Why is teaching becoming a less appealing occupation? One answer is right in front of us [feedly]

Why is teaching becoming a less appealing occupation? One answer is right in front of us
https://www.epi.org/blog/why-is-teaching-becoming-a-less-appealing-occupation-one-answer-is-right-in-front-of-us/

Proof that teaching is increasingly becoming a profession under siege is mounting.

Many of us have relatives or friends who were dismissed from their schools during the recession or kept their jobs but faced cuts in school funding and other challenges affecting their work lives. News reports are replete with stories of teachers who quit or who are thinking about quitting. And the most recent PDK pollof American's views of public education found that more than half of the parents surveyed said they do not want their children to become public school teachers—the largest share since the question was introduced in 1969 and the first time a majority of parents answered this way.

The U.S Department of Education closes the school year with the publication of the Teacher Shortage Areas. Researchers point to a lack of available individuals to fill teaching positions as a factor in the teacher shortage, which we explore in a series of reports being released this spring and summer. The shortage is estimated to exceed 110,000 teachers missing in the current school year, according to our colleagues at the Learning Policy Institute.

Why is the role of educating our children becoming so unpopular?

The explanations people would provide for the declining popularity of teaching are many and may vary depending on the respondent and her or his connection to the profession. Still, it is pretty likely that low teacher pay would be a common response, either as a single cause or as an important feature in a constellation of causes that includes disrespect from policymakers, underfunding (which leaves teachers without the supports to handle their day-to-day needs), and disinvestment in the professional supports that help teachers adapt to changing conditions, continue their professional education, and collaborate with one another—key elements of any professional occupation. It's likely that explanations from teachers themselves would emphasize both the lack of professional supports that reflect a lack of appreciation for teaching as a professional like any other profession and the pay penalty they live with.

Teacher complaints about low pay are backed by the evidence. The teacher weekly wage penalty—how much less teachers make than comparable college-educated workers—is both very large (21.4 percent in 2018) and has grown nonstop since our colleagues Sylvia Allegretto and Larry Mishel have been tracking the penalty. In our new report Low Relative Pay and High Incidence of Moonlighting Play a Role in the Teacher Shortage, Particularly in High-poverty Schools we find that more than half of the teachers (59.0 percent) moonlight—performing extra work for pay inside or outside of the school system to supplement their salaries. That share, which uses data from the 2015–2016 school year, is up from 55.6 percent in the 2011–2012 school year.

Moonlighting brings in extra pay— about $4,100, or 7 percent of a teacher's combined salary and moonlighting pay— but at the cost of reduced family and personal time. And low pay is more acute in high-poverty schools. Teachers in high-poverty schools earn $5,600 less, bring in $300 less in moonlighting income, and are less likely to get their moonlighting income from activities that include a career-building component such as coaching, student activity sponsorships, mentoring other teachers, or teaching evening classes.

So how do we address these pay issues in teaching?

First we must understand why teachers are underpaid. Among the possible reasons is the fact that teaching was historically a ‟pink-collar" profession, i.e., one occupied by women, and it is likely that the teacher pay penalty is partly due to a gender pay gap that persists. Also, teachers' salaries are not set in perfectly competitive markets, which may explain why wages do not reflect teachers' real value or reward the investments in education that people make to become a teacher. Likely, the systems in place to fund education and teacher salaries are inadequate, insufficient, and outdated.

Second we must find the policy, social, and political will to implement the necessary fixes. As a society, it's clearly not a smart strategy to underinvest in those who have the responsibility of educating our children and thus nurturing our human and social capital. What would be smart would be to recognize the role of teachers in building human and social capital and understand that we can't advance the quality of education provided to our young people if we don't support the teachers in charge of the task. Higher salaries for teachers is a policy intervention that has the support of academics, and the general public—a record high two-thirds of Americans say teachers are underpaid. And of course pay increases respond to the call by teachers who have walked out for higher pay and other education investments. Rightfully, politicians are putting teachers' matters at the front end of their agendas.

In today's report, we examine low pay and the need to moonlight as contributors to the teacher shortage problem, because they make attracting and retaining teachers in the schools difficult. But beyond the specific findings is the moral implication of our analysis: that whatever the structural, historical, political, or societal causes behind the pay penalty in education, the penalty, at its heart, is just fundamentally unfair and requires a fix that is commensurate with its unfairness.

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Tim Taylor: How Single Payer Requires Many Choices [feedly]

Single will not be Simple.

How Single Payer Requires Many Choices
http://conversableeconomist.blogspot.com/2019/05/how-single-payer-requires-many-choices.html

I sometimes hear "single payer" spoken as if it was a complete description of a plan for revising the US health care system. But "single payer" actually involves a lot of choices. The Congressional Budget Office walks through the options in their report "Key Design Components and Considerations for Establishing a Single-Payer Health Care System" (May 2019).

As a preview of some of these issues, its worth noting that a some prominent countries with universal health coverage and reasonably good cost control (at least by US standards!) use regulated multipayer systems, like Germany, Switzerland and Netherlands. For those who like the sound of "Medicare for All," it's worth remembering that a certain number of analysts don't consider Medicare to be a single-payer system, because of the large role played by private insurers in the Medicare Advantage program, while all of Medicare's drug benefits (in Part D of the program) are delivered by private insurers.

However, if one narrows the options to an actual single player plan, which is the label typically put on Canada, Denmark, the UK, Sweden and others, a number of questions still need to be answered. Here's a chart from the report showing many of these questions, but because I fear it won't be readable in this blog format, I repeat a number of the questions below:

Would the plan be run by the federal government, the states, or some third-party administration? In Canada, for example, national health insurance is best-understood as 13 separate plans run by the provinces and territories. Would the single-payer plan use a single information technology infrastructure nationwide?

Who determines exactly what services are covered or not covered by the single payer plan? Who decides when new treatments would be covered? Would the mandated package of benefits cover outpatient prescription drugs? What about dental, vision, and mental health services? These are not mandated benefits in Canada.

Would there be cost-sharing for physician and hospital services? There is in Sweden, but not in the United Kingdom. How about a limit on out-of-pocket spending? There is such a limit in Sweden, but not in the UK. Would long-term care services be covered? The answer is "yes" in Sweden, "limited" in the UK, and "no" in Canada. If there is cost-sharing, would it take the form of deductibles, co-payments, or co-insurance?

Will supplemental health insurance be allowed? "In England, private insurance givespeople access to private providers, faster access to care, or coverage for complementary or alternative therapies, but participants must pay for it separately in addition to paying their individual required tax contributions to the NHS. In Australia, private insurance covers services that the public plan does not, such as access to private hospitals, a choice of specialists in both public and private hospitals, and faster access to nonemergency care."

Would people be allowed to "opt out" of the government health insurance plan and purchase private insurance instead?

Will hospitals be publicly owned, privately owned, or a mixture? Will hospitals be paid with a global budget to allocate across patients, or by a payment based on what patients are diagnosed with what conditions, or by fee-for-service? "Currently, about 70 percent of U.S. hospitals are privately owned: About half are private, nonprofit entities, and 20 percent are for-profit. Almost all physicians are self-employed or privately employed. A single-payer system could retain current ownership structures, or the government could play a larger role in owning hospitals and employing providers. In one scenario, the government could own the hospitals and employ the physicians, as it currently does in most of the VHA [Veterans Health Administration] system."

Will doctors be salaried public employees? If they are private providers, will they be paid on a fee-for-service basis, or receive a per-head or "capitation" payment based on the number of patients they serve? In many single-payer systems, the primary care physicians are private, but the outpatient specialist physicians are sometimes (Denmark) or always (UK) public and salaried.

How are prices to be determined for prescription drugs?

Does the financing for the system come from general tax revenues (Canada), an earmarked income tax (Denmark), a mixture of general revenues and payroll taxes (UK), or some other source?

The CBO report goes into these kinds of questions, and others, in more detail. My point here isn't to argue for or against "single payer." There are versions of single payer I would prefer to others, and although it's a story for another day, I like a lot of the elements of the German and Swiss multi-payer systems for financing health care. My point here is that if you are trying to describe a direction for reform of the US health care system, all $3.5 trillion of it, "single payer" is barely the beginning of a useful description; indeed, it sidesteps many of the tough decisions that would still need to be made.

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Dan Little: Theorizing about organizations [feedly]

Powerful sociological perspectives on corporate and large governmental organizations

Theorizing about organizations
http://understandingsociety.blogspot.com/2019/05/theorizing-about-organizations.html

The fields of organizational studies and organizational sociology originated in the early twentieth century but flourished in the post-war period. This makes a certain amount of historical sense. The emergence in the nineteenth century of large, complex organizations in business and government became a factor in modern society that dwarfed the impact of the organizations of the past -- universities, religious societies, and guilds. There was therefore a new sociological topic that demanded study. How do corporations and large government departments work? What concepts permit insightful analysis of large, complex organizations? Max Weber's theory of bureaucracy provided a beginning, but organizations proved to have greater variety and more perplexing features than Weber's ideas could account for.

Large, complex organizations are the most pervasive social structure in the modern world. They structure the food we eat, the ways we work, the compensation we receive for our labors, the technologies that inform our daily lives, the ways that wars occur, and the modes through which governments function. And, as any observant person will recognize, large organizations create some of the most important dysfunctions that our modern society confronts. So it is enormously important to have a better idea of what a large organization is and how it works. We need to understand the variety, structures, and dynamics of large organizations if we are to have realistic ideas about how to make a more humane world.

Charles Perrow has been one of the most insightful contributors to organizational sociology since the 1960s. His research on the topic of safety within high-risk industries (space, nuclear power, marine transport, chemicals) has been highly influential, including especially his 1984 book, Normal Accidents: Living with High-Risk Technologies.

In 1972 Perrow published Complex Organizations: A Critical Essay, which was released in its third edition in 2014. The book is a masterful synthesis of the schools of thought that have emerged in organizational sociology since 1945. Perrow describes the human relations school, the neo-Weberian school, the institutional tradition, the technology [contingency] approach, the economic interpretation, and the "power" interpretation of organizations. The book therefore provides a valuable map of the geography of the field today, and the intellectual origins of current research. But more than that, the book is an important and original presentation of how organizations work, in Perrow's view. Perrow takes a "structural" view of organizations, which amounts fundamentally to the idea that the most important questions have to do with the internal processes of various organizations and the relationships the organization has to powerful external forces. (Perrow quotes March and Simon on organizational structure: "those aspects of the pattern of behavior in the organization that are relatively stable and that change only slowly"; (124). This contrasts with the "human relations" school, which holds that the important properties of organizations derive from features of behavior associated with the individuals who make them up, including leaders, managers, and workers.

An idea that emerges as particularly important in Perrow's account is the idea of bounded rationality and the limits on rational planning and decision-making within an organization. This part of Perrow's treatment depends heavily on the theories of Herbert Simon and James March (March and Simon, Organizations and Simon, Administrative Behavior).

Bounded rationality, however, is visited upon the elites as well. Their position is always insecure, for their information, understanding, and goals are never fully rational. This allows for occasional resistance and subtle changes by the controlled. In fact, bounded rationality, by elites or their subjects, creates a great deal of change, for it permits unexpected interactions, new discoveries, serendipities, and new goals and values. (123)

Perrow emphasizes the inherent diversity of goals and purposes that are operative within an organization at any given point. He describes the "garbage can" theory of organizational goal-setting and problem-setting (135). Executives, managers, and other decision-makers are portrayed as unavoidably opportunistic, in the sense that they address one set of problems rather than another without a compelling reason for thinking that this is the best path forward for the organization.

Goals may thus emerge in a rather fortuitous fashion, as when the organization seems to back into a new line of activity or into an external alliance in a fit of absentmindedness. (135)

Associated with this idea is the idea advanced by March and Simon that plans and goals are often adopted retrospectively rather than in advance of action.

No coherent, stable goal guided the total process, but after the fact a coherent stable goal was presumed to have been present. It would be unsettling to see it otherwise. (135) 

This recognition of the multiplicity and sketchiness of organizational goals casts profound doubt on the functionalism that observers sometimes bring to organizations (the idea that organizations possess the structures and goals they need to optimize the achievement of their goals). Perrow specifically endorses these doubts:

For those doing case studies of organizations it is also indispensable, checking the tendency of social scientists to find reason, cause, and function in all behavior, and emphasizing instead the accidental, temporary, shifting, and fluid nature of all social life.... Garbage can theory provides the tools to examine the process and not be taken in by functional explanations. The decision process must be seen as involving a shifting set of actors with unpredictable entrances and exits from the "can" (or the decision mechanism), the often unrelated problems these actors have on their agendas, the solutions of some that are looking for problems they can apply them to, the accidental availability of external candidates that then bring new solutions and problems to the decision process, and finally the necessity of "explaining" the outcomes as rational and intended. (136, 137) 

Typology and classification of organizations has been a preoccupation of organizational theory for a century. Perrow believes that we do not yet have a satisfactory basis for classifying organizations, but in his discussion of safety and disaster he provides a typology that has a lot going for it. The scheme sorts organizational tasks along two dimensions: the nature of interactions within the functioning of the organization (linear / complex) and the nature of the coupling of events and processes that exists (loose / tight coupling). His analysis of accidents finds that organizations involving high complexity and tight coupling are most vulnerable to disasters; so nuclear plants, the handling of nuclear weapons, the operations of aircraft, military early warning systems, chemical plants, and genetic research fall in the high-risk category. Motor-vehicle departments, community colleges, assembly-line factories, and post offices fall in the "linear, loose coupling" category and present the lowest risk. The intriguing question that arises here is whether there are organizational features that are best suited to safe and efficient functioning in the four quadrants.

Also interesting is Perrow's treatment of the institutionalist school, represented here by Philip Selznick's Leadership in Administration: A Sociological Interpretation and Selznick's study of the Tennessee Valley Authority. This approach is grounded in structuralist-functionalist sociological theory.

Perrow's considered theory or organizations is offered in the final chapter of the book. He advocates for an interpretation of organizations as vehicles of power through which some individuals control the behavior and products of others.

In my scheme, power is the ability of persons or groups to extract for themselves valued outputs from a system in which other persons or groups either seek the same outputs for themselves or would prefer to expend their effort toward other outputs. Power is exercised to alter the initial distribution of outputs, to establish an unequal distribution, or to change the outputs. (259)

Two specific examples illustrate this approach. Corporations influence consumers' palate for products, and they do this in ways that serve the interests of one group in society over another. And corporations and industrial bureaucracies have fundamentally shaped the practices and culture of "work" in ways that fundamentally serve the interests of one group over another. Both are examples of the "social construction" of important categories of social life; and corporations (business organizations) are actively involved in this process of social construction. (This is essentially the approach to the definition of "labor" and "work" offered by Bowles and Gintis in Schooling In Capitalist America: Educational Reform and the Contradictions of Economic Life.) This approach to organizations is mirrored in Perrow's book about the emergence of the business corporation in the United States in the nineteenth century, Organizing America: Wealth, Power, and the Origins of Corporate Capitalism.

In short, Complex Organizations is an excellent overview of organizational theory today, and it provides many of the conceptual and theoretical tools that help to make sense of these extended and pervasive social constructions that so fundamentally shape our modern experience.  

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Yes, ownership matters [feedly]

Interesting post from a lively UK "socialist  investment expert" :)

Yes, ownership matters
https://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2019/05/yes-ownership-matters.html

I welcome the creation of the Common Wealth think tank, which aims to promote "deep shifts in property relations and ownership."  There's one possible preconception about this project which must be debunked, however. This is that it is hippy-dippy yogurt-weaving idealism. It's not. The question of who should own and control companies is bog-standard mainstream economics: at least three Nobel prizes – to Hart, Williamson and Coase – have gone to economists working on this and related issues.

And in fact, stock markets themselves are calling into question the feasibility of existing ownership structures. In the UK the number of companies listed on the main market has dropped from 1747 to 1156 since the start of the century, a trend which matches those in the US and Europe. And as Kathleen Kahle and Rene Stulz show, those that are listed are bigger and older than they were then and are less profitable and hold more cash.

One big reason for this is that dispersed share ownership does not adequately control management. This is partly because of a free-rider problem. With hundreds of outside shareholders each one has an incentive to piggy-back off of others' efforts to oversee management. Everybody therefore hopes that somebody else will be the active investor, with the result that nobody is.

As Michael Jensen pointed out in a famous paper in 1989 this is fine for companies with lots of potentially profitable projects who need to raise money to finance them: it's no disaster if poor oversight of managers causes them to select projects with a 20 rather than 30% return on capital. But, he said, it is a problem for companies facing slow growth or which have lots of cash and few good investment opportunities. And in a world of secular stagnation there are more of these. For them, dispersed ownership is inappropriate – which is why we see fewer companies listed on western stock markets.

This problem can often be solved by more concentrated ownership. But there's another issue here. To see it, ask: who should control an asset? In theory, it should be the one who stands to lose most if the asset falls in value and gain most if it increases. This person is the one who has the strongest incentive to maximize the asset's value. Traditionally, this person has been the owner – be it the shareholder or direct owner. This, it has been thought, is because other stakeholders such as workers, bond-holders, banks or suppliers are protected by contract, leaving the owner as the residual claimant.

This thinking, though, is wrong. As Colin Mayer says (pdf):

Contracts are very restricted…Shareholders are not therefore by any means the only party exposed to the misfortunes of corporations and the more that we strengthen the rights and powers of shareholders, the more we threaten the interests of others.

There are at least four other actors who are residual claimants:

 - As we saw with the collapse of City Link or Carillion, subcontractors often get shafted when a firm fails whilst owners and directors can extract large "consultancy fees".

 - Workers who have invested job-specific human capital in a company cannot get so good a job if the company fails. As Oliver Hart has written, "a party with an important investment or important human capital should have ownership rights." (Firms, Contracts and Financial Structure, p48)

 - The failure of large firms, or those that are key hubs in a network, can cause deep recessions, as we saw in 2008. Pretty much all of us suffered from the collapse of the banks. And as Edward I – a man not noted for socialist sympathies – said "common dangers should be met by measures agreed upon in common.*"

 -  For companies that are contributing to climate change, future generations are in effect a residual claimant: they are at risk from the firms' actions.

All this raises some questions.

First, could these parties exposed to corporate risks be protected by changes in regulation, contracts or carbon taxes? We know that they have not been so far. And I fear that the power of capital to block such changes means they won't be.

Secondly, shouldn't market forces select against bad companies? In part, they don't simply because the forces of competition don't grind so finely. The fact that there is a long tail (pdf) of inefficient companies in all countries shows that bad management isn't strongly selected against. And even when it is, the process is disruptive of people's lives so the residual claimancy problem remains.

Thirdly, can the market alone achieve efficient changes in ownership? The fact of de-equitization suggests that sometimes it does. There are, though, at least two issues here. One is simply that there are credit constraints: the best owner of a firm might not be able to raise finance the buy it. A second is that new forms of ownership might require legal change. The limited company was we know it was created by two acts of parliament in 1844 and 1855. (The notion that free market capitalism is somehow natural and emerged without state intervention is a fiction.) Other new forms might require such change, or at least government encouragement, perhaps through use of its procurement activities as is happening in Preston. 

Fourthly, who should own companies? The answer, as in most economic questions, is: it depends. In some cases, it should be workers. Where these have serious investments in the firm, in the form of job-specific human capital or a lack of outside options, they have sufficient skin in the game to warrant ownership or control. They also often have dispersed fragmentary knowledge about corporate performance and how to improve it that managers cocooned in the C-suite lack: worker control can be a solution to Hayek's knowledge problem. This is especially the case if such firms don't need to raise lots of equity finance. For other firms, Mayer has suggested ownership by a public benefit company, which ensures that firms fulfill a stated public purpose beyond mere maximization of profits: as John Kay has shown, the latter is better done as a by-product of other aims, such as producing great goods.

Fifthly, if all this is the case, why has ownership been off the political agenda for so long? One reason is that since about the 1930s Labour thought that it could achieve social democratic objectives without challenging existing ownership structures – by using macro policy, taxation, regulation or strong unions. The collapse of post-war Keynesianism in the 70s, and weak growth in our neoliberal order since, however, suggests that this belief was wrong. Maybe, therefore, ownership does matter – and in some cases at least, it might be in the wrong hands. And this is to consider the question without even raising the matter of justice and equality.

* I suppose the mood of the times requires that I note that he was a vicious anti-Semite.

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NBER:U.S. Consumers Have Borne the Brunt of the Current Trade War

NBER is arguably the most authoritative economic policy body in the US: it is charged with defining the beginning and end of recessions, for example.

U.S. Consumers Have Borne the Brunt of the Current Trade War  

U.S. Consumers Have Borne the Brunt of the Current Trade War    Recent tariff increases are unprecedented in the post-World War II era in terms of breadth, magnitude, and the sizes of the countries involved.  In 2018, the United States imposed tariffs on a variety of imported goods, and other countries responded with tariffs on imports from America. Two new NBER working papers analyze how this "trade war" has affected U.S. households and firms.   The recent tariffs, which represent the most comprehensive protectionist U.S. trade policy since the 1930 Smoot-Hawley Act and 1971 tariff actions, ranged from 10 to 50 percent on about $300 billion of U.S. imports — about 13 percent of the total. Other countries responded with similar tariffs on about $100 billion worth of U.S. exports.  Digest May 2019 Issue  U.S. Consumers Have Borne the Brunt of the Current Trade War   Mineral Rights Auctions Produce More for Texas than Negotiation   Why Some Regions Rebounded Faster after the Great Recession   How Top Earners Make Money: Often, from Running a Business  Cities' Bright Lights and Big Promises Dim for the Less-Educated   Unintended Births and Fertility Trends in the U.S. since 1991    < Previous Digest Issues >  In The Impact of the 2018 Trade War on U.S. Prices and Welfare (NBER Working Paper No. 25672), Mary Amiti, Stephen J. Redding, and David Weinstein find that the costs of the new tariff structure were largely passed through as increases in U.S. prices, affecting domestic consumers and producers who buy imported goods rather than foreign exporters. The researchers estimate that the tariffs reduced real incomes by about $1.4 billion per month. Due to reduced foreign competition, domestic producer prices also increased. The prices of manufactured goods rose by one percentage point relative to a no-trade-war scenario. The reduction in real incomes represents the welfare cost of higher consumer prices, less the government revenue collected by the tariffs and the additional income of domestic producers who were able to sell their products at higher prices.  The researchers note that continuation of the tariff policy could be especially costly for multinational companies that have made substantial sunk-cost investments in supply chains in other countries, for example by relying on facilities in China or other impacted countries. The study estimates that around $165 billion worth of trade has been rerouted to avoid them.   Pablo D. Fajgelbaum, Pinelopi K. Goldberg, Patrick J. Kennedy, and Amit K. Khandelwal adopt a different methodological approach to address the welfare effect of recent tariffs. They also find complete pass-through of U.S. tariffs to import prices. In The Return to Protectionism (NBER Working Paper No. 25638), they estimate that the new tariff regime reduced U.S. imports by 32 percent, and that retaliatory tariffs from other countries resulted in an 11 percent decline of U.S. exports. They use these responses to estimate import demand and export supply elasticities, and then apply these estimates to calibrate a general equilibrium model of the U.S. economy with detailed input-output linkages. They estimate that higher prices facing U.S. consumers and firms who purchased imported goods generated a welfare loss of $68.8 billion, which was substantially offset by the income gains to U.S. producers who were able to charge higher prices ($61 billion). The researchers estimate the resulting real income decline at about $7.8 billion per year, a value broadly comparable to the net income decline estimated in the previous study.   The researchers use the estimated model to study the heterogeneous impacts across U.S. counties. The protective effect of the tariffs was greatest for states in the Great Lakes region and the Northeast, due to their industry structure. Meanwhile, sectors in rural areas of the Midwest and the Mountain West, such as agriculture, were hit relatively harder by retaliatory tariffs. The average real wage of workers in tradeable sectors declined by 0.7 percentage points, with a standard deviation of 0.4 percentage points across counties, with workers in the Midwest suffering more than those in other regions.   The researchers examine their findings through the lens of party voting in the 2016 presidential election. They find that the U.S. tariffs protected industries that tended to employ workers in the most politically competitive counties. Foreign governments imposed retaliatory tariffs in sectors based in more Republican-leaning counties. The researchers estimate that counties with at least an 85 percent Republican vote share bore losses over 50 percent greater than counties in which the Republican vote share was less than 15 percent.  To benchmark the consumer losses, the researchers highlight potential developments that could offset impacts of the trade war. For instance, one goal was to reduce intellectual property theft from China. To place this in perspective, China paid $8 billion in royalties for U.S. intellectual property in 2017. A substantial increase in royalty payments could offset part of the welfare loss.

--

John Case
Harpers Ferry, WV

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Millions of workers are paid less than the ‘average’ minimum wage [feedly]

Millions of workers are paid less than the 'average' minimum wage
https://www.epi.org/blog/millions-of-workers-are-paid-less-than-the-average-minimum-wage/

Last week, the New York Times published an article in "The Upshot" by Ernie Tedeschi, which argues that after accounting for state and local minimum wages, the United States currently has its highest average effective minimum wage ever at $11.80 per hour. The article correctly underscores how after 10 years of inaction at the federal level, so much of the policy work being done to boost wages for low-wage workers is happening at the state and local level. Yet, it is important to recognize that even with state and local governments taking action in many places, there are still millions of workers being paid significantly lower wages than the "average" minimum wage as calculated in the Upshot piece. In fact, raising the federal minimum wage to $11.80 would directly lift wages for 18.6 million workers, or 12.8 percent of the wage-earning workforce. Moreover, calculating the average effective minimum wage is very sensitive to how one defines the workforce affected by the policy. One would arrive at a much lower average minimum wage if considering the broader low-wage workforce for whom minimum wage policy is relevant.

The Upshot piece explores how the share of workers being paid exactly the federal minimum wage is relatively small. There are two reasons why this is the case. First, the article observes that 89 percent of minimum-wage workers are paid more than the federal $7.25, because 29 states and some 40+ cities and counties have set their own minimum wages above the federal floor. Higher state and local minimum wages—all of which can be found in EPI's Minimum Wage Tracker—are the result of federal inaction and also due to the tremendous success of the Fight for 15 movement in raising awareness about low wages and pushing for minimum wage increases across the country.

Second, the share of workers being paid the federal minimum wage potentially overlooks millions of workers in states with low minimum wages who are earning only somewhat above the required federal minimum. For example, in Texas, a state stuck at the federal minimum wage, 2.7 percent of workers reported earning less than $7.50 per hour last year. But four times as many workers in Texas, or 11.0 percent, earned less than $10.00 per hour. This contrasts sharply with California, where there are higher state and local minimum wages: there, only 3.8 percent of the workforce reported earning less than $10.00 per hour last year. (These calculations use Current Population Survey data.)

This raises some important questions about how the average minimum wage should be calculated. The Upshot article's methodology states that $11.80 is the average minimum wage "weighted by the usual labor hours of minimum wage workers at nonfarm wage and salary jobs paid hourly." However, because minimum wages influence wage levels for more than just those workers right at the statutory minimum, we can instead calculate the minimum wage faced by the entire labor market (not just those earning exactly the minimum wage). The employment-hours-weighted average minimum wage of the entire U.S. workforce is $9.33, substantially below the $11.80 calculated in the Upshot piece.

The reason these numbers are so different is that higher state and local minimum wages will have an outsized influence when limiting the calculation to those workers being paid exactly the minimum wage. Whenever the minimum wage is raised, it compresses the lower end of the wage distribution, creating a spike in the number of workers earning the new minimum wage. This means that, all else being equal, there is always going to be a larger share of workers who are minimum wage workers in areas that have adopted higher minimum wages. As a result, when calculating the average minimum wage weighted by employment at the minimum wage, San Francisco's $15 minimum wage would likely be weighted more heavily than Texas' $7.25 even if Texas has more workers paid a wage only slightly above its legal minimum.

A better way to measure the extent of low wages, despite state and local minimum wage hikes, is by considering how many workers would be affected if the federal minimum wage were raised to the average value identified in the Upshot piece. Using EPI's minimum wage simulation model, we estimate that if the federal minimum wage were raised to $11.80, it would directly lift wages for 18.6 million workers (12.8 percent of the wage-earning workforce.) In other words, simply raising the minimum to the Upshot-calculated average of $11.80 would significantly raise the pay of millions of workers held back by low minimum wages in states and localities throughout the country. Moreover, raising the federal minimum wage to $15 by 2024 would lift pay for nearly 40 million workers, including millions across the country who haven't benefited from a higher state and local minimum wage. Low statutory minimum wages and low wages actually paid to workers are much more prevalent than the Upshot-calculated average suggests and the best way to address this is by raising the federal minimum wage.

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The PRO Act: Giving workers more bargaining power on the job [feedly]

There is no question in my mind that addressing income inequalities in many occupations, including those founded on race, gender or national origin discrimination means enhancing working bargaining power across the board. The proposals below are all good ones, and would, IF ENFORCED, improve the organizing environment. 

Yet, I do not believe all the reforms are enough to get the job done that needs doing. They are based, essentially on a RETURN to the Wagner Act of 1936 which declared the policy of the US government was to ENCOURAGE collective bargaining. The Wagner Act and its subsequent corrupt and anti-labor cousin, The Taft Hartley Act were both based on labors right to strike and by doing so exercise market power in a (usually) local labor market. The law reflected both American culture and reality of industrial relations of the time, which were assumed to be fundamentally adversarial. At no time the the law contemplate the gig economy, nor the rise of services and technical occupations, nor the rise of monopoly power globally to the point where local labor market power was nearly meaningless for big corps.

More is needed. Unions need to be raised to quasi public status and responsible for representing worker needs in between as well as ON the jobs. Wage negotiations need to be national, and perhaps international, as well. More is needed.

The PRO Act: Giving workers more bargaining power on the job
https://www.epi.org/blog/the-pro-act-giving-workers-more-bargaining-power-on-the-job/

Our economy is out of balance. Corporations and CEOs hold too much power and wealth, and working people know it. Workers are mobilizing, organizing, protesting, and striking at a level not seen in decades, and they are winning pay raises and other real change by using their collective voices.

But, the fact is, it is still too difficult for working people to form a union at their workplace when they want to. The law gives employers too much power and puts too many roadblocks in the way of workers trying to organize with their co-workers. That's why the Protecting the Right to Organize (PRO) Act—introduced today by Senator Murray and Representative Scott—is such an important piece of legislation.

The PRO Act addresses several major problems with the current law and tries to give working people a fair shot when they try to join together with their coworkers to form a union and bargain for better wages, benefits, and conditions at their workplaces. Here's how:

1. Stronger and swifter remedies when employers interfere with workers' rights. Under current law, there are no penalties on employers or compensatory damages for workers when employers illegally fire or retaliate against workers who are trying to form a union. As a result, employers routinely fire pro-union workers, because they know it will undermine the organizing campaign and they will face no real consequences. The PRO Act addresses this issue, instituting civil penalties for violations of the National Labor Relations Act (NLRA). Specifically, the legislation establishes compensatory damages for workers and penalties against employers (including penalties on officers and directors) when employers break the law and illegally fire or retaliate against workers. Importantly, these back pay and damages remedies apply to workers regardless of their immigration status. The PRO Act also requires the National Labor Relations Board (NLRB) to go to court and get an injunction to immediately reinstate workers if the NLRB believes the employer has illegally retaliated against workers for union activity. With this reform, workers won't be out of a job and a paycheck while their case works its way through the system. Finally, the PRO Act adds a right for workers to go to court to seek relief, bringing labor law in line with other workplace laws that already contain this right. And, the legislation prohibits employers from forcing workers to waive their right to class or collective litigation.

1. More freedom to organize without employer interference. The PRO Act streamlines the NLRB election process so workers can petition to form a union and get a timely vote without their employer interfering and delaying the vote. The act makes clear it is workers' decision to file for a union election and that employers have no standing in the NLRB's election process. It prohibits companies from forcing workers to attend mandatory anti-union meetings as a condition of continued employment. If the employer breaks the law or interferes with a fair election, the PRO Act empowers the NLRB to require the employer to bargain with the union if it had the support of a majority of workers prior to the election. And the PRO Act reinstates an Obama administration rule, which was repealed by the Trump administration, to require employers to disclose the names and payments they make to outside third-party union-busters that they hire to campaign against the union.

1. Winning first contract agreements when workers organize and protecting fair share agreements. The law requires employers to bargain in good faith with the union chosen by their employees to reach a collective bargaining agreement—a contract—addressing wages, benefits, protections from sexual harassment, and other issues. But employers often drag out the bargaining process to avoid reaching an agreement. More than half of all workers who vote to form a union don't have a collective bargaining agreement a year later. This creates a discouraging situation for workers and allows employers to foster a sense of futility in the process. The PRO Act establishes a process for reaching a first agreement when workers organize, utilizing mediation and then, if necessary, binding arbitration, to enable the parties to reach a first agreement. And the PRO Act overrides so-called "right-to-work" laws by establishing that employers and unions in all 50 states may agree upon a "fair share" clause requiring all workers who are covered by—and benefit from—the collective bargaining agreement to contribute a fair share fee towards the cost of bargaining and administering the agreement.

1. Protecting strikes and other protest activity. When workers need economic leverage in bargaining, the law gives them the right to withhold their labor from their employer—to strike—as a means of putting economic pressure on the employer. But court decisions have dramatically undermined this right by allowing employers to "permanently replace" strikers—in other words, replace strikers with other workers so the strikers no longer have jobs. The law also prohibits boycotts of so-called "secondary" companies as a means of putting economic pressure on the workers' employer, even if these companies hold real sway over the employer and could help settle the dispute. The PRO Act helps level the playing field for workers by repealing the prohibition on secondary boycotts and prohibiting employers from permanently replacing strikers.

1. Organizing and bargaining rights for more workers. Too often, employers misclassify workers as independent contractors, who do not have the right to organize under the NLRA. Similarly, employers will misclassify workers as supervisors to deprive them of their NLRA rights. The PRO Act tightens the definitions of independent contractor and supervisor to crack down on misclassification and extend NLRA protections to more workers. And, the PRO Act makes clear that workers can have more than one employer, and that both employers need to engage in collective bargaining over the terms and conditions of employment that they control or influence. This provision is particularly important given the prevalence of contracting out and temporary work arrangements—workers need the ability to sit at the bargaining table with all the entities that control or influence their work lives.

The PRO Act does not fix all the problems with our labor law, but it would address some fundamental problems and help make it more possible for workers to act on their federally-protected right to join together with their coworkers to bargain with their employer for improvements at their workplace. Research shows that workers want unions. There is a huge gap between the share of workers with union representation (11.9 percent) and the share of workers that would like to have a union and a voice on the job (48 percent). The PRO Act would take a major step forward in closing that gap.

For more information on the importance of unions and collective bargaining to working people and our economy, see the materials developed in connection with Building Worker Power: A Project of the AFL-CIO and the Economic Policy Institute.

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