Daily Digest - January 6: Putting Policies That Help Workers Back on the Agenda

Jan 6, 2014Rachel Goldfarb

Click here to receive the Daily Digest via email.

Economists Agree: Raising the Minimum Wage Reduces Poverty (WaPo)

Click here to receive the Daily Digest via email.

Economists Agree: Raising the Minimum Wage Reduces Poverty (WaPo)

Roosevelt Institute Fellow Mike Konczal looks at a new paper from economist Arin Dube, which finds that regardless of other effects, a higher minimum wage would pull people out of poverty. That, Mike argues, should be enough reason to consider an increase.

Jobless Left in Cold on Benefits (Melissa Harris-Perry)

Roosevelt Institute Fellow Dorian Warren discusses whether emergency unemployment benefits will be addressed even though they're not on House Republicans' agenda. He thinks that the GOP will be forced to deal with this issue whether it wants to or not.

The Gap in Medical Education (LA Times)

Roosevelt Institute | Campus Network alum Rahul Rekhi argues that medical school curricula should be changed to include health policy. Doctors who are better informed about the basics of policy, he argues, are more able to serve as advisors to patients and lawmakers.

The Group That Got Health Reform Passed is Declaring Victory and Going Home (WaPo)

Harold Pollack interviews Roosevelt Institute Senior Fellow Richard Kirsch on the work of Health Care for America Now, which closed shop at the end of 2013. Richard discusses how this model of health reform came to prominence, and the political missteps that happened along the way.

US Economy Losing 'up to a $1bn a week' After Jobless Benefits Cut (The Guardian)

Paul Lewis reports on the assessment of Harvard economist Lawrence Katz, who based his calculation on the "multiplier effect" caused when people on unemployment insurance spend that money. Katz calls the cut "irresponsible" in the still-recovering economy.

H&M Plans to Pay Garment Workers Fair Wages. Here's Why That's Probably BS. (MoJo)

Dana Liebelson critiques the low-priced retailer's announcement, pointing out some flaws in its plan for fair wages. H&M isn't releasing any real wage numbers, and the fair-wage promise isn't extended to subcontractors along the supply chain.

Local Labor Influence Takes Hit in Boeing Contract (ABC News)

Phuong Le reports on a union vote by the Machinists Local 751 in Seattle, which narrowly accepted a new contract with Boeing. The contract had previously been rejected for cuts to pensions, but national leadership urged a second vote when it looked like Boeing would move jobs out of Seattle.

  • Roosevelt Take: Roosevelt Institute Senior Fellow Richard Kirsch praised the union for its initial pushback against the Boeing contract.

The Year of the Great Redistribution (Robert Reich)

Robert Reich argues that the stock market's all-time high at the end of 2013 represents a massive redistribution of wealth from workers to the wealthiest Americans. Those profits have come, in large part, by pushing down wages, and government has permitted this instead of fighting back for labor.

Share This

Daily Digest - January 3: Progressives Have a Lot to Celebrate – and Fight For

Jan 3, 2014Rachel Goldfarb

Click here to receive the Daily Digest via email.

The 25 Best Progressive Victories of 2013 (HuffPo)

Click here to receive the Daily Digest via email.

The 25 Best Progressive Victories of 2013 (HuffPo)

Peter Dreier highlights real accomplishments from the progressive movement last year, ranging from momentum on the minimum wage to continued pressures on Wall Street. He plugs the Roosevelt Institute for its involvement in the fight to reduce student debt.

  • Roosevelt Take: Roosevelt Institute | Campus Network National Field Strategist Joelle Gamble writes about student-led proposals for addressing the student loan crisis.

The great story (CJR)

Dean Starkman argues that a shift in journalism practices from investigative reporting to access reporting, which involves obtaining inside information from powerful people, caused mainstream financial journalism to miss the signs of the financial crisis in 2008.

Finally, Some Conservative Ideas to Solve the Jobs Crisis (The Daily Beast)

Jamelle Bouie praises Michael Strain of the American Enterprise Institute for putting forward a real plan for ending mass unemployment from a conservative perspective. Unfortunately, the GOP's brand of conservatism doesn't include these kinds of proposals.

The Strange Case of American Inequality (Project Syndicate)

J. Bradford DeLong argues that this economic crisis and its impact on America's productive capabilities is actually worse than the Great Depression. The lack of political reaction leads him to suggest that American democracy could be as damaged as the economy.

Low-wage workers’ movement looks to build on banner year (MSNBC)

Ned Resnikoff sees the new labor tactics of 2013 as a possible source of revival for unions. The question is whether alternative labor groups organizing one-day strikes at fast food restaurants and at Wal-Mart can maintain momentum.

Meet the Americans Who've Lost Their Unemployment Benefits: "I'm Thoroughly Petrified" (MoJo)

Dana Liebelson collects stories from people who have been out of work for more than six months, and therefore lost their unemployment benefits when Congress failed to extended emergency benefits. All of these workers have been job hunting; it just hasn't worked out yet.

Senate Democrats Plan Fast-Track Fix to Reinstate Lost Unemployment Benefits (The Guardian)

Paul Lewis and Dominic Rushe explain the bill that the Senate hopes to vote on early next week, which would extend benefits through March. There's little question the bill will pass the Senate, but no one knows what will happen in the House.

New on Next New Deal

Looking to 2014: The Emerging Movement for the Next New Deal

Roosevelt Institute Senior Fellow Richard Kirsch is optimistic about what the progressive movement can accomplish this year. He sees growing support for the fight against economic inequality and smart strategies developing at the grassroots level.

Share This

Looking to 2014: The Emerging Movement for the Next New Deal

Jan 2, 2014Richard Kirsch

The rise of a new progressive organizing is cause to believe that economic reform and a shift toward broadly shared prosperity are within reach.

The rise of a new progressive organizing is cause to believe that economic reform and a shift toward broadly shared prosperity are within reach.

Thomas Edsall, who now is capping off his long career writing insightfully about the relationship between economics and public opinion as a blogger for The New York Times, concluded a piece in late December by saying, “Progressives are now dependent on the fragile possibility that inequality and socioeconomic immobility will push the social order to the breaking point and force the political system to respond.”

Edsall’s bleak prognosis raises the biggest question facing not only progressives, but the future of our democracy: is the political system in the United States capable of responding to the escalating crisis of stagnant wages, shrinking benefits, dissolving economic opportunity, and disappearing hopes of living anything that resembles the American Dream?

It is a question I ask myself every day. But I reach a different conclusion than Edsall, because for all his powers of observation, he misses the role that people play in changing history. I see a growing movement of Americans organized by progressives who are not waiting for the social order to break, but are instead forcing the political system to respond.

Edsall reaches his conclusion by way of two commentators, my colleague Mike Konczal at the Roosevelt Institute and Harvard economist Ben Friedman. Konczal’s analysis of the quandary is cogent, as he provided “a two part description of the liberal state” in a 2011 post:

#1 you would have the government maintaining full employment, empowering workers and giving them more bargaining power, and #2 you would have a safety net for those who fell through the cracks… I think it is safe to say that liberals have abandoned #1 and doubled-down on #2… Without a strong middle and working class you don’t have natural constituencies ready to fight and defend the implementation and maintenance of a safety net and public goods. The welfare state is one part, complementing full employment, of empowering people and balancing power in a financial capitalist society.

Friedman’s contribution is to point out, as Edsall summarizes, that “during hard times people become less altruistic and more inclined to see the poor as undeserving.” Friedman says that when people are squeezed economically, rather than identifying with those still worse off, they “enter a period of retreat and retrenchment.” That is certainly what we are seeing now, with the government cutting unemployment benefits, food stamps, and a much larger swath of the safety net in a shrinking budget.

On the other hand, Friedman says times of broadly-shared prosperity encourage “greater generosity toward those who, through some combination of natural circumstance, market forces and sheer luck, have been left behind.”

When we look at the big periods of progressive change in the 20th century through this lens, we can ask, are we more similar to the soaring post-World War II middle class that led to the Great Society, or to the wrecked economy that led to the New Deal? After the Great Recession, that’s a no-brainer.

So is Edsall then correct in concluding that the only way to get to the next New Deal is waiting for another disintegration of the economy like we saw after the Great Depression? Or is even that a misreading of New Deal history, in which decades of building a movement of working people laid the groundwork for the New Deal laws that established the right to organize unions, fair labor standards like a minimum wage, and social insurance programs like Social Security and unemployment compensation?

If we have to wait, we’re in big trouble, because as we saw in 2008, we are much less likely to see another collapse like the Great Depression thanks to the progressive accomplishments of the 20th century. The aggressive use of the Federal Reserve and banking regulations prevented a total collapse of the financial system. The safety net – food stamps, Medicaid, etc. – and the social insurance programs of unemployment insurance, Social Security, and Medicare prevented widespread destitution. These measures allowed us to have a Great Recession rather than a second Great Depression.  

But the Great Recession also deepened the three-decade-long trend of families seeing their incomes and lifestyles squeezed by stagnant wages, eroding benefits, and the rising costs of gateways to opportunity. As a result, we are seeing an escalation of the path to the next New Deal: organizing people to demand that we create a 21st century economy of broadly-shared opportunity and prosperity.

The past year saw the explosion of organized fast food workers, from a handful of community-supported walk-outs demanding higher wages a year ago to actions involving thousands of workers and supporters in some 130 cities in December. The growing movement earned national as well as local news coverage.

Less visible, but deeper, is the emergence of new forms of worker organizing, taking place largely outside of traditional unions and the national labor law, known generally as the workers’ center movement. Domestic workers, through the National Domestic Workers Union, have won passage of laws giving them new labor protections in California and New York. Tomato pickers in Florida, under the banner of the Coalition of Immokalee Workers, have won higher wages by building consumer pressure against the supermarkets and restaurant chains that buy the crops they pick. Immigrant and low-wage workers around the country, at workers’ centers that are part of the National Day Laborers Organizing Network, have resisted wage theft and won basic protections in day labor and construction. The examples go on and are analogous to the emergence of the labor movement in the late 19th and early 20th centuries.

The long-simmering pressure for raising the minimum wage is now becoming a national political force, with Democrats embracing the issue. The passage of a $15 minimum wage in Sea-Tac, outside of Seattle, will be a harbinger of more local actions to define a minimum wage in ways that make sense for people’s lives, not some political calculation about what’s possible.

In New York City, City Council Speaker Christine Quinn’s reluctance to support paid sick days, siding with the business community, destroyed her support among the progressive base, paving the way for the election of Bill de Blasio, who rose both on his progressive platform and as the result of a decades-long base-building project in the city. These contests will continue to escalate, as we’ve seen in Philadelphia, where a Democratic mayor has twice vetoed a paid sick day ordinance approved by the City Council. As they do, Democrats who take the Quinn route will find themselves on the sidelines with her.

Cultural and demographic trends are encouraging, too. While the progressive politics of the growing numbers of the young, single women, and Latinos have garnered notice, another hopeful trend is that among non-college-educated whites, one of the most conservative groups in the country, the young are much more progressive than their older counterparts. Pope Francis has become an instant hero not just by easing back on his church’s focus on sex, but by directly challenging trickle-down economics.

In all this, history will look at President Obama as a transitional figure. He has pledged to make income inequality the defining issue of the day, but he still chooses a low-wage Amazon warehouse as a venue to address the issue. He still seeks to reconcile the destruction of the middle class with the rise of Wall Street.

Wall Street and K Street and the U.S. Chamber of Commerce, all greasing the system while stoking resentment of “the takers” and people of color, in a nation with a deep “it’s up to me and my family alone” streak, remain huge obstacles to building an America that works for all. The change we are making will take time.

What gives me hope is that, for all its flaws, we still live in a nation where popular will can make change. And we have a history of creating change from below and then electing leaders who, like FDR, drilled into the deep well of hope that has given life to the best of America, from the Revolution, through the Civil War, the Progressive era, the New Deal, the Civil Rights Movement, and the Great Society.

Earlier this week, on the last day of 2013, I called up Mike Konczal and asked him to reflect on Edsall’s dark conclusion. Here’s what he told me: “I’m more optimistic than I was when I wrote that piece two years ago. People are agitating, building new infrastructure. Issues like the minimum wage are gaining prominence. We’re seeing mobilizing among non-traditional workers like day-care workers.”

It is up to us to make history. Let’s get to work in 2014. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

 

2014 banner image via Shutterstock.com

Share This

Daily Digest - January 2: What Kind of Year Will It Be for Workers?

Jan 2, 2014Rachel Goldfarb

Click here to receive the Daily Digest via email.

2013 Was a Bad Year for Wall St. Lobbyists (TNR)

Click here to receive the Daily Digest via email.

2013 Was a Bad Year for Wall St. Lobbyists (TNR)

Roosevelt Institute Fellow Mike Konczal argues that financial reform had a surprisingly good 2013. The combination of engaged activists and intellectuals and supportive legislators and regulators led to several stronger-than-expected regulations.

NSA Scandal May Help Build Cyber-Barriers (Bloomberg View)

Roosevelt Institute Fellow Susan Crawford suggests that the NSA's spying could create further incentive for European Internet companies to establish more secure, and therefore more segregated, Internet traffic routing in the European Union.

Debt, No Degree: Bills Mount for Ex-College Students Who Never Reached the Finish Line (NBC News)

Former Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz looks at how people who took out loans for school but didn't finish are handling that debt in this economy. Some now see the attempt at bettering their lives through education as a complete waste.

January May be Do-Or-Die for Jobless Benefits (WaPo)

George Zornick looks at the options to bring back extended unemployment insurance, which lapsed on December 28, and concludes that the time is now. If an extension isn't passed this month, it's more and more likely that it will get pushed aside for other policy priorities.

North Carolina's Failed Ending of Long-Term Unemployment Benefits (Policyshop)

Matt Bruenig uses charts to explain why North Carolina's official unemployment rate has dropped after the state cut off benefits to the long-term unemployed. It would be great if it was because employment was up, but instead people are dropping out of the labor force entirely.

Nearly One And A Half Million Workers Will Get A Raise On New Year’s Day (ThinkProgress)

Bryce Covert lays out the list of states and cities where the lowest-paid workers got a raise yesterday. Some of these raises come from a minimum wage indexed to inflation, and four states and one town passed new minimum wage laws in 2013 that have just gone into effect.

Supporters of $15 Wage Seek Appeal of Ruling (NYT)

Kirk Johnson reports on the appeal request, which follows a December 27 ruling that the new minimum wage in SeaTac, Washington won't apply at the Seattle-Tacoma International Airport, which is within the town limits but administered by the Port of Seattle.

Share This

The Best from the Roosevelt Institute's Four Freedoms Center in 2013

Dec 30, 2013Rachel Goldfarb

The Roosevelt Institute's Daily Digest is taking a break for the holidays. We'll be back on January 2, but in the meantime, we're rounding up highlights from our blog in 2013. Today, we have highlights from the Fellows in the Four Freedoms Center.

Researchers Finally Replicated Reinhart-Rogoff, and There Are Serious Problems.

The Roosevelt Institute's Daily Digest is taking a break for the holidays. We'll be back on January 2, but in the meantime, we're rounding up highlights from our blog in 2013. Today, we have highlights from the Fellows in the Four Freedoms Center.

Researchers Finally Replicated Reinhart-Rogoff, and There Are Serious Problems.

Roosevelt Institute Fellow Mike Konczal breaks the story that researchers at the University of Massachusetts, Amherst found major flaws in the data Carmen Reinhart and Ken Rogoff used to support the claim that high debt-to-GDP ratios were tied to weak economic growth.

Richard Nixon Knew Family Planning Saves Taxpayer Dollars, But Today’s GOP Doesn’t Care

Roosevelt Institute Fellow Andrea Flynn explains why increasing Title X family planning funds will be essential to maximize the reach and impact of the Affordable Care Act, especially when only some states are expanding Medicaid.

The Jobs Emergency

Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative Jeff Madrick explains why jobs should be the number one issue on the government's agenda, and what questions policymakers must consider to solve this problem.

  • Video: Jeff summarizes three steps that should be taken to address the jobs emergency.

Raising the Minimum Wage is a Step Toward Economic Freedom

Roosevelt Institute Fellow Annette Bernhardt calls for the economic freedom that comes from a higher wage floor, along with stronger enforcement of the minimum wage, including for categories of workers are currently exempt, such as home care workers.

Obama Updates His Story About America

Roosevelt Institute Senior Fellow Richard Kirsch considers the narrative presented by the President in his December 4 speech on economic inequality, in which access to the American Dream is limited by rising inequality.

To Build a Nation and a People: FDR and the WPA

Roosevelt Institute Senior Fellow and Hyde Park Resident Historian David Woolner suggests that today's Congress would do well to learn from President Franklin D. Roosevelt's model during the Great Depression and create jobs directly in order to combat long-term unemployment.

How Can We Help America's Opportunity Youth? Five Lessons Learned in New Orleans

Nell Abernathy, Program Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative, considers the data on opportunity youth, who are between age 16 and 24 and neither working nor in school, and asks what policies could best serve them.

Comcast Profits from the Poor with Internet Essentials Deal

John Randall, writing for the Roosevelt Institute's Telecommunications Equality Project, says that Comcast's Internet Essentials program helps the company's customer acquisition and public relations departments far more than it helps low-income households.

Share This

Daily Digest - December 24: A Job Market That's Two Sizes Too Small

Dec 24, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

The Roosevelt Institute's Daily Digest is taking a break for the holidays. We'll be back on January 2, but in the meantime, we're rounding up highlights from our blog in 2013. On Friday, December 27, we'll share the best posts from our Millennial networks. On Monday, December 30, we'll have highlights from the Four Freedoms Center.

Click here to receive the Daily Digest via email.

The Roosevelt Institute's Daily Digest is taking a break for the holidays. We'll be back on January 2, but in the meantime, we're rounding up highlights from our blog in 2013. On Friday, December 27, we'll share the best posts from our Millennial networks. On Monday, December 30, we'll have highlights from the Four Freedoms Center.

A Roosevelt Institute staffer's sister has gone missing in Buffalo, NY. Watch this video for more information. If you're able to help in any way, you can connect with the search efforts on Facebook.

Five Days Until Unemployment Insurance Ends (The Last Word with Lawrence O'Donnell)

Roosevelt Institute Fellow Dorian Warren decries the political viewpoint that casts the unemployed as too lazy and undeserving of aid. He notes that ending long-term unemployment insurance will put government support for the unemployed at its lowest level since 1950.

Rand Paul Has Some Festivus Grievances with Washington. The Unemployed Have Some With Him. (WaPo)

Ezra Klein suggests that the long-term unemployed have grounds to complain that Washington isn't doing enough to help them find work. There just aren't enough jobs to go around, so cutting off benefits isn't going to solve anything, despite what Senator Paul says.

10 Reasons That Long-Term Unemployment Is a National Catastrophe (MoJo)

Kevin Drum explains all the reasons that Americans should be paying much more attention to the problem of long-term unemployment, not the least of which is that long-term unemployment is estimated to cost around 7 percent of potential GDP growth per year.

Living Wage Ruling Gives Queens Casino Workers a Fighting Chance (NYT)

Rachel L. Swarns reports on the sudden jump in wages for workers at a casino in Queens, NY thanks to a labor arbitrator's decision to require the casino to pay a real living wage. Before the decision, many of these workers relied on second jobs or government assistance.

Phoenix Becomes First City To End Chronic Homelessness Among Veterans (ThinkProgress)

Scott Keyes reports on Phoenix's efforts, which include a "Housing First" policy that prioritizes supportive housing over sobriety requirements. The Obama administration has called for an end to veteran homelessness by 2015, but the rest of the country is far behind Phoenix.

The Business Case for Paternity Leave (The Atlantic)

Arlie Hochschild argues that paternity leave is actually better for the bottom line, particular in this unpredictable economy. Her proof is from a ranking of countries' "business climate" by the World Economic Forum, which puts two countries with paternity leave ahead of the U.S.

The Obamacare Exchange Will Stay Open Today. Here's Why (TNR)

Jonathan Cohn says the administration pushed back the deadline for buying insurance on the federal exchange to give those experiencing rate shock a little more time. Employer-subsidized insurance obscures costs, which makes almost any plan look inordinately expensive to individuals.

Share This

Daily Digest - December 23: It's Hard to Trust in Systemic Economic Inequality

Dec 23, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

In No One We Trust (NYT)

Roosevelt Institute Chief Economist Joseph Stiglitz argues that the behavior of banks leading up to the financial crisis and rising inequality have eroded Americans' trust in a fair economy. Stiglitz says that trust must be rebuilt through stronger regulations.

Click here to receive the Daily Digest via email.

In No One We Trust (NYT)

Roosevelt Institute Chief Economist Joseph Stiglitz argues that the behavior of banks leading up to the financial crisis and rising inequality have eroded Americans' trust in a fair economy. Stiglitz says that trust must be rebuilt through stronger regulations.

It’s Still Too Early for Congress to Stop Worrying About Unemployment (WaPo)

Roosevelt Institute Fellow Mike Konczal looks at data that demonstrates that the labor market hasn't fully recovered from the financial crisis. Mike says that policymakers have moved on from unemployment despite the data, but that doesn't mean the crisis is over.

Is the Economy in Good Shape–or Not? (MSNBC)

Timothy Noah considers the theory that long-term news about the economy demonstrates "secular stagnation," which could mean that the recovery won't last or is weaker than expected. GDP growth should reveal whether the slow recovery is a short-term or long-term problem.

Deserving vs. Undeserving Poor — for the Love of God, Here We Go Again (Washington Monthly)

Kathleen Geier looks at recent discussion of poverty by policymakers, journalists, and researchers. She concludes that those who divide the poor into "good" and "bad" groups are ignoring the structural causes of poverty, which can be fought through existing anti-poverty programs.

Wall Street Unlocks Profits From Distress With Rental Revolution (Bloomberg News)

Heather Perlberg and John Gittelsohn report on the new hot market on Wall Street: rental homes, and corresponding securities. These investors' high cash bids beat out individual prospective homeowners, which is a problem when a house is a key way to build family wealth.

Goldman Real-Estate Play Skirts Volcker Ban (WSJ)

Craig Karmin and Justin Baer explain how Goldman Sachs is working around the Volcker rule's prohibition on banks owning more than 3 percent of a private equity portfolio. The rule doesn't apply to real estate, which creates an opening for highly concentrated and potentially risky investments.

Share This

Local Government is the Secret Weapon in the Fight Against Economic Inequality

Dec 12, 2013Joelle Gamble

With Congress gridlocked, we must look to local governments to pursue more innovative strategies for promoting equal opportunity.

With Congress gridlocked, we must look to local governments to pursue more innovative strategies for promoting equal opportunity.

Americans don’t believe in guaranteed equal outcomes, but we do believe in equal opportunity and the ability to achieve a decent livelihood if one works hard. Unfortunately, the United States, despite being the world’s largest economy, is in the top quartile of the most unequal states, along with countries like Bulgaria, and is more unequal than all of Europe. In addition to high levels of income inequality, the United States still faces a jobs crisis, meaning that many people who want to work to achieve economic stability cannot find gainful employment.

Given the congressional gridlock impeding efforts to promote economic opportunity at the federal level, we should look to community-based solutions to mitigate our unsustainable levels of inequality.

Over the past several decades, political leaders have tried to stimulate the economy on the supply side. They have provided incentives for businesses to invest in capital improvements, loosened regulations to encourage business growth, and lowered tax rates to give investors an incentive to take risks and create jobs. But we do not have a supply-side problem.

Our problem is on the demand side. Average Americans have so little wealth that they cannot afford to consume what companies sell. Income inequality has grown to the extent that those who are not at the very top can no longer afford to participate in the market.

Hyper-partisanship and the special interests that fuel it make it impossible for the current Congress to address the declining wealth of America’s middle- and low-income communities. Just look to the Ryan-Murray budget compromise: Congress is refusing to extend unemployment insurance, claiming that an extension will discourage recipients from looking for new work, while at the same time, congressional Republicans complain that the president is not creating enough jobs for those same workers. While they focus on scoring political points, American workers continue to suffer.

Given the intransigence and stalling at the federal level, what immediate actions can be taken to provide economic security and agency to average Americans? For this, one must turn to our cities and towns.

This is not a simple solution, because local governments do not have the same fiscal tools that Congress has. Cities cannot levy a progressive income tax on residents to fund redistribution, but instead must work with sales and property taxes. These taxes are regressive and punish the very people localities want to support. Some municipalities have tried to attract high-dollar business and residential developments in order to bring in revenues to support progressive programs such as universal pre-K and housing support. Unfortunately, too much development to this degree will backfire by pushing out lower-income and middle-class families.

In order to be effective, plans to address rampant inequality at the local level must be innovative. Instead of focusing on attracting developments solely as a source of tax revenue, local governments should incentivize the creation of local businesses that have fair and uplifting worker practices. For example, the Evergreen Cooperative Laundry in Cleveland Ohio, frequently referred to as the Cleveland Model, pays living wages and allows its employees to earn ownership in the company after a certain period of time. It is a prime example of providing an equal opportunity for American workers to maintain a decent livelihood and to move up economically if they commit to it.

By providing direct loans, utility subsidies, bonds for capital purchases, and other incentives to cooperative model businesses that promote high wages and greater employee agency, localities can support the growth of living wage businesses in areas where they may never have existed before. This will jumpstart a cycle of quality jobs for underserved communities and begin to remedy the demand-side economic challenges our economy faces.

While the detrimental effects of rising income inequality in America are widespread, we do not have to wait for federal action to start implementing solutions that will level the economic playing field. By supporting worker-empowering businesses close to home, local governments can both support job creation in their areas and provide workers with the opportunity they need to lift themselves out of their tough financial situations. 

Joelle Gamble is the Roosevelt Institute | Campus Network's National Field Strategist.

 

Vintage U.S. map image via Shutterstock.com

Share This

Stanley Fischer Will Please Centrists, But He's the Wrong Choice for the Fed

Dec 12, 2013Jeff Madrick

Fischer's track record shows that he'll base his decisions on market ideology instead of empirical evidence about the economy. 

Fischer's track record shows that he'll base his decisions on market ideology instead of empirical evidence about the economy. 

Oh, no, not Stan Fischer. Just when you thought President Obama had come to terms with Janet Yellen, his nominee for the Federal Reserve chairmanship, he sends a counter-message. Yellen, almost sure to be approved by Congress, will be not only the first woman to serve as Fed chair, but the first head of the Fed in a long time who is as concerned with unemployment as she is with inflation. Now the press reports that Obama will appoint Fischer as vice chairman. Wall Street will be soothed. Fischer is a centrist (I’d actually call him center-right) economist, a fully doctrinaire mainstreamer, who is in Obama’s mind probably the next best thing to Larry Summers.

According to press accounts, Summers was Obama’s frontrunner for Fed chair, a man Wall Street would perceive as tough enough to fight inflation, Wall Street’s main bugaboo. The backlash against Summers was too great to be withstood, so Yellen was nominated instead. But Fischer is surely not the person we need as her number two. His resume suggests that in his bones he is an austerian. Although he cut rates sharply during the crisis as head of the Israeli central bank, this is not proof he can manage an economy that is struggling to recover. 

Here is one good reason for concern: one of the comical claims in the admiring and ill-informed press accounts announcing Fischer’s likely nomination is that he was “on the front line” of the 1997 Asian financial crisis, as the Financial Times put it. He sure was. All that financial expertise the press raves about, citing bankers as their sources, and Fischer had no clue that the Asian economies were teetering on the brink in 1996, when he wrote this in a Brookings piece: “none of the East Asian countries has pursued an excessively easy macroeconomic policy, none has tolerated even double-digit inflation, and most have small governments and small budget deficits. So the risk of a prolonged slowdown caused by a need for major macro-economic adjustments is small.”

This is reminiscent of Milton Friedman’s telling Charlie Rose in 2005 that people should stop worrying about the U.S. economy because it was very stable. In 1997, Asia crashed, led by Thailand, which had a property bubble fueled by foreign capital flows. Its “miracle” had been temporary, not driven by good macroeconomic policies based on IMF and World Bank advice, but mostly by exports due to pegging its currency to a dollar adjusted downward by the Plaza Accord. Thailand’s manufacturing exports boomed as Japan, for example, moved production to the cheap currency country.

But Fischer was a pure Washington consensus man, imposing balanced budgets, privatization, and market liberalization everywhere and anywhere he could. Most telling, as number two at the International Monetary Fund in the 1990s, he insisted the developing nations eliminate controls on capital flows. Was this based on any empirical evidence? As far as I know, there was none. It was based on market ideology. 

But worse was to come. To right the ship, the IMF told these nations in the midst of crisis to raise interest rates to keep their currencies from falling. Plummeting currencies encouraged capital flight that brought the countries down. The IMF also demanded budget cuts, assuring very deep recessions and a lot of suffering across Asia. Unemployment and bankruptcies soared.

But you don’t cut budgets in recessions; you stimulate. The IMF imposed austerity and pain on these countries, just as Germany is doing in the eurozone today—and as the U.S. is doing to a lesser extent with sequestration. To heck with Keynes, say the policymakers.

Fischer was a leader in making these enormous policy errors. Should capital flow freely around the world? Yes. But only when nations are ready. The U.S. and Europe waited to end their capital controls. Try gradualism.

What’s sad about this is that Obama may set up another obstacle for Janet Yellen to deal with—another male, no less. The best it says about Obama is that he doesn’t know much about Fischer. The former MIT professor is admired in centrist circles in Cambridge, Massachusetts. But more likely, Obama also wants to placate the inflation and deficit hawks. In truth, he’s leaned that way his entire administration. He’s just a centrist at heart—and maybe somewhat right of that. 

Jeff Madrick is a Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative.

 

Federal Reserve banner image via Shutterstock.com

Share This

Conservatives and Progressives Agree: Congress Should Not Cut Unemployment Benefits

Dec 10, 2013Nell Abernathy

Extremists who think government support for the unemployed is holding the economy back don't have the facts on their side.

Extremists who think government support for the unemployed is holding the economy back don't have the facts on their side.

It’s a rare day indeed when Next New Deal bloggers support economic arguments with links to the Weekly Standard, the American Enterprise Institute, and Goldman Sachs. But at this moment, in this economy, we are all singing the same tune about the absolute necessity of extending unemployment insurance and providing additional support to the long-term unemployed. So, consider our current alignment a sign of extraordinary times.

Extraordinary because six years after the recession, there are still at least 4.1 million long-term unemployed Americans who have been looking for a job for more than six months and have yet to find work. Extraordinary because despite agreement from both progressive and conservative economists on the need for government action, the congressional flank led by Paul Ryan and Rand Paul is so far outside the mainstream that they are arguing to cut benefits for the long-term unemployed. Extraordinary because the 113th Congress is so dysfunctional that these extremists just might succeed in their goal.

Protecting unemployment insurance is a “disservice” to the unemployed, Rand Paul told the morning shows Sunday. The clear logic being that those folks looking for work for the last six months have been all-too-coddled by their $300-a-week government check, when what they need is some real motivation to pound the pavement even harder.

Unfortunately for Mr. Paul and his friends, there are a few flaws in this latest version of the up-by-your-bootstraps logic. But, don’t take our word for it. For a full outline of the arguments in support of extending unemployment insurance, we turn to the conservative intelligentsia and financial establishment.

Who are the long-term unemployed? Lazy hangers-on?

According to a report from the Urban Institute, in 2012, two-thirds of the long-term unemployed were ages 26-55, one-third had children, one-half had at least some college, and one in ten were college graduates.

Michael Strain in the Weekly Standard:

“A large share of the long-term unemployed are people with relatively high earnings potential and personal responsibilities that extend beyond themselves. It is hard to imagine an educated worker in her prime working years with a kid at home having allowed a $300-a-week check to stand between her and a strenuous job search for over half a year.”

Well, then why aren’t they getting jobs?

A growing body of empirical evidence indicates that the long-term unemployed experience “scarring” simply for being unemployed.

Congressional Testimony of American Enterprise Institute fellow Kevin Hassett:

“There is an evident shift in the curve [the Beveridge curve which serves as a measure of how quickly the labor market matches workers with job openings] for workers who have been unemployed for 27 weeks or more, unemployed workers of shorter durations have experienced no outward shift in the Beveridge curve. They conclude that being unemployed for a longer amount of time has an effect on the chances that a worker will become employed, suggesting that being long-term unemployed is in itself a cause of the persistence in unemployment.”

While I feel bad for them, it’s not my problem. Isn’t unemployment insurance just a big waste of my taxpayer dollars?

With a GDP multiplier of 1.6, unemployment insurance is one of the most efficient fiscal stimulus tools. Every dollar spent on unemployment insurance contributes $1.60 to GDP. In contrast, a lump sum tax rebate or a dividend and capital gain tax cut would provide GDP multipliers of only 1.2 or 0.4, respectively.

Congressional testimony of Mark Zandi of Moodys Analytics:

“Emergency UI provides an especially large economic boost, as financially stressed unemployed workers spend any benefits they receive quickly. With few other resources, UI benefits are spent and not saved.”

Moreover, a recent report from the Fed indicates that the declining skills of the long-term unemployed have degraded our potential for GDP growth in the future.

Goldman Sachs Global Economics, Commodities and Strategy Research analysis of Fed report:

“They estimate that real potential GDP growth has only averaged 1.3% since 2007, the output gap is currently about 3% of GDP, and the structural unemployment rate had risen to 5.75% by 2012 (although it is now again on a slight downward trend). They then use a modified version of FRB/US with an added role for ‘hysteresis; in labor markets--that is, a gradual transformation of cyclical unemployment into structural unemployment and/or labor force withdrawal --to analyze the sources of this deterioration, using a simulation in which the model economy is hit by a major financial crisis that is calibrated to match the size of the 2007-2009 episode. In a nutshell, they find that the post-crisis period ‘features a noticeable deterioration in the economy's productive capacity’ and that about 80% of the deterioration ‘…represents an endogenous response to the persistently weak state of aggregate demand.’”

Well what are we supposed to do – just pay them forever not to work?

Well, we can discuss a minimum income later. For now, let’s invest in programs to get workers back in the workforce. Here are a few steps we can take:

1. The government can fund direct employment for the long-term unemployed.

AEI’s Kevin Hassett testifying before Congress:

“The stigma of long term unemployment may be ameliorated by a short run jobs program that recruits the long term unemployed to assist with normal functions of government. This may allow individuals to look for a new job while employed, a change that may have a large impact on placement.”

2. The government can increase transportation infrastructure to ensure all workers can get to work and create jobs.

Michael Strain in the Weekly Standard:

“One way to advance these goals would be to improve transportation networks within cities and their outlying areas in order to shorten commute times from low-income neighborhoods to employment centers…. In its cheapest incarnation, this would involve extra buses that run nonstop from low-income neighborhoods to employment centers, both in city centers and in suburbs. And of course, more money for better roads, bridges, and tunnels would shorten commute times for everyone, including the working poor.”

3. The government can expand work-sharing programs.

Michael Strain in the Weekly Standard:

“To help make sure that we aren’t adding any new workers to the rolls of the long-term unemployed, states without worksharing UI programs — about half of them at the moment — should start them. Under worksharing, a worker who has his hours reduced by his employer in response to a temporary lull in demand can receive a prorated UI benefit. This makes it easier for firms to reduce employees’ hours by, say, 20 percent, rather than laying off 20 percent of their workforce. Government shouldn’t tilt the scales towards layoffs by prohibiting workers who have their hours reduced from receiving prorated UI benefits.”

What now?

I’ve just listed a few of the many government solutions to our current economic woes on which progressives and conservatives agree. Extending unemployment insurance is not a partisan issue. The government providing a helping hand to those who most need it has not, historically, been a partisan issue. This is not about left and right. It is about pragmatic versus extremist.

For the sake of current GDP, future GDP growth, and the long-term unemployed, congressional Republicans cannot let the extremists win this time.

Nell Abernathy is the Program Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative.

Capitol Building banner image via Shutterstock.com

Share This

Pages