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Rebuilding U.S. Manufacturing Is the Only Path to an Economic Renaissance

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Brad Greve knew it was just a matter of time before the computer chip shortage disrupting the auto industry had a ripple effect on aluminum manufacturing in Iowa.

Greve and his colleagues at Arconic Davenport Works—members of United Steelworkers (USW) Local 105—supply the Ford F-150 pickup and other vehicles.

Automakers forced to cut production because of the semiconductor crunch scaled back the amount of aluminum they take from the facility, just as Greve expected, posing another potential setback to a plant already fighting to rebound from the COVID-19 recession.

America cannot afford to jeopardize major industries for want of parts.

The nation’s prosperity depends on ensuring the ready availability of all of the raw materials and components that go into the products essential for crises and daily life.

That will mean ramping up domestic production of the semiconductors—now made largely overseas—that serve as the “brains” of automobiles, computers, cell phones, communications networks, appliances and life-saving medical equipment.

But it will also require building out supply chains in other industries. For example, America needs to produce titanium sponge for warplanes and satellites, pharmaceutical ingredients for medicines and the bearings that keep elevators and other machinery running.

The failure of just one link in a supply chain—as the semiconductor shortage shows—has the potential to paralyze huge swaths of the economy. That’s why it’s crucial not only to source components on U.S. soil but also to incorporate redundancy into supply lines so that an industry can survive the loss of a single supplier.

“It’s that ripple effect,” said Greve, president of Local 105, recalling the time when a fire at a die-cast parts supplier disrupted production of the F-150. “If you shut down a car manufacturer—or they can’t get one part—you can affect a whole lot of jobs around the country.”

COVID-19 interrupted computer chip production even as demand for televisions, home computers and other goods soared among consumers locked down in their homes. Now, neither U.S. automakers nor manufacturers of other goods can obtain adequate amounts of the semiconductors they need.

Because of the shortage, carmakers cut shifts and laid off workers. The production cuts come when the nation needs the boost from auto sales—and other items containing semiconductors—to climb out of the recession.

Although the decreased aluminum shipments haven’t resulted in layoffs at Davenport, the automotive supply-chain meltdown couldn’t have come at a worse time. When the pandemic curbed air travel last year, airplane manufacturers cut back on the aluminum they get from Arconic.

“Automotive is what kept us going,” Greve said.

America was once a leader in computer chip manufacturing. But as with many other industries in recent decades, the U.S. frittered away the upper hand while other countries boosted production.

The nation’s share of chip manufacturing capacity fell from 37 percent to 12 percent over the past 30 years. And although demand for chips continues to grow, the U.S. stands to gain only a fraction of the additional capacity currently in the pipeline.

That leaves the country overly reliant on foreign suppliers who can encounter their own production shortfalls, as happened during the pandemic, or who can cut off shipments for political or economic reasons at any time.

“If you’re going to war with somebody, they’re not going to sell you anything,” Greve said, noting dependence on overseas supplies threatens the nation’s ability not only to make cars and other consumer goods but also to obtain the chips needed for defense and intelligence purposes.

Although the current crisis centers on semiconductors, neglect of the nation’s manufacturing base decimated America’s capacity to produce parts and components for many other industries.

“It affects everybody,” Libbi Urban, vice president of USW Local 9231, said of hollowed-out supply chains that threaten jobs and access to goods. Because of the semiconductor shortage, automakers now take less of the galvanized steel she and her coworkers make at Cleveland-Cliffs’ New Carlisle, Indiana, Works.

Shortages of medical and safety equipment during the pandemic revealed how much manufacturing power the nation let slip away.

But it wasn’t only the finished products, like face masks, America found itself ill-equipped to produce. Makers of hand sanitizer and cleaning products struggled to obtain adequate supplies of the hand pumps and spray triggers made overseas.

“How much time and money are being lost waiting on overseas companies to get products and supplies to the U.S.?” Urban asked.

President Joe Biden took the first step toward rebuilding manufacturing power with an executive order in February requiring immediate reviews of supply chains for the semiconductor, pharmaceutical, electric-battery and rare earth minerals industries as well as longer-term reviews of other sectors.

But after identifying weaknesses, America needs to implement a strategy for restoring supply lines and ensuring long-term resiliency.

That will include direct investment in U.S. manufacturing facilities, such as the $37 billion Biden proposed to ramp up chip production.

It involves strategically using tax incentives to encourage employers to expand operations and invest in new technology. And it means building strong markets for U.S. products, partly through policies that encourage federal contractors and other companies to buy domestic goods.

Besides cutting shifts, Greve noted, automakers have been trying to weather the semiconductor shortage by allocating chips to their most popular models or leaving vehicles partially completed until chips arrive.

GM even eliminated an important feature, an advanced fuel management system, in some models just to save chips and get vehicles to market.

“We shouldn’t have that happen in this country,” Greve said. “If we don’t make the supplies here, then we have no control.”

This article was produced by the Independent Media Institute.

About the Author: Tom Conway is the international president of the United Steelworkers Union (USW).


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Why America’s Future Depends on Rebuilding Our Factories

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Brian Banks and his colleagues at Nipro Glass log 60- or 70-hour weeks right now in a grueling race to produce the glass tubing and vials essential to distributing millions of doses of COVID-19 vaccine.

Banks, a maintenance mechanic for nearly three decades, often feared over the years that the Millville, New Jersey, complex would close like so many other glass-making facilities around the country. If it had, America would struggle all the more to turn the corner on a pandemic that’s already claimed 282,000 U.S. lives.

COVID-19 laid bare the decades-long decline of manufacturing that left the nation straining to produce the face masksventilatorsglass vials and other items needed to contain the coronavirus. Now, with vaccines nearly ready for distribution, America has an opportunity to defeat the virus and revive a manufacturing base crucial for protecting the country from future crises.

Of all the responsibilities that President-elect Joe Biden faces upon taking office on January 20, none demands more attention—and requires greater urgency—than ramping up production capacity and rebuilding broken supply chains to keep America safe.

Biden’s Build Back Better campaign will make commonsense investments in U.S. manufacturing that put millions to work and ensure a reliable, high-quality supply of critical goods, like the Nipro vials that are used to store not only COVID-19 vaccine but also the other drugs needed to treat hospitalized patients.

“It’s comforting for us to know that what we’re doing is contributing to something major,” explained Banks, president of United Steelworkers (USW) Local 219M, which represents the 200 or so dedicated workers keeping Nipro’s two Millville plants operating around-the-clock.

“There used to be lots of different places where we could get this glass. They’ve left. If we didn’t have this plant, where would we get it from?” asked Banks, who saw his own local shrink by thousands of members as several local glass facilities closed in recent decades.

In the urgent scramble to build stockpiles of vaccine that can be swiftly released for distribution once federal regulators give approval, multiple drugmakers approached Nipro for help.

The company added production capacity to help meet the flood of orders and relied on workers to put in extra shifts. However, as Banks noted, the nation could have more easily addressed the surging demand if it still had the large number of producers it did in years past and marshaled those collective resources to ramp up glass production.

“The product is still being made, just not in the U.S. It could have stayed here,” said Banks, who already wonders whether Nipro will embrace America’s long-term need for manufacturing and maintain its recently added capacity once the pandemic ends.

Although there are no quick fixes, Build Back Better will not only arrest the long erosion of the manufacturing base but restore America’s power to produce critical goods of all kinds.

Because while the pandemic exposed the nation’s struggle to produce personal protective equipment (PPE), hand sanitizerpharmaceutical ingredients and even the super-cold freezers needed to keep COVID-19 vaccines viable during transport, that’s really just the tip of the iceberg.

Over the past 30 years, as greedy corporations closed thousands of U.S. factories and offshored millions of jobs to exploit cheaper labor and lax environmental laws in other countries, America also gave away the capacity to produce appliancestirescarsball bearings and many other items.

Not even the pandemic, which highlighted the nation’s urgent need for more manufacturing muscle, slowed the corporate quest for ever-higher profits. In September, FreightCar America announced it will close its Alabama factory, eliminate 500 jobs and move operations to Mexico by the end of the year. And Mondel?z, a company that previously shifted American jobs to Mexico, just threatened to close two of its five remaining U.S. Nabisco bakeries.

America needs thousands of other manufactured products every bit as much as it needs PPE. It relies on trucks, boxes and containers to move commerce every day, textiles to refurnish homes devastated by hurricanes and steel, aluminum and other materials for military vehicles.

Biden understands that rebuilding the manufacturing base is a top priority that transcends politics. He will require government agencies and contractors to spend taxpayer dollars on U.S.-made materials, products and labor, ensuring America invests in itself.

“You’ve got to be able to produce things to survive,” observed Libbi Urban, vice president of USW Local 9231, noting that America’s dependence on foreign suppliers puts the nation at grave risk.

Foreign countries can experience their own production problems, jack up prices during emergencies, deliver inferior products or simply cut off supplies any time they want, noted Urban, who represents workers at two ArcelorMittal steel facilities in New Carlisle, Indiana.

“Do you want to rely on steel from China if you want to make battleships, tanks or aircraft carriers? Do you think they’re going to sell you good-quality steel?” said Urban, who chairs her local’s Women of Steel program. “If you go to war with somebody, you can’t rely on them to make your ships or your tanks.”

Even as they put in wearying amounts of overtime, Banks and his colleagues have to maintain constant vigilance and observe numerous safety precautions to protect themselves from COVID-19.

With millions of lives riding on their work, Banks said, they cannot risk a spate of infections that could disrupt production.

Banks hopes America remembers the risks essential workers continue to make. But what he really wants is for the nation to learn from its failures and commit to a full-scale revitalization of manufacturing to keep his members employed—and America safe—long after the threat of COVID-19 is over.

“We’re happy to be doing this,” he said. “But we are also worried. At some point, when this pandemic ends, are we still going to thrive?”

This article was produced by the Independent Media Institute.

About the Author: Tom Conway is the international president of the United Steelworkers Union (USW).


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Will GM Workers Stay Out On Strike In Hopes of a Better Deal?

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“They always say it will take multiple agreements to reach equality—we can’t win it all in one go,” said Sean Crawford, a second-tier worker at Flint Truck Assembly in Michigan.

For Crawford, the GM strike, the longest at a Big 3 company in 50 years, was the best chance the union had to put an end to the many tiers that have fractured the workforce.

“This is the third contract since the 2009 bankruptcy—that is a third of a career,” Crawford said. “If we don’t get this now, when GM is more profitable than they have ever been, when will we ever get it? So no, I don’t support the contract.”

GM’s profits were $35 billion over the last three years.

After nearly six weeks on the picket lines, auto workers will make a sobering choice: accept the agreement proposed or vote no and stay out in the hopes of getting something better. In 2015 Chrysler workers rejected their tentative agreement 2-1 and sent bargainers back for more. GM workers, voting later, approved their pact by just 58 percent for production workers; skilled trades voted it down.

UAW leaders decided that workers will remain on strike during the ratification vote. Voting will end Friday, October 25 by 4:00 p.m.

Tiers maintained

The contract makes some gains. Workers will receive 3 percent raises in the first and third years of the contract and lump-sums equal to 4 percent of annual wages in the second and fourth years. Second-tier workers, who until now were on an eight-year track to get within a few dollars of first-tier workers’ pay, will now top out at equal pay—$32.32—at the end of the contract, a shorter four-year track. The cap on profit sharing has been lifted and a pathway has been created for thousands of temporary workers to become permanent once they’ve been temps for three years.

“In January, they will convert 850 temporary workers and will continue converting each month after that as people get their time, so they will convert up to 2,000 in 2020,” said Tim Stannard, president of UAW Local 1853 in Spring Hill, Tennessee.

John, a 35-year worker at Detroit-Hamtramck Assembly, said on the picket line today, “What we’re getting is what we’re going to get. It’s not a bad-looking contract.” Was the strike worth it? “Yes. The temps got moved up. There’s decent raises. Health care stayed the same.”

Even with these gains, though, GM has maintained all the tiers that it had before. Second-tier workers—those permanent employees hired after 2007—will still receive a 401(k) for retirement rather than a defined pension. They are not eligible for retiree health care, and their Supplemental Unemployment Benefits when laid off will last half as long as first-tier workers’.

GM workers at warehouses and at four “components” plants will continue to make far less than assembly workers, with an eight-year grow-in.

And temporary workers will continue at pay barely more than half that of Tier 1 workers. GM can continue to use them as probationary employees–with a very long probation.

“I know the language says that temps will be in progression to be hired in as employees after so many years, but they are still using temps,” said Beth Baryo, a materials handler at a parts warehouse near Flint.

Under the new agreement, temps hired after January 1, 2021 who maintain two years of continuous employment must be hired on as permanent. Temps can be laid off for up to 30 days and still maintain continuous service.

“As sure as god wears sandals, you know that GM will lay people off for 31 days,” said Baryo. “I don’t trust anything they will say.”

What they didn’t win

The biggest sting of all was the shuttering of Lordstown (Ohio) Assembly, Warren (Michigan) Powertrain, and Baltimore Powertrain, which GM announced last Thanksgiving. Every contract cycle, GM closes more plants and every contract cycle the UAW claims to have stronger language to protect jobs.

The steady procession of concessions was also sold as a job-saving measure and yet the number of union auto workers employed by GM has dropped from 470,000 in 1979, when concessions began to the Big 3, to less than 50,000 today.

Many of the concessions made in 2007 and 2009 are still in effect, showcasing just how challenging it is for the union to get out of the hole it is in. Those include a cost of living allowance and overtime pay after eight hours (many plants now work regular 10-hour days without overtime pay). Tier 2 workers got nothing for retirement. Future Tier 1 retirees got one $1,000 lump sum.

How will they vote?

As often happens in a strike, many people unhappy with the agreement predicted that other people would vote yes. “People are going to say yes because of the money,” said Adriana Jaime, a 21-year worker at Detroit-Hamtramck Assembly, at the picket line today. “But for the weeks we’ve been walking here, it’s not enough.”

One man said the offer was basically the same as what GM offered before the strike, except for the signing bonus (which increased from $8,000 to $11,000). “I’m not impressed,” he said. “But a lot of people want to get back to work.”

Jack Jackson, with 50 years, will vote no. “I’m mad as hell,” he said. “This contract was probably decided before we even went out and this was a show and tell, a little pony show.

“I hope it’s good for the young folks. It should be 90 days and you’re at full pay. This contract is really not for me. Give the retirees some money—our pension benefit has been the same for 12 or 15 years. You dedicate half your life to GM and they treat the retirees like an old horse they take out in the field and shoot him. We didn’t get the retiree issues—and the people coming behind me are going to retire someday too.”

Carla Duckett, with 37 years, says she’s “on the fence. I’m going to retire—I want to see what this leaves for those who have to stay.”

“The leadership is going to try and make the case that this is the best they can get,” Crawford said, “but if you look at the 2015 agreement, after Chrysler people voted that down, they came back with something significantly better.”

Aramark janitors also have an agreement.

The 850 Aramark janitors and skilled trades workers at five Ohio and Michigan GM plants who struck alongside GM workers were told yesterday that they also have a tentative agreement. They do work formerly done by GM workers, but at far less pay.

“Everyone makes $15. If you’ve been there 10 years you still make $15.” said Karen Cool, from GM’s Tech Center near Detroit. GM hired replacement janitors during the strike who, with police support, crossed picket lines there daily.

The southern problem

Economic constraints placed on the Big Three by the influx of foreign-owned, non-union automakers in the U.S. South are one of the forces outside the control of striking GM workers.

Even though GM has gone from bankrupt to profitable, the company is still losing market share to these non-union competitors like Toyota, Nissan, BMW, Honda, and Volkswagen. All use high proportions of temporaries and contract workers at will. The UAW has engaged in three high-profile organizing drives at Nissan and Volkswagen over the past five years, losing all of them.

Until the whole auto industry is organized, non-union employers will pay their workers less, give fewer benefits, hire more temps, and outsource more work, to gain a competitive advantage over their union rivals.

 

 

This article was originally republished from Labor Notes at In These Times on October 18, 2019. Reprinted with permission. 

About the Author: Chris Brooks is a staff writer and organizer with Labor Notes.

About the Author: Jane Slaughter is the author of Concessions and How To Beat Them and co-author, with Mike Parker, of Choosing Sides: Unions and the Team Concept and Working Smart: A Union Guide to Participation Programs and Reengineering. Her work has appeared in The Nation, The Progressive, In These Times, and Monthly Review, among others. Jane Slaughter  works for Labor Notes in Detroit.


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Trump thinks tariffs will add U.S. manufacturing jobs. Economic reality says they won’t.

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Adam BehsudiWhen then-Gov. Nikki Haley of South Carolina went to a ribbon-cutting ceremony for Kent International in 2014, the bicycle company had grand plans for expansion at its assembly plant to make its products in the United States.

“Manufacturing, it’s never as easy as it looks and people kind of laughed at us, but won’t be laughing very much longer,” Kent International Chairman and CEO Arnold Kamler said. “We are not reinventing the wheel; we just have a really talented bunch of workers and managers.“

President Donald Trump had promised that his steep tariffs on Chinese goods would help bring jobs back to the U.S. But five years later, paradoxically, it is the very tariffs that Trump has imposed that have kept that plant in Manning, S.C., from expanding, Kamler said in an interview.

Firms are indeed moving out of China but are not flocking to the United States, undermining the central promise of Trump’s trade war. Cheaper labor markets in Southeast Asia are the ones benefiting the most amid the trade war that has ratcheted up duties on Chinese goods.

In fact, the administration’s actions have prompted Kent International to still rely on its joint venture partner, Shanghai General Sports, to supply more of its bicycles. For its part, Shanghai General is planning to build a factory on a plot of land in Cambodia. By the end of year, 40,000 square feet of production capacity will be complete.

Kamler estimates that 30 percent of the company’s annual production of 3 million bicycles will come from Cambodia, at the expense of China.

The tariffs are also taking a toll on Kent International’s ambitions to bring jobs to the U.S. The company needs steel tubes as components in the welding assembly line, which currently can only be bought at a reasonable price from foreign suppliers.

The administration’s tariffs on steel and aluminum imports — as well as the threat of new tariffs on the majority of the components used in bicycle production — has meant that additional phases of bringing jobs to the U.S. have yet to happen.

The latest U.S. economic trends aren’t helping efforts. U.S. economic growth has slowed this year and the 3 percent growth Trump promised last year was revised down to almost 2.5 percent.

Manufacturing job trends are also cooling. The latest U.S. jobs report showed manufacturing employment rose by an average of 8,000 per month so far in 2019, compared with an increase of 22,000 jobs per month in the sector in 2018.

Across-the-board tariffs on all Chinese imports could create more than 1 million U.S. jobs in five years, contends the Coalition for a Prosperous America, a major backer of Trump’s tariffs. The reality, however, is other nations with lower wages are the ones benefiting from the president’s strategy.

“The majority of jobs are going to other countries,” said Jeff Ferry, chief economist for the coalition, which has advocated a complete decoupling from the Chinese economy to benefit the U.S.

The group‘s study found only a small gain in production returning to the U.S. the first year of a blanket tariff, representing only about 0.2 percent of the more than $500 billion worth of imports from China. By year 5 though, that number would increase to 13 percent compared to the value of last year’s imports from China, he said.

For his part, Trump pledged that his strategy to escalate the trade war against China would create jobs in the U.S. in the long term.

“Tariffs are a great negotiating tool, a great revenue producer and, most importantly, a powerful way to get companies to come to the USA and to get companies that have left us for other lands to COME BACK HOME,” Trump tweetedlast month.

Acecdotal evidence, not hard numbers.

There have been some prominent announcements from companies trumpeting that they have “reshored,” or brought jobs back to the United States.

Stanley Black & Decker said this year it would move production of its Craftsman line of tools, which it acquired from Sears, from China to Texas where it would add 500 jobs. High-end furniture seller Restoration Hardware said in a recent earnings report that tariffs were spurring it to bring some manufacturing to the U.S.

The U.S. Commerce Department published this year a “case study” on reinvesting in the U.S., highlighting the experiences of six companies moving production to America. The report makes the case “that anecdotal evidence of hundreds of reshoring cases is very real,” but it also admits that tariffs are a “challenge” for companies wanting to move production to the U.S.

Half of the companies profiled by the Commerce Department highlight the harm of tariffs on investment decisions.

Quality Electrodynamics, an Ohio-based company that designs and produces parts for medical devices, “recommended that the U.S. government could promote reshoring and expansion in the United States by revising U.S. tariffs on Chinese components in a way that does not disadvantage U.S. companies.”

Those working to find ways to increase reshoring say the tariffs are making it harder for companies to make decisions on where, or even whether, to add capacity.

Harry Moser, president of the nonprofit Reshoring Initiative, said he agrees 100 percent with the goals of Trump’s tariffs, but said they have had a “modest net negative” effect on jobs coming back to the U.S. as companies look elsewhere to relocate production.

Based on the Reshoring Initiative’s own study, 2018 was a banner year for the return of jobs to the U.S., but that progress dropped off in 2019. Already, $250 billion worth of imports are subject to a 25 percent tariff, and Trump has threatened to slap duties on almost all that the U.S. brings in from China.

Trump has announced that he would hit an estimated $112 billion in imports from China with a 10 percent as of Sept. 1, while another $160 billion subject to the duty as of Dec. 15.

“Clearly Trump caused work to come here more by the things he did on taxes than by pounding on the table with tariffs,” Moser said. “The uncertainty caused by the tariffs are hurting reshoring and foreign direct investment.”

Trump’s trade chief, U.S. Trade Representative Robert Lighthizer, acknowledged recently that tariffs were diverting some production to the U.S. but also to other countries.

“The imposition of tariffs can have many effects, including modifications to supply chains,” he wrote in a response to a written questions from Congress on whether tariffs are benefiting producers in other countries.

“I have closely followed reports of manufacturing coming back to the United States from China or going to third countries in some instances,” he said.

Sebastien Breteau, the CEO of Hong Kong-based supply chain inspection company Qima, said the data his firm collects supports the theory that neither China nor the U.S. is winning the trade war.

The company, which has 6,000 clients worldwide, has seen a 13 percent drop for China-based inspections from U.S. companies.

Meanwhile, inspections for U.S. clients increased 21 percent in Vietnam, 25 percent in Indonesia and 15 percent in Cambodia. Mexico inspections for U.S. clients jumped by a staggering 119 percent in the first six months of 2019.

“There is a clear sign that in the trade war between the U.S. and China, the winner is not going to be the U.S. and it’s not going to be China,” he said. The winners are “going to be Vietnam, Indonesia, Cambodia and very likely Mexico and Bangladesh.”

The Qima data is supported by a recent report from consulting firm AT Kearney, which found that imports from low-cost Asian countries in 2019 outpaced U.S. manufacturing output.

A report by the investment firm China International Capital Corporation released last month estimated that across eight manufacturing sub-sectors in China, the first two batches of tariffs from the United States would likely result in 1.5 million job losses in China. The authors said that looking across the whole manufacturing sector, “this estimate may be low.”

However, there is little evidence to suggest that many of these jobs are flocking to the United States.

George Whittier, CEO of Morey, a Chicago-based custom electronics manufacturer, said his company still relies on imported parts to make GPS tracking devices and controllers for vehicles. Most of those components imported from China are subject to tariffs, but the finished products are not. The result is more time spent haggling over costs with existing customers rather than expanding production and jobs.

Whittier also questioned whether the U.S. labor pool could absorb a major increase in manufacturing. He said he has 15 positions open that he has been unable to fill even after raising the offered salaries twice.

“If there was this big boom of manufacturing coming back from China into the U.S., I gotta be honest, I have no idea where the workers are going to come from,” he said.

Kamler, of Kent International, said previous discussions with the Trump administration had been frustrating because of a perspective that only goods made from “start-to-finish in the U.S.” count as “real” domestic manufacturing. But he added that recent talks with the Commerce Department had been more fruitful.

Kamler has formed a coalition of 12 American companies in an attempt to bring an entire supply chain cluster back to the United States. If the alliance can prove that it’s assembling entire bicycles in the United States, it would “be able to import all the component parts for five years, duty free,” Kamler said.

Still, he said he was told the alliance would only get the tariffs eliminated if it could prove that it could increase U.S. bicycle assembly from 600,000 annually to 4 or 5 million. Kamler said the industry would ultimately have to seek permanent relief from tariffs through legislation, which he said is in the early stages of being developed.

“These things don’t happen so fast, but this is a long-term play and this is actually my hope and part of my legacy that I’m hoping to leave, that I can help bring back the American bike industry,” he said.

Counterfeiting, not tariffs, prompt some moves

For other companies, the threat of intellectual property, or I.P., theft and not tariffs has driven decisions to relocate production to the U.S.

Isaac Larian is the chief executive officer of MGA Entertainment, the world’s largest privately owned toy company. Last year, one of his company’s brands, Little Tikes, reshored production of fashion accessories for its line of L.O.L. Surprise! Dolls to an existing plant in Hudson, Ohio, in a bid to avoid fake versions of its products from being sold to consumers.

“The biggest problem we face in China is the theft of I.P. There are over 200 factories in China that make L.O.L. Surprise! counterfeit products and very little can be done about it,” Larian said. “These counterfeit products are unsafe for children.”

He said MGA tested moving one item’s production to the U.S. and found it was successful. Now, it plans to move more accessories, especially because toys made in China are among the items subject to a 10 percent tariff as of Dec. 15.

“It will definitely affect business due to lower sales, and we are looking at options” to move more manufacturing out of China, he said, adding that “it is too late for this year.”

Another toy seller, Unit Bricks, examined moving production to the U.S. by pricing out the plastic elements of its production as well as packaging. But the company decided it was unaffordable at this stage because profit margins on toy sales are too thin to justify the costs of relocating production to the U.S.

“Everything is about margins,” said Timothy Stuart, the owner of the educational toy maker. “The issue with the U.S. is that labor intensive items become too expensive.”

“All production is in China for us: plastic, wood, packaging. Industry follows labor, and America can’t afford cheap labor,” said Stuart.

With the threat of a new tariffs looming, Stuart said that his business could absorb a 10 percent levy, but should it rise to 25 percent, “we would have zero choice at that point” but to leave China.

“Frankly, I still have hope that the 10 percent won’t hit, but we are prepared for it and have already spoken to customers. They’ve increased the quantities of their orders, so that helps,” said Stuart.

But should things escalate, the U.S. and Poland are both active options but due to the higher cost, “the U.S. is the last resort.”

This article was originally published at Politico on August 24, 2019. Reprinted with permission.

About the Author: Adam Behsudi is a trade reporter for POLITICO Pro. Prior to joining POLITICO, he covered international trade policy for Inside U.S. Trade, where he tracked down the latest news on the Trans-Pacific Partnership from exotic locales such as Auckland, New Zealand; Kota Kinabalu, Malaysia; and Leesburg, Va.Before writing about anti-dumping, export controls and other trade subjects, Behsudi covered city hall for the Frederick News-Post. He got his start in journalism chasing crooked sheriffs and other crime-related news in the mountains of western North Carolina for the Asheville Citizen-Times

Behsudi earned his bachelor’s degree in 2005 from the University of Missouri. With the hope that journalism could return as a growth industry within his lifetime, he earned a master’s degree in interactive journalism from American University in 2010.


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Arizona governor gets caught in a lie over Nike incentives controversy

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Arizona Gov. Doug Ducey (R) claimed this week that he never ordered the withdrawal of Nike factory incentives in his state, following the brand’s decision to pull a Betsy Ross flag-themed sneaker.

This was a lie — and the tweet in which Ducey announced that order is still up on his official account.

“I’d direct you to re-read the tweet,” the governor said Tuesday, when pressed by reporters on his decision to order the incentives withdrawal earlier in July. “Try to be accurate.”

Ducey suggested he had “advocated” for the move but had not ordered it.

Nike had initially planned to build a new manufacturing plant in Goodyear, Arizona, scheduled to open in 2020, which would create 505 jobs over three years. The company made an initial investment of $184.5 million into the plant, while the Arizona Commerce Authority said it was willing to provide a $1 million grant to help sweeten the deal.

In early July, Nike made the decision to cancel distribution of a Fourth of July-themed sneaker which was emblazoned with the Betsy Ross flag. The move came after former NFL quarterback, social-justice advocate, and Nike endorser Colin Kaepernick reached out to company officials to note that the flag had connections to slavery and white supremacy.

Conservatives, including Ducey, who went on a 2 a.m. Twitter rant on the topic, were outraged.

“Instead of celebrating American history the week of our nation’s independence, Nike has apparently decided that Betsy Ross is unworthy, and has bowed to the current onslaught of political correctness and historical revisionism,” he wrote. “It is a shameful retreat for the company. American businesses should be proud of our country’s history, not abandoning it.”

Ducey announced he would reverse the incentives previously promised to the company, as a result of its decision. “Nike has made its decision, and now we’re making ours,” he said. “I’ve ordered the Arizona Commerce Authority to withdraw all financial incentive dollars under their discretion that the State was providing for the company to locate here.”

Ducey’s fellow conservatives also criticized Nike’s decision as an example of over-the-top political correctness.

Ducey has wavered on the controversy since then. Two days after his initial rant against Nike, the governor was spotted wearing a pair of Nike shoes at a Fourth of July event. Ducey was also eager to promote the company a week after the online kerfuffle when Nike officially announced it would move forward with its Goodyear plant.

“This is good news for Arizona and for @GoodyearAZGov,” Ducey tweeted on July 11. “500 plus jobs. Over $184 million in capital investment. Arizona is open for business, and we welcome @Nike to our state.”

Ducey has become a close ally of Trump, vocally supporting the president’s decision earlier this year to declare a national emergency on the border. Trump also selected Ducey to sit on the national Council of Governors, a bipartisan advisory group. When Ducey visited the White House in June, Trump lauded the “fantastic job” the governor  was doing to help create jobs in his state.

“We hope that other states are going to follow Arizona’s lead,” Trump said. “You really have been at the forefront and we really appreciate that.”

This blog was originally published at Think Progress on July 31, 2019. Reprinted with permission.

About the Author: Luke Barnes covers politics and the far right. He previously worked at MailOnline in the U.K., where he was sent to cover Belfast, Northern Ireland and Glasgow, Scotland. He graduated in 2015 from Columbia University with a degree in Political Science. He has also interned at Talking Points Memo, the Santa Cruz Sentinel, and Narratively.


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Workers Who Waged the Biggest Trump-Era Manufacturing Strike Just Struck a Deal—Here’s What It Says

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This article first appeared in Labor Notes.

Three months after the largest manufacturing strike of the Trump presidency so far, locomotive plant workers in Erie, Pennsylvania, have a deal. Electrical Workers (UE) Locals 506 and 618ratified a four-year contract on June 12.

In a qualified victory, the 1,700 members conceded a two-tier wage structure with a 10-year progression for new hires to reach parity with current workers, but beat back the company’s demands for a harsher version of two-tier and numerous other concessions.

“We’ve managed to preserve a lot of what we had,” said UE Local 506 President Scott Slawson. He added, however, “There were some gives on the union side for sure—there’s no two ways about it.”

Wabtec, which took over the plant in February following its purchase of GE Transportation, had threatened to move work out of Erie if the union refused a lower wage scale.

Thousands of jobs have been eliminated at the plant since 1955. In 2017, GE vowed to move all locomotive production to Fort Worth, Texas, where it opened a nonunion plant in 2013. But those plans never panned out, as the Fort Worth plant struggled to hire and retain enough skilled workers, with quality suffering as a result. Work has been moving back to the Erie plant over the last year.

The new agreement not only maintains the existing jobs at the plant but also guarantees 100 new positions in the Erie factory by the end of the contract. UE also beat back Wabtec’s demands to institute mandatory overtime and hire up to 20 percent of the plant’s workforce as nonunion temps.

Four hundred sixty previously laid-off workers will be given preferential treatment in hiring as jobs come open—an important gain in the face of Wabtec’s claim that it had no obligation to workers who were laid off by GE, not Wabtec. However, while they will maintain their seniority, they will come back on the new, lower pay scale.

The company and the union compromised on reorganizing to 31 job classifications; previously, workers had 43 classifications, which Wabtec was attempting to reduce to 17. UE argued the reduction would endanger worker safety.

The union maintains the right to strike based on transfer or subcontracting of work that results in permanent layoffs, or on a failure by the company to resolve grievances in a timely manner.

Wabtec—short for Westinghouse Airbrake Technologies—bought the $4 billion-a-year GE Transportation division last year, doubling the size of the company overnight.

The purchase led to the early termination of UE’s national contract with GE. The Erie plant was the last factory covered under the 70-year-old agreement; GE had spun off the other factories’ work in an ongoing series of corporate reconfigurations, or outsourced it, largely to nonunion plants in the U.S. or overseas.

When the sale was finalized in February, the new owner unilaterally stopped offering a pension and retiree health care, and imposed a host of other concessions, including mandatory overtime and two-tier wages starting as low as $16.75 an hour. That prompted a nine-day strike by Locals 506 and 618, ending with a 90-day interim agreement which restored the terms of the union’s previous contract with GE while the parties negotiated the new four-year deal.

During those three months, Locals 506 and 618 took a number of actions to pressure the company. Workers decorated their lockers with numbers counting down the days until the end of the interim agreement. They held pickets before work. They joined forces with UE Local 610, which represents workers at other Wabtec facilities, to rally in Wilmerding, Pennsylvania, where Wabtec is headquartered. And the union and its allies picketed Wabtec’s shareholder meeting in Pittsburgh.

Wabtec eventually moved off its demand for a permanent second tier. The company’s revised proposal would have started workers off at $17 an hour, with an 18-year progression to reach the top tier. But ultimately, with the threat of another strike looming, the union was able to shrink the progression to 10 years, and boost starting pay to $20.47 for the lowest classification. Existing workers on the lowest job classification currently earn $31.49.

This decade-long grow-in is similar to the Auto Workers’ compromise with the Big 3 automakers, where hires after 2007 take eight years to reach wage parity with pre-2007 hires. A key difference, though, is that these auto workers remain in a permanent Tier 2 when it comes to benefits. Everyone at the Erie plant will get the same benefits, and those in the lower tier will actually pay 20 percent less in premiums.

“The 10-year progression is not something that people wanted to happen, but the company would not let that go,” said UE General President Peter Knowlton. He believes that if the union had held out on the issue, it would have been forced to go on another strike—this one self-defeating. The union would have lost community support, he said, and ultimately would have left 460 already laid-off workers without a job to come back to because Wabtec was claiming it had no responsibility to them.

The good-paying jobs at Wabtec’s Erie plant are crucial not only to union members and their families, but also to the community.

Located between Buffalo and Cleveland, Erie falls squarely in the Rust Belt, and its fortunes mirror those of similar cities. It was once a proud manufacturing hub, but factory relocations and closures have sapped jobs and people. The population is 96,000, down from a peak of 131,000 in 1950. And the city is poor, with a median household income of just $35,800.

“Wabtec is one of the area’s largest manufacturers and it still pays a family-sustaining wage,” said Slawson. “I think there’s a relief in the community—we found a way, we found a path, hopefully for the future of Erie and Erie County.”

He is careful to note that this is the union’s first contract with a new employer, and the union will have to stay on its toes with Wabtec.

“We had 82 years of interpretation with GE,” he said. “I think both sides are going to go through some growing pains over the next four years.”

Still, he’s optimistic about the plant’s future, citing the highly skilled workforce and the possibility that Wabtec could shift additional work to the 4.5 million-acre complex.

This article was originally published at In These Times on June 27, 2019. Reprinted with permission.

About the Author: Saurav Sarkar is an Assistant Editor of Labor Notes. Twitter Username: @labornotes

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Union membership rose in 2017

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This is somewhat unexpected: overall union membership rose by 262,000 workers in 2017, while union density stayed at 10.7 percent. The Economic Policy Institute’s Lawrence Mishel warns against reading too much into the numbers, but pulls out the following interesting data points:

  • Union membership became more common among men: some 32 percent of the net increase in male employment in 2017 went to men who were union members, leading union membership to rise from 11.2 to 11.4 percent of all male employment. Growth of union membership for men was strong in both the public and private sectors and for Hispanic and for non-Hispanic white men.
  • Correspondingly, union membership dipped slightly among women because women’s union membership did not rise in the private sector although employment overall did rise—private sector employment growth for women was concentrated in nonunion sectors. Union membership growth, however, was strong among Hispanic women.
  • Union membership grew in manufacturing despite an overall decline in manufacturing employment. Union membership was also strong in the wholesale and retail sectors, in the public sector and in information sector (where union membership density rose 1.9 percentage points).
  • Union membership density was stable or grew in a number of Southern states: Arkansas, Florida, Georgia, Louisiana, and Virginia with especially strong growth in Texas.

That last point is particularly interesting, since the South has long been such a challenge to union organizing, and since Republicans are bent on making the union organizing environment in the rest of the nation much more like the South has historically been.

This blog was originally published at DailyKos on January 27, 2018. Reprinted with permission.

About the Author: Laura Clawson is labor editor at DailyKos.


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Workforce Intermediaries Advance Equity and Diversity Through Apprenticeship

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As we kick off National Apprenticeship Week, it is more important than ever to shine a light on the ways government agencies, employers and joint labor-management programs can focus their resources on fostering greater equity, diversity and inclusion in the American workforce. Registered apprenticeship programs are a big part of the answer. Workforce intermediary partnerships that promote and operate apprenticeship programs are powerful vehicles for delivering career opportunities.

A new report by the AFL-CIO Working for America Institute and the Jobs with Justice Education Fund profiles a number of workforce intermediaries that reach into disadvantaged communities and mobilize joint funds and industry expertise to help women and people of color advance in their careers and improve diversity in aerospace, health care, hotel and hospitality, steel, transportation and advanced manufacturing.

Workforce intermediary partnerships bring together the needs and resources of multiple employers in a region or industry, and provide essential input from workers and unions to customize the skills training, apprenticeship and educational services required for employers to meet their workforce needs and workers to access career ladders. The Aerospace Joint Apprenticeship Committee, for example, works with hundreds of employers in Washington State to develop curriculum and customize apprenticeship programs. This year, AJAC helped place formerly incarcerated individuals in good-paying aerospace jobs. An AJAC pre-apprenticeship program for high school students has graduated more than 300 young people over five years. Some 20% of the graduates were women and 53% were people of color.

The story of Grace Rutha highlights the power of apprenticeship implemented by intermediaries. A former reporter in Kenya, forced out of her country by an oppressive regime, she came to Philadelphia to seek a better life, but became unemployed and ended up living in a homeless shelter. While volunteering for a community organization, she discovered a community health worker apprenticeship program co-sponsored by a university and the District 1199C Training & Upgrading Fund. After a few months on the job, with the help and guidance of a mentor, she gained the experience to intercede with HIV patients and protect their health without continually going to the emergency room. Now Rutha earns enough to have her own apartment and she serves as a co-instructor in an educational program of Philadelphia FIGHT. She and others are profiled in the Advancing Equity report.

The report lists 18 best practices in workforce diversity as identified by the JWJ Education Fund in its work with North America’s Building Trades Unions. “Hire watchdogs and grant them authority,” the organizations advise, for example, while keeping up the “push for consistent public pressure from community groups.”

Expanding apprenticeship in manufacturing and the hotel and hospitality industries is a prime activity of the AFL-CIO Working for America Institute, which has a five-year contract with the U.S. Department of Labor to operate the Multiple Industry Intermediary (MII) Project.

For us, every week is National Apprenticeship Week. We will continue to use our education and training programs to create opportunity and upward mobility for workers of all backgrounds. Please join us in supporting this important work.

This blog was originally published at AFL-CIO on November 9, 2017. Reprinted with permission. 

About the Author: Daniel Marschall became executive director of the AFL-CIO Working for America Institute WAI) in 2016. From 2008-2015, he served as the legislative and policy specialist for workforce issues for the Federation. He has been involved in the nation’s employment and training system since the 1980s, when he was coordinator of the Dislocated Worker Program for the State of Ohio and executive director of the Ohio State Building and Construction Trades Training Foundation. He served as a legislative director for a Member of Congress. He has a Master’s degree in communication studies from Georgetown University and a PhD in Sociology. He is the author of a 2012 Temple University Press book – The Company We Keep: Occupational Community in the High-Tech Network Society – based on his research in the occupational community of software developers. He is a Professorial Lecturer in Sociology at The George Washington University and a member of the Executive Board of the Labor and Employment Relations Association (LERA). He also represents the AFL-CIO at the OECD Trade Union Advisory Committee (TUAC) Working Group on Education, Training and Employment Policy.


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Elon Musk May Be a “Visionary,” But His Vision Doesn’t Seem To Include Unions

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Tesla CEO Elon Musk has been making more headlines than usual lately. Shortly after the business magnate claimed he had received governmental approval to build a hyperloop from New York to Washington, D.C., he got into a public argument with Facebook CEO Mark Zuckerberg about the future of artificial intelligence. Musk also recently made comments regarding the production of Tesla’s new Model 3, a battery-electric sedan. “We’re going to go through at least six months of manufacturing hell,” he told journalists.

It’s hard to know exactly what constitutes “manufacturing hell,” but it might also be difficult to ever find out. That’s because, since last November, Tesla has required employees to sign confidentiality agreements which prevent them from discussing workplace conditions. This policy has faced increased criticism since February, as workers at Tesla’s Fremont, Calif. plant have expressed concern over wages, safety and their right to unionize. They have reached out to the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) union, which is now intervening.

Last week, some of those workers made specific demands. A group called Tesla Workers’ Organizing Committee sent a letter to the company’s board members seeking safety improvements and a clearer promotion policy. The letter cites 2015 data from the Bureau of Labor Statistics, the last full year for which such information is available. “For that year, data from the Bureau of Labor Statistics indicates that our injury rate was higher than that of sawmills and slaughter houses. Accidents happen every day,” reads the letter. The committee also addressed Tesla’s resistance to workplace organizing: “We should be free to speak out and to organize together to the benefit of Tesla and all of our workers. When we have raised this with management we have been met with anti-union rhetoric and action.”

Attention was originally drawn to the factory’s organizing fight after Tesla employee Jose Moran published a Medium post on February 9. Moran raises safety concerns, writing that, a few months ago, six of the eight people on his work team were on leave due to workplace injuries. He also breaks down problems with the factory’s wages. According to Moran, workers at the Tesla factory make between $17 and $21 in Alameda county, an area where the living wage is more than $28 an hour. Moran wrote that some of his coworkers make a two-hour commute to work because they can’t afford to live near the factory.

“Tesla’s Production Associates are building the future: They are doing the hard work to build the electric cars and battery packs that are necessary to reduce carbon emissions. But they are paid significantly below the living wage for one adult and one child in our community,” Maria Noel Fernandez, campaign director of the local worker advocacy group Silicon Valley Rising, told In These Times via email. “We believe that green jobs should be good jobs, and that they have a right to organize and advocate for themselves and their families.”

The day after Moran published his post, employees passed out literature containing the piece during a shift change at the factory. According to an unfair labor practice charge with the National Labor Relations Board (NLRB) made by workers, and obtained by Capital and Main, this prompted management to schedule a meeting where workers were told they couldn’t pass out information unless it was pre-approved by the employer. The same NLRB charge accuses Tesla of illegal surveillance and intimidation.

Moran’s piece, and the subsequent accusations, were taken seriously enough to be addressed by Elon Musk directly. In an email to employees, obtained by Buzzfeed, Musk declared that safety concerns ignored vast improvements established in 2017. Tesla also put out a statement echoing Musk’s claims. The company’s data points to a 52 percent reduction in lost time incidents and a 30 percent reduction in recordable incidents during the company’s first quarter.

Musk promised a “really amazing party” for workers after the Model 3 reached volume production. In addition to the party, the factory would eventually include free frozen yogurt stands and a roller coaster. “It’s going to get crazy good,” he wrote. As for Moran, Musk claimed he was a paid UAW plant and that he had looked into his claims and discovered they weren’t true. The UAW, he explained, “does not share our mission” and their “true allegiance is to the giant car companies, where the money they take from employees in dues is vastly more than they could ever make from Tesla.”

This wouldn’t be the last time Musk would use such language in regards to a union. Six months after Tesla acquired Germany’s Grohmann Engineering, Musk found himself clashing with the country’s dominant metalworkers’ union, IG Metall. The union intervened to insist that Tesla straighten out a wage discrepancy that had some workers claiming they were making 30 percent less than union rates. Musk sent a letter to Grohmann employees offering a one-time bonus—an extra 150 Euros a month—and Tesla shares instead of a pay increases that the employees desire. “I do not believe IG Metall shares our mission,” reads the letter.

“We’re a money-losing company,” Musk told The Guardian in May. “This is not some situation where, for example, we are just greedy capitalists who decided to skimp on safety in order to have more profits and dividends and that kind of thing.” Two months after that interview, Automotive News reported that Musk had been the highest paid auto executive of 2016, exercising stock options worth $1.34 billion. Musk’s incredible economic success hasn’t exactly been generated via an unfettered free market. According to data compiled by the Los Angeles Times in 2015, Musk’s companies have benefited from billions in government subsidies.

Whether or not Tesla’s board members are receptive to employee demands, it seems clear that the workers’ struggle is not going away anytime soon.

This article was originally published at In These Times on August 10, 2017. Reprinted with permission.

About the Author: Michael Arria covers labor and social movements. Follow him on Twitter: @michaelarria


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The Economy: The New Normal Isn’t

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Robert-Borosage_The November jobs report – 211,000 jobs with the headline unemployment rate staying at 5 percent – met “expectations.” It is now virtually inevitable that the Federal Reserve will begin raising interest rates at its December 15-16 meetings, as Fed Chair Janet Yellen indicated in her congressional testimony yesterday.

The Federal Reserve action essentially declares this economy the new normal. The unemployment rate has dropped from its 10 percent depths in the Great Recession to 5 percent. The economy has enjoyed a record 69 months of private sector jobs growth. Fed Chair Janet Yellen suggests the U.S. economy has sufficient momentum to continue to grow.

While inflation remains far below the Fed “target” of 2 percent, Yellen anticipates that the dollar won’t continue to rise in value and oil won’t continue to fall, suggesting that inflation might pick up in future months. So, she argues, it is time for the Fed to begin – in baby steps and very cautiously – to raise interest rates.

But the new normal is neither normal nor acceptable. Nearly 16 million people are still in need of full-time work. The percentage of the civilian population working or actively looking for work remained virtually unchanged at 62.5 percent, near a 40-year low (back to when women began entering the workforce in large numbers).

African-Americans suffer unemployment rates at 9.4 percent, almost twice the national average. Only one in five of young African-Americans – ages 16 to 19 – are employed.

We still haven’t returned to the same levels of employment, counting new entrants, that we enjoyed before the recession in 2007. Wages are still stagnant, up barely over 2 percent for the year for non-supervisory workers, not close to keeping up with the cost of health care or college or child care.

Worse, the Fed is tightening against the threat of future inflation that exists only in its imagination. And it does so in a world dangerously close to global downturn. Europe verges on deflation, with the European bank extending extraordinary measures to fend off decline. China is slowing faster than expected or admitted. Japan is back in recession. Brazil is suffering the deepest downturn since the Great Depression, with other emerging market countries in decline.

The U.S. economy is not strong enough to be the buyer of last resort for a world desperate to export its way to recovery. The U.S. dollar has already dramatically increased in value, with the Euro and other currencies weakening. This makes imports cheaper and exports more expensive. Already U.S. manufacturing is getting hit.

The Fed is understandably eager to begin raising rates after keeping them near zero for seven years. Free money feeds the bankers’ casino, inflates bubbles, and makes it easier for corporations to doctor their balance sheets. What is missing is any sensible policy from the Congress to get this economy going. Corporations are parking over two trillion abroad to avoid paying taxes. If Congress weren’t ruled by ideologues and bounders, it would force them to pay their fair share of taxes and use that money to rebuild the country, putting people to work in work that needs to be done.

Both the Fed Chair Yellen and the IMF have been calling for action from the Congress without success. Instead, Congress turns itself inside out to pass a modest highway bill that won’t come close to addressing the continued decline in our infrastructure.

This world is closer to a global recession than to healthy normal economic growth. The Fed’s likely action will be modest. But at a time when we need far bolder action across the globe, the Fed is signaling success when it ought to be raising warning flags.

This blog originally appeared at OurFuture.org on December 4, 2015. Reprinted with permission.

About the Author: Robert Borosage is the Co-Director of the Campaign for America’s Future.

 


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