.

What’s noteworthy about Costco, according to Bloomberg Businessweek, is how well it treats its employees.   “If you treat customers with respect and employees with respect, good things will happen,” CEO Craig Jelinek told Bloomberg.

Costco is the second largest retail store chain in the United States, and is fast gaining on Wal-Mart, the largest.  Here are some facts and figures about the two chains.

  • Average hourly pay for Costco employees is $20.89 an hour, versus $12.67 for Wal-Mart.
  • 88 percent of Costco employees have company sponsored health insurance, in which they pay less than one-tenth of the cost of the premium.  Wal.Mart says “more than half” of its employees have health insurance.
  • CEO Craig Jeninek got a base salary of $650,000 a year, plus a $200,000 bonus, plus stock options worth $1.2 million.  Wal-Mart’s CEO got a base salary of $1.3 million , plus a $4.4 million cash bonus, plus $13.6 million in stock.
  • While Costco is doing well, Wal-Mart is in trouble
Costco's stores are no-frills

Costco’s stores are no-frills

Costco overall is a no-frills operation.  It has no public relations department, and Bloomberg reporters were able to talk to the CEO directly.  Costco does not hire managers out of business school.  Its managers are promoted from within.

Its prices, according to Bloomberg, are competitive with Amazon, which Costco managers see as its chief competitive threat.  Profit margins are thin.  About 80 percent of Costco’s gross profit comes from its annual membership fee.

Costco is not necessarily an exception, according to Bloomberg.  Nordstrom, The Container Store, Sephara, REI and Whole Foods Market, all know for treating employees well, are also doing well in the marketplace.  It is true that Amazon, which is not known for treating employees well, also is successful, but maybe they could still be profitable if they treated their warehouse workers better.

A lot of people assume that being callous toward people is always realistic and treating people decently is always naive, but Costco’s experience shows this isn’t so.  Treating employees as assets instead of costs can be good business price.  Bertrand Russell once wrote that if human beings all knew what was in their self-interest, most would be better people than they are and the world would be a better place.


Pay vs. productivity growth around the world

June 6, 2013

Double click to enlarge.


Click to enlarge.

The gap between growth of workers’ productivity and workers’ wages exists in a number of countries, but the gap is much wider in the United States than in other advanced industrial countries.

I took the second chart from an on-line article by an analyst who thinks this is a good thing, not a bad thing.  This analyst thinks it means that U.S. manufacturing is becoming more competitive internationally.

The failure of wages to keep up with productivity could be a good thing if it meant that the profits of U.S. industry were being plowed back into modernizing factories and infrastructure, expanding industrial research and creating new industries.  Do you see any sign this is happening?  Or is this just income being redistributed upward?

Click on US Manufacturing Restores Competitive Vigor for the source of the second chart and an optimistic view by Joseph G. Carson on the AllianceBernstein Blog on Investing.

Click on Signs of Factory Revival Hard to Spot for a skeptical view in the Wall Street Journal.



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