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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.

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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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Trump Is Waging a War On Labor Unions, But You Wouldn’t Know It from CNN’s Dem Debate

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Last night, CNN and the New York Times co-hosted a Democratic debate in Westerville, Ohio—and even by the standards of the mainstream media, the omissions were glaring. There were no questions about police violence, affordable housing, Israel, or the climate crisis. However, there was a softball question about friendship inspired by the bond between Ellen DeGeneres and George W. Bush.

Key labor battles were notably missing from the discussion. While a few of the candidates mentioned unions, the moderators didn’t meaningfully press any of them about the many work stoppages currently taking place throughout the country, except for a question about the General Motors (GM) strike, which mostly focused on the death of the auto industry and how we might be jobs back. The moderators failed to inquire about plans to strengthen worker power, or ask any questions about labor law, giving the impression that unions—and the entire working class—are tangential to the 2020 presidential race.

Surprisingly, there actually was one question about the GM Strike, which has left 50,000 workers without a paycheck for over a month, with the membership poised to vote on a tentative contract, according to breaking news this morning. But the question was framed in the context of a beleaguered industry that could potentially be saved via economic nationalism. The candidates were simply asked about the declining power of U.S. car companies and whether or not they had a plan to bring back jobs from Mexico. There was no mention of the fact that the current strike is directly connected to the restructuring of the company and the concessions that were forced upon workers by the Obama administration as part of the 2009 bailout, despite the fact that a leading Democratic candidate was Obama’s vice president.

That question was fielded by Senator Cory Booker and former Congressman Beto O’Rourke, who both referenced the importance of unions. Booker even said that he’d establish sectoral bargaining rights for workers. That promise might have come as a surprise to the Newark Teachers Union, whose president once declared that the goal of Booker’s state education plan was to “defang public teachers unions.”

No other current strike or worker battle was asked about or referenced in any of the CNN questions. Nothing about the 20,000 Chicago teachers who just voted to authorize a strike, and nothing about the 2,000 striking miners in Arizona or the sanitation workers in Massachusetts who have been on the picket line for a month. There was nothing about the many newsrooms that continue to organize, social workers fighting for a new contract in California, Harvard student workers casting ballots in a strike authorization vote, or the American Federation of Musicians agitating to receive residuals from streaming programs.

There was also nothing asked about the Trump administration’s war on labor unions. Nothing about Trump’s NLRB pushing a corporate agenda for the last two years, its rollback of Obama-era employee protections, its new anti-worker Secretary of Labor, its inadequate new overtime rules, or its dangerous decision to speed up the production lines of slaughterhouses. There was nothing about the state of unions in the wake of Janus Supreme Court decision, and nothing about how to strengthen them despite current legal restrictions.

There were references to the “middle class,” a term that has always possessed a nebulous definition and been used to flatten class divisions and erode working-class solidarity. The only reference to the “working class” was made by Senator Bernie Sanders.

After Warren spoke eloquently about breaking up tech companies, she faced a centrist onslaught of onstage opposition. O’Rourke even compared the plan to the policies of Donald Trump. “We will be unafraid to break up big businesses if we have to do that — but I don’t think it is the role of a president or a candidate for the presidency to specifically call out which companies will be broken up,” he said. “That’s something that Donald Trump has done in part because he sees enemies in the press and wants to diminish their power. It’s not something that we should do.”

Nearly every question posed to the candidates not named Sanders or Warren seemed to be punctuated with an explicit instruction: Tell us why the policies being pushed by a Democratic Socialist and a New Deal Liberal can’t work and why they can’t beat Trump.

However, while the fix might have been in for centrism, it still failed to win the evening. Warren was attacked as if she were the frontrunner and Joe Biden did nothing to suggest the other candidates had picked the wrong target. Despite his recent heart attack and polls that suggest he’s underperforming his 2016 showing, Sanders was strong and concise. While some pundits admitted that the debate might have been his, it was announced Tuesday night that Rep. Alexandria Ocasio-Cortez (D-N.Y.) is endorsing the Senator. Shortly after that bombshell, sources revealed that Rep. Rashida Tlaib (D-Mich.) and Rep. Ilhan Omar (D-Minn.) would also endorse. Bernie has now locked up 75% of The Squad.

Mainstream election coverage may largely omit the subject of labor organizing, but its importance can currently be felt in the labor battles being waged throughout the country. It’s a key component of defeating Trumpism, via the ballot box and beyond. The worker protections that have been eroded must be reinstituted. The labor power that’s been diminished must be built back up. The Democratic candidate must be pushed hard on these issues, whoever it ends up being.

This article was originally published at In These Times on October 16, 2019. Reprinted with permission. 

About the Author: Michael Arria covers labor and social movements.

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The First Labor Plans of the 2020 Race Just Dropped. Here’s What to Make of Them.

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Image result for Shaun RichmanIt was a tale of two cities’ mayors (with presidential ambitions) this week. South Bend, Indiana’s Pete Buttigieg and New York’s Bill de Blasio—the two active-duty mayors among the 20 Democratic presidential candidates still on the debate stage—released their labor and workers’ rights platforms.

Both mayors include fairly robust proposals to overhaul and modernize our nation’s main labor law, the National Labor Relations Act.

But that should no longer be considered good enough. Given that Congressional Democrats’ official proposal right now, the Protecting the Right to Organize (PRO) Act, essentially overturns the anti-union Taft-Hartley Act, adds card check under some circumstances and imposes meaningful financial penalties for employers who violate their employees’ rights, woe to the candidate who doesn’t propose to outdo it. Only one mayor, de Blasio, breaks new ground with his proposal; the other, Buttigieg, offers a survey course of think tank white papers and moderate reforms.

I’m actually uncharacteristically optimistic that we may get the PRO Act—or something close to it—if the Democrats win big in 2020. However, we won’t end our country’s crisis of economic inequality and creeping fascism without a legal framework that puts workers’ rights and union power into every workplace on day one.

This may be hard for union leaders and activists who have been in the political wilderness for four decades to understand. Most of us have experienced begging for scraps like card check and banning permanent replacement scabs as the best we could expect Democrats to meekly fight for (and then fail to deliver). Now the stakes are higher, the essentiality of unions to working-class political education and voter turnout is obvious, and overturning Taft-Hartley is the consensus position of Democratic leadership across the political spectrum. Which means that putting the labor movement’s foremost political demand of the last 70 years in your platform is suddenly Not. Good. Enough.

Fine. This is Fine.

Buttigieg’s platform attempts soaring rhetoric with a preamble about “the verge of a new American era” calling for “a fundamentally new and different approach to fix our broken political and economic system.”

Good, fine so far. The solution, Buttigieg says, requires going “above and beyond existing legislative proposals like the ‘Protecting the Right to Organize (PRO) Act.’” But instead of doing that, Buttigieg’s labor platform goes sideways with extra footnotes.

He wants to plug holes in the law that allow employers to mischaracterize workers as independent contractors and fix the weak “joint employer” standard that allows large corporations like McDonalds to avoid bargaining with hundreds of thousands of their employees. He proposes to correct one of the original sins of the National Labor Relations Act by finally expanding its protections to farm and domestic workers (whose exclusion was a racist concession to Dixiecrats), and to improve upon the Act by imposing multi-million dollar penalties “that scale with company size” for violating workers’ organizing rights, giving unions a right to “equal time” on during election campaigns and creating a certification process for industry-wide bargaining.

He endorses the Paycheck Fairness Act and a host of other anti-harassment and gender discrimination bills that were already on the shelf, waiting for a government that will finally pass them.

He also has a pretty detailed proposal for paid sick and family leave. Actually, it’s virtually identical to Bill de Blasio’s proposal (which I’ll get to below), except that he must feel some supernatural neoliberal impulse to refer to it as “access” to those things. That’s a red flag for me. And if those of us who wave the red flag were to engage in a drinking game that called for doing shots every time a politician proposed “access” to a vitally important thing that should be a “right,” we’ll all be hammered for the duration of the primaries if we don’t die of alcohol poisoning first.

But, in general, Pete Buttigieg’s “New Rising Tide” labor platform is … fine. It’s clear that he got a lot of really good advice from a lot of the smartest people trying to tackle the problem of the legal restrictions on workers’ rights and the economic inequality that results from it. But it’s equally clear that he glommed on to the narrowest, most technical tweaks to a broken system and studiously avoided a more radical rethink of our labor relations system.

Buttigieg’s presence in the race as a media darling is slightly annoying. It’s as if the D.C. establishment convinced themselves of their own nonsense that the reason so many voters supported Bernie Sanders in the 2016 primaries was because he’s a white guy, and if only they could find a younger, charismatic white guy (with just a twist of diversity) that they can garner enough votes for the status quo ante.

It’s nice that he reads books (in self-taught Norwegian, no less!) and speaks “in lucid paragraphs.” But most of his actual contributions to the discourse–like every candidate who’s in the race to thwart popular demands to expand government services–wind up questioning the value of living in a society at all. Take his opposition to free college. “As a progressive,” he explained to an audience of undergraduates in Massachusetts, “I have a hard time getting my head around the idea of a majority who earn less because they didn’t go to college subsidizing a minority who earn more because they did.” There’s nothing remotely progressive about a “hOw d0 Y0u PaY fOR iT?” argument that could just as easily conclude, “Why have any public education at all?”

Bill de Blasio’s presence in the race is also annoying. He has no shortage of critics at home who point to our crises of mass transit, affordable housing and police accountability as  campaigns the mayor should be running to the state capitol to fix. But he also has an impressive track record of delivering wins for New York’s working families and, we learned this week, an impressively bold workers’ rights agenda for the nation.

The right to have workplace rights

De Blasio begins his 21st Century Workers Bill of Rights with an issue that’s near and dear to a lot of us here at In These Times: The Right to Due Process at Work. Simply defined, due process at work, or “just cause,” is the principle that an employee can be fired only for a legitimate, serious, work-performance reason.

In last August’s special issue, “Rebuilding Labor After Janus,” Bill Fletcher proposed a labor movement for just cause laws as a way to “end the tyranny of the non-union workplace,” one that “actively disrupts the strategy of corporate America and its right-wing populist allies.”

And in a recent piece marking ten years of the magazine’s Working blog, Jessica Stites noted that I’ve been using this platform to wage a lonely crusade on this issue for four years now.

Fellow ITT contributor Moshe Marvit and I carried that crusade into an op-ed in the New York Times in December of 2017. We were building support for an amendment to the Fair Labor Standards Act that then-Rep. Keith Ellison was drafting. (If any presidential candidates who are currently serving in Congress want to see a copy of that bill, slide into my DM’s…)

Although Ellison’s move to the Minnesota Attorney General’s office has momentarily orphaned a federal bill for a “right to your job,” the crusade was revived by a New York City Council push for fast food workers that progressive city council member Brad Lander is doggedly shepherding to Mayor de Blasio’s desk. (The bill’s true champion was SEIU local 32BJ’s recently departed and dearly missed president, Hector Figueroa.)

To be sure, de Blasio happened to propose my hobbyhorse. But the reason I’ve been arguing for Right to Your Job law is that it is a reform on another scale. It would increase the bargaining power and legal rights of every worker in America. It has the potential to put union representation in every workplace and gives unions new and creative ways to organize.

The rest of de Blasio’s platform is similar to Buttigieg’s except for one key distinction: A number of proposals highlight concrete improvements that the city of New York has made in the lives of low wage workers during de Blasio’s two terms as mayor.

Like Buttigieg’s, De Blasio’s labor platform includes a right to paid time off, including paid sick days, paid family and medical leave and the right to at least two weeks of paid vacation per year. Buttigieg proposes something similar, but de Blasio actually implemented a paid sick leave law that entitles workers to up to 40 hours a year of sick time, paid through an insurance fund.

De Blasio also proposes a fair scheduling law—modeled on one that fast food and retail workers won in New York—and a $15 minimum wage and new protections for gig workers.

Labor wants more!

Unlike many on the left who are in the “Bernie or Bust” crowd, I don’t have a horse in this race—yet. We’re months away from the Iowa caucuses and I won’t even have a vote in New York’s April 2020 primary (I’m registered in the Working Families Party).

But I’m enjoying the race to the left on policy, and watching candidates like Buttigieg reveal the emptiness at the heart of business-friendly centrism.

No one can doubt Bernie Sanders’ labor bona fides. He has been on the front lines of workers’ struggles for half a century, and the way that he has used his 2020 campaign infrastructure to lift up specific organizing campaigns and strikes and to use his bully pulpit to pressure massive corporations like Amazon and Walmart to raise their workers’ pay should be a model for all the candidates. But he is a blunt force instrument, and his indifference to policy details is frustrating on issues as complicated as how to restore the legal rights and collective power of workers.

Elizabeth Warren’s whole stock in trade is that “she has a plan for that.” As a Senator, she bucked the “think tank industrial complex” by developing a team of experts on her staff who reached out far and wide to progressive thinkers for policy ideas. Her staff have been picking the brains of In These Times writers on policies to tip the scales in favor of workers for years. She would enter office with a slew of policies to empower unions and worker centers to carry out the Robin Hood role the economy needs.

Any other candidate who wants to appeal to voters on labor issues has to propose bold solutions to even be noticed, standing next to Bernie and Warren. Pete Buttigieg has fallen short of that mark. Bill de Blasio has introduced a bold new workers’ right that no candidate was talking about. He’s earned your $3 donation to keep him on the debate stage, if only to ask the question: Why should your boss be able to fire you for no reason at all?

Update: Later in the day on July 26, Gov. Jay Inslee (D-Wash.) released the third labor planof the race. Like de Blasio’s, it includes just cause protections.

This article was originally published at In These times on July 26, 2019. Reprinted with permission. 

About the Authors: Kate Bronfenbrenner is director of labor education research at Cornell University, Chris Brooks is a staff writer and organizer with Labor Notes and Shaun Richman is a former organizing director at the American Federation of Teachers.

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