10 examples of Trump's anti-worker agenda at the NLRB

Economic Policy Institute Director of Government Affairs Celine McNicholas explains how Trump's National Labor Relations Board has actively worked against the workers the NLRB is tasked with protecting—on behalf of corporations.

Looking for evidence of wage-led productivity growth

Josh Bivens

Josh Bivens Director of Research, EPI

While unemployment rates are sitting at their lowest levels in decades, wage growth (adjusted for inflation) remains slower than in previous periods of comparably low unemployment. Part of the reason why wage growth remains subdued is that productivity growth has been generally weak since the Great Recession ended. This week’s newsletter provides some guidance on a key question for macroeconomic policymakers like the Federal Reserve: do we need to take this slow rate of productivity growth as a given, or can we nudge productivity upward by allowing unemployment to sink even lower for longer?

Specifically, I address the widespread speculation about the possibility of “wage-led productivity growth”—the hypothesis that tight labor markets that push up labor costs lead firms to invest more in labor-saving equipment and practices. Some suggestive evidence of this wage-led productivity growth has been shown in patterns of macroeconomic data. This newsletter provides some more suggestive evidence from patterns of productivity growth broadly but also across a set of very detailed industries when the labor share of industry income rises and falls. Here are the key findings:

  • At the aggregate level, a rise in the labor share of corporate-sector income is associated with a small but significant rise in the pace of average productivity growth over the subsequent two years.
  • At detailed industrial levels (looking at 124 industries mostly in manufacturing), this relationship is even stronger: a 1 percentage-point rise in the labor share of industry income is associated with a 0.1 percentage-point increase in the average pace of productivity growth over the subsequent two years.
  • These relationships between labor share of income and productivity growth are consistent with a scenario in which firms try harder to make labor-saving investments and organizational changes when labor becomes scarcer and the need to pay higher wages threatens to pinch profits. If the labor share of corporate-sector income rose from today’s 78% to the 82% that characterized the tight labor markets of 2000, this would imply a boost to productivity of roughly 0.4 percentage points—an amount that would cut almost in half the gap between the productivity growth in recent years and the productivity growth of the late 1990s.

These results are obviously suggestive, not dispositive. The key challenge to testing the causal link that runs from higher pressure labor markets to increased effort by firms to find and adopt labor-saving practices and investments is finding truly exogenous changes in labor market tightness. This search for exogenous changes in the cost pressures firms face should be a prime preoccupation for macroeconomic policymakers in the near future. In the rest of this newsletter, we’ll describe our findings in a bit more detail and discuss their potential implications.

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Let’s Check in on What’s Been Happening With General Motors in Lordstown

Cathalijne Adams Digital Media Manager, AAM

It's been nine months since General Motors (GM) shuttered its assembly plant in Lordstown, Ohio, but the impact of the automaker's decision continues to reverberate... and it's been a busy few days. 

GM announced on Thursday that it plans to open a $2.3 billion battery factory not far from the site of the car assembly plant that the company closed in Lordstown, part of the company's efforts to expand its electric vehicle (EV) business. Speaking of the Lordstown facility, it looks like the automaker also is loaning electric-vehicle startup Lordstown Motors Corp. at least $40 million to cover the purchase and retooling costs at the plant.

Huh.

O.K., let's start with the battery factory.

In the aftermath of the closure of the nearly 53-year-old Lordstown plant, GM attempted to ameliorate the loss by relocating most of the 1,600 workers remaining at the site to alternate GM facilities. Nonetheless, the region was left devastated in the aftermath, and the lives of the workers and their families were upended.  

Enter the new battery plant. The planned facility is central to GM's mission to expand its EV offerings and should enable the company to produce batteries for its cars more affordably while leveraging the region's manufacturing talent. The company argues that by locating the new plant near Lordstown, it is fulfilling its promise to bring back jobs to the region; White House trade adviser Peter Navarro even offered praise in The New York Times!  

It's not all good news, however. Though GM estimates that it will employ 1,100 workers at the new facility, this number pales in comparison to the roughly 4,500 jobs that the Lordstown plant sustained three years ago. Moreover, plant employees will earn between $10 and $15 an hour, roughly what U.A.W. workers earned at Lordstown, according to GM CEO Mary Barra. But that's well below the "top union wage of $32 an hour," The New York Times pointed out.  

And what about the fate of the original Lordstown assembly plant?

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What’s scaring the bejeezus out of billionaires?

Jim Hightower

Jim Hightower Author, Commentator, America’s Number One Populist

There’s a new political army on the march in America: Tromp-tromp-tromp they came, it’s the Billionaire Brigade!

It’s actually a very small army – only 749 Americans rank as billionaires. But they have a lot of firepower – collectively, they’ve amassed some $4-trillion in personal wealth and are now grabbing nearly all of the new wealth that our economy generates. In response to the extreme inequality their greed has created, Bernie Sanders, Elizabeth Warren, and other Democratic leaders are proposing a widely-popular wealth tax on the opulence of this tiny group. And oh, what wails of anguish this has generated in the lairs of billionaires! They’re indignant that fortunes above $50-million would be assessed a teeny surtax to help fund education, health care, infrastructure, and America’s other essential needs.

So, with a rallying cry of Save the Poor Rich, the Billionaire’s Brigade seeks your pity: Mark Zuckerberg laments that taxing his gabillions would hurt charities; Michael Bloomberg suggests that the tax could turn America into Venezuela; and Wall Street baron Leon Cooperman actually teared up while wailing that a wealth tax would harm his family. As one money manager said, “These tax proposals are scaring the bejeezus out of people who have accumulated a lot of wealth.”

I don’t think there’s much Jesus in these people! The Biblical Jesus would bless Sanders, Warren, and the majority of Americans who favor a wealth tax to benefit the Common Good. No need to cry for the few hundred haughty families whose love of money would be only slightly dinged by this tax – every one of them would still be fabulously rich. Plus, they’ll be privileged to live in a country that’s a little more closely aligned with its people’s egalitarian values. And that’s priceless.

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Reposted from Hightower Lowdown

Valuing Working-Class Life: Recent Memoirs by Working-Class Women

Sarah Attfield Editor, Journal of Working-Class Studies

With the UK general election looming, there has been renewed interest in the effects of years of austerity measures on poor and working-class people. It seems clear that inequality has increased and more and more people rely on food banks and charities to provide the basics. Many children live in poverty, and households cannot heat their homes in winter. Homelessness has been on the rise. Special features in publications such as the Guardian  and documentaries like Growing up Poor have made all of this visible.

Yet even though these articles and documentaries include the stories of those affected, they seem to be created for the middle-class reader and viewer, people who are much less likely to have experienced poverty. They view working-class lives from a distance. But two new memoirs written by working-class women offer insights into poverty and hardship from a more intimate perspective. Kerry Hudson’s Lowborn tells her story of growing up in poverty in the 1980s and 1990s, and Cash Carraway’s Skint Estate relays her more recent experience of living hand-to-mouth as a working-class single parent. These first-person narratives seem to be written for working-class readers, who know how easy is it to slip from getting by to not affording the rent or bills. Such readers will find plenty in these books to recognise, empathise with and get angry about.

Lowborn jumps between Hudson’s early life moving around with her mother from Scotland to the south of England, back to the north, and then ending up in the east of England. She experienced huge disruption to her schooling and a dysfunctional family life. There is a sense throughout the book that Hudson, now a successful author who lives a mostly middle-class life, comes to terms with her childhood poverty. She returns to her childhood homes to recall in detail the experience and effects of poverty and to reconcile with her past. This is not a romantic journey. Her mother did not cope, and at times, Hudson was taken into care by the state. Their relationship was difficult, and they remain estranged, but through the process of writing the book, Hudson finds commonalties and closeness with some of her extended family.

What is striking when reading this book are the small details that working-class readers will recognise: the mad dash from her council flat down to the ice-creak van with a few pence in hand to buy the cheapest treat available, trips across the country on National Express coaches (rail travel was a real luxury), and the sheer delight of occasional fancy foods such as pop and mini-sausage rolls. While the more extreme experiences of being homeless, living in B&Bs, surviving neglect and abuse might not be as common, the working-class reader is likely to have lived in close proximity to families like Hudson’s.

The book also reveals how Hudson and her mother were let down by various institutions and individuals (especially the men in her mother’s life) and how the effects of being left behind accumulate and wear people down. The book includes stories of substance abuse and self-harm, which seem to be symptoms of poverty and life-long disadvantage. Ultimately, Hudson reclaims her working-class origins, but she also shows how the stigma of growing up poor can harm.

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Bipartisan Bill Aims to Make Sure Drinking Water Infrastructure is Made in America

Elizabeth Brotherton-Bunch

Elizabeth Brotherton-Bunch Digital Media Director, Alliance for American Manufacturing

We’ve been so lost in the hustle and bustle of the holiday season that we didn’t get a chance to talk about an important bipartisan bill introduced last month that aims to improve a key piece of America’s infrastructure — and create good-paying jobs, too.

Reps. Cheri Bustos (D-Ill.) and David McKinley (R-W. Va.) put forth the “Buy America for Drinking Water Extension Act” on Nov. 20. The legislation would permanently ensure that all iron and steel products used for projects in the Drinking Water State Revolving Fund are “made entirely in the United States.”

The revolving fund is a federal-state partnership that is used to finance projects to improve drinking water systems nationwide. Between 1997 and 2018, the fund has given more than $38.2 billion in low-interest loans to more than 14,500 projects, helping provide safe drinking water to millions of Americans.

Still, more needs to be done. Like most of America’s infrastructure, our nation’s drinking water infrastructure is in terrible shape. The American Society of Civil Engineers gave it a “D” rating in 2017, noting that the 1 million miles of pipes that deliver water to our homes in businesses were laid in the early-to-mid 20th century.

Given that these pipes have a lifespan of 75 to 100 years, it’s time to get to work modernizing these systems. And when we do, it’s important to also make sure our tax dollars are reinvested back into our communities, creating jobs and boosting the local economy, which is the goal of the new legislation.

Although they might at first seem like separate issues, jobs and infrastructure are closely linked. It’s no secret, after all, that the places that were hit hardest by manufacturing job loss and industrial flight in the late 20th century also watched their infrastructure crumble.

Perhaps the most famous example of this is Flint, Michigan.

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Amplified Advantage: Why Education Is Not the Answer to Our Class Problems

Allison L. Hurst Oregon State University

Thirty years ago, after having dropped out of college after just one term, unable to pay for my dorm room, I was unsure if I would ever leave the working class.  Two years later I was a student at Barnard College, an elite small liberal arts college three thousand miles from my parents’ home.  To this day, I am not sure how I made that leap, but it was smoothed over by significant financial assistance from the college.  Unable to pay for my public university, I was able to graduate from one of the best private colleges in the country virtually debt-free.

Now I study higher education and its connection to what we call intergenerational social mobility, the movement (or lack of movement) between classes, comparing children and parents’ occupational outcomes over time.

I have some bad news.  While the path I took was not easy, gaining social mobility through college education is much harder for young people today.  Ironically, even as more children of the working class go to college, the educational attainment gap between the middle class and the working class continues to grow.

How can this be?  For one thing, the bar for “being educated” continues to rise.  As more people earn college degrees than ever before, the kind of college degree increasingly matters.  What type of institution?  What major field of study?  Also important is the level of education – in many fields a four-year degree is no longer enough to assure a middle-class salaried job.  You need a master’s degree, or even a PhD, for some work, even outside of academia.

Scholars of education (including sociologists like me) have known all of this for a while now, which is why so many of us have studied access to colleges and programs.  Colleges have struggled to open their doors to first-generation and working-class students.  They are paying more attention to ways of broadening access, sometimes pushed and shoved into doing so by state boards of higher education.  At the same time, budget cuts at public colleges and universities undercut many of these efforts.

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A Future Where People Will Have Jobs: A Conversation

AFL-CIO State of the Unions Podcast co-host Tim Schlittner talks to Guy Ryder, the director-general of the ILO about the international labor movement, the idea of "decent labor" and the future of work.

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Reposted from AFL-CIO

Workers will lose more than $700 million dollars annually under proposed DOL rule

By Heidi Shierholz and David Cooper

In October, the Trump administration published a proposed rule regarding tips which, if finalized, will cost workers more than $700 million annually. It is yet another example of the Trump administration using the fine print of a proposal to attempt to push through a change that will transfer large amounts of money from workers to their employers. We also find that as employers ask tipped workers to do more non-tipped work as a result of this rule, employment in non-tipped food service occupations will decline by 5.3% and employment in tipped occupations will increase by 12.2%, resulting in 243,000 jobs shifting from being non-tipped to being tipped. Given that back-of-the-house, non-tipped jobs in restaurants are more likely to be held by people of color while tipped occupations are more likely to be held by white workers, this could reduce job opportunities for people of color.

The background: employers are not allowed to pocket workers’ tips—tips must remain with workers. But employers can legally “capture” some of workers’ tips by paying tipped workers less in base wages than their other workers. For example, the federal minimum wage is $7.25 an hour, but employers can pay tipped workers a “tipped minimum wage” of $2.13 an hour as long as employees’ base wage and the tips they receive over the course of a week are the equivalent of at least $7.25 per hour. All but seven states have a sub-minimum wage for tipped workers.

In a system like this, the more non-tipped work that is done by tipped workers earning the sub-minimum wage, the more employers benefit. This is best illustrated with a simple example. Say a restaurant has two workers, one doing tipped work and one doing non-tipped work, who both work 40 hours a week. The tipped worker is paid $2.50 an hour in base wages, but gets $10 an hour in tips on average, for a total of $12.50 an hour in total earnings. The non-tipped worker is paid $7.50 an hour. In this scenario, the restaurant pays their workers a total of ($2.50+$7.50)*40 = $400 per week, and the workers take home a total of ($12.50+$7.50)*40 = $800 (with $400 of that coming from tips).

But suppose the restaurant makes both those workers tipped workers, with each doing half tipped work and half non-tipped work. Then the restaurant pays them both $2.50 an hour, and they will each get $5 an hour in tips on average (since now they each spend half their time on non-tipped work) for a total of $7.50 an hour in total earnings. In this scenario, the restaurant pays out a total of ($2.50+$2.50)*40 = $200 per week, and the workers take home a total of ($7.50 + $7.50)*40 = $600. The restaurant’s gain of $200 is the workers’ loss of $200, simply by having tipped workers spend time doing non-tipped work.

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Putting the Brakes on Corporate America’s Inequality Engine

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Why has the United States become so much more unequal over the last four decades? Any number of factors have been driving our increased inequality. But no single factor may have been more significant than the behavior of the modern American corporation.

Corporations are contributing to inequality on two fronts. On the one hand, they’re systematically depressing incomes for average Americans, via everything from outsourcing to pension cuts. On the other, they’re just as systematically stuffing the pockets of America’s executive class.

These two vile sets of behaviors are relentlessly reinforcing each other. Outrageously huge rewards give corporate executives an incentive to behave outrageously, to squeeze their workers at every opportunity.

So how can we fight these corporate pay outrages? We change the incentive structure. We start giving Corporate America reason to narrow income divides, not stretch them ever wider. New legislation just introduced in Congress does just that.

The legislation — the Tax Excessive CEO Pay Act — raises the corporate tax rate on companies that pay their top executives over 50 times more than what they pay their most typical workers. The wider the pay-gap multiple over 50 times, the higher the tax rate.

Not that long ago, no one could have possibly dreamed that this sort of tax penalty would be so necessary. In mid-20th century America, CEOs at major U.S. firms seldom made much more than 30 or 40 times average worker pay. Today, by contrast, the nation’s top CEOs average nearly 300 times more. In 2018, a new Institute for Policy Studies report details, 50 top execs grabbed over 1,000 times more.

The proposed Tax Excessive CEO Pay Act carries some heavyweight sponsors. In the Senate, Bernie Sanders (I-Vermont) introduced the legislation November 13, the same day that veteran lawmaker Barbara Lee (D-California) and outspoken first-termer Rashida Tlaib (D-Michigan) introduced the bill in the House. And, on the Senate side, Senator Elizabeth Warren (D-Massachusetts) is co-sponsoring the legislation.

Over two dozen national labor, religious, and policy organizations have already endorsed the new Tax Excessive CEO Pay Act. They range from the AFL-CIO and the National Council of Churches to the Coalition on Human Needs and Public Citizen.

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