Must Reads: You may be interested in this short review by the New York Times' Joe Nocera of the book, "Factory Man," a saga about one U.S. manufacturer's fight against the tide of globalization and how it affects workers. There are also two interesting place-based stories to read from Annie Lowrey. In New York Magazine, she reports on whether Connecticut's high inequality and slow growth mirrors wider U.S. problems, and earlier in the summer in the New York Times, she looked at eastern Kentucky, one of the poorest places in America. This Urban Institute report looks at the destabilizing nature of unemployment on families with children. Lastly, in the Washington Post, Felix G. Rohatyn and Peter C. Goldmark Jr. look at whether infrastructure programs can spur more U.S. economic growth.
Your editor hopes you in enjoyed the summer and long weekend and apologizes for the minor publishing delay. Let’s start with a cartoon from R.J. Matson:
We also have a quick history lesson on how Labor Day came to be a federal holiday—apparently it all began with the Pullman Railway strike in Chicago, reports the Huffington Post. What’s been happening post-Labor Day? In unintended homage to the Pullman strike of a century ago, fast food workers took to the streets again in multiple cities to demand a wage hike. Over at Business Insider, one McDonald's worker discusses why he is striking. In the midst of these battles, the Economic Policy Institute argues that across the board for most workers, wages have remained largely flat; check out this chart:
In another chart of note EPI finds that worker share of corporate income is at its lowest in 30 years:
The New York Times reports an increasing number of workers also accusing employers of wage theft. Meanwhile, FedEx watchers are still discussing a recent court ruling on the West Coast that says the company’s delivery drivers are employees and not “independent contractors” writes the New Republic’s Danny Vinik:
Employee misclassification costs workers a tremendous amount. They must purchase and maintain their own equipment. For the FedEx drivers, that meant purchasing or leasing the truck, furnishing it with company-approved equipment, and buying the proper uniform. In a traditional employer-employee relationship, the employer is generally responsible for all these costs. But under the independent contractor model, those costs are shifted to the worker. It doesn’t end there, either. Workers don’t receive any employment-related labor law protections, like rules governing the minimum wage and overtime pay. They aren’t eligible for health and retirement benefits. Employers don’t pay premiums for worker’s compensation or unemployment insurance. Unless they pay into those premiums themselves, independent contractors who lose their contract or are hurt on the job can’t collect unemployment insurance or worker’s comp.
And in similar news, a major exposé by McClatchy reporters finds builders may have skirted federal rules and taxes by also classifying ineligible workers as contractors. TIME's Dan Kedmey reports that one in three workers are now doing some kind of freelance work (about 34 percent), check out this chart:
All of these developments have people asking what's going on with unionizing these days? In Tennessee, the new Volkswagen plant will have an opt-in union that departs from traditional agreements because it will not represent all the plant's workers, reports Moshe Marvit over at In These Times:
With this experiment, Chattanooga may again become a harbinger of labor’s future. Members-only unionism may represent a new way for workers to organize, especially in so-called right-to-work states, where it could solve the “free rider” problem: Though workers in right-to-work states can opt out of paying union dues, the union must still represent them. However, a members-only union represents only those who join. To succeed, the local will need to work outside many of the protections of labor law, which will require unusual agility and creativity. To discuss the potential of minority unionism, In These Times talked with former UAW President Bob King, who retired in June, Catherine Fisk, a law professor at the University of California-Irvine and an expert on minority unionism, and Matthew Finkin, a professor of labor law at the University of Illinois School of Law.
Meanwhile, the New Republic's Jonathan Cohn asks labor strategist Rich Yeleson about the state of the labor movement. Yeselson says unions still have significant power in the public sector but are diminishing in the private sector:
A lot of people don’t realize that the decline has occurred all over the advanced capitalist world, even in countries with laws that protect and promote unions far more than in the U.S... But, yes, the United States is a special case. The peak of union density in the US following the Second World War was lower than in other wealthy democracies, and its trough is now lower, too (France actually has smaller percentage of union members than the US, but union contracts cover almost the entire workforce.). In no other advanced country is the entire political economy as relentlessly opposed to unionization as it is here. The U.S. has the most hostile anti-union management/ownership class, and corresponding conservative politicians and media to assist it, in the advanced world. The legal framework assumes that companies—the people who sign workers check—have a right to interfere with their right to choose a collective bargaining agent. Workers do not get a corresponding right in the United States to participate with management in investment decisions. Anti-union activity is flourishing billion dollar consulting business. Laws to fight it are toothless. Today, decades after the National Labor Relations Act became law, Republicans don't accept its basic legitimacy—and do everything they can to undermine the NLRB.
You might be interested in reading about another hohum jobs report released Friday, that the New York Times reports is mostly likely due to a decline in retail employment.
In the New York Times, Thomas Edsall looks at what makes Americans poor and why scholars can't come to consensus:
Despite the conflicting nature of these left and right analyses, there is a strong case to be made that they are, in fact, complementary and that they reinforce each other. What if we put it together this way? Automation, foreign competition and outsourcing lead to a decline in well-paying manufacturing jobs, which, in turn, leads to higher levels of unemployment and diminished upward mobility, which then leads to fewer marriages, a rise in the proportion of nonmarital births, increased withdrawal from the labor force, impermanent cohabitation and a consequent increase in dependence on government support. The major roadblock to synthesizing competing explanations has been — and continues to be — political polarization. Vested interests on the left and right have delayed, and in some cases prevented, recognition of the overlap between liberal and conservative hypotheses, and have pointedly ignored evidence that contradicts their preconceived partisan positions.
Over at Slate, Reihan Salam reports on how the urban suburbs became poor:
Before we can understand what makes some suburbs so miserable, we first have to understand what makes others succeed. The most successful suburban neighborhoods fall into two categories. First, there are the dense and walkable ones that, like the most successful urban neighborhoods, have town centers that give local residents easy access to retail and employment opportunities. These neighborhoods generally include a mix of single-family homes and apartment buildings, which allows for different kinds of families and adults at different stages of life to share in the same local amenities. The problem with these urban suburbs, as Christopher Leinberger recounts in his 2009 book The Option of Urbanism, is that there are so few of them, and this scarcity fuels the same kind of gentrification that is driving poor people out of successful cities... The other model for success can be found in sprawling suburban neighborhoods dominated by households with either the time or the resources to maintain single-family homes and to engage in civic life... There are many differences between these two models. But the most important one is that denser suburbs can accommodate family diversity relatively well while sprawling suburbs simply can’t. Living the low-density lifestyle requires that you either be rich in money or rich in time and skill.
Yes! Magazine's Dean Paton discusses ways in which we can end poverty and democratize wealth, and shares this infographic looking at a few decades of policy choices and how they affected inequality. And be sure to check out this video of Brookings' Richard Reeves using Legos to explain social mobility: http://youtu.be/t2XFh_tD2RA
Over at Entrepreneur, Robert Reuteman looks at corporate social responsibility, comparing so-called vice funds to social funds:
It's one thing to manage a vice fund that caters to contrarian individual investors, but the holy grail for mutual-fund managers is to tap into the $19.4 trillion U.S. retirement market, which includes annuities, individual retirement accounts (IRAs) and employee-sponsored 401(k)s. In their 2007 report "The Price of Sin: The Effects of Social Norms on Markets," Harrison Hong of Princeton University and Marcin Kacperczyk of the University of British Columbia state: "There is clearly a societal norm against funding operations that promote human vice, and consequently many investors may not want themselves or others to support these companies by investing in their stocks." Indeed, huge institutional investors with billions to spend--such as pension funds, universities, banks or insurance companies--aren't keen on adding holdings that feature the names "vice" or "sin," since their operations are transparent and open to public scrutiny.
You also may be interested in this piece in the Pioneer Post contemplating whether social enterprises should use more celebrity power to attract attention to their causes:
A study by Rutgers, the state university of New Jersey in the US, found that athletes, film stars and newscasters were associated with the largest increase in public donations to 500 US charities and not-for-profit-organizations. It also concluded that relationships with celebrities allowed non-profit organizations to allocate more resources to service missions, rather than fundraising campaigns. Relationship crises between charities and celebrities tell us that social entrepreneurs should be wary of using a celebrity without strategy, and should always take potential communication risks into account. But evidence to date shows when used wisely politicians and celebrities alike are a powerful force for engaging audiences, boosting credibility and raising funds.
Would having more female investment professionals change Wall Street? Bloomberg View's Seema Higorani says doing so just might:
Terrance Odean and Brad Barber, University of California professors, also found that men trade more frequently, which can lower performance, especially when transaction costs are counted. LouAnn Lofton, the author of "Warren Buffett Invests Like a Girl: And Why You Should, Too," identified eight traits that women investors share with Buffett, including that they do more research, trade less frequently and take on less risk than men. None of this means that one gender invests more wisely than the other. Yet it seems reasonable to conclude that gender differences can enhance long-term investing success. As it turns out, the misperceptions that dissuade investment managers from hiring women provide the strongest argument to employ them: Diversity of thought, investment strategy, investment instrument and asset class can help maximize risk-adjusted returns. It’s not just good social policy; it’s also sound investment strategy.
Missed this year's Social Capital Markets convening, no worries you can find a playlist of videos here on YouTube.
You also may be interested in this Brookings report on "foreign-owned establishments" and what they have to do with jobs. There is also this U.S. Conference of Mayors' report on metro economies and wage gaps.