Saturday, September 6, 2014

Federal Reserve Must Create New Jobs

Even the Council on Foreign Relations Is Saying It: Time for Federal Reserve to Rain Money on Main Street

Tuesday, 02 September 2014 10:46By Ellen Brown, The Web of Debt Blog | News Analysis

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(Photo: Eyeslash)You can always count on Americans to do the right thing, after they’ve tried everything else.

—Winston Churchill

When an article appears in Foreign Affairs, the mouthpiece of the policy-setting Council on Foreign Relations, recommending that the Federal Reserve do a money drop directly on the 99%, you know the central bank must be down to its last bullet.

The September/October issue of Foreign Affairs features an article by Mark Blyth and Eric Lonergan titled “Print Less But Transfer More: Why Central Banks Should Give Money Directly To The People.” It’s the sort of thing normally heard only from money reformers and Social Credit enthusiasts far from the mainstream. What’s going on?

The Fed, it seems, has finally run out of other ammo. It has to taper its quantitative easing program, which is eating up the Treasuries and mortgage-backed securitiesneeded as collateral for the repo market that is the engine of the bankers’ shell game. The Fed’s Zero Interest Rate Policy (ZIRP) has also done serious collateral damage. The banks that get the money just put it in interest-bearing Federal Reserve accounts or buy foreign debt or speculate with it; and the profits go back to the 1%, who park it offshore to avoid taxes. Worse, any increase in the money supply from increased borrowing increases the overall debt burden and compounding finance costs, which are already a major constraint on economic growth.

Meanwhile, the economy continues to teeter on the edge of deflation. The Fed needs to pump up the money supply and stimulate demand in some other way. All else having failed, it is reduced to trying what money reformers have been advocating for decades — get money into the pockets of the people who actually spend it on goods and services.

A Helicopter Drop on Main Street

Blyth and Lonergan write:

[L]ow inflation . . . occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the EuroZone, inflation has recently dropped perilously close to zero. . . . At best, the current policies are not working; at worst, they will lead to further instability and prolonged stagnation.

Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The Government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality. [Emphasis added.]

A money drop directly on consumers is not a new idea for the Fed. Ben Bernanke recommended it in his notorious 2002 helicopter speech to the Japanese who were caught in a similar deflation trap. But the Japanese ignored the advice. According to Blyth and Lonergan:

Bernanke argued that the Bank of Japan needed to act more aggressively and suggested it consider an unconventional approach: give Japanese households cash directly. Consumers could use the new windfalls to spend their way out of the recession, driving up demand and raising prices.

. . . The conservative economist Milton Friedman also saw the appeal of direct money transfers, which he likened to dropping cash out of a helicopter. Japan never tried using them, however, and the country’s economy has never fully recovered. Between 1993 and 2003, Japan’s annual growth rates averaged less than one percent.

Today most of the global economy is drowning in debt, and central banks have played all their other cards. Blyth and Lonergan write:

It’s well past time, then, for U.S. policymakers — as well as their counterparts in other developed countries — to consider a version of Friedman’s helicopter drops. In the short term, such cash transfers could jump-start the economy. Over the long term, they could reduce dependence on the banking system for growth and reverse the trend of rising inequality. The transfers would not cause damaging inflation, and few doubt that they would work. The only real question is why no government has tried them.

The Hyperinflation Bugaboo

The main reason governments have not tried this approach, say the authors, is the widespread belief that it will trigger hyperinflation. But will it? In a Forbes article titled “Money Growth Does Not Cause Inflation!”, John Harvey argues that the rule as taught in economics class is based on some invalid assumptions. The formula is:

MV = Py

When the velocity of money (V) and the quantity of goods sold (y) are constant, adding money (M) must drive up prices (P). But, says Harvey, V and y are not constant. The more money people have to spend (M), the more money that will change hands (V), and the more goods and services that will get sold (y). Only when V and y reach their limits – only when demand is saturated and productivity is at full capacity – will consumer prices be driven up. And they are nowhere near their limits yet.

The US output gap – the difference between actual output (y) and potential output – is currently estimated at about $1 trillion annually. That means the money supply could be increased by at least $1 trillion without driving up prices.

As for V, the relevant figure for the lower 80% (the target population of Blyth and Lonergan) is the velocity of M1 –– coins, dollar bills, and checkbook money. Fully 76% of Americans now live paycheck to paycheck. When they get money, they spend it. They don’t trade in the forms of investment called “near money” and “near, near money” that make up the bulk of M2 and M3.

The velocity of M1 in 2012 was 7 (down from a high of 10 in 2007). That means M1 changed hands seven times during 2012 – from housewife to grocer to farmer, etc. Since each recipient owes taxes on this money, increasing GDP by one dollar increases the tax base by seven dollars.

Total tax revenue as a percentage of GDP in 2012 was 24.3%. Extrapolating from those figures, one dollar spent seven times over on goods and services could increase tax revenue to the government by 7 x 24.3% = $1.7. The government could actually get more back in taxes than it paid out! Even with some leakage in those figures, the entire dividend paid out by the Fed might be taxed back to the government, so that the money supply would not increase at all.

Assume a $1 trillion dividend issued in the form of debit cards that could be used only for goods and services. A back-of-the-envelope estimate is that if $1 trillion were shared by all US adults making under $35,000 annually, they could each get about $600 per month. If the total dividend were $2 trillion, they could get $1,200 per month. And in either case it could, at least in theory, all come back in taxes to the government without any net increase in the money supply.

There are also other ways to get money back into the Treasury so that there is no net increase in the money supply. They include closing tax loopholes, taxing the $21 trillion or more hidden in offshore tax havens, raising tax rates on the rich to levels like those seen in the boom years after World War II, and setting up a system of public banks that would return the interest on loans to the government. If bank credit were made a public utility, nearly $1 trillion could be returned annually to the Treasury just in bank profits and savings on interest on the federal debt. Interest collected by U.S. banks in 2011 was $507 billion (down from $725 billion in 2007), and total interest paid on the federal debt was $454 billion.

Thus there are many ways to return the money issued in a national dividend to the government. The same money could be spent and collected back year after year, without creating price inflation or hyperinflating the money supply.

Why It’s the Job of the Fed

Why not just stimulate employment through the congressional funding of infrastructure projects, as politicians usually advocate? Blyth and Lonergan write:

The problem with these proposals is that infrastructure spending takes too long to revive an ailing economy. . . . Governments should . . . continue to invest in infrastructure and research, but when facing insufficient demand, they should tackle the spending problem quickly and directly.

Still, getting money into the pockets of the people sounds more like fiscal policy (the business of Congress) than monetary policy (the business of the Fed). But monetary policy means managing the money supply, and that is the point of a dividend. The antidote to deflation – a shrinking supply of money – is to add more. The Fed tried adding money to bank balance sheets through its quantitative easing program, but the result was simply to drive up the profits of the 1%. The alternative that hasn’t yet been tried is to bypass the profit-siphoning 1% and get the money directly to the consumers who create consumer demand.

There is another reason for handing the job to the Fed. Congress has been eviscerated by a political system that keeps legislators in open battle, deadlocked in inaction. The Fed, however, is “independent.” At least, it is independent of government. It marches to the drum of Wall Street, but it does not need to ask permission from voters or legislators before it acts. It is basically a dictatorship. The Fed did not ask permission before it advanced $85 billion to buy an 80% equity stake in an insurance company(AIG), or issued over $24 trillion in very-low-interest credit to bail out the banks, or issued trillions of dollars in those glorified “open market operations” called quantitative easing. As noted in an opinion piece in the Atlantic titled “How Dare the Fed Buy AIG”:

It’s probable that they don’t actually have the legal right to do anything like this. Their authority is this: who’s going to stop them? No one wants to take on responsibility for this mess themselves.

There is a third reason for handing the job to the Fed. It is actually in the interest of the banks – the Fed’s real constituency – to issue a national dividend to the laboring masses. Interest and fees cannot be squeezed from people who are bankrupt. Creditor and debtor are in a symbiotic relationship. Like parasites and cancers, compound interest grows exponentially, doubling and doubling again until the host is consumed; and we are now at the end stage of that cycle. To keep the host alive, the creditors must restock their food source. Dropping money on Main Street is thus not only the Fed’s last bullet but is a critical play for keeping the game going.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

Steel Workers Union Promotes Blacks

FEATURES » SEPTEMBER 3, 2014

Why Labor Matters in the Fight for Racial Justice

Black workers’ struggles in the labor movement have won important gains—including transformation of unions themselves.

BY LEO GERARD, UNITED STEELWORKERS PRESIDENT

This was a period when black workers still were relegated to the most dirty, dangerous and grueling positions in industry. They were frozen out of transfers and promotions to what were considered white men’s jobs, even at union plants. But, as Fred says, 'Even the worst union in the world is the best for black folks.'

When Fred Redmond, was a child in Chicago, he and a dozen siblings and cousins spent summers picking cotton for their grandparents in Mississippi.

Fred’s great, great grandparents had been slaves. His grandparents, maternal and paternal, were sharecroppers, working other people’s land. The grandkids’ summer farm work helped Fred’s maternal grandparents meet quotas and scrape by.

Fred says those summers taught him that sometimes people do not reap the value of their work. In Chicago, Fred’s family found a way workers may secure a fairer share of the profits generated from their labor. That, of course, is collective bargaining. Union membership launched Fred’s family into the middle class, and Fred has devoted much of his life to helping ensure that access to others.

Fred’s parents met in Lexington, Miss., where his mother attended high school and his father briefly worked. In 1953, they married and moved to Chicago, where they first stayed with Fred’s uncle, Wilbur Redmond. Fred was born the following year, 1954. His father pumped gas, stocked shelves, swept floors. His mother caught three buses to get to Evanston to clean houses.

Still, they struggled. Fred recalls one time his brother asked for a quarter to give to United Way, which his schoolteacher had told him helped poor kids. Their mother explained to them that they were the poor kids, the kids who got their school vaccinations at a clinic where they had to wait all day, the kids whose parents both worked but whose survival still required food stamps.

Then, suddenly, Fred’s family experienced a revolution. His father got a union job at Reynolds Metals Co. This is what Fred told me about that: “I was 12 and for the first time went to a dentist, a doctor just for your teeth! We got a television. We went to a private doctor for the first time. My father started saving and bought a home. That changed my life. From my grandfather’s experience to my father’s experience, the union changed my life. I am a living example of what a labor union can do for a person’s life.”

Fred’s Uncle Wilbur had gotten a job in the plant through a friend at church. About a year later, Wilbur Redmond was able to help Fred’s father, Curtis Redmond, get hired. Right away, Wilbur Redmond got active in the union and was elected chairman of the grievance committee. Curtis Redmond served on the committee.

Fred’s parents were raised in the Jim Crow South. Fred’s maternal grandfather, Charlie Paige, taught his children and grandchildren to be cautious. Paige, who in addition to sharecropping was a preacher at the Church of God in Christ, served as a role model of circumspection, even when treated with disrespect by white people.

Summers, Fred was told the cautionary tale of Emmett Till, a young teenager from Chicago who was murdered in Mississippi. It happened in 1955, the year after Fred was born. Someone in the town of Money, Miss., accused Emmett of whistling at a white woman. The Klu Klux Klan went to the house where Emmett was staying with a relative, grabbed the 14-year-old out of his bed, then tortured, beat and lynched him.

Those summers in Mississippi taught Fred to be reserved. But during the remainder of the year, he watched as the Union gave his father and uncle the strength to be forthright. Here’s what Fred says, “My father got involved in the Union and was outspoken and spoke to white people in a way that he never would growing up. The Union allowed him to talk back and speak out to white people. He was able for the first time in his life to speak out against injustice. He got that through the Labor movement. He was able to tell a Supervisor that he was wrong, that the Supervisor had treated an employee badly.”

Four days after Fred graduated from high school in 1973, he went to work as a Laborer at the aluminum mill. He got his College degree by attending part-time.

This was a period when black workers still were relegated to the most dirty, dangerous and grueling positions in industry. They were frozen out of transfers and promotions to what were considered white men’s jobs, even at Union plants. But, as Fred says, “Even the worst Union in the world is the best for black folks.”

He explains, “For the first time, you were in an environment where you could speak against the Union and against the company.” In the Union, black workers had the power of collective voice, and they used it to change the Union itself.

Black workers had been protesting job discrimination and disparate treatment by the Union for decades. They formed organizations called Ad Hoc Committees for Black Steelworkers. They even picketed USW events, including the USW National Convention in Chicago in 1968.

Wilbur and Curtis Redmond were active in that effort. Fred was just a teenager when his father and uncle assigned him to hand out fliers at a USW District Conference demanding that the Steelworkers hire Black workers for Staff positions. Some USW members balled them up and threw them at Fred.

A year after Fred started at Reynolds, the USW and nine steel companies signed a consent decree with the Federal government to resolve more than 400 discrimination cases filed by Black Steelworkers and ad hoc committees. The intent of the decree was to enable black workers to transfer out of lower-paid, dead-end jobs to better-paid positions that had been effectively reserved for white workers.

Two years after that, the USW created a new position on its executive board, Vice President for Human Affairs, and appointed a Black Staff Member who worked as an organizer in Memphis to fill the slot. That was Leon Lynch.

At that time, Fred was working his way up through the ranks of the Union, beginning at the Reynolds local. He recalls being passed up for overtime one day and complaining to the grievance man. When the Griever did nothing to help him, Fred went to his Uncle Wilbur, the Chairman of the Committee. Wilbur Redmond told Fred that he agreed with the Griever, and if Fred didn’t like it, he should start attending local union meetings and run against the guy.

First, Fred ran for shop steward. Later, he challenged the Griever for Election and beat him. Ultimately, he became President of Local 3911, which was the largest USW local in the Chicago area. He followed in the footsteps of Rayfield Mooty, who had served as President of the Local when Emmett Till was murdered in 1955. Mooty, who would become an activist with the ad hoc committees, was a cousin to Emmett’s mother, Mamie Till-Mobley, and traveled across the country with her as she sought Justice for her son. Mooty persuaded the USW to write the U.S. attorney demanding action to stop lynchings.

Fred served on the USW staff in Chicago and Pittsburgh. Later, he was an assistant to a USW District Director. After Leon Lynch retired, Fred ran in 2006 to replace him and won.

Fred says he knows his grandparents could never protest against the sharecroppers who owned the land on which they lived. If they complained, even when being cheated on pay, the owner could throw them out.

Because of the injustice he saw inflicted on his grandparents, Fred Redmond has sought to ensure through Collective Bargaining that Workers receive fair compensation for their Labor and that every Worker gain entrance to the middle class.

LEO GERARD, UNITED STEELWORKERS PRESIDENT

Leo Gerard is the president of the United Steelworkers International union, part of the AFL-CIO. Gerard, the second Canadian to lead the union, started working at Inco's nickel smelter in Sudbury, Ontario at age 18. For more information about Gerard, visit usw.org.

New Labor Tactics Can Save America

People Can Regain Power

and Transform America

by Joe Burns

If the American labor movement is to rise again, it will not be as a result of Electing different Politicians, the passage of Legislation, or improved methods of Union organizing.

Rather, workers will need to rediscover the power of the Strike. Not the ineffectual strike of today, where employees meekly sit on picket lines waiting for scabs to take their jobs, but the type of Strike capable of grinding industries to a halt—the kind employed up until the 1960s.

In Reviving the Strike, labor lawyer Joe Burns draws on Economics, history and current analysis in arguing that the Labor movement must redevelop an effective Strike based

on the now outlawed traditional Labor tactics of stopping production and workplace-based Solidarity.

The Book challenges the prevailing view that tactics such as organizing workers or amending Labor Law can save trade Unionism in this Country.

Instead, Reviving the Strike offers a fundamentally different solution to the current labor crisis.

Burns showing how Collective bargaining backed by a Strike, capable of inflicting Economic harm upon an Employer, is the only way for Workers to break free of the repressive system of Labor Control that has been imposed upon us by Corporations and the Government for the past Seventy-five years.

Amen

New Strategy for a New Labor Movement

Secondary Strikes Are Primary to Labor’s Revival

JOE BURNS

Solidarity is the heart and soul of Unionism—the only force capable of confronting power and privilege in society. To revive Unionism, we must recover labor’s long-lost tools of workplace-based Solidarity.

Today, Union activists join each other’s picket lines and hold fundraisers for striking workers. While important, these acts of Solidarity are largely conducted away from the workplace.

In contrast, labor’s traditional forms of workplace-based Solidarity allowed workers to join across Employers and even Industries to confront bosses. Such tactics included Secondary strikes and industry-wide strikes.

What’s a secondary strike? Say workers at a small auto parts plant in Indiana walked out. If they enlisted the support of the Teamsters to refuse to transport the parts, the United Auto Workers to refuse to assemble a car with the parts, and employees of car dealerships to refuse to sell the cars, their power would be multiplied. The original strike would be a primary strike and the others would all be secondary strikes.

In the past, solidarity tactics allowed workers to hit employers at multiple points in the production and distribution chain. By impeding the flow of supplies into a plant, unions pressured the employer to settle a strike or recognize the union. Similarly, secondary boycotts pressured retailers to stop selling struck goods.

Solidarity tactics expanded the site of the conflict, allowing workers to confront employers as a class. Many of the strikes we know from history, like the 1912 Lawrence Bread and Roses textile workers’ strike or the huge postwar steel strikes, are great and historic precisely because they involved tens of thousands of workers across entire industries.

More recently, the UPS strike of 1997 involved 200,000 Teamster drivers and loaders and captured the imagination of union and non-union alike.

1% OUTLAWING SOLIDARITY

From the earliest days of Unions, workers understood the need to unite with others in their industry to seek common standards. Otherwise, workers winning wage increases at one company would be undercut by other companies that failed to match the raises.

Thus in the 1940s through the 1970s, unions negotiated industry-wide or pattern agreements, at times covering hundreds of thousands of workers. Along with this broad scope of bargaining came major confrontations between Workers and Employers.

But in the 1980s, in the face of a deep recession and a legal system hostile to Solidarity, and with Unions failing to mount effective strikes, the patterns and therefore Union standards began to crumble. As this publication argued earlier this year, “After a 30-year employer onslaught, national patterns have been largely devastated or have become top-down conduits for concessions.”

Today, the most powerful forms of Solidarity are outlawed. Secondary strikes and workers’ refusal to handle goods from struck plants were banned by the Taft-Hartley Act in 1947. The Landrum-Griffin Act in 1959 closed a loophole Unions had used in the 1950s, in which the Union would negotiate “hot cargo clauses” where the Employer agreed not to use struck goods.

At a deeper level, modern Labor law forces Unions to bargain with individual employers rather than establish standards on an industry-wide basis. Over the decades since the passage of the National Labor Relations Act in 1935, the Supreme Court tightened the noose on industry-wide tactics.

The Court allowed employers to unilaterally opt out of multi-employer bargaining and made it an unfair Labor practice for a Union to insist on such bargaining. So by the 1980s, employers wishing to break free from pattern agreements had the law on their side.

To be clear, the downfall of Solidarity cannot be attributed solely to legal factors. Unions willingly agreed to no-strike clauses. Over the years, many focused on just the needs of their own members, failing to embrace a Social Unionism that looked out for the interests of all workers. In the 1980s and afterwards, Unions often failed to defend their pattern agreements, allowing special deals for particular “troubled” employers until the pattern was no more.

And Union officials all too often squashed Rank-and-file attempts to join together across bargaining units, even at the same Employer. So, for example, striking Meat packers at Hormel in the mid-1980s were attacked by the United Food and Commercial Workers International for attempting to expand picket lines beyond the Austin, Minnesota, plant.

GOING AFTER THE BIG GUYS

The best current demonstration of the power of secondary activity comes from Farmworkers. The Coalition of Immokalee Workers in Florida forced Taco Bell and other huge corporations to increase pay for tomato pickers in their supply chains.

Rather than target the Subcontracting growers, CIW pressured the major Corporations that purchase the farm produce—companies whose financial interest in the dispute is relatively indirect.

CIW’s work shows the power of an industry-wide approach. Targeting individual growers would not have succeeded, because a grower paying higher wages would not have been able to get Taco Bell to buy its products.

CIW mirrored SEIU’s successful Justice for Janitors campaigns of the 1990s, which made life difficult for all levels of the contracting chain, including the end-users of janitorial services as well as workers’ immediate employers, and sought industry-wide agreements in a City.

For almost 30 years, most Union activists have tried to ignore the fact that restrictions on Solidarity hamstring our movement. We’ve been told that organizing new Members and conducting Corporate campaigns can revive the Labor movement. It’s not working.

REDISCOVERING POWER

Last month, rank-and-file Longshore workers provided a rare example of workplace-based solidarity in action. Fresh Del Monte Produce transferred work from a Union pier in Philadelphia to a non-union facility, threatening 300 Longshore jobs.

To spread their fight to a much bigger site, rank-and-file workers from Philadelphia set up picket lines at the major New York and New Jersey Ports. Workers there honored the picket lines for two days—despite an injunction from a Federal Judge and the opposition of their International Union.

After two days, Del Monte promised to negotiate and workers pulled the picket lines. Workers rediscovered a real sense of collective power, but anemic follow-through from the International means the Philadelphia local is looking at a long fight to win back their work.

Still, workplace-based Solidarity and expanding the dispute were crucial. The Philly workers pulled their natural allies, other Longshore workers concerned about Non-Union ports, into the dispute. They made other Corporations—all those trying to ship goods into New York or New Jersey—feel pain as well, by tying up shipping for two days.

Longshore workers occupy a Strategic spot in the U.S. Economy. Their struggle illustrates why workplace-based Solidarity is outlawed—precisely because it is so effective.

Reviving Solidarity will not be easy. Labor law forbids it. It goes against a Union culture based on bargaining with individual employers. Reviving Solidarity will require new ways of thinking and, perhaps, new forms of Workers organization.

But the labor movement has little choice. As AFL-CIO President Richard Trumka noted in the early 1990s, Unions need “their only true weapon—the right

to strike. Without that weapon, organized labor in

America will soon cease to exist.”

Big Bill says "Amen"

Fed Chair Encourages Labor

Encouraging Economic Leadership

5COMMENTS

04/17/2014

William E. Spriggs

This week, Janet Yellen made her second major speech as chair of the Federal Reserve Bank. Again, her talk as chair is fresh air compared with what is typically heard from Fed chairs. During her first speech in April in Chicago, she actually called out the names of specific unemployed workers—putting a human face on the real effects of Fed policy.

The Federal Reserve is an odd body. Its Board of Governors is nominated by President Obama and confirmed by the Senate. There are seven members of the board, and every two years, a new 14-year term will begin for a slot on the Board. So, in theory, a President would appoint only four members, although Board members rarely finish their terms and Presidents normally appoint more. The Chair and Vice Chair of the Board are chosen by the President and confirmed by the Senate, from among the Board members. Their terms of four years do allow more direction from the president.

The Board of Governors, the President of the New York Federal Reserve Regional Bank and four of the remaining 11 Presidents of the regional Federal Reserve Banks (who rotate their one-year membership) form the policy-making body that sets U.S. monetary policy—the Open Market Committee (FOMC). That committee sets interest rates for the United States, determining how easy it will be for Banks to extend credit and businesses and consumers to borrow to invest in the economy or buy homes or cars—expanding the economy and creating jobs.

The five members of the FOMC who are regional Bank Presidents are chosen by their Regional Bank’s Board of Directors, the majority of whom are elected by the Commercial Banks in that region, with approval from the Fed Board of Governors.

So, for such a powerful policy-making body, this clearly is a design giving more weight to America’s financial elite. Though the operating tenet of U.S. Monetary Policy set by the Humphrey-Hawkins Full Employment Act is to promote full employment consistent with price stability, because Banks loan money, they are clearly more nervous about inflation than unemployment. Inflation lowers the value of dollars, helping those who borrow and get to repay loans with dollars of smaller value. And Workers, of course, are far more concerned with Unemployment than are Bankers.

For too long, the Fed has kept Wall Street happy by assuring everyone that inflation would remain under control, not Unemployment. But that means keeping a tight rein on the economy, resulting in long periods of high unemployment. Weak labor markets break down the efficiency of labor markets. First, the bargaining power of employers is obviously higher when unemployment is high and there are lines of potential hires to choose from. Depressed wages weaken the signals that rising wages send of skill shortages that would encourage people to get training for occupations in demand. Second, many job openings are filled by word-of-mouth networks among friends, co-workers and neighbors. High levels of unemployment, like fallen telephone wires, break down the flow of information on jobs in the networks, making it more difficult for firms and workers to find matches of skills and wages—especially those who are high school educated.

In Yellen’s New York talk, she emphasized the Fed would remain committed to moving toward full employment, warning that may be at least two years away. And, most importantly, she said that rather than a single target—like the unemployment rate—the FOMC would consider a range of information on the labor market.

Predictably, inflation hawks in the financial world don’t like that message. They instead warn that if the economy overheats, it will cause the Fed to take “costly” actions to undo that. But, that is an odd reaction. The Congressional Budget Office estimates our unemployed resources will cost the economy more than $1 trillion compared with producing at our nation’s potential this year. And that is five years into this “recovery.” Given the unprecedented efforts of the Fed to move the economy forward, the lesson of this downturn is that the Fed should seriously doubt its ability to get America back to full employment if it takes actions that slow the economy. What could be more costly?

Tuesday, September 2, 2014

Labor Wins in A World Where Corps Rule

Labor Day Victories to Celebrate

Monday, 01 September 2014 10:10By Dean Baker, Truthout | Op-Ed

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Employees and supporters rally during the workday in the parking lot of Market Basket headquarters in Tewksbury, Mass., July 18, 2014. (Photo: Katherine Taylor / The New York Times)

In recent decades the news for the country’s workers and the labor movement has been mostly bad. We’ve seen stagnant wages, declining unionization rates, anti-union court rulings, and for the last six years mass unemployment as the labor market is still far from recovering from the collapse of the housing bubble. It would be easy to go on about how bad things are, but it is worth highlighting a couple of good news items against this backdrop.

First, there was the victory of the workers at Market Basket, the Boston based grocery store chain. This was far from a normal labor action. It involved most of the workers, and most of the managers, uniting to bring back Arthur T. Demoulas as CEO of the company, after he had been fired in a coup engineered by his cousin Arthur S. Demoulas. Workers supported Arthur T. because he had a policy of paying decent wages and providing good benefits. His cousin was looking to trim costs to ready the firm for a private equity buyout.

The workers had support of people in the community who boycotted the stores and many political figures in the area who proclaimed their support of the Arthur T.’s high road policy. Last week Arthur S. struck a deal and agreed to a buyout offer that put his cousin back in charge.

The other piece of good news for workers was the decision by 27,000 home health care workers to join the Service Employees International Union (SEIU). This is an important step towards making these decent quality livable wage jobs. In other states where home health care workers have organized, like Illinois and California, wages have risen by 30-40 percent from levels that had been near the minimum wage.

Higher pay not only means a better living standard for these workers and their families, it will mean better care for patients. Low-paying jobs are high turnover jobs. No one will stay at a job paying $7.25 an hour if they see an opportunity to get a living wage job. The sick and the elderly will not be getting good care if they constantly must adjust to new providers. By allowing workers to remain at their jobs, pay increases mean that patients will get better quality care.

But enough of the good news, the big picture is still not looking great. While Market Basket may continue to go the high road, it faces stiff competition from low-road competitors. The outcome is far from clear.

It is worth noting that the low-road path is not always a winning route even on a pure dollar and cents basis. Back in 2007, the electronic retail chain Circuit City fired its more senior employees as a cost saving measure. Whatever it saved in wages, it lost in sales, as customers realized they could no longer count on finding knowledgeable sales staff. It filed for bankruptcy two years later.

The Minnesota victory for home health care workers is inspiring but Unions face an enormous uphill drive in organizing. In addition to the opposition of employers, they also have to deal with a hostile court. Most recently the Supreme Court ruled that unionized home health care workers who are paid by the government cannot enforce contracts that require that all the workers benefitting from the contract pay for their Union representation. There is a real risk that the court will apply this principle to all public sector workers and possibly even the workforce in general.

This further increases the asymmetry in labor law. When workers do an illegal action, like an unauthorized strike, employers can go to court and within hours have an injunction threatening Union leaders with jail if they don’t end the strike. By contrast, if the Company illegally fires workers for trying to organize a Union, it can take months or even years for them to get a hearing at the National Labor Relations Board (NLRB). The worst the employer risks is being forced to hire back the workers and make up back pay.

Of course the biggest factor affecting workers’ standard of living in the years ahead is the overall state of the economy. Here also there is much to worry about. While Federal Reserve Board Chair Janet Yellen has repeated her commitment to allowing the economy to grow and unemployment to fall, the inflation hawks are constantly looking for new excuses to press the Fed to raise interest rates and dampen an already weak recovery.

Naturally the inflation hawks are prepared to lie, cheat, and steal to get their way. Inflation erodes the value of the money they lent. They don’t care if workers have jobs. In the absence of substantial political pressure for more jobs and growth, Yellen will eventually have to give in to the inflation hawks. If the Fed acts to prevent the unemployment rate from falling much further, labor markets will never get tight enough so that most workers are in a position to share in the gains of economic growth. That would make the picture on future Labor Days even bleaker than it is today.

So we have a full agenda for the year ahead. We have to ensure that workers have the right to organize and bargain collectively and that the Fed doesn’t act to slow the economy and throw people out of work.

DEAN BAKER

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He is a regular Truthout columnist and a member of Truthout's Board of Advisers.

Sunday, August 31, 2014

Seattle SEIU Helps Win $15 per Hour Minimum Wage

$15 and Change: How Seattle Led the Country's Wage Revolution

Sunday, 31 August 2014 09:11By David Goldy Goldstein, YES! Magazine | News Analysis

A sign held by a minimum wage protester outside Seattle city hall. (Photo: Toby Scott)"It's easy to not think about the person serving you your food,"

21-year-old Caroline Durocher told me as she prepared for the 8 p.m. to 2 a.m. shift at a Taco Bell in Seattle's Ballard neighborhood.

Durocher had been working low-wage jobs since she was 16, but after five years of so-called "entry-level" employment, she felt stuck. Unable to get a better job without a college degree, but unable to earn enough money to go back to college, Durocher barely scraped by serving up 99-cent tacos to a steady stream of impatient drive-thru customers before heading home to the studio apartment she shared with her father.

"We definitely get disrespected a lot and looked down upon for being in fast food," sighed Durocher. But she was about to earn some respect.

Shortly after 11 p.m. that night, May 29, 2013, Durocher walked off her $9.19 an hour job to become the first fast-food worker in Seattle to strike for a $15 an hour minimum wage. The next day, hundreds of Seattle fast-food workers and their supporters followed her lead, temporarily shutting down as many as 14 restaurants to chants of "Supersize our salaries now!"

It was an outrageously ambitious goal—a 64 percent pay hike to more than twice the federal $7.25 an hour minimum wage. Yet only one year and four days later, the Seattle City Council met their demands, unanimously approving the first $15 minimum wage in the nation. Seattle's path to a $15 minimum wage is a winding tale of effective organizing, smart messaging, bold experimentation, opposition missteps, and blind dumb luck. It is also a road map for bypassing our nation's partisan gridlock by rolling out a broader progressive agenda one city at a time.

Partly through its early support of Occupy Wall Street, New York Communities for Change (NYCC, formerly the New York City chapter of ACORN) came to focus on the minimum wage as a tool for improving the lives of the working poor, taking a lead role in organizing the first of what would eventually become a series of national, rolling, one-day, fast-food strikes. It was a bold plan with potentially big media appeal. But what exactly were the workers' demands? A $10 minimum wage seemed way too low, especially in pricey New York City, but $20 an hour seemed unrealistic. It was at a meeting in Brooklyn that organizers settled on splitting the difference. And thus the $15 minimum-wage movement was born.

On Nov. 29, 2012, about 200 fast-food workers walked off their jobs in New York City to strike for $15 an hour and the right to unionize, the largest such job action ever to hit the industry. The powerful Service Employees International Union (SEIU) had helped back NYCC's efforts and quickly started funding organizing efforts nationwide. It was representatives from SEIU-funded Good Jobs Seattle who first approached Durocher at her Seattle Taco Bell.

"Local organizers came into my store and said, 'We want to help you make a living wage," Durocher recalled, "and I said, 'Awesome!'"

But the fast-food strike was not SEIU's only living-wage campaign in Washington state.

SEIU and other unions had been trying to bargain on behalf of ground crew workers at Sea-Tac International Airport—baggage handlers, fuelers, cleaners, skycaps, others—for years, but marches and pickets and rallies had zero impact. Alaska Airlines had laid off its Unionized ground crew workers a decade earlier and Outsourced their jobs, at greatly reduced wages, to nonunion contractors who refused to negotiate. But in 2013, inspired by the fast-food strikes, officials at SEIU Local 775 came up with a novel mechanism for applying political pressure: a local $15 minimum-wage initiative.

Sea-Tac Airport is located entirely within the Municipal boundaries of the City of SeaTac, population 27,667. Gathering the few thousand signatures necessary to get an initiative on the City ballot would be easy, and, with an army of trained organizers at their disposal to canvass voters, passing an initiative would be a very real threat. But it was only intended as a threat.

"If the Port of Seattle and Alaska had chosen to negotiate in Sea-Tac, there never would have been an initiative," says SEIU 775 President David Rolf. To SEIU's surprise, Alaska and its contractors refused to budge.

The campaign was on. And in more ways than one.

Kshama Sawant is an unlikely political superstar: an immigrant woman of color, a Community College Economics Instructor, and an avowed Socialist who got her activist start in the Occupy Seattle movement. Her campaign for Seattle City Council, announced in March 2013, seemed quixotic. Its centerpiece: a $15-an-hour minimum wage.

Even in ultra-progressive Seattle it seemed a stretch that a Socialist could win an at-large, citywide election.

By October, the three-pronged $15 movement—the fast-food strikes, the SeaTac $15 initiative, and the insurgent Sawant campaign—was dominating local political headlines. Eager to win both street cred and Labor endorsements, both candidates in Seattle's hotly contested Mayoral race suddenly jumped on board, promising a $15 minimum-wage ordinance if elected. Several council members followed suit.

In the end, Sawant won a stunning 50.7 percent of the vote against a widely endorsed, scandal-free Democratic incumbent. In nearby SeaTac, the $15 initiative held on for a narrow victory despite an expensive media campaign launched by Alaska Airlines and the hospitality industry.

SEIU, Sawant, and their supporters had turned the November election into a referendum on the $15 minimum wage, and the message from voters was clear. By the end of December, eight of nine Seattle City Council members had publicly endorsed a $15 minimum wage.

Sawant and her Socialist Alternative colleagues built on their electoral victory, creating 15 Now as a viable threat to run a $15 minimum-wage initiative should the council fail to pass an acceptable ordinance. But newly elected Mayor Ed Murray followed through on his promise and convened an Advisory committee of Business, Labor, and social-service leaders to hammer out a compromise that phases in $15 over three to 10 years, depending on the size of the business.

In a nod to the fast-food strikers who sparked this movement, most franchises will count as big businesses, which means that most of Seattle's 33,000 fast-food workers will be phased in to $15 an hour by Jan. 1, 2017. Congratulations, Caroline.

A lot of things had to happen just right for Seattle to win $15. The fast-food strikes, the SeaTac initiative, and the Sawant campaign all fed off of and into each other, creating the perfect political storm. But the movement is spreading.

In San Francisco, the City Council unanimously voted to send a minimum-wage initiative to the November 2014 ballot: $15 phased in by 2018 for businesses of all sizes, with no tip or benefit deduction. It is expected to pass easily. And Oakland, Berkeley, San Diego, Los Angeles, and other California cities are all moving forward with their own minimum-wage measures of various shapes and sizes.

Farther east, several Chicago aldermen have proposed a $15 minimum wage, prompting a noncommittal Mayor Rahm Emanuel to convene a Seattle-style minimum-wage task force to hammer out a compromise. And in Massachusetts, both houses of the legislature have approved a highest-in-the-nation state minimum wage of $11 an hour.

Meanwhile, back in New York City, where the $15 movement started, NYCC moved on from the fast-food strikes to become an early supporter of newly elected Mayor Bill de Blasio, who campaigned on seeking authority from the state to raise the City's minimum wage to $15. Pressured by de Blasio's victory and hoping to win support from the Mayor's Progressive base, New York Gov. Andrew Cuomo recently became a convert to the cause, asking legislators to approve a $10.10 state minimum wage while allowing cities to raise the local wage to 30 percent above that.

Immigrant rights organizer Pramila Jayapal, a member of Mayor Murray's advisory committee and herself now a candidate for Washington State Senate, credits Seattle's bold embrace of $15 for "pushing the national consciousness" and broadening the perception of what is possible. "We're in a new environment where people are taking back control into local hands," Jayapal says.

Where once the national conversation focused around proposals to raise the federal minimum wage to just $10.10 an hour, Seattle's achievement has given advocates "the opportunity to think even bigger," Jayapal explains. "That's huge."

Sawant agrees. She's also quick to point out that Seattle's $15 minimum was only achieved through relentless grassroots pressure—the strikes, the rallies, the crowded public forums, and of course the constant threat of an even more sweeping $15 initiative. "They gave $15 not because they like it but because they couldn't stand the pressure," Sawant insists. In April, she and her Socialist Alternative comrades held the first 15 Now National Conference, drawing to Seattle hundreds of minimum-wage activists from across the country, with the goal of setting up active chapters nationwide. Again, it is an outrageously ambitious objective. "The winning strategy is not to allow the political establishment to define your boundaries," Sawant says.

Meanwhile, SEIU and other labor unions are using the organizations they already have to apply more traditional forms of political pressure, filing local ballot measures where politicians are moving too slowly and threatening to support pro-minimum-wage challengers to politicians who fail to move at all.

There are lessons to learn from Seattle: Elections matter. Grassroots activism matters. Individuals like Durocher matter. But the most important lesson in this era of partisan gridlock is that sometimes the most direct path toward achieving a national progressive agenda is to pursue one locally. Had fast-food workers in New York City never walked out on strike, Seattle fast-food workers might never have won a $15 minimum wage. And Seattle's $15 victory provides both the example and the momentum necessary for workers in New York and other cities to win the same. It is a strategy of distributed politics befitting the Internet age.

As Council member Sawant proclaimed just before casting her vote in favor of the ordinance, slyly paraphrasing the Communist Manifesto: "Fifteen in Seattle is just a beginning. We have an entire world to win."