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Economy hurting after Congress fails to act on stimulus

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Just weeks after Washington lawmakers allowed a $600-a-week boost in payments for millions of unemployed workers to expire, the economy is already starting to feel the pain.

The number of workers lining up for jobless aid has been rising. The retail and delivery sectors, which especially benefited from laid-off Americans spending the extra cash, have cut back on hiring. Walmart, the nation’s biggest retailer, reported record profits in the second quarter thanks to government aid to consumers but now says sales growth is slowing.

As lawmakers dig in their heels over how much cash to spend to prop up the pandemic-battered economy, the cut in unemployment aid and the expiration of a program that provided more than $500 billion in loans to small businesses to keep workers on the job are threatening to drag on the recovery. That’s likely to ratchet up pressure on Congress and the White House to come to a deal on a new economic relief package.

Unemployment insurance added about $25 billion a week to the economy during the four months the additional aid was in place, and now since the expiration of the extra benefit, it’s running closer to $10 billion, former U.S. Treasury economist Ernie Tedeschi said. That’s going to have “devastating individual implications for the families that receive that payment and also going to have economic implications for America as a whole,” he said.

“When you have $60 billion less going to families,” Tedeschi added, “that means that there’s going to be something close to that less in spending.”

With less money to spend on groceries, gas and other goods, the lapse of federal pandemic aid has aggravated the labor market outlook. Businesses acutely affected by consumption have started hiring fewer workers, according to Nick Bunker, economic research director at Indeed Hiring Lab. Listings for jobs in beauty and wellness seeking workers like hairdressers, nail technicians, fitness instructors and cosmetologists are falling, as are those for retailing and delivery drivers and truckers.

The number of job listings posted in the week ending Aug. 14 were 20 percent lower than they were at this time in 2019 — and the first drop the website has seen since late April, according to Indeed.

“Really the last few weeks we’ve started to see a significant slowdown in the trend in job postings,” Bunker said.

Hiring, hours worked and the number of employees working over the last six weeks — a period that began before the extra unemployment aid ended on July 31 — has slowed down or flatlined, according to data from workforce management platforms Kronos and Homebase.

At the same time, the number of jobless claims rose to 1.1 million in the week ending Aug. 15, halting several weeks of decline and suggesting that large numbers of people are still being pushed out of work due to the pandemic.

Economists say the July-to-August plateau is especially concerning because jobs usually pick up this time of year due to increased demand in the summer season.

“We’re expecting the next few months to be — even barring a significant recurrence of some Covid hot spots — a very slow recovery,” said David Gilbertson, vice president at Kronos.

Republican lawmakers have argued that the $600-a-week boost allowed many laid-off workers to make more money at home than they earned at their previous jobs. That, they said, was creating a disincentive for them to return to work and slowing down the economic recovery.

But the lack of a pickup in business activity is “a warning sign,” said Ray Sandza, vice president of data and analytics at Homebase. “Any expectation that removing [unemployment insurance] benefits was going to suddenly fill a bunch of jobs was, predictably, misplaced,” he added in an email. “There just aren’t enough jobs to go around right now; it’s not a supply issue.”

According to the Real-Time Population Survey, which was created by researchers at Arizona State University and Virginia Commonwealth University, the unemployment rate was 15.5 percent in the week ending Aug. 15.

“There was a really rapid recovery going on in May and June, and then since June things still have been modestly getting better but just at a much slower pace,” said Adam Blandin, assistant professor of economics at VCU, who helps develop the real-time survey. “And between the new virus cases and the changes in policy … the million dollar question is are we going to stay at something above 10 percent unemployment, for a long period, or is it going to continue to go down like it did early in the summer?”

Without another stimulus deal from Congress and less money for Americans to spend, companies are unlikely to risk expanding their workforce, meaning fewer jobs available for laid-off workers to fill and tamer growth in the economy.

“Consumers are not spending money, at least in some sectors,” Gilbertson of Kronos added. “The face of our economy is changing.”

Until businesses are confident that Americans will start spending more, “they’re probably not going to be expanding their hiring,” he said.

The stock market’s robust performance isn’t doing much to spur lawmakers into agreeing to provide more relief. While fears of a slowdown led shares to plummet in March — and motivated Congress to take sweeping action to rescue the economy — the precarious state of the nation’s workforce now hasn’t generated a similar reaction.

While jobless Americans are facing dire economic conditions, Wall Street has gained back all the losses it suffered early on in the pandemic. The S&P 500 has been hitting record highs.

Even a slide in share prices at the opening bell Thursday, in response to newly rising unemployment claims, was short-lived as prices recovered by midday.

The stock market also isn’t representative of most Americans, especially the low-wage workers hit hardest by the recession. While about half of American families own stocks, the vast majority of the value of shares is held by wealthier investors.

The stalemate in Washington over how much additional Covid-19 aid the federal government will offer to help struggling businesses and Americans has also clouded the outlook for large companies, many of which have done considerably well during the pandemic.

When Walmart touted its second-quarter profits during its quarterly earnings call on Aug. 18, it cited spending “aided by government stimulus.” But Brett Biggs, the chief financial officer and executive vice president, said sales began to revert back to normal toward the end of the quarter when $1,200 stimulus checks the government had doled out to millions of Americans ran out.

“There’s just a lot of uncertainty right now and so much variance in how customers are feeling about their situation,” said Douglas McMillon, Walmart’s president and CEO, during the call.

Target, bracing for an additional drop in expected fall demand because of schools switching to remote learning, has offered to extend its back-to-school season.

“It’s a very challenging environment for us to provide guidance,” Brian Cornell, the chairman and CEO of Target, said during the company’s earnings call Wednesday. “We’ve got the pandemic in front of us. We’ve got uncertainty about back to school, back to college, the state of the economy.”

Now that laid-off workers are no longer receiving the extra $600-per-week unemployment payment, Behnaz Mansouri of the Unemployment Law Project, which provides services to laid-off workers in Washington state, says her clients are facing more difficult choices than they encountered at the beginning of the pandemic.

The year “has been made bearable by this patchwork of financial assistance,” Mansouri said. “And now without it, I fear, it’s going to become unbearable.”

“I’m hearing a lot of people struggling to assess their living situations over the next couple of months,” she added. “Do they potentially start looking for jobs, even if they’re in a high risk category or live with someone who’s in a higher risk category?”

Kellie Mejdrich contributed to this report.

This blog originally appeared at Politico on August 24, 2020. Reprinted with permission.

About the Author: Rebecca Rainey is an employment and immigration reporter with POLITICO Pro and the author of the Morning Shift newsletter.


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A $6.5 Trillion Stimulus Plan Now! Hong Kong Labor Activists Under the Gun

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Let’s go really big! I outline a $6.5 trillion stimulus—more than double what the Democrats in the House passed—because that’s what the people need over the next year: $1.3 trillion in wage guarantees; $715 billion for state and local governments; $600 billion for a “Pandemic Medicare For All”; $1.5 trillion to cancel all student debt; $200 billion for a rent and mortgage freeze…and a lot more. Fight me on the specifics—but let’s expand the debate and the way people think about what is possible, what is needed and what should be done.

Just a few days ago, China imposed a new National Security Law which is aimed at shutting down the mass protests that have consumed Hong Kong for more than a year. In the crosshairs especially are union activists who have been signing up people to dozens of new unions which doesn’t thrill China’s leaders who manage the linchpin for the global corporate supply chain. Cathy Feingold, the director of international affairs for the AFL-CIO and deputy president of the International Trade Union Confederation, joins me with a look at the pressures facing unions in Hong Kong.

This blog originally appeared at Working Life on July 8, 2020. Reprinted with permission.

About the Author: Jonathan Tasini is a political / organizing / economic strategist. President of the Economic Future Group, a consultancy that has worked in a couple of dozen countries on five continents over the past 20 years.


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Chicago Window Workers Who Occupied Their Factory in 2008 Win New Bankruptcy Payout

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kari-lydersenSeven years after Republic Windows & Doors workers occupied a recently-shuttered factory in Chicago, making international news, and three years after they opened their own window company, they are receiving a $295,000 payout in bankruptcy court that is both a symbolic and pragmatic victory.

When a company goes bankrupt, workers are usually at the end of the line to get paid, as they are considered “unsecured creditors” behind various secured creditors who are owed money. That means workers often never get money they are owed.

But the Republic Windows workers have broken the mold in many ways, starting when they occupied the factory on Goose Island in the Chicago River, receiving massive community and political support and convincing Bank of America and JP Morgan Chase to hand over the severance and vacation pay due them.

They became a poster child of the American Recovery and Reinvestment Act (or the “stimulus”) after the company was bought by a California-based maker of highly energy efficient products. Then they occupied the factory again when that owner threatened to close it. Finally in spring 2013 they opened their own factory, New Era Windows.

In January 2009, not long after the occupation, the United Electrical Workers (UE) union, which represented Republic workers, filed a complaint with the National Labor Relations Board charging that the company violated the union contract by closing abruptly without negotiating over the closure terms. Two years later, the board ruled in favor of the workers and decided they were due two weeks’ wages, the estimated amount of time that bargaining over a closure would have taken.

The company was in bankruptcy proceedings by then, however, and it wasn’t until this week that the bankruptcy court ordered the release of the funds. The NLRB will distribute the money to individual workers.

A release from the NLRB this week noted:

The Board found that the employer violated the National Labor Relations Act when they closed their Goose Island facility and moved operations to an alter ego operation in Iowa. However, ongoing bankruptcy procedures made full or partial compliance with the order unlikely until a successful suit against the employer’s insurer made additional assets available for the repayment of debts.

The board continued that: “Bankruptcy proceedings often prevent compliance with Board-ordered remedies as employer’s assets are liquidated through Chapter 7 processes. While the employees did not receive full back pay, obtaining partial compliance in this case is a victory for workers who have been waiting for a remedy since 2008.”

“Some people feel like it’s not enough, but it’s symbolic,” said Armando Robles, one of the New Era worker-owners and a leader of the occupation and ensuing efforts. “It’s a huge victory.”

UE organizer Leah Fried noted that the payout is thanks to “the constant haranguing we had do to. We had to wait until everyone else came out of the woodwork, but the fact we kept pressuring the court” paid off.

“It’s great that seven years later, [the workers are] still winning money,” she says.

The former Republic Windows CEO, Richard Gillman, was sentenced to four years in prison for fraud charges related to the closing of the factory and the purchase of another window factory in Iowa. He was released after serving significantly less time than the sentence.

New Era has been growing, with 14 worker-owners and four new hires, Robles said. This is the slow season, however, when few people are ordering windows. Robles said the bankruptcy payment should mean about $1,200, helping him pay rent and bills until New Era business picks up in the spring.

“It hasn’t been easy, obviously,” said Fried. “But they’ve shown you can run a company without bosses, and do well.”

This blog originally appeared in inthesetimes.com on January 25, 2016.  Reprinted with permission.

Kari Lydersen, an In These Times contributing editor, is a Chicago-based journalist and instructor who currently works at Northwestern University. Her work has appeared in the New York Times, the Washington Post, the Chicago Reader and The Progressive, among other publications. Her most recent book is Mayor 1%: Rahm Emanuel and the Rise of Chicago’s 99 Percent. She is also the co-author of Shoot an Iraqi: Art, Life and Resistance Under the Gunand the author of Revolt on Goose Island: The Chicago Factory Takeover, and What it Says About the Economic Crisis.Look for an updated reissue of Revolt on Goose Island in 2014. In 2011, she was awarded a Studs Terkel Community Media Award for her work.


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Full Employment Is More Than Possible. It Is Essential.

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Dave JohnsonProgressives have not only been able to beat back the D.C.-elite effort to cut Social Security, we put the idea of expanding Social Security on the table instead. We pushed LGBT rights and gay marriage and have won significant victories. Sunday’s Climate March will force climate onto the map.

We got the discussion of income inequality going. We have achieved minimum wage increases and paid sick days in several cities and states. The National Labor Relations Board is functioning and we even saw labor-movement gains in the South this week. We have held back (so far) the drumbeat for big cuts in corporate taxes they’re calling “tax reform.”

Now it’s time to put our demand for full employment policies on the table. And guess what – it’s a great way to win elections!

What would it mean in people’s lives if there were more job openings than people? Right now people suffer terrible job fear that forces them to accept pay cuts, benefit cuts, extra hours and other things that increase profits for the giant corporations.

Think about the huge change in the mood and structure of the country if employers had to fight to get employees. If your boss couldn’t find the people needed to do the work and knew that you had three job offers, you might be getting a raise instead of a pay cut – and you would know that, too.

It has been a while, but imagine the situation in our economy if working people had the upper hand. This is what full employment would mean. And it is possible to achieve full employment – but only if We the People decide to just go ahead and pursue this, through our government.

How To Get To Full Employment

There are so many things we could be doing to bring about full employment. For example, this is the record of the 2009 “stimulus.” We were losing more than 800,000 jobs a month in the wake of the 2008 recession, then because of “government spending” we were gaining 100,000-250,000 jobs a month. Look at this chart and think, “No wonder Republicans don’t want more government spending to create jobs.”

Monthly_0208_0514[1]
This blog originally appeared in Campaign for America’s Future (Ourfuture.org) on September 19, 2014. Reprinted with permission.  http://ourfuture.org/20140919/full-employment-is-more-than-possible-it-is-essential

About the Author: Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.

 


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Assert Yourself, America; Don’t be an Illegal Trade Victim

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Leo GerardLong-suffering victim is hardly the American image. Paul Revere, Mother Jones, John Glenn, Martin Luther King Jr. — those are American icons. Bold, wry, justice-seeking.

So how is it that America finds herself in the position of schoolyard patsy, woe-is-me casualty of China’s illegal trade practices that are destroying U.S. renewable energy manufacturing and foreclosing an energy-independent future?

Come on, America. Show some of that confident pioneer spirit. Stand up for yourself. Tell China that America isn’t going to hand over its lunch money anymore; international trade law will be enforced now.

That’s the demand the United Steelworkers (USW) union made this week when it filed a 5,800-page suit detailing how China violates a wide variety of World Trade Organization (WTO) obligations.

The case, now in the hands of the U.S. Trade Representative, shows how China uses illegal land grants, prohibited low-interest loans and other outlawed measures to pump up its renewable energy industries and facilitate export of those products at artificially low prices to places like the United States and Europe.

The U.S. aids renewable energy industries, like solar cell and wind turbine manufacturers, but no where near the extent that China does. And the American aid lawfully goes to renewable manufacturers that produce for domestic consumption. China, by contrast, illegally subsidizes industries that export, a strategy that kills off competition.

The USW recognizes and appreciates that trade with China has lifted millions there out of poverty. But truly fair trade would benefit workers in both China and the United States. And that is what the USW is demanding.

The USW is far from alone in accusing China of violations. New York Times reporter Keith Bradsher described them in a story Sept. 8, titled “On Clean Energy, China Skirts Rules.” It ends with this quote from Zhao Feng, general manger of Hunan Sunzone Optoelectronics, a two-year-old solar panel manufacturer that exports nearly 95 percent of its products to Europe and is opening offices in three U.S. cities to push into the American market:

“Who wins this clean energy race really depends on how much support the government gives.”

The U.S. isn’t providing support that violates WTO regulations. China is. And it’s hundreds of billions — $216 billion from China’s stimulus package, another $184 billion to be spent through 2020, $172 million in research and development over the past four years.

Bradsher’s story details illegal aid given Sunzone and says that it’s common, not exceptional. It includes China turning over land to Sunzone for a third of the market price and government-controlled banks granting Sunzone low-interest loans that the provincial government helps Sunzone repay.

In addition, the USW suit notes that China, which accounts for 93 percent of the world’s production of so-called rare earth materials like dysprosium and terbium essential for green energy technology, has severely restricted their export. That practice, illegal under WTO rules, forces some foreign companies to move manufacturing to China to get access.

And when corporations move, China routinely – and illegally — mandates they transfer technology to Chinese partners, which often means U.S.-tax-dollar-supported research and development benefits China.

That is one reason China rose to first in the world in clean energy so quickly. China now leads globally in producing solar panels. It doubled its wind power capacity in one year – 2009. Worldwide, Chinese manufacturers supply at least half of all hydropower projects and fabricate 75 percent of all compact fluorescent light bulbs.

Meanwhile, here in the United States, BP shut down its solar panel manufacturing plant in Maryland this year and Evergreen Solar of Marlboro, Mass., plans to close its American plant, eliminating 300 U.S. jobs. Both are moving manufacturing to China.

Germany’s Solar World still manufactures in Europe and the United States, and its chief executive, Frank A. Asbeck, told Bradsher the German solar industry association is investigating whether to file a suit of its own to try to stop China’s illegal practices:

“China is cordoning off its own solar market to fend off international competition while arming its industry with a bottomless pile of subsidies and boundless lines of credit.”

The Times story also says China’s “aggressive government policies” are designed to ensure “Chinese energy security.”

China’s illegal aggression to secure its energy independence and dominate world production of green technology threatens the energy security of the United States.

America turned to renewables not just to diminish climate change but also to reduce dependence on foreign oil, an addiction that has entangled the U.S. in costly and bloody wars.

If the United States can’t build its own renewable energy products, it will forfeit the next generation high technology industry and good manufacturing jobs, and it will remain dangerously beholden to foreign nations for energy.

China agreed to follow international regulations when it joined the World Trade Organization. This pledge was crucial because China’s economy is government-controlled, very different from the free market economies of the United States and most Western nations.

Faced with blatant rule-flouting that has cost USW members their jobs and threatens to cost their children high-technology manufacturing of the future, the USW is demanding the American government put a stop to it.

That is how a true American acts. Americans have a sense of justice. They follow the rules and expect trading partners to do the same. When they don’t, Americans do something about it.


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Will Teacher be Left Behind by the Stimulus Gold Rush?

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To teachers across the country, the carrot that Washington is dangling before schools could soon start to feel like a stick.

As the Obama administration funnels stimulus money into public schools, states will compete for a $4.3 billion fund known as Race to the Top. But the strings attached to the money reflect a vision for school reform that many activists fear will drive the corporatization of education and the marginalization of organized labor.

One key requirement is that states allow teachers to be assessed on the basis of standardized test scores—a policy that could ignite labor disputes over merit pay and raise philosophical questions about how to evaluate educators.

The funding guidelines could endanger some states’ access to the funds, due to “firewall” policies that bar the direct use of test scores in employment-related decisions, such as awarding tenure—a protection against unfair judgment of teachers based on limited data.

The Race to the Top guidelines also prioritize the expansion of charter schools and alternative pathways for teacher certification, like Teach for America’s fast-track program for top-tier college grads. Both have been hyped as a way to bring innovation and “entrepreneurialism” to public schools. But critics view charters and alternative credentialing as steps toward privatization and deregulation, which in turn alienate struggling students and undermines union power.

By tethering stimulus money to controversial policy initiatives, Education Secretary Arne Duncan is stoking tensions between free-market reform principles and unions’ mission to protect their professions and labor standards.

Randi Weingarten, head of the American Federation of Teachers, signaled a willingness to compromise in a recent statement, calling for “shared responsibility” and transparency in reform efforts.

But many cast doubt on the merits of the Duncan brand of reform.

In a new report on efforts to reform teacher pay schemes, the Center for American Progress challenges the common assumption that “compensation is the primary incentive for teachers to perform at higher levels”:

[N]umerous approaches have been punitive or simplistic in design, implementation, or marketing. This is one reason that teachers and unions have frequently opposed efforts to link learning and compensation. Teachers have often seen these efforts as professionally insulting and as misunderstanding what leads to improved performance.

To progressive education activists, the Duncan brand of reform—which was incubated during his tenure as CEO of Chicago Public Schools —embodies the worst aspects of No Child Left Behind.

Though the Bush-era law was billed as a path toward alleviating racial and socioeconomic educational gaps, critics say it has cheated disadvantaged students by emphasizing rigid high-stakes testing regimes rather than genuine intellectual development.

From a labor standpoint, Jim Horn of Schools Matter says the Race to the Top will accelerate the downward spiral in public education:

The winners of the Race to the Top will not be teachers, who will be further humiliated by having meager pay raises to their embarrassingly low salaries now dependent upon test score production work….

Among the winners will not be the embattled teaching profession, since Mr. Duncan prefers the marginally-prepared and the alternatively-certified teachers to those with real credentials based on both content and pedagogy expertise.

While Duncan tries to pull schools and unions toward a hardline “accountability” agenda, there are signs that some educators are bucking mainstream reform trends from the ground up. Teachers at some charter schools are moving to unionize to stabilize their jobs and working conditions.

In Duncan’s former hometown, a crop of radical teachers has risen up against Chicago’s plans to overhaul and shut down under-performing schools. The Caucus of Rank and File Educators (CORE) filed a discrimination lawsuit last month to challenge the city’s school “turnaround” initiative.

CORE alleges that black teachers have been disparately harmed by staff purges, and that the restructuring has disrupted students’ education, with little accountability to parents and surrounding communities.

Amid all the political bluster around “fixing” public schools, the lesson that seems to constantly elude policymakers is a simple one: a classroom is a space for intellectual exploration as well as a workplace, and it works best when it enables students and teachers to thrive together.

In the Obama administration’s race to reform, is there room at the top for the whole school community?

Michelle Chen: Michelle Chen’s work has appeared in Extra!, Legal Affairs, City Limits and Alternet, along with her self-published zine, cain. She also blogs at Racewire.org

This article originally appeared at Working In These Times on July 30 and is reprinted here with permission from the source.


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