Sherry Linkon and John Russo: Classing the Resistance [feedly]

Let me say: I love Sherry Linkon, and her persistence in sticking to CLASS as the most important IDENTITY that, once understood, links all struggles for progress. Those who do the work of the world should be more united.

Check out Sherry's other recent studies breaking down the working class components of voting data in recent elections.

Classing the Resistance

Sherry Linkon and JOhn Russo

https://workingclassstudies.wordpress.com/2017/04/03/classing-the-resistance/

One of the founding goals of new working-class studies was to counter the tendency for academic and political discussions to downplay class in favor of other aspects of identity and inequality. Most critical and public attention to cultural identity and social justice has organized around race, gender, and/or sexuality, and that has generated resentment from many white working-class people who feel that their struggles have been ignored. As a result, many have rejected social movements and political positions that they see as excluding them. And as we saw last year, some have been drawn to populist politics that emphasize economic struggle, including those that displace blame onto women, immigrants, and people of color.

As the resistance movement grows today in the US, will its organizers repeat the mistake of downplaying economic injustice? In the first few months of 2017, an energetic and multi-pronged resistance has emerged across the U.S. (and around the world), from inauguration day protests to the multiple versions of the Women's March the next day,and continuing with spontaneous protests at airports after the travel ban was announced to a continuing round of marches and rallies focused on immigration, defending the Affordable Care Act, women's rights.  Over the next few months, more are planned, including a "Trump Taxes March" (April 15), a "March for Science" (April 22), the People's Climate Change March (April 29), an "Immigrants' March" (May 6), and the annual Pride march (June 11).  During the February Congressional recess, we also saw many more local actions, especially at legislators' town hall meetings, where senators and representatives were challenged by constituents to defend their support for Trump's nominees and implored to preserve Obamacare, among other things.

With a few notable exceptions, however, the resistance has not (yet) emphasized class or economic justice.  Yes, calls for Trump to release his tax returns reflect concerns about inequality and about social welfare for the wealthy, but the debate has been shaped just as much by a sense that Trump is a habitual liar who may have misrepresented his economic success and/or gamed the system in ways that reflect badly on his character. Similarly, responses to the travel ban could have been framed in economic terms, highlighting the low wages so many immigrants earn or their vulnerability to wage theft, but most of that discussion has emphasized religious diversity and the American tradition of welcoming outsiders. Many of the other important issues that have been raised since January — from opposition to sexism and xenophobia at the Women's March to anxieties about whether Russia manipulated the election or consulted inappropriately with Trump's transition team to the more generalized (but significant) concerns about whether and how a Trump/Republican administration could undermine democracy itself — reflect legitimate concerns that largely ignore economic justice.

The most significant attention to economic justice surfaced in response to Republican efforts to overturn Obamacare, though the bill went down less because of resistance from the left than due to internal debates among conservatives about whether the new bill went far enough in overturning the ACA. Still, debate over that bill, in Congress and in the media, drew attention to its inherent economic injustice, especially its redistribution of wealth by cutting support for poorer people and granting the wealthy a significant tax cut.

The failure of that bill also represents the first major rift between the President and Congressional Republicans. On most other issues, Republicans have seemed willing to go along with their president's policies, despite hundreds of thousands of calls, postcards, and visits from constituents (for a good, but troubling discussion of the effectiveness of contacting your legislator as a tactic for resistance, see Kathryn Schulz's  recent essay in the New Yorker).  At the same time, some state legislatures are actively pursuing anti-democratic policies to undermine the resistance, such as the law passed by Republicans in North Carolina to circumvent that state's new Democratic governor's power, or the spate of laws that have been proposed to curb protests.

Despite Republicans' failure to overturn Obamacare, which had some on the left feeling at least a bit less anxious, the resistance faces a long, tough series of battles. We cannot rely on protests or contact-your-representative campaigns to stop the conservative tide. We need to elect enough Democrats to Congress in 2018 to block the Republican agenda.  That will be difficult in any case, but it will be even harder if the Democrats don't address economic inequality more directly.

Many assume — wrongly — that white working-class voters made a sudden sharp turn to the right last year, but that shift began decades ago, and white working-class voters have long favored the Republicans. Working-class voters' doubts about the Democratic Party's commitment to economic justice has a long history, dating back at least to Bill Clinton's support for NAFTA, welfare reform, and the war on drugs. Under Obama, and in part because of his role as the nation's first black president, the party has focused on building a coalition focused on social justice. We applaud efforts to build support for gay marriage and transgender rights, to end mass incarceration and police violence, and to support immigrants and refugees.  These should be central to Democratic politics.  But so should economic justice.

We can't ignore the appeal of populist, economically-focused politics (on both the right and the left, both Trump and Sanders). As Frank Rich wrote recently in New York magazine, Democrats will probably never win support of the "silent majority" portion of the working class, people who moved to the right inspired by the Republicans' southern strategy, which appealed to racial rather than class identities. But, as Jack Metzgar has explained, many white working-class voters could be drawn back to the left – maybe even enough to overcome Republican gerrymandering and undermining of voting rights.

Put simply, Democrats cannot win without more a forceful, strategic economic platform. As we have argued about the academic study of class, in political life we don't have to choose between "diversity" and "labor" – even in reaching out to straight white men.  The Party also needs to remember that economic anxieties are not limited to those who have been left behind by deindustrialization or the very partial recovery from the Great Recession.  Many in the middle class share those anxieties, especially as they look to their children's futures. After all, exit polls show that Trump won (albeit narrowly) in all of the higher income groups, from those earning $50,000 a year on up. Democrats need to more directly address the real economic losses and anxieties of both the working class and the large segments of the middle class who feel vulnerable in today's economy.

To make that happen, we need a resistance movement that also puts class and economic injustice at the center. The precarity of many contemporary jobs, wage stagnation and declining benefits, workplace injuries and exploitation, and the undermining of laws protecting workers all deserve more attention. Two examples from this year's resistance movements show what this might look like. February's "A Day Without Immigrants"highlighted the centrality of immigrant workers in the US economy (though the strike also reminded us of their economic precarity). The People's Climate March, coming up later this month, bills itself as focused on "climate, jobs, and justice." As these efforts suggest, resistance can be classed.

Sherry Linkon and John Russo, Kalmanovitz Initiative for Labor and the Working Poor

 -- via my feedly newsfeed

Laura Tyson: The Truth About NAFTA [feedly]

The Truth About NAFTA

Laura Tyson (fmr Chair of Obamas council of Econ advisors)

https://www.project-syndicate.org/commentary/trump-mexico-renegotiate-nafta-by-laura-tyson-2017-04

BERKELEY – As US President Donald Trump receives bids to build his supposed "beautiful wall" along the border with Mexico, his administration is also poised to build some figurative walls with America's southern neighbor, by renegotiating the North American Free Trade Agreement. Before US officials move forward, they would do well to recognize some basic facts.

Trump has called NAFTA the "single worst trade deal" ever approved by the United States, claiming that it has led to "terrible losses" of manufacturing production and jobs. But none of this is supported by the evidence. Even NAFTA skeptics have concluded that its negative effects on net US manufacturing employment have been small to non-existent.

After NAFTA's passage in 1994, trade between the US and Mexico grew rapidly. America's merchandise trade balance with Mexico went from a small surplus to a deficit that peaked in 2007, at $74 billion, and is estimated to have been around $60 billion in 2016. But, even as the US trade deficit with Mexico has grown in nominal terms, it has declined relative to total US trade and as a share of US GDP (from a peak of 1.2% in 1986 to less than 0.2% in 2015).Trump may prefer not to focus on facts, but it is useful to begin with a few. Bilateral trade between the US and Mexico amounts to over $500 billion per year. The US is by far Mexico's largest trading partner in merchandise – about 80% of its goods exports go to the US – while Mexico is America's third-largest trading partner (after Canada and China).

Perhaps more important, the US and Mexico aren't just exchanging finished goods. Rather, much of their bilateral trade occurs within supply chains, with companies in each country adding value at different points in the production process. The US and Mexico are not just trading goods with each other; they are producing goods with each other.

In 2014, Mexico imported $136 billion of intermediate goods from the US, and the US imported $132 billion of intermediate goods from Mexico. More than two-thirds of US imports from Mexico were inputs used in further processing – cost-efficient inputs that boost US production and employment, and enhance the competitiveness of US companies in global markets. Goods often move across the US-Mexico border numerous times before they are ready for final sale in Mexico, the US, or elsewhere.

When cross-border trade flows are occurring largely within supply chains, traditional export and import statistics are misleading. The auto industry illustrates the point. Automobiles are the largest export from Mexico to the US – so large, in fact, that if trade in this sector were excluded, the US trade deficit with Mexico would disappear.

But standard trade figures attribute to Mexico the full value of a car exported to the US, even when that value includes components produced in the US and exported to Mexico. According to a recent estimate, 40% of the value added to the final goods that the US imports from Mexico come from the US; Mexico contributes 30-40% of that value; the remainder is provided by foreign suppliers.

When the value-added breakdown is taken into account, the US-Mexico trade balance changes drastically. According to OECD and World Trade Organization calculations, the US value-added trade deficit with Mexico in 2009 was only about half the size of the trade deficit measured by conventional methods.

Trump claims that high tariffs on imports from Mexico would encourage US companies to keep production and jobs in the US. But such tariffs, not to mention the border adjustment tax that Congress is considering, would disrupt cross-border supply chains, reducing both US exports of intermediate products to Mexico and Mexican exports – containing sizable US value-added – to the US and other markets.

That would raise the prices of products relying on inputs from Mexico, undermining the competitiveness of the US companies. Even if supply chains were ultimately reconfigured, the US and Mexico would incur large costs – to both production and employment – during the transition period.

Imports from Mexico support US jobs in three ways: by creating a market for US exports; by providing competitively priced inputs for US production; and by lowering prices of goods for US consumers, who then can spend more on other US-produced goods and services. A recent study estimates that nearly five million jobs in the US currently depend on trade with Mexico.

Given all of this, it is good news that Trump has lately toned down threats to withdraw the US from NAFTA and to impose large unilateral tariffs on Mexican imports (his position on the border adjustment tax is unclear). Instead, in a draft proposal to Congress, his trade officials are calling for flexibility within NAFTA to reinstate tariffs as temporary "safeguard" mechanisms to protect US industries from import surges.

The Trump administration also wants to strengthen NAFTA's rules of origin. As an illustration, current rules dictate that only 62.5% of a car's content must originate within a NAFTA country to qualify for a zero tariff. That has made Mexico an attractive location for assembling Asian-produced content into final manufactured goods for sale in the US or Canada.

If the Trump administration succeeds in raising the share of content that must be produced within NAFTA to qualify for zero tariffs, both the US and Mexico could "reclaim" parts of the manufacturing supply chain that have been lost to foreign suppliers. Stricter rules of origin could also boost investment by these suppliers in production and employment in both Mexico and the US.

The Trump administration's draft outline for NAFTA renegotiation also sets objectives for stronger labor and environmental standards – important priorities for Congressional Democrats who share the president's opposition to the current agreement. Stronger standards could create benefits for all of NAFTA's partners; but with the Trump administration actively dismantling labor and environmental protections at home, a US-led effort to strengthen them within NAFTA in any meaningful way seems farfetched. Perhaps Canada will take the lead. 

Uncertainty over the fate of NAFTA has already hit the Mexican economy. It has also weakened the position of the reformist and pro-market President Enrique Peña Nieto, just over a year before the general election in Mexico. This may aid the rise of right-wing populists riding the wave of anti-Trump nationalism.

A strong, stable Mexican economy, led by a government committed to working with the US, is clearly in America's interests. Trump would be well advised to work quickly to ensure that the NAFTA renegotiations he has demanded generate this outcome.

 -- via my feedly newsfeed

Econospeak: Fascism And You Know Who (YKW) [feedly]

Fascism And You Know Who (YKW)

JB Rosser

http://econospeak.blogspot.com/2017/04/fascism-and-you-know-who-ykw.html

[from when the Italian Fascist government was 'but a few years old"]

"The Secretary of the Fascist Party visits a large factory, accompanied byt the obsequious company director.  At the end of the tour all the workers are massed in the yard to listen to a speech. Before addressing them the Fascist chief looks them over proudly from his podium and asks the director: 'What are these people's politics?' The director answers: "One-third of them are Communist, one-third Socialist, and the rest belong to several small parties.' The Fascist's face turned livid. 'What?" he cries, 'And how many of them are Fascist?'  The director reassures him quickly: "All of them, Your Excellency, all of them.'"

Luigi Barzini, The Italians, 1965, pp. 225-226.

I shall simply list a bunch of characteristics associated with fascism and see how YKW (He Of Whom We Cannot Speak) fits as of now, an ongoing situation as it were.  So my list would include extreme nationalism, militarism, racism, sexism (and homophobia), left-right populism ultimately going right, mixed relations with organized religion, building infrastructure, control of arts, megalomania, dictatorship, and suppression of human rights.

1. Extreme nationalism.  YKW seems to fit the bill here. Totally.

2. Militarism.  It would seem that he does here too, proposing a $54 billion increase in the military budget even as he proposes slashing most other parts of the budget to the point of eliminating completely some agencies.  OTOH, he claimed to be anti-Iraq war (although he supported it initially) and campaigned on how he would pull US out of Middle East conflicts. So far looks  like he is going the other way, sending more troops to Syria, Iraq, and Afghanistan, if not yet going off the deep end, although making loud noises towards North Korea, and China, if not Russia.  Also, OTOH, he has never served in the military personally, indeed got out of Vietnam War service due to an obviously phony claim about some foot spur that just disappeared conveniently.  He does not himself seem into wearing military uniforms and strutting about like Mussolini and some others have done.  But he has also  appointed more generals to high positions in his administration than we have ever seen in US history, and weirdly enough many of us are counting on them to be Voices Of Reason in this completely wacko and incompetent administration.

3. Racism.  His dad was arrested in a KKK demo back in the 20s or thereabouts, and among Trump's first business activities were managing housing complexes that were convicted of racial discrimination, not just once but twice.  His whole history stinks of racism, although it looks like he is more anti-Hispanic and Mexican in particular than anti-black, although the family KKK history is certainly the latter.  I mean he does keep Ben Carson around a few other friendly African-Americans, but Hispanics of any sort are very hard to find in this admin, and his anti-Mexican screeds, attitudes, and policies seem deep-died, with his ridiculous campaign to "build that wall" one of the few things he seems to be really set on, although he may yet not be able to get funding for it from Congress.

4. Sexism (and Homphobia).  Well, quite aside from all his notorious "grab..." quotes and wandering through the dressing rooms to see scantily clad teenage girls during some of the events he has hosted over the years, and despite some token stuff about child care that favored daughter Ivanka managed to talk him into (not likely to go anywhere in current Congress), he seems to be playing into current views on Planned Parenthood  and so on of the current GOP.  On LGBTQ he has played a bit of a mixed game, again with perhaps Ivanka and Jared trying to hold him back as well as the fact that obviously all those years in NYC and show biz has left him with many gay acquaintances, he seems in the end to  siding with the traditional GOP conservative view, even if  the Log Cabin Republicans supposedly find some things to like about him.  Anyway, very sexist, although not pushing a fully classic kinder, kirche, kuche line (a kkk rather than a KKK).

5. Left-Right Populism Ultimately Going Right.  Yes, this is certainly a forte of his, dragging those poor sucker coal miners to stand with him while he trashes environmental policies when we all know that there will be no new coal jobs in the US probably ever simply due to market forces, definitely reinforced by his anti-enviro policies, especially not slowing fracking, which is what  has given us cheap natural gas, which has become the death knell for the coal industry.

The other aspect of this is of course the trade issue, and certainly on this we have portions of the old midwest manufacturing working class that he is appealing to and has made moves to please, at least with his withdrawal from TPP, even if  other moves to protectionism are floundering in his ongoing incompetence.  Will there be a major restructuring of NAFTA?  Will there be a trade war with China?  I don't know, but increasingly it looks like probably not, but who knows?

As for Going Right, well, traditional fascists tended to appoint their party hacks who came up through the ranks with lower class backgrounds (like Mussolini and Hitler themselves) and their cronies, who would go all corrupt once they got government positions.  But with spoiled brat YKW who would be wealthier by all reports if he had simply reinvested and sat on his inheritance, we have the biggest flood of full out billionaires into top positions we have ever seen, with many of them apparently amazingly incompetent on top of all their money (see DeVos).  Libertarians like to argue that the fascists and Nazis were socialists because, well, the fascists did nationalize some industries, and "Nazi" is short for "National Socialists," although the Nazis did not nationalize companies and were quick to make friends of big business such as I.G.Farben, even if big business had not been among their original supporters, who were,  well, little guy populist suckers, just like those supporting YKW.

5.  Mixed Relations With Organized Religion. For classical fascists this has largely meant the Roman Catholic Church, although in Germany Hitler had a stronger base in the Protestant rural North than in the Catholic South, even though his initial base was uber-conservative and Catholic Bavaria.  Mussolini was initially anti-Church, and the Nazis long pushed their pseudo-Wagnerian neo-paganism, even as Wagner himself ultimately went with the Church in his final opera, Parsifal. Certainly the softer fascists in Spain and Latin America have tended to side up with reactionary elements in the R.C. Church, and in the end Mussolini made peace with the Church in the 1929 Lateran treaties, aka "Concordat," that settled relations between the Church and the Italian state, a deal that still holds today (Barzini credits Mussolini with this, saying it is the one clearly good thing he did).

This is harder to call because Protestanism is more important in the US than Catholicism.  Like the old fascists it looks like YKW is really not very religious, if not openly anti-religious in the way Mussolini was for awhile.  But he has made peace with the US conservative religious establishment, with so-called Evangelicals among his strongest supporters in the election, as well as conservative elements in the Catholic Church, as well as Orthodox Jews.  He has clearly set himself up against the liberal Pope Francis, with his alt-right de facto fascist adviser, Steve Bannon, openly involved in an effort to combat the current pope.  So, he has allied himself pretty firmly with traditional religion.  No wonky neo-paganism for him.

6. Building Infrastructure.  Ah yes, a classic fascist fixation given their fixation on Ancient Rome, which did a good job with infrastructure.  On this YKW has talked a lot, although the rumbles have involved silly stuff such as tax breaks to private companies to privatize infrastructure.  Given his massive incompetence, for better or worse his talk about a big infrastructure program looks like it is going nowhere.  This is one area where maybe we would wish that he was more of a "good fascist" than he is.  I mean, Mussolini did make those trains run on time, more or less. Looks like YKW could care less.

7.  Control of Arts. Classical fascists would ban certain types of art and push certain other types that they viewed as building up the nation and state.  YKW has proposed simply eliminating funding for NEA, no more Big Bird, so it does not look like he is out to Control Art, although clearly he simply does not care about it all, major vulgarian that he is.

8. Megalomania.  Yep, like nationalism, this one YKW has in spades.  It  is All About Him.

9.  Dictatorship.  Thankfully this is  one area where he has run into  a brick wall thanks to the US constitution and judicial system, at least so far.  He obviously has fascistic tendencies and would really like to just be able to order people to do what he wants and have them do it. After all, this is a CEO view of the world.  The real question will be if he ends up pulling a Reichstag Fire routine and uses some incident, cooked up or  not, to declare martial law, and if he does so, will he get away with it. If he does, well, then we shall have the full monty fascism here in the US.  If he is held back by the courts, his incompetence, or whatever, well, for all his tendencies, we shall fortunately hold back from full out fascism.

10.. Suppression Of Human Rights.  This is obviously tied to the previous one as the really serious suppression of human rights that we saw in classical  fascism with death camps and all that came with dictatorship.  But even without that his racist-motivated anti-immigrant push has been one of the few things that he has seemed really into pursuing vigorously, even as he has run into road blocks from the courts on some of  his initiatives. But in terms of horrifying episodes happening since he became president, the worst have involved deportations and people being held trying to enter the country, including people with a full right to do  so.  YKW may not (yet) be a full blown fascist, but in this particular area his fascistic tendencies have probably shown their fullest and most egregoius manifestations.  Let us hope that it does not get worse.

Barkley Rosser

Addendum:

One point I missed is that of the economic policy labeled "corporatism," which both Mussolini and Hitler officially subscribed to.  Aspects of it were described above in the part about "left-right," but it should be commented on.  While both of them came from anti-clerical initial positions, corporatism as a term and a concept came from the Roman Catholic Church in the late 19th century in reaction to  the socialist movements of the time.  The idea was that the class conflict was to be overcome or subsumed in a national unity that would involve state-private interaction within the moral codes of the Church.  This implied that some bones should be thrown to  the workers, underlying the "left" part of the appeal, although in practice under fascism unions were suppressed as the state claimed to speak for the workers.  There was also much state interference in the private  sector, often to support national leading companies, but in some cases more directly,with Mussolini nationalizing some industries and Hitler through Hjalmar Schacht instituting command central planning, although firms remained privately owned, hence formally capitalist.


Another area where YKW does not resemble these  earlier leaders is that he is personally wealthy and out to add to that in office in violation of the emoluments clause of the constitution and in a way unprecedented in US history.  Thus he resembles more the recent buffoonish Italian leader, Silvio Berlusconi more  than the officially poor Mussolini and Hitler, even if they did have lavish lifestyles while in power.

 -- via my feedly newsfeed

EPI: False choice for workers—Flexibility or overtime pay [feedly]

False choice for workers—Flexibility or overtime pay
http://www.epi.org/publication/false-choice-for-workers-flexibility-or-overtime-pay/

The Working Families Flexibility Act (H.R. 1180), introduced February 16, 2017, by Rep. Martha Roby (R-Ala.), would further erode overtime protections for American workers. Millions of workers are working overtime but are not getting paid for it.1 This is, in part, the result of outdated overtime rules governing workers' eligibility for overtime pay. The erosion of overtime protections has led to workers earning less money while working longer hours, and has created a generally overworked middle class. The way to address this issue is to strengthen overtime protections—not, as H.R. 1180 does, create a new employer right to avoid paying workers overtime.

Background

The Fair Labor Standards Act (FLSA) requires employers to pay certain employees time-and-a-half (or 1.5 times) their regular pay rate for each hour of work per week beyond 40 hours. For nearly 80 years, this system has struck a successful balance by giving employers a way to get work done at a fair price while protecting employees' time with their families. Most hourly workers are guaranteed the right to overtime pay, while salaried workers' eligibility is based on their pay and the nature of their duties. Most salaried workers who earn less than $455 per week ($23,660 annually) are automatically eligible for overtime pay, regardless of their job duties. Salaried workers who earn $455 per week or more may be exempt from guaranteed overtime if their job duties fall into one of three categories: professional, administrative, or executive. The duties associated with these categories involve supervisory responsibilities or a high degree of control over their time and tasks because these exemptions from guaranteed overtime were intended to apply to only a small segment of workers who perform relatively high-level work with a salary that reflects this.

However, the salary threshold has been updated only once since the 1970s—in 2004, when it was set too low. As a result, the share of the salaried workforce that earns less than the threshold has shrunk significantly. Consider that in 1979 nearly 12 million salaried workers had overtime protections. But today, with a 50 percent larger workforce, only 3.5 million salaried workers are automatically protected.2 Workers who have lost overtime protection based on an outdated salary threshold have lost not only the right to be paid time-and-a-half for their overtime—they have lost the right to be paid for it at all. And now that overtime hours do not cost employers extra money, they are more likely to require workers to work longer hours. No wonder so many workers feel that they need "flexibility" to balance family responsibilities. Employers have no incentive not to require those workers to work extra hours.

Obama-era rule

The deterioration of overtime protections led to the promulgation of a Department of Labor rule to restore the salary threshold to a meaningful level. The rule—scheduled to take effect on December 1, 2016, but blocked by an injunction that is on appeal in the U.S. Court of Appeals for the Fifth Circuit—raised the threshold from $455 to $913 per week (or from $23,660 to $47,476 for a year-round worker). The rule would directly benefit a wide range of workers including 6.4 million women and 4.2 million parents.3

Working Families Flexibility Act

The Working Families Flexibility Act would amend the FLSA to allow private-sector employers to "compensate" hourly workers with compensatory time off in lieu of overtime pay. Contrary to proponents' claims, the bill does not create employee rights, it takes them away. It does create a new employer right—the right to delay paying any wages for overtime work for as long as 13 months. The legislation forces workers to compromise their paychecks for the possibility—but not the guarantee—that they will get time off from work when they need it.

Congressional Republicans have introduced versions of this legislation for the past 20 years:

• H.R. 1, the Working Families Flexibility Act of 1997, which sought to amend the FLSA to extend comp time to the private sector.
• H.R. 1119, the Family Time Flexibility Act, which proposed extending comp time to the private sector in 2003.
• H.R. 6025, the Family Friendly Workplace Act, a nearly identical comp-time bill introduced in 2008.
• H.R. 933, a reintroduction of the Family Friendly Workplace Act in 2009.

Despite the marketing, none of these bills would have resulted in greater flexibility for workers. Instead, they would have simply allowed employers to avoid paying overtime. Workers depend on the wage and overtime protections in the FLSA. They should not have to sacrifice earned wages to have flexibility.

FLSA already provides flexibility

The FLSA is the original family-friendly law. It permits a wide range of flexible work schedules. For example, under current law, public and private employers may choose to allow their workers to vary the start or end of their workday, including on an ad-hoc basis. Employers may also choose to permit employees to schedule four 10-hour days with one workday off, or arrange nine-hour workdays with a day off every other week. All of these arrangements are permissible under the FLSA. Employers can and should take advantage of the flexibility the current law already provides.

Perhaps most revealing, under the FLSA, an employer may pay an employee for overtime worked in a given week and then, to reward the employee for putting in extra time, may schedule future unpaid time off. The result would be that the total annual hours worked and income received would be the same as under Rep. Roby's comp time in lieu of overtime proposal, but workers would not have to wait for up to 13 months to be paid for the overtime hours. In other words, everything the comp time bill purports to provide for workers is actually available under the FLSA.

 The "flexible" arrangements of the comp time bill could be offered today, with no new employer rights, duties, paperwork, recordkeeping, causes of action, or oversight. 

The bill will reduce worker income

The Working Families Flexibility Act would result in less money in employees' paychecks, even when they do work overtime. Many employees rely on overtime pay to earn enough money to make ends meet every month—but this bill would allow employers to avoid paying overtime premiums when employees work extra hours, by giving them "comp time" to bank for future use instead. This means employees will still be working longer hours, but they will be receiving less in their paychecks at the time they work the longer hours. They will essentially be loaning their employer their overtime pay (at no interest) for as long as 13 months.

Under the legislation, an employee may decline to accept comp time in lieu of overtime. It follows that employers will assign overtime preferentially to those who accept comp time, thereby depriving the workers who need the extra cash of opportunities for overtime work. So, not only will the employees who receive comp time instead of overtime pay earn less, so will the employees who refuse comp time and insist on being paid overtime pay.

The bill would give employers—not employees—the right to control comp time

Nothing in the bill guarantees a worker that she will be able to use accrued comp time hours when she needs to access them. Under the legislation, an employer may deny a worker's request for comp time if it "unduly disrupts the operations of the employer." This broad standard for denying overtime provides employers with enormous control over employees' access to comp time.

Furthermore, because the bill provides inadequate penalties, there is little incentive for unscrupulous employers to provide meaningful access to comp time. (An employer is liable for only the wages owed as well as liquidated damages reduced by each hour of comp time used by the employee.) Instead of providing meaningful access to comp time, employers could simply assert undue disruption to their operations in response to a request for a comp time hour and deny a worker the requested time off and continue to avoid paying overtime wages. The bill does not require employers to pay employees interest on their comp time pay, which employees would receive if they put their overtime pay in the bank, so the employer gets to keep any interest earned on the wages held as well.

The bill would lead to unpredictable schedules for workers

• The comp time bill undermines the fundamental goal of the FLSA's overtime rules: to discourage employers from overworking employees by making it more expensive for them to do so.
• Allowing employers to give "comp time" cheapens the use of overtime since employers don't have to pay out overtime premiums when the work is actually done.
   Because this bill makes overtime work cheaper for the employer, employers will be more likely to schedule mandatory overtime more often. 
• The employer, not the employee, has the final say over when comp time can be used. Employers can deny an employee's request to use comp time hours if they feel it would "unduly disrupt" the employer's business. And employees are required to make a request in advance without any leeway in emergency situations. Accordingly, many employees will work a lot of overtime and find their leave banks full at the end of the year. If workers don't manage to use at least two-thirds of their banked comp time, they will actually have worked more hours during the year, not less.

Why comp time won't work in the private sector

Proponents of comp time in lieu of overtime pay argue that public-sector employees receive this benefit and it should be extended to private-sector workers. However, there is little information available on the use of and experience with comp time in state and local governments, making it impossible to determine whether workers are able to meaningfully access comp time under the system. Furthermore, there are important differences between the public-sector workforce and the private-sector workforce that make comp time riskier for private-sector workers. Public-sector workers can't be fired except for good cause, they have administrative appeal rights, and they have significantly higher rates of union representation. These considerations make them more likely to challenge an employer's decision denying them the use of comp time and less likely to be coerced into agreeing to comp time in lieu of overtime pay. And, while nothing in this legislation provides any guarantee that a worker will ever be able to take the comp time that she accrues when she needs it, private-sector workers also face a real danger of losing comp time accrued in the event of a business failure. According to the Small Business Administration, in 2013, over 400,000 small businesses closed.4 Nothing in the legislation provides workers whose employer goes out of business with a guarantee to receive payment for accrued comp time. The employer is not required to put sufficient money in escrow or to buy a bond to guarantee payment in case of closure or bankruptcy.

Conclusion

At no risk to the employee, the FLSA already allows an employer to grant time off to employees who work overtime. H.R. 1180 adds nothing but delay and risk to the employees' right to receive extra compensation when they work more than 40 hours in a week.

Endnotes

1. Ross Eisenbrey and Lawrence Mishel, The New Overtime Salary Threshold Would Directly Benefit 13.5 Million Workers, Economic Policy Institute report, August 2015.

2. Ross Eisenbrey, Testimony before the United States Senate Committee on Small Business and Entrepreneurship, May 11, 2016. Current statistics referred to are as of 2014.

3. Ross Eisenbrey and Will Kimball, The New Overtime Rule Will Directly Benefit 12.5 Million Working People, Economic Policy Institute report, May 2016.

4. U.S. Small Business Administration Office of Advocacy, "Frequently Asked Questions," June 2016.

 -- via my feedly newsfeed

House ACA Repeal Bill Would Be Largest Robin-Hood-in-Reverse Transfer in Modern U.S. History [feedly]

House ACA Repeal Bill Would Be Largest Robin-Hood-in-Reverse Transfer in Modern U.S. History
http://www.cbpp.org/blog/house-aca-repeal-bill-would-be-largest-robin-hood-in-reverse-transfer-in-modern-us-history

The Trump Administration and House Republicans are reportedly discussing a deal to revive the House GOP leadership's Affordable Care Act (ACA) repeal bill — the American Health Care Act.|

 -- via my feedly newsfeed

Stumblin and Mumblin: Wages and Productivity

Would higher wages boost economic growth? They might, if the marginal propensity to spend out of wages is higher than that out of profits. However, Ben Chu suggests a different mechanism – that higher wages might stimulate growth via the supply-side rather than demand-side:

Perhaps wage increases will prompt higher productivity in firms that employ low-wage labour. Perhaps, in order to protect their profit margins, managements will be spurred into increasing the efficiency of their operations. Perhaps they will invest in more capital equipment to enable their workforce to produce more per hour of their time. Think of a hand car wash installing automatic equipment but retaining the same amount of staff, retraining them to operate the new machinery, and doing more business. This would make minimum wage increases positive for productivity.

Those words "doing more business" are important. Higher wages alone might merely induce capital-labour substitution, leading to unemployment rather than higher output. Which is why Ben is right to say higher wages must be accompanied by fiscal stimulus.

In this, he's echoing Verdoorn's law. This says that faster GDP growth is usually accompanied by faster productivity growth.

I'd like to believe this. But I'm not sure I do. For one thing, whilst the Bank of England research Ben cites finds that higher wages can lead to higher productivity, this is the case for only a minority of industries. And for another, Verdoorn's law hasn't been so strong recently. My chart shows that whilst there was a massive correlation between GDP growth and productivity from the 50s to the 80s, it hasn't been so strong lately; productivity has been weak even relative to GDP.

This draws our attention to the possibility that there are several things that might throw sand into the wheels of the mechanism whereby higher wages might raise productivity, for example:

 - Uncertainty. If the car wash business is to invest in a new machine, it must be confident that the boost to demand will last. This requires something more than just looser policy – be it a looser inflation target, commitment to future easing or whatever.

 - Management quality. Do bosses have the skill to introduce new technology well? Bloom and Van Reenen have shown (pdf) that there's a "long tail of badly managed firms" – but it is in these where productivity is lowest.

 - The fear of future competition. I suspect that one reason why capital spending has been low is that firms fear that their investments will be undercut by future, cheaper ones by their rivals: it's the second mouse that gets the cheese. It's not clear that fiscal stimulus will allay these fears.

 - Credit constraints. Another reason for low investment is that firms don't trust banks to keep credit lines open in future. Again, fiscal policy doesn't address this.

 - Weak profits. The hand car wash is probably only just getting by, and so lacks the means and motive to buy fancy kit. The care home sector, for example, is already teetering: why should it respond to higher minimum wages by increasing capital spending?

Now, I don't say this to dismiss Ben's idea entirely. Given that the Phillips curve is, to say the least, ill-defined in the UK, the cost of experimenting with fiscal loosening is perhaps low. And even if actual productive capacity isn't terribly cyclical, estimates of it might be - and they are worth having even if we don't get a renaissance in productivity. Erring on the side of loose policy seems to me to be better than erring on the side of tight.

The issue here is much bigger than it might seem. The question is: is capitalism cooperative or conflictual? Are the interests of workers compatible with those of capitalists or not? It's this that divides social democrats from Marxists. Historically, the answer has been sometimes yes and sometimes no. I'm not sure which it is today, but I'd like to find out so I'd like to see Ben's suggestion tested.

--

John Case
Harpers Ferry, WV

The Winners and Losers Radio Show

7-9 AM Weekdays, The EPIC Radio Player Stream, 

Sign UP HERE to get the Weekly Program Notes.

Check out Socialist Economics, the EPIC Radio website, and 

The Poets and Mechanics Quaker Worship Group

EPI: Trump administration trade policy review misses the big picture [feedly]

Trump administration trade policy review misses the big picture
http://www.epi.org/blog/trump-administration-trade-policy-review-misses-the-big-picture/

The Trump administration announced last week that it would sign two executive actions to launch a review of U.S. trade policy. A review of trade policy and its potential to harm U.S. workers is welcome and long overdue. However, the specifics of the review offered by President Trump mean that it is likely to fail to provide any help to American workers, in part because it asks the wrong questions.

The president's first order requires Secretary of Commerce Wilbur Ross and White House Trade Council to "identify every form of trade abuse and every nonreciprocal practice that contributes to the U.S. trade deficit," according to the commerce secretary. . The report is to be completed within 90 days, with an analysis of the detailed cause of the deficit "by country and major product." But the trade deficit is not a "product by product" or a "country by country" problem. We know what it is caused by and what should be done about it.

The trade deficit is not a bilateral problem between the United States and individual countries. The U.S. trade deficit is a result of global trade imbalances. There are ten to twenty countries that have developed large, persistent, structural trade surpluses that are distorting trade flows worldwide. The top ten surplus countries are shown in Figure 1 below. In 2015, these countries, led by China, Germany, Japan, Korea, and Taiwan, had a collective trade surplus of approximately $1.5 trillion. (The figures reported are current account balances, the broadest measure of trade in goods, services and income.)[1] The United States' current account deficit of $463 billion in 2015 accounted for less than one third of the total surplus accumulated by the big surplus traders. Other countries have also suffered from persistent, structural trade deficits, job losses, and downward pressure on wages, including Great Britain, Brazil, Australia, and Mexico. Attacking the root causes of global trade imbalances will benefit all deficit countries, and not just the United States.

It is also important to note that Mexico is not a country that has maintained large, global trade surpluses. In fact, it has had significant current account deficits in every year since 2000. This analysis shows why bilateral trade data are a poor guide to trade policy development. Measures of each country's overall trade balance with the world provide a much more accurate and effective basis for identifying global distortions in trade flows. ­

The causes of global trade imbalances are also well known. While dumping, subsidies, and massive amounts of excess production capacity in some industries (e.g. steel, aluminum) and some countries (e.g. China, Korea, Japan) are an important cause of the problem, the single most important cause is currency undervaluation. Countries with larger, persistent trade surpluses have undervalued currencies. Rebalancing of major currencies, last achieved following the 1985 Plaza Accord, is the single most effective way to rebalance global trade flows. Such an agreement is needed to increase (realign) the exchange rates of the major surplus countries shown in Figure A, relative to the U.S. dollar, which is heavily overvalued.

FIGURE A

Countries with the 10 largest current account balances in 2015 (billions of US dollars)  

Country	Current account balance
China	600.2
Germany	284.224
Japan	135.58
Korea	105.871
Taiwan	76.165
Switzerland	75.822
Russia	69
Netherlands	64.417
Singapore	57.922
Italy	39.907

 

​ChartData

Note: China's trade balance is reported in place of current account balance due to reported errors in China's broader goods and services trade flows.

Source: International Monetary Fund, World Economic Outlook Database, October 2016

The president's executive orders on trade also "reflected a marked softening" from the heated trade rhetoric used by Trump on the campaign trail in 2016. The announcement also seems to reflect a search for small, specific, trade actions that could yield "tweetable" trade victories. For example, the president's second order calls for "enhanced collection" of anti-dumping and countervailing duties, to address the "under-collection" of such duties. White House National Trade Council Director Peter Navarro said that $2.8 billion in such duties were uncollected between 2001 and the end of 2016, or approximately $175 million per year. When compared with the U.S. goods trade deficit, which reached $749.9 billion in 2017, such duty "under-collections," were small potatoes indeed. While recouping these "missing" duties would be good for injured workers and companies, and would create opportunities for regular announcements of trade "victories," they will have no significant impact on the overall U.S. balance nor on trade related job losses.

Small victories on unfair trade, while welcome, will not bring about the currency realignments needed to rebalance trade flows. Voters, Congress, and manufacturers should settle for nothing less.

---

[1] Data on goods trade are reported for China due to problems with Chinese data collection.

 -- via my feedly newsfeed