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‘A tale of 2 recessions’: As rich Americans get richer, the bottom half struggles

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The path toward economic recovery in the U.S. has become sharply divided, with wealthier Americans earning and saving at record levels while the poorest struggle to pay their bills and put food on the table.

The result is a splintered economic picture characterized by high highs — the stock market has hit record levels — and incongruous low lows: Nearly 30 million Americans are receiving unemployment benefits, and the jobless rate stands at 8.4 percent. And that dichotomy, economists fear, could obscure the need for an additional economic stimulus that most say is sorely needed.

The trend is on track to exacerbate dramatic wealth and income gaps in the U.S., where divides are already wider than any other nation in the G-7, a group of major developed countries. Spiraling inequality can also contribute to political and financial instability, fuel social unrest and extend any economic recession.

The growing divide could also have damaging implications for President Donald Trump’s reelection bid. Economic downturns historically have been harmful if not fatal for incumbent presidents, and Trump’s base of working-class, blue-collar voters in the Midwest are among the demographics hurting the most. The White House has worked to highlight a rapid economic recovery as a primary reason to reelect the president, but his support on the issue is slipping: Nearly 3 in 5 people say the economy is on the wrong track, a recent Reuters/Ipsos poll found.

Democrats are now seizing on what they see as an opportunity to hit the president on what had been one of his strongest reelection arguments.

“The economic inequities that began before the downturn have only worsened under this failed presidency,” Democratic presidential nominee Joe Biden said Friday. “No one thought they’d lose their job for good or see small businesses shut down en masse. But that kind of recovery requires leadership — leadership we didn’t have, and still don’t have.”

Recent economic data and surveys have laid bare the growing divide. Americans saved a stunning $3.2 trillion in July, the same month that more than 1 in 7 households with children told the U.S. Census Bureau they sometimes or often didn’t have enough food. More than a quarter of adults surveyed have reported paying down debt faster than usual, according to a new AP-NORC poll, while the same proportion said they have been unable to make rent or mortgage payments or pay a bill.

A historic House vote on marijuana legalization will take place later this month. We break down why Democrats are voting on the bill despite the fact that it’ll be dead upon arrival in the Senate.

And while the employment rate for high-wage workers has almost entirely recovered — by mid-July it was down just 1 percent from January — it remains down 15.4 percent for low-wage workers, according to Harvard’s Opportunity Insights economic tracker.

“What that’s created is this tale of two recessions,” said Beth Akers, a labor economist with the Manhattan Institute who worked on the Council of Economic Advisers under President George W. Bush. “There are so obviously complete communities that have been almost entirely unscathed by Covid, while others are entirely devastated.”

Trump and his allies have seized on the strength of the stock market and positive growth in areas like manufacturing and retail sales as evidence of what they have been calling a “V-shaped recovery”: a sharp drop-off followed by rapid growth.

But economists say that argument fails to see the larger picture, one where roughly a million laid-off workers are filing for unemployment benefits each week, millions more have seen their pay and hours cut, and permanent job losses are rising. The economy gained 1.4 million jobs in August, the Labor Department reported Friday, but the pace of job growth has slowed at a time when less than half of the jobs lost earlier this year have been recovered.

Some economists have begun to refer to the recovery as “K-shaped,” because while some households and communities have mostly recovered, others are continuing to struggle — or even seeing their situation deteriorate further.

“If you just look at the top of the K, it’s a V — but you can’t just look at what’s above water,” said Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth. “There could be a whole iceberg underneath it that you’re going to plow into.”

The burden is falling heavily on the poorest Americans, who are more likely to be out of work and less likely to have savings to lean on to weather the crisis. While recessions are always hardest on the poor, the coronavirus downturn has amplified those effects because shutdowns and widespread closures have wiped out low-wage jobs in industries like leisure and hospitality.

Highly touted gains in the stock market, meanwhile, help only the wealthiest 10 percent or so of households, as most others own little or no stock.

The disconnect between the stock market and the broader economy has been stark. On the same day in late August that MGM Resorts announced it would be laying off a quarter of its workforce, throwing some 18,000 workers into unemployment, its stock price jumped more than 6 percent, reaching its highest closing price since the start of March.

“The haves and the have-nots, there’s always been a distinction,” Sahm said. But now, she added, “we are widening this in a way I don’t think people have really wrapped their head around.”

A store going out of business
A customer leaves a retail store, which is going out of business, during the coronavirus pandemic. | Lynne Sladky/AP Photo

Without further stimulus, the situation appears poised to get worse. Economic growth until now had been led by increasing levels of consumer spending, buoyed by stimulus checks and enhanced unemployment benefits that gave many people, including jobless workers, more money to spend.

Low-income consumers have led the way, and they spent slightly more in August than they did in January, according to the Opportunity Insights tracker — even as middle- and high-income consumers are still spending less.

But those low-income consumers were also the most dependent on the extra $600 per week in boosted unemployment benefits, which expired in July. Since that lapsed — and since Congress appears unlikely to extend it any time soon, if at all — “we’re likely to see other macroeconomic numbers really fall off a cliff in the coming weeks,” Akers said.

The expected drop in spending, paired with the expiration of economic relief initiatives like the Paycheck Protection Program, could also spell trouble for businesses in the coming months. Many economists expect a wave of bankruptcies and business closures in the fall, contributing to further layoffs.

In that sector, too, owners are feeling disparate impacts. More than 1 in 5 small business owners reported that sales are still 50 percent or less than where they were before the pandemic, according to a recent survey from the National Federation of Independent Business, and the same proportion say they will need to close their doors if current economic conditions do not improve within six months.

At the same time, however, half said they are nearly back to where they were before, and approximately 1 in 7 owners say they are doing better now than they were before the pandemic, the survey showed.

Those diverging narratives could be understating the need for further stimulus by smoothing over some of the deeper weaknesses in the labor market and the economy, experts say.

“This is a case where the averages tell a different story than the underlying data itself,” said Peter Atwater, an adjunct economics professor at William & Mary.

While Republicans appear to be embracing the idea of further “targeted” aid, they are also touting what Trump has called a “rocket-ship” economic recovery and emphasizing record-breaking growth while downplaying the record-breaking losses that preceded it.

“There’s no question the recovery has beat expectations,” said Rep. Kevin Brady (R-Texas), the top Republican on the House Ways and Means Committee, this week on a press call with reporters.

Talks between the White House and Democratic leaders, meanwhile, have been stalled for weeks. The Senate is set to return from its summer recess next week with no clear path forward on a relief package.

“People are in these bubbles,” Atwater said. “And if people aren’t leaving their homes, are not really getting out, it’s unlikely that they’re seeing the magnitude of the downside of this K-shaped recovery.”

This article originally appeared at Politico on September 7, 2020. Reprinted with permission.

About the Author: Megan Cassella is a trade reporter for POLITICO Pro. Before joining the trade team in June 2016, Megan worked for Reuters based out of Washington, covering the economy, domestic politics and the 2016 presidential campaign. It was in that role that she first began covering trade, including Donald Trump’s rise as the populist candidate vowing to renegotiate NAFTA and Hillary Clinton’s careful sidestep of the Trans-Pacific Partnership.

A D.C.-area native, Megan headed south for a few years to earn her bachelor’s degree in business journalism and international politics at the University of North Carolina at Chapel Hill. Now settled back inside the Beltway, Megan’s on the hunt for the city’s best Carolina BBQ — and still rooting for the Heels.


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U.S. unemployment rate fell to 8.4 percent in August

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The unemployment rate dropped to 8.4 percent in August, the Labor Department reported on Friday, marking the fourth month of declines even as the pace of job growth is slowing.

The August rate is down from its April peak of 14.7 percent, but still remains far above the 3.5 percent recorded in February, before coronavirus shutdowns took hold.

The economy recovered 1.4 million jobs last month, the report showed. That’s a slowdown from the previous month’s gain of a revised 1.7 million and from the 4.8 million recovered in June.

After four straight months of growth, fewer than half of the more than 23 million jobs lost in March and April have been recovered.

“Slowing job growth is a disaster when you are 11.8 million jobs in the hole,” Heidi Shierholz, a former chief economist at the Labor Department, posted on Twitter Friday. “This is not the V-shaped recovery that could get us out of this crisis in a reasonable timeframe.”

The data released Friday morning are the results of a survey conducted in mid-August, reflecting some of the earliest effects since enhanced federal unemployment benefits expired at the end of July. The growth was led by rehires in retail, education, leisure and professional services. It also includes nearly 240,000 workers the government temporarily hired to work on the 2020 Census.

Economists warn the labor market may well have grown weaker since the report was conducted, however. Many expect further layoffs through the fall especially if Congress fails to pass further stimulus relief, as an expected drop in consumer spending, the expiration of a small business relief program and other factors could spur a wave of business closures across the country.

The number of permanent job losses is also rising, a signal that damage to the labor market is likely to be long-lasting. The vast majority of unemployed workers are classified as on temporary layoff, indicating they still expect to return to their previous jobs. But permanent losses climbed to 3.4 million in August, the report showed, up from July’s 2.9 million.

White House National Economic Council Director Larry Kudlow hailed the latest numbers on Friday, with the caveat that “we are not out of the woods.” He also downplayed the need for further stimulus, saying in an interview on Bloomberg TV that he believed the economy was “self-sustaining” and could survive without an immediate deal in Congress.

“We can absolutely live with it,” he said, adding, “It depends on the package. A bad package would not be helpful, a smart, good package, well-targeted would be helpful.”

The unemployment rate is dropping fastest for white workers, the report shows, while employment among minority workers is recovering at a slower rate.

The white unemployment rate for white people fell to 7.3 percent in August, the report showed, a drop of 6.9 percent from its April peak. The unemployment rate for Black people, meanwhile, stands at 13.0 percent, a drop of 3.7 percent from its April level.

This article originally appeared at Politico on September 4, 2020. Reprinted with permission.

About the Author: Megan Cassella is a trade reporter for POLITICO Pro. Before joining the trade team in June 2016, Megan worked for Reuters based out of Washington, covering the economy, domestic politics and the 2016 presidential campaign. It was in that role that she first began covering trade, including Donald Trump’s rise as the populist candidate vowing to renegotiate NAFTA and Hillary Clinton’s careful sidestep of the Trans-Pacific Partnership.

A D.C.-area native, Megan headed south for a few years to earn her bachelor’s degree in business journalism and international politics at the University of North Carolina at Chapel Hill. Now settled back inside the Beltway, Megan’s on the hunt for the city’s best Carolina BBQ — and still rooting for the Heels.


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This week in the war on workers: Republicans attack minimum wage wins, but state news isn’t all bad

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Lawmakers are saying “screw the will of the voters” in response to ballot votes to raise the minimum wage in several places across the country, Josh Eidelson reports:

Voters took to the polls in November and approved big hikes in four states’ minimum wages: Washington State, Colorado, Maine and Arizona.

But the increases may not actually take effect as voters intended because elected representatives — mostly Republicans — are moving to rein them in. In Washington, where voters opted for a $13.50 an hour minimum wage by 2020, and Maine, where it was set to rise to $12 that year, state legislators have proposed a battery of bills to water down the increases. The city council in Flagstaff, Arizona has done the same to a local initiative that would have boosted the wage floor to $12 this year, sooner than the statewide increase.

The news is better in Maryland, where both the state House and Senate have passed a paid sick leave bill with veto-proof majorities:

The bill passed by the General Assembly requires employers with 15 or more workers to provide five days of paid sick leave. It does not offer tax incentives to help offset the cost.

The House agreed to accept a change in the legislation made in the Senate that cut the number of sick days per year that employers must offer from seven to five.

That would make eight states with paid sick leave laws, all of them coming since Connecticut kicked it off in 2011.

This article originally appeared at DailyKOS.com on April 8, 2017. Reprinted with permission.

Laura Clawson is a Daily Kos contributing editor since December 2006. Labor editor since 2011.


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Scott Walker Boots 15,000 People Off Food Stamps In Three Months

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AlanPyke_108x108In just three months, 15,000 people in Wisconsin have already lost food stamps thanks to Gov. Scott Walker’s (R) decision to enforce full work requirements for the program in Milwaukee despite economic conditions dire enough to trigger a federal reprieve.

Walker’s administration made the policy change in April. Since then, anyone deemed to be an able-bodied adult with no dependents to care for must prove they are working or participating in job training programs for at least 20 hours per week. Failing to meet that standard means losing Supplemental Nutrition Assistance Program (SNAP) benefits after three months.

The 15,000 bumped from the rolls from May to July is only half the number the state predicts will ultimately lose food stamps because of the move.

The 20-hour weekly work requirement is typically waived when economic conditions are too tight. Since making people hungrier doesn’t create jobs where none exist, the federal government alerts states each year to the areas within their borders where the work rules can be suspended. Other linkages between SNAP enrollment and a person’s willingness to work a job if offered one remain in place, but the hard-and-fast hourly rule is waived.

Unless a governor decides not to heed the federal economists who study local labor markets, as Walker did here and numerous other state leaders – most Republican – have done in the past few years. In Wisconsin, about 60,000 of the state’s nearly 800,000 SNAP recipients were expected to be subject to the new rules.

There are 14 counties in Wisconsin where the labor market is too weak for the federal government to enforce the requirements. Walker declined to except those counties when his administration reinstated the stiffer rules, leaving food stamps recipients to contend with work rules in local economies where work is too hard to find.

The 14 counties contain roughly a quarter of the state’s 5.8 million overall population, but more than half of Wisconsin’s non-white population. Mostly that’s because three of the state’s most ethnically diverse population centers – Milwaukee, Racine, and Beloit – all qualify as “Labor Surplus Areas” for fiscal year 2016. The additional burdens of Walker’s food stamps decision are therefore falling on about one in four of his citizens, but one of every two people of color in his state.

Sherrie Tussler heads the Hunger Task Force, a Milwaukee group that distributes food donations to food banks and shelters. Walker’s move “will bankrupt our food banks” as impoverished people lose access to a modest food stipend, Tussler told the Wisconsin State Journal.

There is supposed to be an escape valve for the pressure on anti-hunger networks that states create by imposing work rules in places where federal bean-counters believe they are untenable. Participation in a job training program can stand in for payroll employment to fulfill the requirement.

But that valve often fails to rescue people who search for jobs that don’t exist. Few states actually have sufficient slots available in job training programs to satisfy the demand for those slots from people who can’t find work, according to the Center on Budget and Policy Priorities. Beneficiaries who are denied entry into a program that’s over capacity still lose their benefits when the three-month clock runs out.

In Wisconsin, unemployed food stamps recipients who don’t have a disability or a dependent are automatically enrolled in the state’s SNAP Employment and Training program. But getting SNAP E&T programs right is hard and expensive, and true success at launching people toward self-sufficiency is rare.

In Milwaukee County, only one in every 14 childless able-bodied adults who’s enrolled in the state training system has actually found a job through it. The impact of Walker’s move there “will result in wide scale shortages in Milwaukee [food banks],” Tussler wrote to the governor in October.

This blog was originally posted on Think Progress on December 1, 2015. Reprinted with permission.

About the Author: Alan Pyke is the Deputy Economic Policy Editor for ThinkProgress.org. Before coming to ThinkProgress, he was a blogger and researcher with a focus on economic policy and political advertising at Media Matters for America, American Bridge 21st Century Foundation, and PoliticalCorrection.org. He previously worked as an organizer on various political campaigns from New Hampshire to Georgia to Missouri. His writing on music and film has appeared on TinyMixTapes, IndieWire’s Press Play, and TheGrio, among other sites.


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Lawmakers Unanimously Approve Country’s Most Robust Paid Sick Leave Law

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Bryce CovertThe Montgomery County, Maryland council voted unanimously to pass a paid sick leave bill on Tuesday, making the town the 23rd place in the country to enact such a requirement.

The law is one of the most robust to be passed at the city or state level so far. “The Montgomery County paid sick days laws is one of the strongest yet, and it should serve as a model for the state of Maryland and the nation,” said Charly Carter, director of Maryland Working Families.

Once it goes into effect in October 2016, around 90,000 people will get the right to a day off when they get sick that they currently don’t have. Employees at businesses with five or more workers will be able to earn up to seven days off a year, while those at companies with fewer workers can earn four paid days and three unpaid. Many current laws in other places exempt smaller businesses completely. Amendments to exempt people under the age of 18, people who work fewer than 16 hours a week, and smaller employers all failed.

Montgomery County’s leave can also be used for a wide variety of purposes beyond taking a day off for a worker’s own illness: to care for a sick family member, to deal with a public health emergency, or to deal with domestic violence, sexual assault, or stalking.

A statewide bill in Maryland has been introduced but not yet passed, although it will be re-introduced next session, according to Working Matters, the group organizing support for paid sick leave in the state. While the country still doesn’t have a national requirement that employers offer their workers paid sick leave, unlike all other developed nations, many local governments have taken action on their own. With Montgomery County, four states and 19 cities have passed laws.

paid-sickleave-infographic-june

CREDIT: Andrew Breiner, ThinkProgress

Without a federal law, however, about 40 percent of America workers don’t have the ability to take paid time off when they or their family members get sick, the majority of them low-income workers who may not be able to afford an unpaid day. President Obama has called to change that, and Democratic lawmakers have introduced bills that would require all of the country’s to offer sick leave, but they haven’t moved forward.

While businesses often claim that they can’t afford to offer paid sick leave, the evidence from many of the places that have passed requirements is that the laws don’t represent an economic burden. In Connecticut, Jersey City, and Washington, D.C., employers don’t report that the laws have been costly or difficult to comply with, while some have seen benefits like decreased turnover and increased productivity. Meanwhile, job growth in Connecticut, San Francisco, and Seattle has been stronger after their laws took effect, and a majority of employers in many of these places now support the laws.

But the opposition has gained ground in other places. Ten states have passed laws that ban cities and counties from passing their own paid sick leave laws, and others are considering the same move.

This blog was originally posted on Think Progress on June 24, 2015. Reprinted with permission.

About the Author: The author’s name is Bryce Covert. Bryce Covert is the Economic Policy Editor for ThinkProgress. She was previously editor of the Roosevelt Institute’s Next New Deal blog and a senior communications officer. She is also a contributor for The Nation and was previously a contributor for ForbesWoman. Her writing has appeared on The New York Times, The New York Daily News, The Nation, The Atlantic, The American Prospect, and others. She is also a board member of WAM!NYC, the New York Chapter of Women, Action & the Media.


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California Labor Ruling Deals A Blow To Uber’s Strategy For Denying Drivers Benefits

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AlanPyke_108x108Uber must pay its drivers benefits, overtime, working expenses, and other standard compensation that the company has thus far avoided providing, the California Labor Commission has ruled.

The decision is not self-executing across the state and can only be directly applied in one specific driver’s case. But it signals to the company’s other employees that the body charged with adjudicating California labor law views Uber to be an employer with all the obligations that come with the label. Uber notes in a statement that the same commission had ruled the opposite way in a 2012 case, and that neither of those rulings would be binding in any other individual lawsuit over similar complaints by other drivers.

The ridesharing start-up, whose market value recently hit $50 billion, has relied upon paying drivers as though they were independent contractors rather than employees. Classifying a worker as a contractor negates most provisions of federal labor law, saving an employer thousands of dollars per year for each person they treat as a contractor.

If a company treats a contractor like an employee by exerting substantial control over day-to-day job activities, though, it risks being found guilty of misclassifying workers. Misclassification is a widespread problem, with complaints popping up everywhere from trucking to strip clubs to beauty parlors.

In California, Uber argued that its relationship with drivers is not controlling enough to constitute an employer-employee relationship, pointing out that they don’t set drivers’ hours or require a minimum number of trips in a shift. But California’s definition of the line between employment and contract work is primarily based on whether the worker is providing a service that’s integral to the main line of business of the company paying her. Labor commission lawyers examined Uber’s policies for drivers and overall business model and found the company’s argument weak.

“Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation. The reality, however, is that defendants are involved in every aspect of the operation,” the commission ruled. By vetting would-be drivers, requiring them to register their vehicles with Uber, and terminating them if their approval ratings dip too low, the state found, Uber positioned itself as an employer rather than a non-controlling party to a contract.

The case that generated the ruling will only cost Uber about $4,000 in reimbursement payments to a driver named Barbara Ann Berwick. But its consequences could be much grander. If it cannot successfully appeal the finding, it will have to choose between fielding further individual lawsuits or reclassifying all its California drivers as regular employees to pre-empt the suits. That means paying unemployment insurance and other payroll taxes that aren’t triggered for contractors, as well as potentially being subject to overtime rules and made to reimburse drivers for work expenses like gas, tolls, and some traffic tickets.

Any multi-billion-dollar corporation should theoretically be able to absorb such costs. But they threaten to turn Uber into a much smaller-margin enterprise, one more akin to the traditional taxi company business model that the firm has made so much money disrupting. And because Uber’s market value is a fluid, on-paper number that depends on investor confidence and market analyst’s reading of the economic tea leaves, the California ruling could lead to some shrinkage in the car service’s worth and ability to raise private funds.

The ruling isn’t the end of the story, either. There are other civil cases outstanding in California and elsewhere that touch on similar issues and could be decided differently. And the sheer variety of different driver experiences, from people who drive a few hours a week for supplementary income to those who log long hours in vehicles leased from the company itself, suggests that it’s hard to pin down the entire category of workers with either the “employee” or “contractor” label that the law provides.

This blog was originally posted on Think Progress on June 17, 2015. Reprinted with permission.

About the Author: The author’s name is Alan Pyke. Alan Pyke is the Deputy Economic Policy Editor for ThinkProgress.org. Before coming to ThinkProgress, he was a blogger and researcher with a focus on economic policy and political advertising at Media Matters for America, American Bridge 21st Century Foundation, and PoliticalCorrection.org. He previously worked as an organizer on various political campaigns from New Hampshire to Georgia to Missouri. His writing on music and film has appeared on TinyMixTapes, IndieWire’s Press Play, and TheGrio, among other sites.


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Broward Is Second Florida County to Address Wage Theft

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Kenneth Quinnell

This week, Broward County—one of the most populous counties in South Florida—became the second county in the state to pass a local wage theft ordinance, joining Miami-Dade County. In a 7-2 vote, the Board of County Commissioners voted to create the new law to deal with a significant and growing problem in Florida. Wage theft occurs when workers are not paid overtime, not paid at least the minimum wage, are forced to work off the clock or are not paid at all for work they have completed.

“I was at the meeting yesterday asking commissioners to vote yes for the ordinance, speaking on behalf of my close friends who are victims of wage theft in our county and haven’t been able to recover their wages after months of effort,” says Maria Isabel Fernandez, a resident of Dania Beach in Broward County. “I was thrilled when the ordinance passed! It may be too late for my friends, but it will help other people like them in the future who will now have the possibility of recovering the salaries they earned through their work without having to hire a lawyer and wait months without any income.”

Florida is considered one of the worst states in the country for wage theft, and Broward County is the third worst county in the state. Nearly 5,000 wage theft cases have been reported in Broward in the past three years, totaling more than $2 million in back wages. More than $28 million in unpaid wages have been recovered in Florida. Miami-Dade created a similar ordinance in 2010 and has recovered more than half a million dollars in unpaid wages in that county alone.

Several factors contribute to the problem. Florida does not have a state-level Department of Labor, has a high percentage of workers who are not covered by federal wage and hour laws and has a legislature that is openly hostile to wage theft laws, so much so that it recently tried to ban such laws at the local level.

Cynthia Hernandez of the Research Institute on Social and Economic Policy at Florida International University says:

Policymakers need to consider the ramifications of Florida becoming a glaring example of a state that tolerates and even encourages wage violations. Broward County and Miami-Dade’s wage theft ordinances are examples of good government policy addressing this growing issue. These ordinances are critical to maintaining a fairly competitive business environment so critical to Florida’s economy.

Alachua County, where Gainesville and the University of Florida reside, is considering becoming the third county to pass a wage theft ordinance. For more information or to report wage theft in Florida, contact the Florida Wage Theft Task Force.

This post was originally posted on AFL-CIO NOW on Monday, October 29, 2012. Reprinted with permission.

About the Author: Kenneth Quinnell is is senior writer for AFL-CIO. He is originally from Florida and is the father of three sons. He can be reached at [email protected]


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What Workers Really Fear on the Job

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Credit: Joe Kekeris
Credit: Joe Kekeris

What’s your biggest worry about your job?

Some 40 percent of America’s workers say they fear their benefits will be reduced in the near future, according to Gallup’s annual Work and Education poll released today. That compares with 28 percent who are afraid their wages will be cut back and 28 percent who fear they will be laid off, a percentage that’s still high compared with pre-recession levels. (Click on chart to enlarge.) In addition, 26 percent fear their hours will be cut back.

The polls found U.S. workers with less formal education are more likely than those with greater educational attainment to worry about losing their job or having their pay or benefits reduced. Some 34 percent of college non-graduates say they are worried about being laid off, compared with 18 percent of college graduates.

So what do these new data mean?

American workers feel secure about their employment situation, even during one of the slower economic times in U.S. history—perhaps
helping to maintain consumer spending enough to prevent a second recession.

U.S. workers feel their benefits are most at risk, which may be the first place employers seek to cut back during difficult economic times. And workers may be willing to accept such cuts over more severe measures like pay cuts or layoffs.

When you depend upon your employer to provide essentials like health care, losing a job means a lot more than lost wages. Unions are the best defense against the billionaire-backed Romney/Ryan politicos who seek to do what America’s workers fear most: cut benefits, slash jobs and squeeze wages.

This blog originally appeared in AFL-CIO on August 22, 2012. Reprinted with permission.

About the Author: Tula Connell got her first union card while she worked her way through college as a banquet bartender for the Pfister Hotel in Milwaukee they were represented by a hotel and restaurant local union (the names of the national unions were different then than they are now). With a background in journalism (covering bull roping in Texas and school boards in Virginia) she started working in the labor movement in 1991. Beginning as a writer for SEIU (and OPEIU member), she now blogs under the title of AFL-CIO managing editor.


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Looking for a Good Job? Don’t Get Your Hopes Up

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Michelle ChenIf you think your job stinks, you’re not alone. And if you’re still looking for a decent job, don’t expect to find one anytime soon, or ever.

A new analysis of job quality, assessing various measures of benefits and wages, confirms what many of us already suspected: Good jobs are vanishing from the United States, with global trade and social disinvestment leaving workers stranded on a barren economic landscape.

The report, published by John Schmitt and Janelle Jones from the Center for Economic and Policy Reseach (CEPR), shows that the downward spiral began long before the recent economic crisis. It notes that since 1979, the “good job” (one that “pays at least $18.50 an hour, has employer provided health insurance, and some kind of retirement plan”) has become an endangered species:

[T]he economy has lost about one-third (28 to 38 percent) of its capacity to generate good jobs. The data show only minor differences between 2007, before the Great Recession began, and 2010, the low point for the labor market.

In 2010, “less than one-fourth (24.6 percent) of the workforce” possessed those precious good jobs. And the clincher is this downturn is beginning to look like a sad plateau:

The deterioration in the economy’s ability to generate good jobs reflects long-run changes in the U.S. economy, not short-run factors related to the recession or recent economic policy.

While workers around the world have witnessed massive economic volatility in the recent boom-bust cycles, food crises and political upheavals, the trend line of labor hardship holds steady. The societal impacts of unemployment crises parallel the effect of long-term effects on individual workers, especially young ones–a self-perpetuating sense of despair and isolation, and perhaps entrenched, long-term suffering.

The report’s long-term prognosis undercuts the historically entrenched national mythology of upward mobility. Alan Barber, a spokesperson for CEPR, tells In These Times via email:

It may come as a surprise or at least run against logic to some readers because even though the workforce is better educated and older, one would expect that more people have good job. Conventional wisdom holds that if a person goes to college and gets a degree they will get better jobs. It also holds that the longer you are in the workforce the better your prospects for getting a good job. But as the report shows this is not the case.

The divergence between the American Dream and American reality has widened as neoliberal policies have assaulted workers under the guise of promoting “personal responsibility.” The belief that hard work pays off has been betrayed by the degradation of public trusts like education and health care, while mortgage and student debt crises and the decline of union representation, hollow out communities from within.

The erosion of public services and social programs is nothing new, but the flip side of a shrinking safety net–a crumbling labor market–pushes self-sufficiency even further out of reach for millions.

The vanishing promise of social mobility may have an even more severe impact across generations. According to the Pew Economic Mobility project’s report on intergenerational prosperity:

  • Eighty-four percent of Americans have higher family incomes than their parents did.
  • Those born at the top and bottom of the income ladder are likely to stay there as adults. More than 40 percent of Americans raised in the bottom quintile of the family income ladder remain stuck there as adults, and 70 percent remain below the middle.
  • African Americans are more likely to be stuck at the bottom and fall from the middle of the economic ladder across a generation.

So apparently the traditional rungs by which earlier generations climbed the class ladder–a bachelor’s degree, a first home, “loyalty” to a single company–are now shakier than ever. Pew researchers uncovered a cleft in mobility over time: in terms of “relative” mobility, people tend to do a bit better than their parents. But the gains often fail to add up to “absolute” mobility, which means people don’t ascend to a significantly better income bracket. Many are actually falling behind relative to the rest of the economy. About 16 percent are “downwardly mobile,” staying put or falling in the class hierarchy. Overall, some 20 percent “make more money than their parents did, but have actually fallen to a lower rung of the income ladder.”

The withering of the middle class is deeply skewed by race, with black and white households moving ahead at vastly different rates. According to Pew, “only 23 percent of blacks raised in the middle exceed their parents’ wealth compared with 56 percent of whites.”

So what’s left for workers who not only face a lifetime of economic hopelessness, but also can’t even give their kids the hope of achieving something more? The CEPR report doesn’t offer policy prescriptions, but does note that the shrinking share of good jobs in the U.S. workforce is not an inevitability. The research connects the decline in quality jobs to the dismantling of the economic supports that make work fair and rewarding, including union power and industry regulations. On a macro level:

the decline in the economy’s ability to create good jobs is related to a deterioration in the bargaining power of workers, especially those at the middle and the bottom of the income scale. The main cause of the loss of bargaining power is the large-scale restructuring of the labor market that began at the end of the 1970s and continues to the present.

The public sector has suffered under privatization, and once-solid middle-class jobs have been lost to the tides of global commerce. Immigrants meanwhile have been absorbed into a precarious low-wage workforce that feeds raging inequality. And meanwhile, political elites are finding new and creative ways to siphon more resources away from the public and subsidize predatory corporate wealth.

The deficit in good jobs can’t be simply chalked up to globalization or a decline in American workers’ “competitiveness.” It’s a reflection of a deficit in power at the bottom, and a surplus of greed at the top.

This blog originally appeared in Working In These Times on August 24, 2012. Reprinted with permission.

About the author: Michelle Chen work has appeared in AirAmerica, Extra!, Colorlines and Alternet, along with her self-published zine, cain. She is a regular contributor to In These Times’ workers’ rights blog, Working In These Times, and is a member of the In These Times Board of Editors. She also blogs at Colorlines.com. She can be reached at michellechen @ inthesetimes.com.


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Workers are worried about having their benefits cut. With good reason.

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Laura Clawson

Americans’ fears about having their benefits or wages reduced, being laid off, or having work hours cut back shot up in 2009, and haven’t fallen back to pre-2009 levels since, a Gallup poll finds. Benefit cuts lead the list of worries, with 40 percent fearful about that, while wage cuts and layoffs follow at 28 percent.

It’s no wonder that fears about benefit cuts have consistently topped responses to this question since the first time Gallup asked it in 1997. You only have to look at any story about a union’s contract negotiations—companies are overwhelmingly demanding cuts to health insurance and pensions, and they didn’t come for union members’ health insurance and pensions first. Companies worked their way methodically through, cutting benefits to the most vulnerable workers first, selling middle-class professionals on the idea that 401(k) plans would make them investor-class masters of the universe and make pensions obsolete and undesirable.

Union members’ benefits only started getting hit after enough other people’s benefits had been cut that companies could play divide-and-conquer, stoking resentment against workers who still had good benefits, promoting the question “why does my neighbor have a pension when I don’t?” rather than “why did my boss take my pension?” And even as too many people still fall prey to that corporate campaign of division, it may be starting to sink in that once pensions are gone for everyone in the 99 percent, and once even people who have employer-provided health care are paying a bigger chunk of the costs every year until they can’t afford it at all, businesses are coming for something else next. So, yeah. American workers should be worried about benefits. And they should be doing something about that worry—voting, organizing, taking to the fucking streets—before there are no more benefits to be worried about.

This blog originally appeared in Daily Kos Labor on August 22, 2012. Reprinted with permission.

About the Author: Laura Clawson is labor editor at Daily Kos. She has a PhD in sociology from Princeton University and has taught at Dartmouth College. From 2008 to 2011, she was senior writer at Working America, the community affiliate of the AFL-CIO.


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