In this issue: investing in manufacturing and retail; democracy and poverty in America; and the rise of philanthropy as the government falters.
It isn't Labor Day but it is worth reflecting on some bits of good news for the least paid in America. First, in this Work in Progress podcast on the future of work, LinkedIn's Caroline Fairchild and Chip Cuttery looks at why Walmart is investing in higher wages, education and training for employees at a time when retail seems to be in a downward spiral.
You also might be interested in this Atlantic piece on why the death of U.S. manufacturing is exaggerated: "While manufacturing’s share of the U.S. economy has declined, it still draws more than a third of foreign direct investment in the country, and foreign companies still employ nearly 1 in 5 people in manufacturing jobs." In another future of work series over at Quartz, Sara Kessler interviews Ryan Avent on his book, The Wealth of Humans, and why education will not save your job from robots:
Not all of the new jobs that are being created will require an advanced degree in computer science. But my view is, the number of jobs that falls into [the category manufacturers describe] is actually fairly small. We’re talking about thousands, maybe tens of thousands, maybe a little more, but we’re not talking about millions and tens of millions of jobs. Whereas when we’re talking about job losses in retail or transportation we are talking about millions and tens of millions of jobs.
The other thing that people talk about when they talk about the future of work are care jobs. It is true that humans are well-suited to do those jobs in some cases, but I think in fewer cases than people think. A lot of people think as therapy, for instance, as something that only a human could do. But that’s not necessarily true...so I’m not sure there is going to be as much employment in healthcare as people think. The other thing is that the more employment growth there is in healthcare, the more it means we’re not getting productivity increases in healthcare that would make it cheaper and more accessible. And that would be bad. Ultimately we want to have people get affordable healthcare. And part of what that entails is reducing how labor intensive it is.
There is a new farm labor union in the Pacific Northwest reports David Beacon in American Prospect, after one farm facing a U.S. worker strike tried to abuse the visa process and hire in Mexico:
Primary among the union's gains in this new contract is the re-establishment, in effect, of the piece-rate system Torres designed four years earlier. Three workers chosen by the union will go into a field to make a “test pick” before the work starts. Depending on the amount of fruit and field conditions, a piece-rate price is then set so that an average worker can make the equivalent of at least $15 per hour. All workers are guaranteed a $12 hourly minimum...In addition, the contract contains other protections for workers. One provision requires a just cause for any discipline—a sensitive issue given the firings that took place during the four-year campaign. Eight union representatives will be able to represent members in grievances. A seniority system will ensure that workers doing the work this year will be able to return in following years. The contract will last two years, and a labor-management committee will try to draft a retirement plan for workers by the end of that period.
In more news from the region, Fast Company takes a look at Seattle minimum wage hike and finds that early data shows the critics are wrong about it being a job killer:
Allegretto says, throw some water on the traditional Economics 101 scenario of supply and demand that’s often used to caution against minimum-wage increases. “That idea implies that in a perfectly competitive market, when you increase the price of a good (in this case, labor), demand goes down,” Allegretto says. “But the low-wage labor market is not a perfectly competitive market; it’s much more complex than that.” The fact that large firms like Wal-Mart have recently started paying their employees more without initiating layoffs attests, Allegretto says, to the fact that they were likely setting wages below what the workers were rightfully earning.
Contrary to the simple supply-and-demand theory, higher minimum wages, Allegretto says, may end up saving companies money in the long run. “We know that turnover decreases when you increase minimum wages,” she says. “If companies invest more in their workers, the workers are going to be more satisfied. In industries like the restaurant industry, where the turnover rate is sometimes above 100% in a year, that’s a lot of money to spend on recruiting and training and re-recruiting constantly,” Allegretto says.
But over at the New York Times some find that the jury is still out on what is going on in Seattle and whether this trend is being driven by the minimum wage or general labor market forces. Also did you know that just 35 percent of American teens are taking summer jobs down from 60 percent four decades ago? In TIME, Kari Vick looks at the labor market and demographic forces at play in the decline of the summer job. "The BLS reports that, in a societal shift as slow (and as relentless) as the movement of tectonic plates, less affluent older workers are indeed delaying retirement and taking part-time jobs in fields, like food preparation, where teens are now working less. But the same market forces that require some to keep thinking about work later in life compels their grandchildren to begin thinking about it earlier and earlier."
Seems the Pacific Northwest is going to get all the love this week as we top this section off with a look at region air carrier Horizon Air, which recently canceled 300+ flights for lack of pilots. Slate's Daniel Gross argues pilot shortages of pilots is about economics and not people:
Flying these routes isn’t some ancillary or side business for Horizon. It’s the only business it is in. Canceling flights is damaging to your brand and your company’s long-term prospects—it alienates and annoys customers who have already purchased tickets. And it’s damaging to your short-term profits...Horizon and other companies in this situation are paying the price for a decade or more of corporate pathology surrounding wages. Labor is a commodity. It’s why we call it a labor market. When labor is in abundant supply, when lots of people with the requisite skills are looking for jobs and openings are few, you don’t have to pay as much to fill positions. That’s the world looked like from 2008 to 2012. But when labor is in short supply, when few people with the requisite skills are seeking work and there are lots of openings, you have to pay a lot more. That’s what the world has looked like for the last few years.
But many businesses seem blind to the reality. They’ve become accustomed to thinking they have can have all the labor they want, with all the skills they need, without having to pay much for it or offer long-term job security or help fund the training.
As we celebrate the July Fourth holiday, it is worth reflecting on the state of American democracy. Over at the Atlantic, we has a looked at recent polling by a democracy-watchdog groups on how well the country is meeting its ideals:
Most respondents agreed, for instance, that the U.S. government met democratic standards for protecting the right to protest, preventing electoral fraud, deterring political violence, and not interfering with the press. But most disagreed that the U.S. met standards for granting citizens an equal opportunity to vote, stopping officials from exploiting their public office for private gain, and conducting politics and formulating policy based on a common acceptance of basic facts or expert consensus.
Your editor is particularly interested in the part about preventing voter fraud since such efforts seems to always disproportionately effect low-income communities and communities of color as the Washington Post reported last year: "In 2012, a federal court in Washington concluded that the burden of obtaining a state voter-ID certificate would weigh disproportionately on minorities living in poverty, with many having to travel as much as 200 to 250 miles round trip." In TIME, Delaware Sen. Chris Coons and the Brenan Center for Justice's Nicole Austin Hillery wrote that voter ID laws and other so-called safeguards represent a threat to democracy:
[T]oo many Americans don’t realize that 10% of Americans who are fully eligible to vote don’t have the right form of identification to satisfy new voter ID laws. They may not appreciate how difficult it can be to take time off work to vote on Election Day or get a legally acceptable form of ID. They don’t notice that DMVs and early-voting places have been closed only in certain neighborhoods, disproportionately impacting communities of color. They don’t understand why discriminatory voting laws wouldn’t just be struck down by the courts. They don’t realize that after Shelby County, even the most egregious laws often aren’t blocked until after an election, when the damage has already been done.
Too many Americans don’t realize that voter suppression works, and that it has a cumulative, destructive effect on democracy.
Such gaps in access to a political voice helps fuel lawmakers decisions such as the Senate's plan to cut Medicaid by 35 percent over the next decade. Also on the GOP congressional agenda is the return of "welfare reform", reports Vox's Tara Golshan:
Rep. Jim Jordan (R-OH) has proposed reforms to TANF and SNAP that could cut upward of $214 billion, according to estimations by the conservative group Heritage Foundation, by harshening eligibility requirements to receive food aid and temporary assistance, adding additional layers of work requirements, and increasing the burden on impoverished families. The Heritage Foundation has also thrown its support behind Rep. Garret Graves’s (R-LA) bill, which would also expand work requirements.
Their demands would reduce government aid for the poorest Americans, in order to help fund tax cuts that are projected to primarily benefit the very rich. If this proposal goes through, fewer people would receive benefits, and not necessarily because they don’t need them...There is strong evidence that SNAP reduces food insecurity and improves health outcomes, especially among children, who make up the majority of SNAP beneficiaries. But the evidence from randomized studies of work requirements shows that they have little or no effect on poverty — and leave many people who aren't induced to work without a safety net.
Also in the Atlantic, Yoni Applebaum takes another look at whether modern philanthropy is at odds with democracy as argued recently by Rob Reich at the Aspen Institute of Ideas Festival:
It’s a genuine dilemma. At its worst, big philanthropy represents less an exercise of individual freedom, Reich said, than a tax-subsidized means of taking private profit and converting it into public power. And he argued that big foundations possess the leverage to bend policy in their favored direction in a coercive manner, pointing to the example of the Gates Foundation’s funding of educational reform...If large foundations are a threat to democracy, then, is there a way to reform them short of abolishing them altogether? Reich said yes, arguing for turning “the apparent vice of unaccountability” into a virtue. Philanthropies operate over longer time horizons than either government or private business. At their best, Reich said, they can serve as “an extra-governmental form of democratic experimentalism,” piloting risky or unproven policies, testing them, then presenting them to the public “for a stamp of democratic legitimacy.” It’s only this sort of bold experimentation, Reich argued, that can ultimately justify the array of benefits and protections big philanthropy enjoys.
With the rise of philanthropic stars such as Bill Gates and Jeff Bezos we have an additional pair of stories on this issue. Over at Quartz, Ted Lechterman also looks at the tension between democracy and philanthropy:
The term “philanthropopulism” first surfaced a decade ago, as big donors sought new ways to make their giving more effective. Now, emerging research on the wisdom of crowds shows that large numbers of minds often make better decisions than small numbers of experts. Perhaps, well-designed procedures for involving the public in giving decisions could help improve the quality of the gifts.
That might also help to respond to critics like Stan Katz, a historian who worries that today’s biggest donors are betraying the principles of American democracy. The ideal of democracy requires that everyone enjoy equal opportunities to influence matters of public concern. But as private wealth finances a widening array of public functions, and inequality proliferates, ordinary people are losing more and more control over their common affairs.
And last month in the New York Times, Inside Philanthropy's David Callahan looked at the ways in which government is faltering as philanthropy booms:
It’s not just their money that makes the givers so powerful in public life; it’s also their nimbleness. Answering to neither voters nor shareholders, philanthropists and foundations can move boldly. This freedom sounds like a good thing, and often is. But it can produce actions disruptive to communities, as we saw in Newark, where donors led by Mark Zuckerberg backed a school reform effort that lacked local support. When things go wrong with big philanthropy, citizens have little recourse. The givers are accountable to no one.
Most Americans have yet to consider what the power shift away from government means for United States democracy. When people think of philanthropy, they tend to imagine giving for museums or hospitals. Yet today’s biggest donors aren’t much interested in such old-style charity, aiming instead to make “systemic” changes in society.