Apr 03 2013

The Value of Work

Posted by Steve Ross in State Politics

In these hallowed halls, your rights are slowly slipping away via wikipedia

In these hallowed halls, your rights are slowly slipping away
via wikipedia

Over the past several days I’ve been writing about Gov. Haslam’s decision on Medicaid expansion. While this has been going on, a bill, supported by the Governor, has been steamrolling its way through the state legislature. A bill that would further shift power away from workers and workplace protections by creating new hurdles for people hurt in the workplace.

On Monday, the State Senate passed their version of HB 0194, a bill that would create a new mechanism for workers to receive compensation while hurt on the job, and reduce their rights even if the injury was through no fault of their own.

The bill is currently in the final stages of passage in the State House.

The proposed changes dramatically shifts the burden from employers, who have a duty to provide a safe work environment, to the government and employees.

What’s more, it creates a new special judicial system, administered by the State Dept. of Labor, which was recently reported to have grossly mismanaged the Unemployment Insurance program to the tune of $73m.

You may recall, the head of that department recently stepped down, just days before the announcement of this report, following a trend of Haslam appointees who have resigned due to poor management.

This trend of mismanagement follows another trend of “worker reforms” that began with the limiting of collective bargaining for teachers, among other efforts.

Through the Governor’s support of these bills, he has sought to do what so many other GOP leaders seek, to tilt the balance in favor of business under the rationale that it will be good for workers. This of course, couldn’t be further from the truth.

Work, an American Value

Workers built America

Workers built America

One of the values that Americans hold dear is the idea that hard work will be rewarded with a certain measure of success.

I think we all understand that not everyone will be Warren Buffett rich, but we have a national expectation that your work will not be in vain. An idea of “merit”, that hard work has value.

This is an idea that starts before our revolutionary beginnings, continued during our early westward expansion, carries its way through the the gilded age, the Great War, Great Depression, WWII and to this very day.

Its an idea expressed in the writings of Horatio Alger through books like Ragged Dick, the story of a poor worker who rose to the Middle Class. Something that was not very easy in the late 1800’s.

Over the years we have romanticized these rags to riches stories. They have become a part of the mythology of America. An oral history that, like most tall tales, has been exaggerated over time.

The stories of early industrialists, like Andrew Carnegie, who started working at age 12, and through the course of many years of hard work and helpful benefactors became a real life example of the mythology of merit.

While there’s no question about Carnegie’s humble beginnings, particularly in comparison to his ultimate wealth, the reality is, without the help of a great many people, who steered him to the right investments, helped him raise capital to build his empire…not to mention some of his more cut-throat practices against investors, labor, and anyone else that stood in his way, he would not have risen to the level of wealth he eventually acquired.

The forgotten reality is that hard work doesn’t necessarily make you rich. It can help make you “not poor”.

Birth of the Middle Class

Home Ownership was the hallmark of the growth of the Middle Class

Home Ownership was the hallmark of the growth of the Middle Class

In the post-WWII era, the combination of increased business regulation, government spending on infrastructure, and compulsory education that began during the Industrial Revolution led to the creation of a robust middle class in America.

I think we like to believe that a large Middle Class has always existed in this country. That couldn’t be further from the truth. If it were so, works like Upton Sinclair’s The Jungle wouldn’t have had the impact that they did.

The premise of the book was, at first, derided by the administration of Theodore Roosevelt, who called Sinclair a “hysterical crackpot”. Upon further inspection, Roosevelt’s view of the work evolved, culminating in the first real labor reforms of the 20th century.

In the wake of the Great Depression, which was brought on by wild speculation, among other things, more worker reforms were passed like the National Labor Relations Act (NLRA), which acknowledged that in wage negotiations, capital had the upper hand. Take it of leave it is not a negotiation. In order to level that playing field, NLRA allowed workers to band together and bargain as a group for the common good.

It is interesting that the rise of the middle class, and unions came hand in hand, though that shouldn’t be surprising. The Treaty of Detroit, one of the first large victories of labor, led the way to workplace reforms that became the standard both in the marketplace, and eventually Federal law.

While there’s no question that the overall economy during the post WWII era (1946-1965) had its ups and downs, overall, people benefitted from the collaboration of labor, capital, and government, as income became more evenly distributed throughout the workforce.

Devaluing Work

Pres. Reagan speaking on the Air Traffic Controller’s strike
via Wikipedia

One of the most stunning contradictions of the past 40 years is the way we have come to revere work while deriding labor. It is a mindset that says that some work is more important than other work.

I have a difficult time with this idea.

From my perspective, the most important work is that which I have no desire to do. Things like trash collection, construction and farming, public safety (police, fire, EMS) or teaching for that matter. These are jobs that are necessary for our society to function, grow, and thrive, but the reality is, no one is getting rich doing any of these things.

You wouldn’t know that to hear some tell it.

In recent years, the push to crush labor has taken many forms. From the first truly successful assault in 1981 with the firing of air traffic controllers to more recent efforts, like those in Wisconsin and Michigan to cripple labor through “right to work” laws.

Full Circle

Wage stagnation has become a feature of the new economy

Wage stagnation has become a feature of the new economy

While the value of work in the American psyche and ideas of merit have gone largely unchanged over the past 40 years, the reality for workers has gone through a massive transformation.

As the chart to the left shows, real wages have remained largely stagnant for workers in the United States since 1989. The reality is, its been going on longer than that.

All the while, the very people who have sought to shift the balance of labor from an equal playing field, to one that places greater importance on “job creators”, have, at the same time, used the rhetoric of bootstraps and hard work to fool voters into believing their ideas are somehow going to benefit them.

The reality couldn’t be further from the truth.

In every measurable way, the effort has resulted in a race to the bottom for average people while a very few benefitted the most.

This is not merit, as most Americans understand it, but a value judgement that puts a wealthy few above those who actually do the things that move our economy along.

It is an injustice, that hasn’t been committed by a few small acts, but a systemic and concerted effort over the years.

That injustice, and the fight against it will be the topic of tomorrow’s post.

Dec 05 2012

Much is required

Posted by Steve Ross in National Politics

I don’t normally write about national issues, but this fiscal cliff thing is one particularly dumb set of concern trolling on the part of the national media so it seems like a prime target.

Beep! Beep!

Its dumb because as the Wonk Blog explains this is anything but a cliff. It’s a slope at best. A slope to recession, sure, but it’s not as if this is a Wyle E. Coyote moment. Nope, Just a leisurely stroll down Recession Lane.

To be clear, I don’t want to see a recession happen any more than anyone else, but considering the players involved, and the lack of real governance from the Tea Party caucus that rules the roost in the House, there’s no real reason to believe anything other than a pull of the trigger, or an extension of the deadline is on the immediate horizon.

Now I’m sure some of my more moderate friends are screaming compromise right about now. Compromise is a two way street. Getting rid expensive tax cuts for 2% of the American populous at a time when everyone (wrongly) seems to think deficit reduction is what we need to do is the definition of compromise. 98% of the people benefit and there’s some new revenue to satisfy the deficit chicken hawks. Seems like a good deal. If you don’t get that, your definition of compromise involves a great deal of ankle grabbing.

Ward, don’t you think you were a little hard on the Beaver…

Not my idea of a good time, but to each his own.

Of course, ankle grabbing compromise has defined the politics of the past 30+ years. As Nick Kristof candidly explains in this NY Times editorial we’ve been screwing up the future for, by his estimation, 50 years now with cheap tax rates for folks who didn’t need them, that were supposed to create jobs and growth and didn’t. That strategy hasn’t worked and its not going to work. Its time to bring back a new look at an old strategy that did work. 1950’s era tax rates here we come!

In the 1950’s top earners paid as much as 92% on everything they made over $400,000/yr. Don’t believe me? Here’s the chart from the IRS.

Of course, no one’s asking that from the top 2%. Just a return to the 39.6% marginal rate of the Clinton era. You know, the Clinton years, where we had that huge recovery and 4% unemployment? Yeah, doesn’t sound so bad does it?

Republicans are losing their minds over this because according to the funders of their campaigns, any kind of tax increase is devastating. But if the GOP wants a return to the 1950’s, which is something they’ve been saying essentially for 30 years, then why not the tax rates that went with them? Seems to me you can’t have one without the other.

Because, more than anything else, that’s what Republicans want right? A return to a simpler time that never really existed. Remember the coded language of the 1980/90’s GOP? A return to a “simpler” time when “family values” were values and the world was a picturesque reflection of “Leave it to Beaver”.

Honestly, the GOP rhetoric hasn’t changed much since. The difference now is that rather than “Family Values” the right is pushing Prosperity doctrine. If you’re not familiar with prosperity doctrine here it is in a nutshell:

“If you believe/give to the church/etc. more you will succeed”, which by implication means that because you haven’t succeeded, you therefore do not believe enough.

Sounds just like GOP rhetoric doesn’t it? They built it!

Interesting that they ignore the gospels when they quote the bible. Probably because its just too inconvenient. Here’s what Jesus had to say about people who are without want.

For unto whomsoever much is given, of him shall be much required: and to whom men have committed much, of him they will ask the more. Luke 12:48

See, if you read the gospel literally, and I understand that’s all the rage these days, folks that are without want are REQUIRED…called by God, to do more to help people. If they actually did it, then maybe we could talk about some of the rewards they’ve received over the years. But since those guys don’t seem to be holding up their end of the bargain, only bringing mythical job creation, imaginary investment, and the like, I guess its time to return to the prosperity of the distant past to pressure them to do their part for society. We won’t get there by continuing tax cut policies of the past 40 years.

Here’s the dirty truth: tax cuts don’t drive expansion, they drive savings…and we’ve seen a mass expansion of savings for those who have something to save. The rest of us have been limping along barely keeping up with inflation.

He’s so sensitive about saving the wealthy

If it continues, we’ll have the first generation of folks since the Great Depression that didn’t see an appreciable increase in their standard of living or quality of life. That’s something you’re going to be hearing from me a lot over the coming months, because that’s what’s at stake.

As for the fiscal cliff, we’ll just have to see, but I’m not that worried. House Republicans have made their counter offer, weak and repackaged as it may be. Now the Kabuki Theatre can start in earnest. Chances are, they still will not vote for any tax increases, even if it only impacts the top 2% of earners.

That’s right, they’re ready to throw the other 98% of us under the bus for the 2% that pay for their campaigns…like Sheldon Anderson.

Jesus may have said For unto whomsoever much is given, of him shall be much required but you’d be hard pressed to convince the funders of the GOP that their assault on tax equity over the past 40-50 years makes them anything other than victims of the majority, all while they’ve benefitted from our collective 30+ year slumber.

So, you have a choice. You can choose to be scared as hell about this fiscal cliff and all the rhetoric that’s being bandied about, or you can look at what we’ve been doing that’s not working, what we’ve done in the past that did work, and make an intelligent choice.

One thing should be clear. After 30 years of tax cuts for people who don’t need it amidst declining incomes and lower standards of living for millions of middle class Americans, you need to ask yourself if you’re better off than you were, or your parents. If you aren’t, maybe its time to do something different.

Sep 19 2012

Defining The Middle Class

Posted by Steve Ross in Policy

Once upon a time home ownership was a prime indicator. Now its a bit more complicated.

There’s been a lot of talk about the middle class, and entitlements, and who benefits from what. Newscoma reminded me I wanted to talk about this yesterday. The notion that a household income of $200,000+ makes you “middle class” is not only misguided, its not supported by the facts.

Being the research goob that I am, I decided to look at what family income looks like these days, and break that down into something useable. Its important to understand where people are, and why our concepts of “middle class” have shifted to something that isn’t anywhere near the middle.

Middle Really is the “Middle”

Below is a chart that shows family income broken into groups of 20% each (quintiles), plus the top 5%. The rest is pretty self explanatory. Data comes from the US. Census. Median Family size is 3.

Now, let’s really look at these numbers.

The bottom quintile averages about $15,000/yr…or less than poverty for a family of 3 ($19,000/yr). The upper limit of this quintile is 140% of poverty, which means you’re less than 1 paycheck away from falling into poverty. So 20% of all the earners in the nation are at or near the poverty level and most likely qualify for benefits from the US government (TANF, SNAP, Medicare/Medicaid, etc.). In addition, the majority of these families have only one income earner and at least two children. A tiny fraction of these earners have a college degree.

It should also be noted that earners making the current minimum wage, $7.25/hr, working 40 hours a week for 52 weeks gross $15080/year or 135% of poverty for a household of 1. Also, the current poverty thresholds assume that 30% of income will be spent on housing. Current averages show that 45%-50% of income is spent on housing throughout the bottom 3 quintiles of earners.

Th second quintile is the working class. The average income is 200%, or 2 times the poverty level. The top limit of the working class is 250% of poverty. Everyone in the working class is about 1 paycheck away from falling into poverty. It is important to note that virtually no one in the working class qualifies for government assistance, including TANF child care credits. This means that if they have an infant or toddler, nearly $7,000 of their income is consumed by childcare, which puts additional pressure on their financial situation.

The third quintile is the middle class. The average income is 3 times the poverty level and tops out at 4 times poverty. The majority of these families have at least 1 income earner who has a college degree. Depending on the debt load of the family they may be as little as 2 paychecks away from poverty (1 month) or as much as much as 3 months.

So what we’re seeing so far is that 60% of all families in the United States are 3 months, or less of earnings away from poverty.

I don’t think I need to cover the top two quintiles. Unless earners in those classes have massive debt (which isn’t out of the realm of possibility) or are in an industry that is bleeding jobs, they’re likely safe. Both typically have two earners with college degrees, and options should they lose employment for a while. Its not that these earners necessarily have it easy, but claims of poverty should fall on deaf ears. More often than not, financial concerns don’t impact their ability to live, but their ability to maintain the life they’ve built. Two very important distinctions.

While earners making up to $140,000/year may qualify as Upper Middle Class, its important to understand that they represent the top earners in the United States. Only 11% of earners make more than $150,000 and just over 5% of families in the US make more than $200,000.

$200,000+/year isn’t middle class. Its wealthy, even though it may not seem like it to the people making that kind of money.

In order to make policy that creates conditions where more people reach that threshold, we have to have our facts straight. Based on the discussions by both Presidential candidates over the past few weeks, we don’t have a realistic understanding of that yet.

Edited to Add: Per a request in the comments, the same year by Household Income.

Mar 11 2011

Republicans Strike Out Against Ronnie’s Idea of Freedom

Posted by Steve Ross in State Politics

“Where Free Unions and Collective Bargaining are Forbidden, Freedom is Lost. Freedom is never more than one generation away from extinction.” – Ronald Reagan

Republicans in Tennessee are trying to ensure we lose as much freedom, as defined by conservative icon Ronald Reagan, as possible. Their method, ending the very thing that Reagan himself said was a cornerstone of American freedom in the form of SB 0113 a bill that “abolishes teachers’ unions ability to negotiate terms and conditions of professional service with local boards of education.

While Reagan’s record on unions is a mixed bag in and of itself, what we’re seeing now, the summary dismantling of a whole category of collective bargaining, flies in the face of the words used by a man who, was himself, the President of a labor organization.

From the just signed law in Wisconsin, to moves in State Legislatures across the country, conservatives are working overtime to ensure people, eventually, won’t get paid any overtime, as they attempt to strip collective bargaining, and related workers rights from people in the midst of a recession that has left millions either unemployed or underemployed.

What’s all this about?

It could be political retribution, unions have traditionally supported Democrats rather than Republicans for office.

What about the budget? That’s the rationale they’re using, but cutting money from teachers is like cutting off your leg so you’re not burdened by the weight as you run. By making teaching even less attractive, there’s not much chance you’ll get the best and the brightest turning to teaching, unless their down with a vow of poverty.

Nope, what all this really seems to be about is more tax cuts, at least in Wisconsin. The budget shortfalls that are reported up there are the result of a package of nearly $200m in tax cuts, $117m previously approved, and an additional $82m yet to be approved. So while teachers and students, Medicare recipients and public sector workers are asked to sacrifice, business gets a tax cut in the midst of a $3.6b state budget shortfall. Let’s hear it for austerity.

At the end of the day, this is nothing more than an attack on an already suffering middle class. Conservatives have waged this attack, not just at unions, but every social institution that supports the middle class, a group that carried our nation to a level of prosperity since the 1950’s that no other nation on earth has ever experienced. The result of this and other Republican proposals is a huge tax cut for the 400 people who hold 50% of the total wealth in the nation and a big screw you to the other nearly 311,000,000 of us.

Way to work for the working man Republicans, and start us down the path that ensures, to paraphrase Reagan, this will be the last generation in America that saw freedom.

If you want to see who the real “small government” people are, let me reccomend this post by Economist, Barry Ritholtz.