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Head Of The Federal Reserve, Janet Yellin, Takes On Income Inequality

Janet_Yellen_official_portrait

Diagnosis unmatched by prescription

Janet Yellin, who chairs the Board of Governors of the Federal Reserve System, delivered an unusual and important speech two days ago about the growing gap between the richest Americans and everyone else.

Speaking at a conference at the Federal Reserve Bank of Boston, Yellin  offered “Perspectives on Inequality and Opportunity from the Survey of Consumer Finances.”  She said,

It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.

It’s fair to assume that was a rhetorical question and the answer is, no, the widening gap between the ultra-rich and the rest of the population is a threat to democracy and the economic futures of most people.

While the trend of wage stagnation for working Americans goes back to the 1970s, Yellin focused on the most recent period of economic history, 1989 to 2013.  This is useful because it includes the recent economic meltdown as well as the so-called “recovery.”

Yellin illustrated her talk with an obligatory set of graphs (she’s an economist after all), including this one depicting changes in net worth (i.e. wealth) for the wealthiest 5% of Americans, the next 45%, and the bottom half of the population.

yellen20141017a3As the chart makes obvious, the wealthiest 5% of Americans saw their share of the nation’s wealth climb from about 55% to about 65%, while the next 45% saw its share go from from 45% to 35% and the share held by bottom 50% approaching zero percent.

It’s good to know the nation’s top economist is alarmed.

The second half of Yellin’s speech concerned what she called “four building blocks of opportunity,” access to early education, access to higher education, ownership of private businesses, and inheritance.  The first three could be useful ways for individuals and families to do better in a time of widening inequality, but do not affect tax policy, deindustrialization, political and business attacks on organized labor, and the growth of the finance sector’s share of the economy, i.e. the factors driving the equality gap to historic highs.

For a more incisive analysis of what went wrong, I recommend the latest issue of Dollars and Sense, especially an article by Gerald Friedman on “What Happened to Wages?”  He writes,

From the dawn of American industrialization in the 19th century until the 1970s, wages rose with labor productivity, allowing working people to share in the gains produced by capitalist society.  Since then, the United States has entered a new era, in which stagnant wages have allowed capitalists to capture a growing share of the fruits of rising productivity.

I recommend examining Friedman’s charts alongside Yellin’s.  And try to follow Yellin’s fourth piece of advice:  inherit a fortune.

Originally posted on InZane Times 

Blog Action Day 2014 — #Inequality: Overcoming Income Inequality With Progressive Policies

Income-Inequality-Graph-from-Robert-Reichs-New-Film
Income-Inequality-Graph-from-Robert-Reichs-New-Film

Image from Inequality For All

Supreme Court Justice Louis Brandeis once said, “We can either have democracy in this country or we can have great wealth concentrated in the hands of a few; but we can’t have both.”

We as a nation are facing a problem. A same problem we have faced and overcome in the past. Income inequality is once again dividing our great nation from the have’s and have not’s.

Early in the 1900’s the United States had a vast income inequality. Workers slaved for sixteen hours a day in dangerous factories. The majority of a workers income went to paying their employer for room and board, while the factory owners collected absorbent amounts of money.

Former AFL-CIO President Thomas Donahue once said, “The only effective answer to organized greed is organized labor.”

As workers fought to get a fair share of the profits, wealthy Americans began using their vast wealth to influence the political system. Using their political influence they blocked legislation that provide workers with better safety regulations, better working conditions and the opportunity to bargain collectively with their employers.

As massive workplace tragedies like the Triangle Shirtwaist fire ripped through the headlines workers had had enough. Workers began to organize and form unions. As workers fought and died, the union movement began to gain traction.

It would still be decades before Congress would pass the National Labor Relations Act that gave workers the legal right to organize. As workers began organizing and negotiating for fair wages the entire country saw the gap between the poor and the wealth slowly start to close.

Unions became a powerhouse against corporate greed by ensuring that all workers were paid fairly, had a voice in their workplace and could retire with dignity.

With the addition of Social Security and the Minimum Wage people began to lift themselves out of poverty and what emerged was a vibrant middle class that would lead the nation through decades of economic prosperity.

In the late 1960s, corporations were looking for ways to weaken the power of unions to increase their profits. The answer was something they knew all along, to elect politicians who would put the interest of the corporations above the interest of the workers. They began a massive lobbying campaign to change regulations, slash workers rights and elect politicians who would vote for their corporate interests first.

As the power of the corporations began to rise again, unions began to fall. Massive anti-union campaigns blocked workers from organizing. President Reagan fired 15,000 air traffic controllers in the 1981 PATCO strike and that drove a stake right through the heart of organized labor. President Reagan showed the nation that it was acceptable for an employer to ignore the demands laid out by the unions and when the time comes, fire them all and rehire new workers. Corporations began using this principle to break unions thereby hiring new workers are drastically reduced wages.

As workers began to lose their voice, income inequality began to rise again. By the 1980s Wall Street was booming. Corporate profits were skyrocketing. CEOs began making obscene amounts of money while the everyday worker saw their wages stagnate.

ceo-vs-workerBy 1983 the ratio between the average worker and the CEO was 46:1. This is double what it was only ten years earlier (23:1). The more wealth Wall Street and greedy CEOs acquired, the more workers suffered.

Corporations continued to use their power in Washington to change the rules of the game for their own benefit. They changed banking regulations that allowed corporations to file for bankruptcy on their pension obligations. After thirty years with a company workers are left with nothing. All the money they contributed to their retirements, gone. Corporations began closing factories and shipping their jobs overseas. Millions of workers lost their jobs and their retirements as factories were chopped up and sold in shady Wall Street deals that paid executives boatloads of money.

As union membership began to decline inequality between workers and CEOs grew by leaps and bounds. Now the ratio between the average worker and the CEO is over 400:1. This is eight times higher than the next highest country, Venezuela at 50:1. That is obscene.

Now over forty percent of the nations wealth is held by only a select few. Income inequality in America now is worse than it was in the 1920s.

econ_onepercentchart15_630

Now that we have identified the problem, how do we fix it to rebuild the middle class and narrow the gap between the average worker and the ultra-wealthy?

The heart of the problem lies in the myth that if we give more money to the ultra-wealthy — or as the Republicans like to call them — job creators, then that money will trickle down to the rest of us. This failed idea continues to shape the political debate in Washington as millionaires and billionaires use their political lobbying groups, like the Americans For Prosperity, to push legislators to give more tax breaks to high-income earners.

Groups like the Americans For Prosperity continue to say that if we take anymore from the wealthy job creators they will just stop creating jobs. The fact is no matter how much money the job creators are given, they still are not creating any jobs. This feeds into the myth that we must give them more money.

The Americans For Prosperity also work to destroy unions, and fight against any progressive measures like raising the minimum wage. They demonize workers who want a living wage, while greedy corporations rake in more profits than any other time in history.

To begin to close the inequality gap we must rely on proven measures that have worked for previous generations. Policies like increasing the minimum wage, ensuring that the ultra-wealthy are paying their fair share in taxes and expanding Social Security. These three policies pushed America out of the Great Depression and into the most prosperous generation in American history.

It sounds simple, but given that too many of our politicians are bought and paid for by corporations and wealthy hedge fund managers, changing these policies have created the gridlock we are currently experiencing on Capitol Hill. Progressives want to move the country forward, while the Conservative majority who want to take us backwards.

There is one more change that we need to enact if we ever want see real change in America. We must get the corporations out of our political system. We need to get their dirty money out of Washington D.C. Their corruptive influence is blocking any meaningful legislation from moving forward. Politicians vote for what their corporate sponsors tell them to, no matter how much the voters disagree.

Across the country, in nearly every poll, voters overwhelmingly agree that it is time to raise the minimum wage. Despite this overwhelming voter support for raising the minimum wage, conservative politicians still oppose the increase.

As Senator Bernie Sanders says, “our democracy is turning into an oligarchy,” and that will eventually destroy America, as we know it.

“America Out Of Whack” By Arnie Alpert of InZane Times

American Flag (Sam Howzit FLIKR)

Writing in the New York Times, Thomas Edsall assembles an impressive array of facts that illuminate the realities of wealth inequality in America.  

Citing Federal Reserve figures, Edsall reports that household net worth, corporate profits, and the value of real estate have been going up at an impressive pace.  If you think that sounds like evidence of recovery you’d be mistaken, at least if you equate “recovery” with economic conditions that are improving for most workers.   

“The September Federal Reserve Bulletin graphically demonstrates how wealth gains since 1989 have gone to the top 3 percent of the income distribution,” he writes.  “The next 7 percent has stayed even, while the bottom 90 percent has experienced a steady decline in its share.”

It’s not just wealthy individuals getting wealthier; it’s also the corporations they own and run.    Citing statistics from Goldman Sachs, Edsall says corporate profits rose five times faster than wages last year.  And he quotes an article from Business Insider that stated,

“America’s companies and company owners — the small group of Americans who own and control America’s corporations — are hogging a record percentage of the country’s wealth for themselves.”

Edsall asks, “Why don’t we have redistributive mechanisms in place to deploy the trillions of dollars in new wealth our economy has created to shore up the standard of living of low- and moderate-income workers, to restore financial stability to Medicare and Social Security, to improve educational resources and to institute broader and more reliable forms of social insurance?”

It’s the right question. 

For answers he turns to a bunch of economists, who provide data about tax rates, labor force participation, the declining growth of well-paying jobs, globalization, and the reduction of labor’s share of profit relative to capital in a time of rising productivity.  

My answer is a bit more straightforward:  America’s companies and company owners — the small group of Americans who own and control America’s corporations — are hogging the political system.  This is nothing new, but in the legal environment created by recent Supreme Court decisions (Citizens United and McCutcheon in particular) it is becoming easier for corporate interests to wage class war and win.  Simply put, the people who make the laws and set the policies have their receptors tuned to the frequency where the corporations are broadcasting. 

Edsall notes survey data that reveal corporations are not so popular in the USA and other so-called “advanced countries.”   He asks if the legitimacy of free market capitalism in America is facing fundamental challenges.

My gut response is to say “I hope so.”  But the dynamics described by all those economists are not the workings of “the invisible hand.”  The market is operating under a set of rules established by those who already have more than their fair share of power, wealth, and privilege.  The legitimacy of our corporate-directed political system that must be challenged as well.

#GUI

Granite State Rumblings: Congress Reauthorizes Child Care Block Grants And That Is Good News

Child Care Facility (EAGLE102_Net CC FLIKR)
Child Care Facility (EAGLE102_Net CC FLIKR)

YMCA child care room (EAGLE102_Net CC FLIKR)

Here is some important news from our friends at Zero to Three and the National Women’s Law Center.

For the first time in nearly 20 years, the Senate and House have reached an agreement to reauthorize the Child Care and Development Block Grant (CCDBG), the primary federal program that provides funds for child care subsidies for low-income working families and to improve child care quality.

The House voted Monday to pass the legislation and the Senate will vote on the bill before Congress goes into recess on Sept. 23.

(Read the joint statement of the bipartisan group from the House and Senate who came together to forge this legislation here.)

The bipartisan bill promises to:

  • Improve the health and safety of children in child care settings;
  • Make it easier for families to get and keep the child care assistance they need;
  • Enable children to have more stable child care; and
  • Strengthen the overall quality of child care.

Most notably for infant-toddler advocates, the agreement would create a 3% set-aside of funds to improve the quality of infant-toddler care. These funds will increase states’ capacity to invest in helping programs reach a high level of quality as well as specialized training and support for infant-toddler providers.

High-quality child care is linked to the success of children and their parents. Child care provides early learning opportunities to children and enables women to work so they can support their families. With significantly increased funding, this bill can make a critical difference.

While this agreement is an important step toward the reauthorization of CCDBG, the Senate must now vote to approve the compromise bill and get this to the finish line. Phone calls to your Senators are especially needed this week.
~

And this from our friends at the Center on Budget and Policy Priorities:

Our new report provides context for the official poverty and income figures for 2013, which the Census Bureau will release on Tuesday, September 16th.

Here are the highlights:

  1. As in other recent recoveries, poverty has been slow to decline.  Over time, poverty rates tend to move roughly in tandem with economic indicators, which generally improved slightly in 2013.  Thus, the poverty rate — which jumped from 12.5 percent in 2007 to 15.1 percent in 2010 and remained essentially unchanged at 15.0 percent in 2011 and 2012 — may start to improve in 2013 as well, although the improvement might not be statistically significant .A return to pre-recession poverty levels is unlikely soon.  To replace the millions of jobs lost in the Great Recession anytime soon and keep up with population growth, the economy must create jobs faster than it has to date.  Although the economic recovery (which officially began in June 2009) is not uniquely disappointing in this regard, it is still problematic — and because the economic downturn was so deep, there is much more ground to make up.  Recoveries in the 1960s, 1970s, and 1980s featured quicker reductions in poverty.
  2. Austerity policies likely hampered progress against poverty in 2013.  The economy almost certainly would have improved more in 2013 had austerity policies not reduced the government’s contribution to the economy.  These included the “sequestration” spending cuts of the 2011 Budget Control Act and first implemented in 2013 and the expiration of the payroll tax holiday, which reduced most workers’ take-home pay by 2 percent of earnings.
  3. Unequal wage growth also slowed progress.  Between 2009 and 2013, inflation-adjusted hourly wages rose by 1 percent for workers at the 95th percentile (workers whose wage levels exceed those of 95 percent of all workers but are less than the remaining 5 percent), but fell by about 4 to 6 percent for workers in the bottom 60 percent of the wage scale, according to the Economic Policy Institute.
  4. Income inequality tied a record-high level in 2012.  The income gap between rich and poor as measured by the Gini index — the Census Bureau’s main summary indicator of inequality in pre-tax cash income — tied a record in 2012, with the data going back to 1967.  Other inequality measures also stood at or near record levels in 2012.
  5. Most poverty figures released on Tuesday won’t reflect non-cash benefits.  The Census figures will focus on the official poverty statistics, which are based on pre-tax cash income and omit support such as food assistance and rental subsidies as well as tax-based assistance such as the Earned Income Tax Credit (EITC).  An alternative Census Bureau poverty measure, the Supplemental Poverty Measure (SPM), includes these types of assistance, and experts generally consider it a more reliable tool for measuring changes in poverty over time as well as the safety net’s impact on poverty.  Unfortunately, Census will not release SPM figures for 2013 until later this year.  However, Census will release a table on Tuesday providing data on the poverty-reducing effects of certain programs, including SNAP (formerly food stamps) and the EITC.

Granite State Rumblings: How Healthcare, Income Inequality, and The Gender Wage Gap, Are All Connected

African American waitress serving lunch

Since President Obama gave the State of the Union Address, we have been hearing a lot of talk about income inequality and the gender wage gap.

A new report from The Working Poor Families Project states that in 2012, there were more than 10 million low-income working families with children in the United States, and 39 percent (4.1million) were headed by working mothers struggling to support 8.5 million children. The economic conditions for these families have worsened since the onset of the recession; between 2007 and 2012, there was a four percentage-point increase in the share of female-headed working families that are low-income.

The report defines “low-income working families” as earning no more than twice the federal poverty income threshold. In 2012, the low-income threshold for a family of three with two children was $36,966.

Addressing challenges specific to these families will increase their economic opportunity, boost the economy and strengthen the fabric of communities across the nation.

Public policy can play a critical role in our future prosperity by reversing this trend and improving outcomes for low-income working mothers. While the federal government can play a role, of particular interest in this report is how state governments can best invest in helping working mothers gain the education, skills, and supports necessary to become economically secure and provide a strong economic future for their children.

Here are a few of the key points from the report:

Education

  • Increasingly, education is the key to success in the labor force and is a major factor driving the growing economic gap between lower-income and higher-income families. However, relatively few low-income working mothers have the training and skills needed to earn decent wages.
  • Education can provide a pathway out of poverty, but postsecondary education and skills training are often out of reach for low-income working mothers.
  • Access to postsecondary education can be limited due to a number of factors such as tuition costs, transportation issues and class schedules that conflict with standard working hours.
  • Lack of affordable, high-quality child care also limits the ability of working mothers to both enter and succeed in college.

Low Income, Fewer Benefits

  • A key barrier for working mothers is the gender gap in earnings. In 2012, women earned just 77 cents for every dollar earned by men, a gap that has persisted over the past ten years.
  • The primary challenge for working mothers is their concentration in low-wage jobs. Women remain significantly underrepresented in many high- paying, high-demand occupations, especially in blue-collar and technical fields.
  • Women in low-wage work are often in jobs that do not provide benefits such as health insurance paid sick leave, or, in some occupations, even wage protections.
  • The U.S. Family and Medical Leave Act (FMLA), guarantees the availability of unpaid sick leave for just over half of U.S. workers. But for those not covered, and/or who are living from paycheck to paycheck, unpaid leave is generally not a viable option since staying at home to take care of a sick child may lead to greater economic pressures, including the loss of a job.

For maximum impact on this problem, the report says state governments should focus on policies that are sensitive to the needs of working mothers and to all parents in general by:

  • Increasing access and success for low- income working mothers in postsecondary education.
    • Create and expand tuition assistance programs that make postsecondary education accessible for low-income working mothers.
    • Allow undocumented students to pay in-state tuition at public post-secondary schools.
    • Better utilize existing program resources of TANF, Adult Education and WIA to support the success of working mothers in postsecondary education.
    • Provide increased and dedicated academic and personal supports for low-income working mothers, including affordable, high-quality child care and other strategies targeted to promote student parent success.
    • Invest in programs that help pregnant women and young mothers achieve a high school credential and transition to postsecondary education.
    • Restructure adult basic education and community college programs in accordance with bridge program and career pathway concepts to better accommodate low- income working mothers, including English Language Learners who may be seeking an occupation credential or degree.
    • Take steps to encourage and support low-income working mothers to pursue career and technical education/training programs in nontraditional fields such as STEM, manufacturing and transportation by crafting state policies to take advantage of opportunities in such programs as Perkins, WIA and apprenticeships.
  • Improving the quality of low-wage jobs.
    • Raise the state minimum wage and minimum wage for employees who receive tips and index them to inflation to help meet basic household needs.
    • Implement and enforce paid maternity leave and paid sick leave policies to ensure all working mothers can take paid time off when they or their children are sick.
  • Creating a strong network of work supports to strengthen female-headed, low-income families and assure basic family needs are met.
    • Provide a state refundable EITC for low- income families, including non-resident fathers who pay their child support, to help make low-wage work pay.
    • Support the expansion of Medicaid eligibility under the Affordable Care Act to ensure low-wage working mothers have access to affordable health care.
    • Improve access to quality child care for low-income families during work and school.
    • Maintain a strong commitment to work supports (e.g., SNAP, Medicaid as well as EITC and child care) and structure eligibility levels to avoid “cliff” effects with the goal of improving family well-being.

Launched in 2002 and currently supported by the Annie E. Casey, Ford, Joyce and Kresge foundations, The Working Poor Families Project is a national initiative that works to improve these economic conditions.

Here are some facts about New Hampshire from the Working Poor Families Project report:

  • Number of low-income working families: 28,751
  • Number of female-headed low-income working families: 12,450 or 43%
  • National Average of female-headed low-income working families: 39%
    • NH Ranking among all states: 32
  • Number of women in female-headed low-income working families with no post-secondary education:  6,607 (53%)
  • National average of women in female-headed low-income working
  • Families with no post-secondary education: 49%

There is currently legislation being considered in New Hampshire on several of the recommended policy actions in the WPFP report.

  • Allow undocumented students to pay in-state tuition at public post-secondary schools.
    • HB 474 – An act relative to eligibility for in-state tuition rates at the university system of New Hampshire.
      • Status – Passed/Adopted with Amendment by the House
  • Raise the state minimum wage and minimum wage for employees who receive tips and index them to inflation to help meet basic household needs.
    • HB 1403 – An act establishing a state minimum hourly wage.
      • Status – In House Labor, Industrial and Rehabilitative Services Committee
      • Executive Session today (2/18/14) at 2:00 PM in LOB 307
  • Address the gender wage gap.
    • HB 1188 – An act relative to paycheck equity.
      • Status – Majority Committee Report – Ought to Pass
      • Scheduled for House Floor Vote – Wed., February 19th
    • SB 207 – An act relative to paycheck equity.
      • Status – In Senate Commerce Committee
  • Support the expansion of Medicaid eligibility under the Affordable Care Act to ensure low-wage working mothers have access to affordable health care.
    • SB 413 – An act relative to access to health insurance coverage.
      • Status – In Senate Health, Education and Human Services Committee
      • Public Hearing – Today (2/18/14) at 9:15 AM in SH 100

For more information about the SB 413, please read this week’s Common Cents blog post from NH Fiscal Policy Institute:

An Overview of SB 413: Extending Affordable Health Insurance to Low Income Residents.

On Thursday, February 13, 2014, Senators Morse, Larsen, Bradley, Gilmour, Odell and D’Allesandro introduced SB 413 to create the Health Protection Program.

SB 413 creates three stages of extending affordable health insurance to low income Granite Staters: the Health Insurance Premium Program (timeline: ASAP–December 31, 2016); the Bridge to Marketplace Premium Assistance Program (timeline: ASAP–June 30, 2015 if no waiver or December 31, 2015 if waiver approved); and the Marketplace Premium Assistance Program (timeline: January 1, 2016–December 31, 2016 if waiver approved).

Descriptions of the three stages can be found by clicking here.

SEIU President Mary Kay Henry On SOTU

Image by Chet Susslin 
From National Journal


“It should not fall only on the president and Congress to make sure workers earn a decent wage. Our business leaders have a responsibility to help close the growing income gap, especially in an era of record profits.” – Mary Kay Henry, President, Service Employees International Union (SEIU)

Image by Chet Susslin  From National Journal

Image by Chet Susslin
From National Journal

WASHINGTON, DC – After President Obama delivered his 2014 State of the Union address, Mary Kay Henry, President of the Service Employees International Union (SEIU) issued the following statement:

“In his address tonight, President Obama made clear that he believes economic inequality to be the defining issue of our time. It threatens the state of our union and I applaud the president for beginning a broader discussion about how we achieve shared prosperity.

“One step forward is the president’s proposal to raise the federal minimum wage to $10.10 an hour. Bills exist in Congress that would raise the wage and we hope they are taken up and passed as soon as possible. We need to end the new ‘normal’ of workers stringing together low-wage jobs with no benefits that can’t support a family. As President Obama said tonight, ‘the best measure of opportunity is access to a good job.’

“In addition, requiring federal contractors to pay their workers $10.10 is another step forward and we are encouraged that the president will use his executive authority to make it happen. When American jobs and livelihoods depend on getting something done, the president shouldn’t have to wait for Congress.

“While raising these wages is a good start, it won’t solve the problem by itself. The best way for workers to thrive is by bargaining with their employers for better wages and a shot at a better future. However, it should not fall only on the president and Congress to make sure workers earn a decent wage. Our business leaders have a responsibility to help close the growing income gap, especially in an era of record profits.

“Simone Sonnier-Jang, a fast food worker from Los Angeles who sat in the House gallery tonight, is one of thousands of workers around the country calling attention to the crisis of low wages. Workers like her are making their voices heard and demanding $15 an hour and the right to form a union.

“Also of critical importance to achieving shared prosperity is action on commonsense immigration reform. The time is now – actually, it’s past due. Both sides need to come together to pass immigration reform with a pathway to citizenship and we urge the president to keep the pressure on lawmakers to pass real reform so that 11 million people can come out of the shadows and participate fully in our democracy.

“It’s important to note how important affordable health care is for Americans’ economic security. That’s why protecting the Affordable Care Act should remain a priority for this Congress.”

The Courts could destroy even MORE of our rights while we wait for Congress to fix Taft-Hartly

1947 CIO rally at Madison Square Garden
1947 CIO rally at Madison Square Garden

1947 Rally at Madison Square Garden

As I promised in yesterday’s post, here are a few examples of how things are getting worse, the longer we wait for Congress to fix (or repeal) the Taft-Hartley Act.

More states have passed so-called “Right to Work” laws. Nevermind what they’re called, RTW laws restrict employers’ rights: they prohibit employers from voluntarily agreeing to “agency fee” clauses in their union contracts. Last year, Indiana and Michigan joined the list of states that restrict employers’ rights; and the American Legislative Exchange Council (ALEC) is clearly still trying to spread their “model legislation” nationwide.

The Supreme Court will soon decide two cases that could further limit employers’ rights in their dealings with employee unions. Read the New York Times article here.

  • The first case will decide whether employers have the right to agree to remain neutral during a union organizing drive. (Shouldn’t employers be able to allow their employees to make their own decisions about union representation? In many worksites, unions and employers work cooperatively because they share the same goals. Why should federal law require the employer-union relationship to be adversarial, rather than cooperative?)
  • The second case attempts to impose “Right to Work” on the whole country through a court decision — rather than leaving it up to each state to decide for itself whether to limit employers’ rights.  (What happened to that old Tenth Amendment/states’ rights principle?)
  • The second case also challenges whether a state government has the right to allow union representation of home-care workers who are paid by Medicaid.  (Again: are we about to see the federal court system restrict a state government’s exercise of reserved powers?)

Taft-HartleyAnd then there’s Boeing. Just my personal opinion, but… it sure seems to me like Boeing is setting up another chance to litigate all those legal theories it came up with in 2011, back before the Machinists asked the NLRB to drop its complaint about Dreamliner production. The basic question at issue: whether a company has the right to relocate jobs in retaliation for (legally protected) union activity. That 2011 complaint was part of “a very long line of cases that the NLRB has been pressing since the 1940s, when employers began moving work from unionized workplaces in the industrial Northeast to non-unionized workplaces in the Southeast and later the Southwest.” Just think what the impact on unions could be, if Boeing persuades the courts to agree with its legal theories. (Read more NHLN coverage of Boeing here.)

Why am I so concerned about these Court cases (and potential court cases) ?  Well… because the Supreme Court is now headed up by Bush appointee John Roberts.  Back in 2005, he was described as one of the “three possible nominees that big business would cheer” — in part because they thought Roberts might “influence the court to decide more cases deemed critical to business.”  Quoting one observer of that nomination process: “Roberts has spent his career as a mind-for-hire on behalf of the rightwing Republican agenda.”  Quoting another: “if Roberts feels free to overturn precedent… Of particular concern is a return to the Lochner era, a time when free-market capitalists read their ideology into the Constitution by striking down statutes aimed at protecting workers’ health and safety.”

I guess we’re about to find out whether those observers were as accurate in their predictions as President Harry Truman was, in his.

(If you didn’t read yesterday’s post, to read Truman’s prognostications from 1947, click here.)

————

Sen. Edward M.KennedyAnd, in a sad epitaph for Sen. Ted Kennedy… as far as I can tell, no-one has re-filed the Employee Free Choice Act since he died.

(Read yesterday’s post to learn more about the economic and social problems caused by Taft-Hartley, and one possible reason why Sen. Kennedy filed EFCA to fix them.)

Still Waiting for Congress to fix Taft-Hartley By Passing EFCA

Photo from Kheel Center, Cornell University via Flikr/Creative Commons

Sen. Edward M. Kennedy

It has been a decade since Sen. Ted Kennedy first filed the Employee Free Choice Act.

He filed the bill on Friday, November 21, 2003 – almost exactly 40 years after the death of President John F. Kennedy.

A coincidence? Not likely. Here’s the back story:

The Employee Free Choice Act would restore union organizing rights that were taken away by the 1947 Taft-Hartley Act. John F. Kennedy was a member of the Congress that passed Taft-Hartley.

“The first thing I did in Congress was to become the junior Democrat on the labor committee. At the time we were considering the Taft-Hartley Bill. I was against it, and one day in Harrisburg, Pennsylvania, I debated the bill with a junior Republican on that committee who was for it . . . his name was Richard Nixon.” [from a 1960 recording of President Kennedy reflecting on his career]

Both Kennedy and Nixon believed that Nixon won that debate. And just weeks later, Congress passed the Taft-Hartley Act, overriding a veto by President Harry Truman.

President Truman was eerily accurate in his predictions of what the Taft-Hartley Act would do.

Photo from Kheel Center, Cornell University via Flikr/Creative Commons

Photo from Kheel Center, Cornell University via Flikr/Creative Commons

From his radio address to the country:

“The Taft-Hartley bill is a shocking piece of legislation. It is unfair to the working people of this country. It clearly abuses the right, which millions of our citizens now enjoy, to join together and bargain with their employers for fair wages and fair working conditions. …”

“I fear that this type of legislation would cause the people of our country to divide into opposing groups. If conflict is created, as this bill would create it—if the seeds of discord are sown, as this bill would sow them—our unity will suffer and our strength will be impaired.”

From his veto message to Congress:

“When one penetrates the complex, interwoven provisions of this omnibus bill, and understands the real meaning of its various parts, the result is startling. … the National Labor Relations Act would be converted from an instrument with the major purpose of protecting the right of workers to organize and bargain collectively into a maze of pitfalls and complex procedures. … The bill would deprive workers of vital protection which they now have under the law…. This bill is perhaps the most serious economic and social legislation of the past decade. Its effects–for good or ill–would be felt for decades to come.”

Fast-forward through those decades, and read the testimony of former National Relations Labor Board Hearing Officer Nancy Schiffer:

“At some point in my career… I could no longer tell workers that the [National Labor Relations] Act protects their right to form a union. … Over the years, the law has been perverted. It now acts as a sword which is used by employers to frustrate employee freedom of choice and deny them their right to collective bargaining. When workers want to form a union to bargain with their employer, the NLRB election process, which was originally established as their means to this end, now provides a virtually insurmountable series of practical, procedural, and legal obstacles.”

Read this report by researchers at the University of Illinois-Chicago:

“Each year in the United States, more than 23,000 workers are fired or penalized for union activity. Aided by a weak labor law system that fails to protect workers’ rights, employers manipulate the current process of establishing union representation in a manner that undemocratically gives them the power to significantly influence the outcome of union representation elections. … Union membership in the United States is not declining because workers no longer want or need unions. Instead, falling union density is directly related to employers’ near universal and systematic use of legal and illegal tactics to stymie workers’ union organizing.”

Read the report by Cornell University Professor Kate Bronfenbrenner:

“Our findings suggest that the aspirations for representation are being thwarted by a coercive and punitive climate for organizing that goes unrestrained due to a fundamentally flawed regulatory regime … many of the employer tactics that create a punitive and coercive atmosphere are, in fact, legal. Unless serious labor law reform with real penalties is enacted, only a fraction of the workers who seek representation under the National Labor Relations Act will be successful. If recent trends continue, then there will no longer be a functioning legal mechanism to effectively protect the right of private-sector workers to organize and collectively bargain.”

Now, go back and consider President Truman’s most serious prediction from 66 years ago: that the Taft-Hartley Act “would cause the people of our country to divide into opposing groups. If conflict is created, as this bill would create it—if the seeds of discord are sown, as this bill would sow them—our unity will suffer and our strength will be impaired.”

President John F. Kennedy

Think about our national politics.  Isn’t our country divided enough? Isn’t it time to reverse the process started by the Taft-Hartley Act?

It’s been a decade since Sen. Kennedy first filed the Employee Free Choice Act.  Next week, we will mark a half-century since President John F. Kennedy died.

 

Isn’t it time to yank the roots of discord, start ending the conflict, and heal the division that was created by the Taft-Hartley Act?

————

To my long-time readers: apologies if this sounds familiar.  Once again, I have just updated last year’s post to reflect the passage of time; there was no reason to write a new post, because things haven’t changed.  So instead of trying to reword things I’ve already said, I’m just going to start using a new hashtag: #dejavu. (You can see all my repeats in one place!)

Actually, it’s not exactly true that “things haven’t changed.”  In this case they are changing — they’re getting worse.  But more on that, tomorrow.

Stakeholder Capitalism vs. Shareholder Capitalism; How Workers Lost Everything

Hedrick ArnieAlpert

Editors Note: This is a part of the larger post on Hedrick Smith’s lecture to the NH AFL-CIO about his new book ‘Who Stole The American Dream’.  You can read the entire post here

Stakeholder Capitalism vs. Shareholder Capitalism

HRSmith 4There are two very different perspectives about how a business should be run.  On one hand there is the view – best described by Henry Ford – that a company is there to produce something, and pay people a wage high enough that they could become your customers.  This is commonly referred to as ‘Stakeholder Capitalism’.

There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.”
HENRY FORD

On the other hand, there is the current business philosophy that companies are only there to make their owners and shareholders money.  This is called ‘Shareholder Capitalism’.

This difference is a major focus in Hedrick’s new book.  He spent a majority of the time during last week’s discussion talking about the differences between these two views – and how ‘Shareholder Capitalism’ has led to the decline of the middle class.

Hedrick explained that ‘Stakeholder Capitalism’ drove the American economy after World War II.  From 1945-1970, the productivity of American workers went up by 96%.  At the same time, the average median income grew by 94%.  “Growth in productivity lead to shared prosperity,” Hedrick observed.  Everyone from the poor to the wealthy prospered during these years – in fact, those at the bottom of the wealth spectrum benefitted even more than those at the top.

Then, beginning in the 1970s, businesses moved into ‘Shareholder Capitalism’.  Productivity continued to rise by leaps and bounds, yet workers’ wages stayed flat.  The added revenue the company received from the higher productivity had to go somewhere – and it went right to the executives and shareholders. This is why the average CEO’s salary is now 380 times higher than the average worker’s salary.  [Read Citigroup’s report “Plutonomy: Buying Luxury, Explaining Global Imbalances” here.]

Through the 1970s, CEOs knew that shared prosperity was good business. “The job of the CEO was to balance the needs of all the Stakeholders,” Hedrick explained.  That means balancing the wages of the workers with the cost to consumers, and the need to turn a profit for the shareholders.  This was the job of the CEO.  Some of those needs were very simple.  The workers needed money.

The middle class had been the major consumer in our economy.  Middle class Americans are spenders, not savers: they spend 90% or more of what they bring home.  For the majority, the only savings they accrue is paying off their mortgages.   If the middle class does not have money to spend (like our current situation) then the economy is very slow to recover from any economic downturn.

In 1948, the United Auto Workers (UAW) and the CEO of General Motors Charlie Wilson signed the first collective bargaining agreement that included a lifetime pension.  This means that after you put in your many years of service to GM they would pay you a salary for the rest of your life.  This trend continued in union and non-union companies for the next few decades.  GM became the model for industry and labor relations throughout the country.

By 1980, 84% of all companies with 100+ employees had a full pension for their retired workers; 70% of them had full healthcare coverage for retirees as well.

Hedrick ArnieAlpertNow that ‘retirement security’ has all but disappeared.  Only 30% of companies with 100+ employees offer a pension; and only 18% offer retiree healthcare.  Those numbers go down every year, as workers who retired with these ‘outdated’ pensions are passing away.

GM used to be the template for a successful industry, now Wal-Mart is the template,” said Hedrick.  Wal-Mart is the modern day success story in the world of ‘Shareholder Capitalism’: they have experienced massive growth and high stock returns.  Just disregard the fact that they do not offer healthcare to the majority of their employees, or pay wages that would keep their workers out of poverty.

In ‘Shareholder Capitalism’ the stakeholders (consumers, shareholders, and workers) are in conflict with each other.  The shareholders are the only people the CEO cares about: business is all about profits and stock prices.  This is also why corporations like Wal-Mart buy back their stock to continue to drive up stock prices.

The middle class is not getting their share of the pie,” said Hedrick.  “The system (economy) will not work until the middle class get more of the pie

Simple Math – US Wealth is Being Redistributed Upward (InZane Times)

Chuck Collins

Chuck Collins, whose latest book is 99 to 1: How Wealth Inequality is Wrecking the World and What We Can Do About it, spoke to the Henniker Peace Community yesterday. 

 

Chuck Collins

Chuck Collins

Chuck Collins didn’t come to Henniker to “foment antagonism or class warfare,” he said, but instead to encourage people to do some “simple math.”  It’s pretty much the same thing.

The richest 44 households in the USA hold more wealth than the poorest 95%, for example.  The wealthiest 1 percent controls 36 percent of US wealth and more than 42 percent of all financial assets. 

It hasn’t always been that bad.  According to Collins, there’s been a “dramatic upward redistribution of wealth” in the past three decades.  That was no accident, but followed policy changes in which the rules of the economy were “rigged” to benefit asset owners over wage earners.  “These are the folks we need to defend ourselves against,” he told an audience of more than fifty people at the Henniker Congregational Church.

Historically, Collins said Americans have been comfortable with wealth and income inequality as long as they thought the rules were fair.  But that has shifted since the 2008 Wall Street meltdown.  Now, 70 percent of Americans believe extreme henniker 11-3-13 005inequality is a problem.

It’s a problem that can be addressed with three types of policy changes:

1) “Raise the floor,” through a higher minimum wage and a stronger safety net;

2) “Level the playing field,” through reforms of the political process, such as overturning the Supreme Court’s “Citizens United” decision; and

3) “Break up concentrations of wealth and power.” 

It’s that third point that would meet the most resistance from the natural persons, organizations, and corporations where power and wealth are unfairly concentrated.  But there are specific steps to advocate, such as restoring the progressivity of US income taxes, raising the estate tax, closing loopholes that enable corporations to evade taxes by assigning profits to overseas subsidiaries, breaking up the megabanks, and imposing a tax on financial transactions.    Some of the One Percenters even agree.

One place we can take this message is into the presidential campaign, now warming up in both major parties.  New Hampshire and Iowa may soon be awash in candidates.  Let’s tell them what we think.

Originally Posted on InZane Times by Arnie Alpert

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