Today the topic of unemployment is foremost in the minds of many. With the highest unemployment rate in decades and the worst economic situation since the Great Depression, with no end in sight, most Americans either know someone struggling or effected by unemployment or are fearful for the security of their own jobs. It has become a very contentious and emotional problem.
According to the Bureau of Labor Statistics, the official national unemployment rate in January 2011 is 9.8% , in December of 2009 it was 10%. So there has been minimal strides made in making a dent in the Unemployment rate. Some states are experiencing even more dire official unemployment figures, Michigan came in with the highest figure of 14.7%. The national U6 unemployment rate is listed at 17.3 % for the same period. The U6 rate actually is the more accurate measure.
When one starts examining the numbers more closely, things are even more concerning, especially between the sexes, among minorities, different age groups and education levels. Recent college graduates are having a particularly hard time in this market and men in general have taken a huge hit during this crisis. Not to forget to mention, the underemployed which is a related but it is a side issue.
Of great concern right now is the number of long term unemployed. During a crisis of this magnitude, the long term unemployed cause a drain on resources and don’t add to the productivity of society. This obviously causes many issues, from effecting consumer behavior and consumer confidence, as well to a rise in public services required to help these people survive. Thus, long term, high unemployment effects tax bases, causes an increase in social programs such as welfare and Medicaid, which is a drain on states tax roles, as well as increased Unemployment taxes for employers. Some evidence suggests this situation takes a toll on other factors as well, such as criminal activity and increased use of drugs and alcohol.
The domino effects created by long term, high unemployment can have dire consequences on all elements of the economy and society. Thus, less income means less spending, this leads to fewer customers and less profit for business and less taxes collected by local, state and federal governments. While it increases expenditures by the different government agencies.
During periods experiencing “normal” economic conditions some unemployment is to be expected. Frictional and structural unemployment is inevitable. With this in mind, conventional wisdom cites 5% unemployment to be the high end as an acceptable rate as a percentage of unemployed, thus deemed to be a positive indicator of near full employment.
The problems facing the unemployed in our current situation are many. Unfortunately, for many, the market for unskilled labor in the United States is dwindling. Due to efforts to increase global trade, with lower tariffs, “free trade agreements”, ease of international shipping, technological advances and lower labor costs in other lands, industry is not likely to return those jobs to the United States. Therefore, many of today’s American unemployed are not prepared for the new realities facing them.
In addition, a lack of adequate training and without the proper knowledge, including multi lingual abilities, leaves many Americans ill prepared to face competition for jobs in a global marketplace. This situation provides further opportunity for companies to look outside the United States for the appropriate skills they need in a global marketplace. However, it leaves many Americans, especially older ones nearing retirement age, without the ample skills and thus opportunity to compete with younger, more aptly educated in other countries.
Combined with the changes in industry, technology and educational requirements, many American workers are not prepared for the new world in which they find themselves. Add to that the current economic crisis and lack of available well paying jobs, many are without the ability to support themselves thus relying upon government and public assistance to provide for their basic needs. However, most public programs, including unemployment do not provide adequate income to keep these individuals out of poverty.
There is a school of thought, that these safety net programs create a culture of dependence upon society. Personally, I think this idea is hogwash. While I understand the idea that “people respond to incentives”, and don’t necessarily disagree, the idea that safety nets are an excuse for unemployment is simply not realistic in my mind. I suggest that those who make such statements and believe such ideas have never attempted to live on the measly amounts provided for from unemployment or welfare.
The problem with that type of thinking and analysis is that it doesn’t address the actual dollars and cents of the equation. For example, let’s take the unemployment insurance program in the state of New York. In New York State the maximum any unemployed worker will receive from their unemployment insurance is $405.00 per week, gross. Income taxes are payable on that amount. $405.00 per week for 26 weeks is usually the maximum unless legislation is enacted to extend the benefit during period with long unemployment. At best $405.00 per week equates to $21, 060 gross annually, or $1755.00 monthly, which is below the federal poverty level for a family of four. The 2009 poverty level for a family of four is $22,050 annually.
Now if a person was making $2000 per week before the found themselves unemployed, this is a drastic decrease in income and thus probably is not sustainable for that individual. In so far as people who made less while employed their benefit will reflect that reality. Thus if someone was making $400.00 per week or $10.00 per hour and was laid off, their unemployment benefit in NY State would be about $230 per week. Thus effectively cutting their weekly income in half. New York State is actually quite generous, some states the maximum benefit, regardless of income made is much less. In this situation, the person now only has a potential yearly income of $11,960 or $997 per month. Well below the poverty rate for a family of four and barely above poverty for an individual.
Welfare benefits are not much better, if someone finds themselves in need. First of all eligibility requirements vary depending on the services requested. From Medicaid to food stamps and other economic assistance, these policies vary by state and by level of income and assets, as well as which benefit is being requested. Using the New York State website, for example, provides the limitations of these programs. Unless there is an individual with a disability in the household or children, the program does not provide much in the way of assistance, contrary to popular mythology. The food stamp program has one set of requirements and eligibility criteria, while medical assistance has another and cash assistance has yet another.
To insist that these programs provide too much and thus discourage incentive to work is only true because many jobs simply don’t pay enough to be worth one’s while, not necessarily that the safety nets cause a disincentive to work. A quick perusal of the want ads these days shows many jobs with pay starting around $10 per hour that is with experience and education. Entry level jobs are starting just slightly above minimum wage. Many jobs which require education and experience pay in the $30,000 per year range and provide yearly merit increases of 3-5%.
At that rate, it becomes difficult for individuals to gain economically, thus with wages so low, it isn’t that government programs create dependency, but rather that the private sector is not providing enough incentive and the government programs while not lucrative are equitable to the private sector wages. So the question should be, why would anyone choose to work for an employer who doesn’t value them enough to pay them a living wage?
By doing the math, it becomes apparent that work isn’t worth the effort when productivity is not valued. It is a business decision, on behalf of those who make the decision to continue on government assistance or who choose to stay on unemployment benefits, rather than a dependency decision.
It all depends on one’s perspective of the situation. For those who have never experienced this situation, they may misread the intentions of those in the situation. The incentive to work or not to work is not because there is a safety net; but rather the incentive to work or not work is predicated on the value paid by the employers of the work. If people don’t feel valued and don’t feel there work is being compensated appropriately they simply won’t have an incentive to work.
Now the impulse of many is to do away with the safety nets to encourage more to take “any” job. Well, in a situation like the one we have today, where there are too many unemployed and not enough jobs to accommodate the unemployed; all that dismantling of safety programs would do is leave more to be unable to survive in anyway, shape or form and decrease the value of labor, thus bringing wages down further. That wouldn’t be good for society as it would create further income inequality and less money being spent in the economy. In addition, it would lead to higher crime and civil disorder.
As we know supply and demand applies to all markets, including the labor market. Since supply of labor for most positions is high now and demand is low, wages are lowering as a result. Many labor markets are shrinking and many are being forced to take pay cuts or reductions in hours.
While productivity is high, this situation is causing overload, burn out and discontent on many of the people who are producing at high levels but not reaping any economic reward for their labor. Due to the high levels of unemployment and long term unemployment during this time, most are not able to look for work which is more suitable or that is less demanding. The fear of losing their income is also a substantial factor and thus provides incentive to keep working hard, even though the individuals are not reaping adequate rewards for their work.
This causes an interesting dichotomy of which the solutions may not be desirable for society as a whole. How long can this situation go on unabated? What will the eventual outcomes be for society and individuals if this situation continues for too long?
There are many who would suggest that minimum wage laws and unions are an impediment to job creation and job growth. I have mixed thoughts on those subjects, while on the one hand, I can see part of the argument, on the other, I must say “hogwash”.
It is my belief that too many businesses simply don’t value their workforce. They pay as little as they can to the majority of their employees, the ones who are actually necessary to ensure the production of the company’s goods and services are provided to the customers and pay too much to select members of the organization who provide nominal value to the company but are perceived to have high value.
Something is wrong with the compensation at most large organizations. While I understand the “theory of supply and demand” I suggest that the supply of able, competent managers, sales people, accountants, supervisors is much higher than the evidence suggests. Due to the hierarchal nature of most organizations and the limited number of positions within them that pay large wages, the pool of potential candidates is not limited by credentials and capabilities, but rather it’s limited by insider politics and other factors not related to competence; such as loyalty, seniority, personal preference of higher level personnel, personality and other hard to quantify attributes.
In addition, it is my belief that paying the lowest wages possible for labor is not necessarily the most beneficial business strategy to ensuring quality of workers nor high production. The efficiency theory of wages, in my mind may be a better long term economic strategy for employers to consider. I am of the mindset that you “get what you pay for”. Thus if you pay low wages, you will attract lower quality employees, which is not necessarily the best way to provide for the long term prosperity of a business and probably isn’t good for society either.
While the economic conditions and unemployment situation is rather dire, the possible solutions to our problems are equally complex. There are many theories and methods being proposed to rectify the situation. However, at this point there is no real consensus as to the best methods to alleviate the problem. There are various ideologies and political ideas being proposed, each with their own possible positives and negatives.
Personally, I am of the belief that the solution to this mess is a complete rethinking and reevaluating of our old paradigms and looking to new long term solutions, not just short term “band aids” and “bubbles”. In my opinion, government investment in research and development can spur some new innovations which will lead to private investment in new business ideas. Another thought, is for the government to provide direct loans, as investments, to would be unemployed entrepreneurs who are unable to receive funding for their concepts from the private sector, these new businesses could spur a new wave of opportunities for many who are currently unable to find viable work.
This current crisis could provide an opportunity for people to reinvent themselves and for new ways of thinking about economics and our society as a whole.
Bibliography
United States of America. Labor Force Statistics from the Current Population Labor Force Statistics from the Current Population Survey Washington, D.C.: Bureau of Labor Statistics, 2009. Web. 10 Jan 2010. http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS14000000>.
Mankiw, N. Gregory . “Principles of Economics.” Fourth Edition. Ed. Jack C. Calhoun. Mason: Thomson South-Western, 2007. Print.
Fisch, Carl, Dir. Did You Know; Shift Happens – Globalization; Information Age. 2006, Web. 10 Jan 2010. http://www.youtube.com/watch?v=FdTOFkhaplo>.
Friedman, Thomas L., Perf. The World Is Flat. MITOpenCourseware: 2005, Web. 10 Jan 2010. http://mitworld.mit.edu/video/266>.
New York State. Unemployment Assistance. , 2009. Web. 10 Jan 2010. http://www.labor.state.ny.us/unemploymentassistance.shtm>.
United States of America. THE 2009 HHS POVERTY GUIDELINES. Washington, D.C.: Assistant Secretary for Planning and Evaluation, 2009. Web. 21 Jan 2010. http://aspe.hhs.gov/poverty/09poverty.shtml>.
File Unemployment.” File Unemployment.org. 2009. Web. 10 Jan 2010. http://fileunemployment.org/unemployment-benefits-comparison-by-state>.
“New York State.” Office of Temporary and Disability Assistance. 2009. New York State, Web. 10 Jan 2010. http://www.otda.state.ny.us/main>.
Irwin , Neil. (2010, January 2). Aughts were a lost decade for u.s. economy, workers. The Washington Post, Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2010/01/01/AR2010010101196.html?hpid=topnews
Nilsen, Sigurd. United States Government Accountability Office, Committee on Ways and Means, House of Representatives. (2007). Poverty in america (GAO-07-343T). Washington, D.C.: Retrieved from http://www.gao.gov/new.items/d07343t.pdf
Well done, Abby! Not only is this an excellent article, the comment thread is amazing as well. How is it that the masses have accepted a view of the government vs. corporation dynamic that is so ass-backward when many of the immediate issues can be expressed so succinctly? It boggles my brain!
I just had to have a conversation with someone in my family, patiently explaining that the POTUS can not veto a law that was signed into law by a different POTUS in 1958.
Why? Because a lot of people have the attention spans of a gnat. If it can’t be said in small words, in two sentences. forget it.
It boggles mine as well.
I just wrote another article on my take on our society’s disfunction….we need help!
🙂
I would like to pop off with a request here. I have seen a few people use the terms “offshoring” and “outsourcing” interchangeably (not pointing at anyone in particular here).
“Offshoring” is sending jobs overseas. When first coined, it meant specifically jobs that were sent to a plant or business center overseas that was owned by the exact same company that employed the original workers.
“Outsourcing” is contracting another company to provide services that were originally provided in-house. Currently, a lot of companies “outsource” their human resources, benefits programs, accounting (although some may be still provided in-house), janitorial and maintenance services, etc. Outsourcing is almost as old as business itself. The Big Three automakers outsource a lot of their parts, a lot of companies and small businesses outsource their printing needs, etc.
While some outsourced jobs might have been off-shored, there are some outsourced overseas jobs that were never off-shored. The business providing outsourced services may have never been in the United States at all.
I do believe that outsourcing has been almost as abusive to our economy as offshoring. I find it hard to believe that many contract companies can actually provide the same service that the contracting company originally provided at a lower cost. And outsourcing rarely works well in emergency or urgent situations, especially when the two businesses are in separate time zones.
Actually that is a very good point.
The two concepts are slightly different.
I think many of just used the one term for both, when that isn’t really accurate. Point well taken.
Also, I agree with your second point as well…I’m not sure if outsourcing is always a good idea either.
Abby, I have seen corporations insist that the janitorial services can offer services for lower costs because they are serving more than one company at a time.
This is bushwah (a euphemism). The company that my call center with Wells Fargo used was formed specifically to bid on the contract with Wells Fargo, AND THAT CONTRACT ONLY.
I have seen the same at other former employers as well.
I have also seen contract companies actually charge more UP FRONT than the corporation was paying for their own people.
Temp agencies are a good example. Think about it. The temp employee is getting the same (very often) wage as a regular employee. The temp agency is often cahrging the corporation more than 150% of the temp employee’s wages (I say one place that was more like 300%). And that is each temp employee, almost no agency I have seen discounts in bulk or only charges an administrative fee. It would be cheaper for the corporation to hire their own employees, but they don’t.
I have also seen where executives or managers in the corporation are either board members or investors of the temp agency or other outsource companies. Wells Fargo has several board members who are execs with companies that provide goods or services to Wells Fargo.
YOU have brought up some fabulous issues with the concept of outsourcing…I too have seen some less than appropriate rationales for outsourcing services. MUCH of it didn’t pass the smell test, and if you followed the money trail…there was a reason it stunk!
A diversion, 2nd Class – bushwah is a fine alternative. Maroon is equally as good and Bugs Bunny employed it. When my brother was in High School he and his friends used to use the euphamism, “Bush” to stand for Bullshit. OK – they got detention for it, but it DOES convey what you mean without being overt. Bushwah is perfectly appropriate and kindly in the process. WE GET IT!
I tried to coin a new word for Bush’s glossolalia and propaganda: BushLlit.
reverse the “sh” and “ll”.
Nicely said!
I’m not sure if private contracting is the same as outsourcing? Mitch Daniels has done that with everything he can in Indiana – like prison guards are no longer state employees. Their pay was cut in half and benefits decimated. Hell he even sold our toll road and we’re still in debt
“Hello… my name is Peggy..”
Customer service does seem to be one of the most commonly outsourced jobs, along with janitorial and security.
2nd, The reason those commercials are so funny is that everyone has had the experience and can relate.
So why do we tolerate it?
I would like to see the tax loophole closed, but we saw that fail during the 9-11 first responders health care bill debate.
You can try to switch your business to those that do not outsource or offshore, but good luck. I know of two banks that do not outsource customer service, USBank and WellsFargo. Neither are anywhere near perfect and their ethics are in serious doubt.
I once called a company that was *only* in the city I was in, and got a call center in India. So not even “buy local” is safe.
Pseudo-cons would scream, but I would suggest a tax on outsource *and* offshore services. A “imported/transferred services” tax, on any service that is transferred from outside the company to inside the company (like human resources).
CREDIT UNIONS!!!!!!
It’s the only viable alternative. If you are wedded to convenience, you are missing your own best moment. Convenience – ATMs on every corner – will come when we give our business to something that is NOT commercial banking.
Where do we complain? What can we boycott?
US Uncut: A Progressive Response to Economic Shock Therapy
http://planetpov.com/2011/02/24/the-daily-planet-vol-5/#comment-100635
Join our nationwide display of progressive solidarity.
http://planetpov.com/2011/02/25/the-daily-planet-vol-6/
Are you sure that’s not “Hello, my name is Pehgee”???
Buffalo, NY, having cheerfully watched its steel industry croak, having given away its preferential rail rates so the grain elevators there (21 of them) were no longer viable stopping points, decide their “future” lay in customer service centers. That lasted about TWO freaking years. So now people who briefly got jobs at $8 per hour (a living wage in Buffalo, trust me on this) are back to being unemployed. Such are the ways of multinational capital.
How many concessions were those companies given by the city/county/state to come to Buffalo to provide jobs?
When will municipalities learn how to write a contract with penalty clauses?
The politicians around here are so corrupt…they make Washington look good.
They don’t care about writing in penalty clauses….cause they got theirs.
I really loathed the mayor of Buffalo in the 80s – a major dumbfuck. Jimmy Griffin wanted to be the New Richard Daly – but he lacked Daly’s intelligence and class (that IS a joke!) That said, his machine politics was infinitely preferable to the “reform” politics that followed. Griffin gave away snow ploughing contracts. Mayor Masiello sold out the waterfront and development. On the whole, I will take machine politics any day of the week – it’s small and petty graft vs. large, wholesale decimation of a city.
CL are you from Buffalo?
Lived there for 16 years. Originally from Chi-caw-go.
Aw….no wonders you are so astute! 🙂
The one who is pissing me off royally right now is our county exec…HE’s determined to do to the WHOLE county what was done to the city. HE’s a real fuckin rightwing zealot. CAN’T friggin stand him.
Good observation, 2ndClass (but 1st Class writer). And a very thoughtful piece, Abby.
My one critique – and it’s entirely political – is that I believe the January figures showed a drop from 9.8 to 9.0 AND this is NOT the time to bring up the U6! During Reagan years the U6 was somewhere around 20-plus percent, but we never really discussed it. I agree it’s a vastly more reliable figure, but without putting it into a 2008 and Reagan context, it will rebound on this administration. That’s just my observation of the political downside of reality!
What needs to change first, I think, is tax laws. We pay business an accelerated depreciation when they go OUT of business – that’s tax free cash. It’s a huge part of the reason plant closures happened so fast in the Midwest and Northeast – they were “cash cows” for corporate bottom lines. The law was created to compensate liquor companies during Prohibition – but they now have no strings attached. Bring back the strings! Being shut down (as in when we eliminate insurance companies through single payer) by the government is one thing. Buying plants – profitable plants – in order TO close them is quite another. End this abuse.
Second – we PAY corporations to offshore (go overseas) their work and facilities. We’ve done that since WW II so that Ford and many other firms got “behind the tariff barriers” in Europe to build their own plants. Ford at one point was the largest employer IN Europe. We failed to look at what it did to our trade balance – you don’t export cars if your cars are built there. It was part of the slippery slope to being less competitive – Ford US wound up competing with Ford Europe. What sense is there in that?
When we provide subsidies to create jobs, let us do so with the proviso that they HAVE to be created inside the US. I am happy about the GM support and revival – I am NOT happy that quite a bit of that tax support was given to hire overseas. Yes, I know parts there supply cars here, but…
Let’s reinforce restraint of trade laws? Let’s break up monopolies and oligopolies. Twenty years ago when I taught this stuff, many industries had a oligarchical dominance of 4-8 firms. That has dwindled over the years so that fewer and fewer firms control more and more. And let’s enforce laws preventing interlocking directorates where theoretically competing corporations sit on each other’s boards? It remains illegal. Let’s STOP it. Collusion is just as harmful as monopoly. Price agreements must also be made illegal where two competitors agree to the same price. What “free enterprise competition” is THAT?
If a company IS subsidized at the state or federal level and fails to comply with the terms of that subsidy – job creation, for example – then let’s employ “clawbacks” – forcing them by dint of garnishment to return the money. In states where they just close down, then take back the COMPANY – repo it. They will write it down for the federal bucks – so when they holler over the repo, then compare the money the state gave vs. the WRITE DOWN value of the property (established BY the company) and if money is owed them, fine, but chances are nothing will be.
Finally – to stop what happened in the early 80s where US workers were “overpriced” on the international “market” for labor. let’s be clear about the cause. US labor costs, compared with steady values in currency, were NEVER paid more than their Japanese of European counterparts. The problem is due to the deregulation of currency by Nixon and global interests. We made our medium of exchange ALSO a commodity to be traded with NO reliable value. When the dollar rose, we were locked out of trade. When it falls, we do well with exports – except we tore a lot down and have less and less to produce to sell.
Since today we cannot call US labor “overpriced” – the dollar is very low – we now attack public sector workers. There is nothing left to gouge out of the private sector. Been there, done that.
To stop ALL of these pernicious practices, monetary stabilization and regulation MUST be reinstated. Back to the Bretton Woods agreements. Yes that would harm the poor currency speculators who CAUSE world crises with their shenanigans, but I bet they can find work in hedge funds. Or GOLD! Glenn Beck can employ them!
There are a myriad of other laws that need revision, but Obama has begun, quietly, to make some of these changes. One really great first step was part of the tax agreement package in the lame duck – he secured accelerated depreciation for NEW investment! That has not happened in decades and puts US companies on the same level as their European and Japanese counterparts that let new equipment and other capital improvements get written off immediately. This seems a trifle, but it’s the first tax policy in years that rewards DOING business rather than going OUT of business.
We have to mean it when we say we want jobs here – and we will never get them if we do not hold corporations utterly accountable for honoring the agreements and standards any REAL person would have to meet. It’s long overdue for us to have a standard where a multi-billion enterprise is as rigorously held to principle as a single mom receiving Earned Income Tax Credit.
If corporations are fictitious persons, then let us now demand that they live up to that time-worn GOP standard – personal responsibility. It’s the least – the very least – they can do for us when spending taxpayer money.
C’Lady– freaking nailed it!
Report: Multinational Corporations And Banks Use Tax Havens To Dodge $37 Billion In U.S. Taxes Per Year
According to a new report from an organization backed by Sen. Carl Levin that is seeking to end tax avoidance and evasion, multinational corporations and banks are ducking $37 billion annually in taxes:
Fifty years ago, corporate income taxes accounted for 23.2% of federal government receipts, and individual income tax payments were less than twice those of large corporations’ tax payments.
Today, the U.S. Office of Management and Budget estimates corporate tax receipts will account for just 7.2% of federal revenues in 2010, with large corporations contributing less than one-sixth as much as small business and individual taxpayers to the Federal Treasury (small businesses most often pay taxes according to their owner’s individual tax rates).
Last May, the President told Congress of his plan to end tax breaks for U.S.-based multinational companies. And a tax bill under consideration—right now–would end tax deductions for offshoring jobs. BOTH of these were 100% opposed by the Repubs.
And then this:
ANALYSIS: House GOP ‘Jobs Plan’ Would Give Billions In Budget Busting Tax Breaks To Huge Corporations
House Republicans have proposed the Economic Freedom Act of 2010, that has the same destructive policies that failed over the last decade. It seeks to create new jobs through a number of huge tax breaks for wealthy individuals and corporations. It won’t crate any jobs, but among other things it will lower the corporate income tax from 35 percent to 12.5 percent.
Not only does this plan lower corporate tax revenue in a system already full of loopholes and tax credits, it is also totally inefficient in creating economic activity. According to Moody’s Economy.com, a corporate tax cut only generates 30 cents of economic activity for every dollar spent. In contrast, the unemployment benefits extension that the Republicans filibustered earlier this year will result in $1.61 of economic activity for every dollar spent.
This tax break is estimated to add $2.7 trillion to the deficit relative to current law.
Obama’s American Recovery and Reinvestment Act (the stimulus) has saved or created about three million jobs according to the Congressional Budget Office. In addition, it has provided tax cuts to more than 95 percent of American households. On the other hand, the Economic Freedom Act will not only cost the country trillions of dollars, but will also send the overwhelming majority of its tax breaks to a minority of individuals and large corporations, when we want money flowing into the hands of the people who are most likely to spend or invest it to create jobs.
Frankly, although it IS a huge double-edged sword, the Dems should have reformed the filibuster rules to prevent the the job-KILLING Repubs from blocking those bills.
But, ferchristssake! Yes, there IS a difference between the Parties.
Yes indeed, Cher – that is right on target! And yes, there IS a difference between parties! One helps real people, the other fictitious persons, and one creates real jobs while the other just lards up the already rich with no benefit to the nation.
GOP – Guardians Of Privilege.
I agree with the job-creation incentive idea. However, I would add the proviso that if the job is ended or shipped overseas within ten years, the corporation has to pay back 300% of the incentives.
I have watched too many companies get tax breaks and incentives from governments and municipalities, and then a year or two down the line, pull out completely, leaving the taxpayers holding the (empty) bag.
Consumer’s Energy did it to the city of Jackson Michigan about ten years ago. Cost to the city was in the millions, Consumer’s paid virtually nothing, and then pulled all of their great jobs out of the city in favor of another city.
And this was during the first dip in the economy after George W. Bush was selected the first time (a lot of businesses in Michigan enacted hiring freezes for about 6 months after W was selected – a popular ploy by corporations).
Wow 2ndClass = I LIKE this. Three hundred percent??? It’s consistent with common law principles of ‘treble damages’, so it’s grounded in our customary way of penalizing offenders. Yup. Like it a lot.
I think every reform we’re discussing is justifiable as ways to ENHANCE success in business rather than rewarding and subsidizing FAILURE. Why should we make people on welfare getting $600 a month be forced to offer proof of need every 4 months while corporations scamper off with our cash stuffed in every pocket?
I do ask the business community to one thing though: STOP talking about “free enterprise” as if they EVER did ANYTHING without a safety net of taxpayer CASH. It’s an outright insult to pretend we’re capitalist in anything like the sense of the term. And yeah – the French DO have the word entrepreneur – and you hardly see a one of ’em anymore. Too bad we don’t know French. Small businesses, yes. Very small. Larger businesses? Rarely.
EXCELLENT points ALL CL!
Sadly, as with any article, I couldn’t get in to everything…and just went from one angle, but you brought up so many of the other factors…it’s fantastic!
As to the figures, I used data from the BLS website and not from any news reports. Although, maybe I did use the wrong table, when I typed my article…that is possible! 🙂
However, that still isn’t much of a drop…not really. And the U6 rate is still more accurate…as it was back in the 80’s as well.
But the situation is more complicated today than it was in the 80’s as all the other variables (a global economy, technology and other factors ) were not yet in the mix in the 80’s.
I don’t blame the current administration, for the numbers…I blame our society and our messed up ideas of economics for these problems.
In addition, I do think MORE could be done to reign in the excesses of corporate malfeasance, but sadly there is no political will to tackle those issues. SO how to get it done?
I totally agree, Abby – the figures are always incorrect, and the U6 is far more accurate. (I seem to recall that it was called the U7 once? Deflation???) But I don’t want to whip it out now when the “dark side” would use that in comparison with Reagan’s ordinary BLS figures.
Over the last 30 years only a handful of people saw what was happening. Finally in the Bush era books began to emerge with real critiques of the giveaways to corporations that permitted – even encouraged – the abandonment of US jobs and US people. By that time, though, the damage was done. Clinton, I regret to say, gave away much of the labor and consumer protection. Those who hollered were called ‘backward” or “protectionist” as if that were a BAD thing.
One of the more heartening things is the ways many of the unions saw that they needed to take care of people in other countries who were also being dispossessed – especially Mexico – and not to blame them for ‘taking our jobs’ which is far more of a white middle class mantra. Union folks knew the companies had ripped the jobs out from under them and flung them into maquilladoras and then China – the Chinese people did not, could not “steal” them.
I do think the political will is returning. There is even some sympathy for it with some GOP since they dislike social welfare and wish to strengthen individual self sufficiency. Some don’t care – having a huge, poor, and dependent working class is just dandy. Cheap labor like that Upton Sinclair depicted in “The Jungle” is fine with them. Work people on poverty wages until they drop dead, then cart ’em off to Potters Field and swoop up the next round. But some GOP do see the frailty of that mindset. We can only hope that pretty soon so do the American people.
But people do need to remember the anti-Nazi essay by German pacifist Lutheran pastor Martin Niemoeller: “First they came for the trade unionists, and I didn’t speak up because I wasn’t a trade unionist…and then they came for me…”
United we stand. Divided we die. Alone.
Fabulously well said CL. My goodness a woman after my own heart!
I was bitching about Reaganomics since the 80’s…gawd I hated everything that man stood for.
Don’t even get me started on the global trade issues and the give aways to the corporate elite..I might be here for awhile!
I keep hoping that more and more people are gaining awareness and are soon going to demand some changes…or heads will roll. I must say, I have my moments…when I don’t just mean that metaphorically. There are a few very influential elite billionaires,that I wouldn’t necessarily shed a tear for, if they were no longer with us.
I despised Reagan back before 1980. The day I read an op-ed he published in the National Enquirer, talking about how he though gay people were really “sad” and “pathetic”.
I despised him too and always felt like a fish out of water. It seems like I’ve been arguing with someone about politics since I graduated from college. I never seem to fit in – thank you for this forum.
I’m so impressed with both of your knowledge in economics. Even owning a business only gives you the basics, my son is a CPA so I often go to him when I need something explained and act like I understand.
My good friend had a husband that was an QC engineer for GM and they were sent to China about 12 yrs ago – they were 3 hours from Bejing – he basically taught them how to run the plant. What I don’t know is if was a GM plant or a Chinese joint venture. He had a translator at all times and the my friend had a miserable time. She was in the middle of no where and no one spoke English – she was very isolated. It’s just interesting how many years ago this was going on.
Interesting side note, they went to the zoo one day and were the main attractions, there were no westerners in the city, the next time they went, their photos were in frames and they were being sold in the gift shop.
The GM plant here is now closed and he is retired – I’m sure the plant in China is going strong!
Abby you bring up a good point about millionaires.
I think one of the problems with the income tax debate is Dems tried to call all people making over $250K rich. Yes people that make $250K are comfortable but not rich. Dems should approach the next tax fight with a better story. They should frame it as tax reform.
Keep your $250k bracket and add one at the real rich. Set another tax bracket at $1MM. The vast majority of people cannot argue that is you make that you are rich. Then set a tax rate on those people that is much higher in the mid 40%.
I know the Senate tried something like this late but we really need two years of messaging to start now for now when the tax cuts expire again.
Also what comes to mind is where are all the progressive think tanks? To me all the progressive institutions are doing these days is telling us how bad things are, complaining and being reactionary. Where is the forward looking work they should be doing like advancing progressive tax policy? Now don’t get me wrong when they do take a step forward the reactionary media ignores them but for the most part they bought into the program and use reactionary complaining as their main activity now.
Excellent comment and great points there KQ. I too thought the threshold of 250K was the wrong argument and caused issues. It should have been framed differently, just as you suggest.
Good question, there too…WHERE are the progressive think tanks in all this…and why no real mention in the MSM about any studies THEY have produced???
Could it be….the MSM isn’t really progressive! 🙂
Well done! Everyone must understand that if the unions lose all workers lose. unions set the stand for working conditions and wages, nonunion workers get better conditions otherwise the workers in their company would unionize;eliminate the unions and wala everyones scrud.Be afraid people we aren’t far from the demise of a living wage for all and the total downfall of America as we know it,fight on
It was the union situation that prompted me to start writing about all this! People need to understand it’s all interconnected and leads to the dismantling of the middle class.
It’s by design.
Here’s a thought…
Eliminate Minimum Wage altogether at the federal and state levels. Gone. Done.
Replace it with a Basic Income system. At the age of majority, every citizen, without any other qualification, gets a yearly stipend from the government large enough to meet basic needs.
Studies show that increases in Minimum Wage do have a tiny negative effect on job creation. A Basic Income system would not, and studies show it may be cheaper to the economy.
http://en.wikipedia.org/wiki/Basic_income
The math:
300MM people, about 70% adults (210MM)
$20K per annum
Basic Income stipend
20K x 210MM = $4.2T per annum (about 28% of current annual GDP)
No modification to current recipients or people eligible for SocSec, Medicare, Medicade, federal retirement pensions, etc., but not available for people in the future.
Completely eliminates the need for minimum wage, workers can “sell” their time for what they think it’s worth.
Completely fair, rich, poor, male, female, everyone gets the same.
Non-taxable.
Will allow people to pool their resources and live decently in retirement.
Encourages innovation and creativity, since people are no longer tied to the necessity of having to work all day every day.
If people want to live like a poor college student or a starving artist and not work, that’s fine.
Opens up the workforce for more motivated people.
In addition, to reduce the supply of workers, altering the supply and demand equation…
Offer a one-time-only deal with Soc Sec. Anyone over 55 can retire with full SocSec benefits right now. Not available in the future. I don’t know how many people would take that deal, but I know I would.
Sometimes radical ideas get people thinking…
Interesting idea PW….very interesting. I got to give this one some real thought!
Abby – that’s what it’s for… I have no real idea if anything like that is viable, but I always like to imagine that there is no “box” to think outside of.
Having worked with allot of people from Europe you’ll find American workers are just suckers. Europeans workers would just not take the abuses Americans do. There would have been massive strikes all over this country decades ago if we we’re so servile to our masters.
I don’t disagree with you at all. I too have worked with many throughout the world and in many places in Europe and closer to home, Canada, they would NEVER tolerate what we put up with!
The bottom line is there is very little government can do in a capitalist economy. You can talk about what FDR did all you want but unemployment was over 10% until we started ramping up for war.
Worse corporations are as partisan as most of America now. Big business use to just care about profits. Now they care about profits and getting as much Republicans in power as possible.
So what we see is corporations making record profits and strangling the American worker. They love the current economic situation make no mistake about it. But this strategy like every other reactionary strategy will only cannibalize the very consumers business counts on to purchase it’s goods and services.
Some big business people may think they can move on like locusts and just sell to the growing lower middle classes in countries like India and China but that’s just as wrongheaded reactionary thinking. Who in their right mind would accept American managers after they destroyed their own economy.
They are simply traitors one and all. Tax burdens for corporations have never been lower in this country. While they waive the red, white and blue they will sell out America in a second.
Indeed KQ.
What is going on is very disturbing, and very concerning. I’m not really sure what can be done…but we can’t ignore it or not talk about it…we need to continue to get the message out, so HOPEFULLY we can figure it out.
Continuing the discussion and trying to figure out exactly how we got to this point and how to fix it is KEY.
They did it in Egypt.
The only thing that can be done is starting to be done. Workers need to take it to the streets and not Faux News tea party types.
This has to be a ground up movement and a movement that is more mainstream.
AMEN! Spot on!
WE all must get involved!
Well done, Abby!
I do think the unemployment picture is part of a new economic structure corporations have imposed. There is a reason that corporater profits are breaking records and employment is weak.
This is the dynamic they have built. This is the situation they want. Keep supply of American workers high (thanks to outsourcing), make those who have jobs aware how replaceable they are so they will do the work of 2 employees without complaint, eliminate unions to assure political control by corporations and give corporations total power to decrease pay, benefits and working conditions…it’s Corporate Nirvana.
We do indeed need to kick this game board over and restructure how our economy and business models are structured or it is a very dim future for millions of Americans.
I couldn’t agree more Adlib. And truthfully, I thought this subject a perfect tie in with the desire of many to do away with Unions or point to unions as being the problem.
Corporate malfeasance and unsustainable profit motive, incentive causes much of these problems and leads to a very negative outcome for the majority of people.
BUSINESS exist to benefit mankind. MANKIND was not put on this earth to benefit business…why is this so hard for so many to understand?
Because greed is self-justifying? And greed has been integrated into the American Dream as a good thing, disguised as “The American Way” where “everyone can succeed”.
People need to raise their kids not to buy into the corruption that passes for the American Dream.
99.5% of Americans will not be millionaires. That’s a fact. So we need to protect and enhance the standard of living for that 99.5% instead of supporting the .5% and their agenda because we naively believe that, “One day, I’ll be a millionaire too!”
Exactly! I am of the same mindset…we have to raise our progeny differently and with different paradigms.
Abbyrose- you nailed it!
My gripe in addition, is why do companies feel the need for so many ‘middle management’ people?
I worked for the ultimate upper management company! If someone’s nephew was too stupid to actually Do a job, they would create a supervisor, assistant manager, administrative asst. manager, team leader or assistant executive vice manager.
They even had administrative assistant vice presidents, and assistant vice presidents!!
That company also had self funded health insurance. The name: Employee Health Risk Management! Also, if you had an accident on the job, you would be disqualified unless you peed in a cup and had a blood test drawn within 1hr of the incident..
Welcome to a ‘right to work state’.
It’s deplorable! The whole paradigm is a mess and needs to be fixed.
Until we get to the root causes of these problems, the problems will just keep growing like weeds, strangling the healthy plants in the garden.
oy!
IT IS!
Girlfriend you’ve been keystroking your little fingers to the bone today!
Now, I’m off to see why I never got my piece of the American Dream..
Hugs for your hard work..
Thanks jkkFL….got to do something…even it’s a small contribution, such as writing articles in the hopes of educating and bringing awareness!
Have a good one!
{{HUGS}}
I was hired by a hospital and I took vicodin and I passed their blood test because it was prescribed, however I didn’t work with heavy machines, nor was I medical personel. But they don’t really care what you’re taking if you’ve got a script.