In Case You Missed It: Laboring for Labor Day

In Case You Missed It

In this issue, debate on the Fed's labor market efforts, white poverty and 'welfare queens,' the trials and tribulations of corporate transparency, and Etsy's so-called 'tax haven.'

 **Editor's Note: Next week our website and weekly post will get a makeover and therefore will be offline. The next post is scheduled for Sept. 18. Stay tuned.

Working All Night Long

Let's start with a cartoon:

So what is going on with U.S. labor this holiday weekend? Well for starters, older men, who left the market, are not coming back, report Don Lee and Samantha Masunaga in the LA Times:

Labor participation for men age 25 to 54 has been declining for decades but sped up during the recession with large-scale layoffs in construction and manufacturing. Their growing withdrawal from the job market is especially worrisome because it carries significant social and economic costs.

Collectively, these trends indicate that the U.S.'s potential workforce -- and thus productive capacity -- may be considerably smaller than previously thought.

Some economists have long argued that the true unemployment figure is a few percentage points higher than the government-reported rate, currently 5.1%, because officials don't count people as unemployed if they're not actively looking for work.

But more and more experts are concluding that the great exodus of workers in recent years isn't going to reverse.

There has also been discussion of the Fed's policy aimed at improving the labor market and the latest jobs report, such as this recent Economist report and this report from FiveThirtyEight:

Many Fed watchers saw Friday’s jobs report as a potential tiebreaker.

Theoretically, they may have been right. If the Fed’s decision really is as close as the experts say, then a singularly positive or negative report might have made a difference. But in the real world, the notion of a “game-changing jobs report” is a bit silly. The monthly jobs numbers are based on surveys and have large margins of error. Fed policymakers know enough not to overreact to one report, no matter how good or bad.

We’d all be wise to follow their example. The monthly jobs figures are important — they’re the one economic indicator we regularly cover — but it’s important to keep them in perspective.

 

RealClearPolitics' Robert Samuelson also gets in on the discussion of the Fed and wage stagnation:

To judge whether inflationary pressures are building, many economists look at trends in wages and fringe benefits. Higher labor costs, it's assumed, are passed on to consumers. So increases in labor-costs are considered a reliable precursor of broader inflationary pressures that the Fed should counteract. Otherwise, the economy could fall into a destructive wage-price spiral, as it did in the late 1960s and '70s. (From 1965 to 1980, annual increases in consumer prices jumped from 1.6 percent to 13.5 percent.)

But there's also a downside to squelching an incipient wage-price spiral. It implies that, if the economic recovery continues, workers will have a hard time getting "real" (inflation-adjusted) wage increases, because the Fed will move to slow the economy -- and wage gains -- before they become widespread.

It all seems logical, if perverse.

But the logic has a big flaw: The connection between higher wages and higher prices has broken down. That's the conclusion of a new study by Fed economists Ekaterina Peneva and Jeremy Rudd. They examined the relationship between increases in labor costs and consumer prices from the 1960s until now. In recent years, there wasn't much. Or to be more precise, the connection was "statistically indistinguishable from zero."

Good news, some employers are changing their practices regarding scheduling but a New York Times editorial argues that is not far enough:

Gap follows Abercrombie & Fitch, Starbucks and Victoria’s Secret in promising to end on-call scheduling. It took strong public and regulatory pressure to get the companies to change, but change they have.

Unfortunately, unpredictable scheduling is still widespread. According to federal data, 66 percent of food service workers, 52 percent of retail workers and 40 percent of janitors and house cleaners have at most a week’s notice of their schedules.

On-call scheduling is but one of many dubious pay and scheduling practices. Workers who show up for a scheduled shift may be sent home without pay if business is slow. Schedules can fluctuate from week to week, making it hard to manage family life or calculate a budget.

In TalkPoverty, the Economic Policy Institute's Elise Gould and Alyssa Davis say a pro-worker agenda is the best policy for fighting poverty:

Except for a short period of across-the-board wage growth in the late 1990s, 2015 marks a general 36-year trend of broad-based wage stagnation and rising inequality in our country, which has had real adverse effects on low- and middle-income households. This anemic wage growth is closely tied to the stalled progress in reducing poverty since 1979, as many poor people work and their incomes are increasingly dependent upon work. Therefore, along with strengthening the safety net, the goals of anti-poverty advocates should be one in the same with pro-worker advocates: to reverse the decades-long trend of wage stagnation and promote real wage growth for all Americans. Despite dramatic gains in educational attainment, wages have failed to grow for those at the bottom (and middle) over the last four decades. At the same time, low income household incomes have become increasingly dependent on wages.

 


Hello, is it Poverty You're Looking for?

Over at the Chronicle of Philanthropy, Pablo Eisenberg looks at invisible white poverty and why philanthropy is not doing enough on the issue:

According to recent census data, 42 percent of the poor — some 18.9 million people — are non-Hispanic whites. They make up almost 10 percent of the country’s white population. Sixty-three percent of rural Americans who live below the poverty line, or more than 6 million people, are white. A little over one-third of the 13 million children who are members of impoverished families are white. Over half of the South’s population in poverty is white. And there are indications that poverty among whites is gradually increasing.

Deep-seated as the problem is, the reasons for philanthropy’s benign neglect are fairly clear: The situation reflects the national sense of insouciance about poverty among whites...

While many nonprofits represent minority constituencies, there are few organized groups, other than extremist right-wing hate organizations, that advocate for better conditions among the white poor.

Exacerbating the problem is the fact that most major foundations and wealthy donors are located in metropolitan areas and have little contact with people in rural areas.

Similarly in the Jacobin, Sanford Schram and Joe Soss examine how demonizing welfare recipients advances the agenda of the rich and powerful, particularly on race:

For years state lawmakers have piled on these sorts of rules, creating a great wave of prohibitions, with drug-based denials of aid the most popular ban of choice. Things have gotten so bad that in May the Huffington Post ran an article titled “Wisconsin GOP Advances Bills Controlling How People on Welfare Eat and Pee.” When The Onion lampooned the new rules with an August article titled “New Law Requires Welfare Recipients To Submit Sweat To Prove How Hard They’re Looking For Job,” the line between satire and news had never seemed thinner...

Now as in the past, elites have rolled out tales of a parasitic and undeserving poor to deflect public anger from themselves. Lazy and criminal “takers” who abuse the goodwill of hardworking taxpayers are offered up as a handy scapegoat for the new hard times and a ready explanation for fiscal shortfalls.

Deeply racialized stories of a threatening underclass captivate the public imagination, while on the periphery lobbyists and public officials rewrite policies and administrative procedures to redistribute wealth upward. The welfare queen and the street criminal are brandished to discredit progressive redistribution, pare back social protections, and justify ever-tougher modes of policing and social control.

The Nonprofit Quarterly's Richard Cohen doubles down on the demonizing sentiment in this round up of attacks on poor people:

The vituperative attacks on the War on Poverty sound a little gleeful or mean-spirited or nutty—sometimes all three. A quick review of recent press coverage would lead almost anyone to think that Head Start, Legal Services, community health centers, food stamps, ESEA Title I support for education, the Job Corps, and a host of other programs had no connection to the War on Poverty but materialized sui generis to provide vital services to the poor. To the contrary, these and an array of additional programs were conceived and started as components of the War on Poverty in the 1960s and somehow survived over the years despite attacks that started on Day One of the anti-poverty movement and never let up.

Meanwhile Heron's Clara Miller is featured in this TalkPoverty radio segment on philanthropy's role in the new economy alongside the Washington Post's Terrence McCoy talking about the bilking of lead poisoning victims and the Roosevelt Institute's Saqib Bhatti discussing the astronomical fees cities pay for financial services.

Speaking of McCoy, check out this chart in his article on companies that seem to be encouraging disabled folks who are the victims of lead paint and severe poverty to sell their structured settlements for pennies on the dollar:

The family had settled a lead-paint lawsuit against one Baltimore slumlord in 2007, granting Rose a monthly check of nearly $1,000, with yearly increases. Those payments were guaranteed for 35 years...

The reality, however, was substantially different. Rose sold everything to Access Funding — 420 monthly lead checks between 2017 and 2052. They amounted to a total of nearly $574,000 and had a present value of roughly $338,000.

In return, Access Funding paid her less than $63,000.

Over RealClearMarkets, Brookings' Richard Reeves discusses two approaches to fighting poverty:

There are two strategic approaches to tackling poverty. Strategy 1: raise the incomes of those with low incomes. Strategy 2: reduce the knock-on effects of having a low income on housing, schooling, safety, health or health care.

Strategy 1 policies attempt to reduce the number of people in income poverty, usually by transferring income directly. Strategy 2 policies try to blunt the impact of income poverty on overall quality of life. Strategy 1 anti-poverty policies are necessary, but far from sufficient. We must work harder on the Strategy 2 side, and make poverty matter less.

The motivation of Strategy 2 policies is to ‘decluster disadvantage,' to borrow a phrase from Jonathan Wolff and Avner de-Shalit, authors of Disadvantage. Inequalities will always exist on all dimensions; but these inequalities are amplified when they strongly overlap. Equality is impossible; but reducing the concatenation of inequalities is not.

‘A society of equals is a society in which disadvantages do not cluster, a society where there is no clear answer to the question of who is the worst off,' Wolff and de-Shalit argue. ‘To achieve this, governments need to give special attention to the way patterns of disadvantage form and persist, and to take steps to break up such clusters.'


Stuck on Your Impact

In this interesting piece in Boston Review, Elena Fagotto and Archon Fung look at the trials and tribulations of transparency in the digital corporate age:

The interesting question about transparency is not whether it is good or bad. Sometimes it works and sometimes it doesn’t. What matters is how to make it work better. Successful transparency policies exhibit several common features. First, they introduce information that is relevant to important decisions, for example, choices affecting one’s health, safety, or financial well-being. Second, that information comes in forms people can understand, such as a letter grade (A, B, C) or straightforward comparison (you used twice as much electricity as your efficient neighbor). Third, this new information relates to real choices people can actually make: this food, not that one; this doctor, bank, restaurant...

Transparency systems that help consumers and citizens usually harm some companies and governments, at least in the short term, by exposing hidden risks in their products, services, and behavior. Banks need to lower the fees they charge; restaurants need to make healthier food and clean up their kitchens; manufacturers have to produce safer vehicles; politicians have to serve their constituents at the expense of donor interests. So it is no surprise that disclosure initiatives are frequently met with intense opposition from those asked to undertake them.

You might be interested to know that a bunch of activists are petitioning B-Labs to have Etsy's B-corp status removed for signing up in an Irish tax haven:

Like many big multinational companies, Etsy uses an Irish subsidiary to manage its tax bill. Late last year, Etsy reorganized that Irish unit as an unlimited liability company. Under Irish law, that means it no longer has to make public the financial results of that subsidiary.

"We file our tax returns and pay our taxes in many states and countries, but we don’t publish those filings for everyone to read," Chad Dickerson, Etsy’s chief executive officer, wrote in a blog post.

Do underserved/working class neighborhoods need Uber? Check out this analysis from Mic.com:

But Uber distances itself from that picture of upper-class bourgeois lifestyle. An app can send a car to a far-flung neighborhood if need be, and for what it's worth, Uber will claim that prices are going to get lower and lower. The company regularly runs promotions and slashes prices. Uber also has a carpooling service, UberPool, that offers cheaper fares to riders who share.

But that comes at a cost. Right now, these lower fares are possible because Uber's drivers are contract employees who have to put up with sudden and drastic changes to the way they're paid, leaving them ducking for cover when Uber needs to slash fares in its war against competitor Lyft. And eventually, Uber wants to replace all of those workers with an invisible army of robot drivers.

The Foundation Center looks at giving to "philanthropic and nonprofit infrastructure."

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