Is the WPA Invisible to Millennials?

Apr 8, 2013Elizabeth Pearson

The products of the WPA are all around us, but their history has been erased.

The products of the WPA are all around us, but their history has been erased.

The fact that the Works Progress Administration (WPA) is today remembered as an exceptional moment in American economic policy is evidence of the serious blind spots Americans have developed in the way we think about government. Even Millennials, who have experienced perhaps the worst impacts of the current recession, have often celebrated entrepreneurship as a solution to their employment woes, rather than calling for the robust public action that has always been a part of effective responses to economic crisis.

But making the case that addressing the jobs crisis requires much stronger public investment will have to go beyond advocating for larger stimulus packages or revived public employment programs — we must also challenge myths of economic recovery, both past and present, that render activist government invisible.

The unfamiliarity of the WPA’s activist-government legacy is startling in light of its truly vast scope. In his history of New Deal public works projects, historian Jason Scott Smith notes that in addition to employing 8.5 million people, the WPA built over 480 airports, 78,000 bridges, and almost 40,000 public buildings. In my own town of Berkeley, California, the list of WPA projects is long: two city parks, several high-school buildings, post-office murals, the former University of California Press building (now being renovated to house the Berkeley Art Museum), a city library, and the planting of 15,000 trees.

With so many tangible reminders of the impacts of public investment right in front of our eyes and under our feet, why isn’t the memory of government economic intervention  more present? Part of the answer lies in a much broader erasure of government from our lives — from the mis-recognition of publicly-subsidized success as individual initiative to the deliberate concealing of government spending as private savings. Political scientist Suzanne Mettler calls this new type of social infrastructure “the submerged state”: invisible benefits delivered to citizens through the tax code or as subsidies to private companies rather than as more visible direct spending. The home mortgage interest deduction is a (very expensive) government spending program, but most Americans would be truly puzzled to hear that they live in publicly subsidized housing.

Given this context, it’s no wonder that many Millennials believe that entrepreneurship, creativity, and technological innovation will provide the foundation for economic recovery. But the start-up economy can no more build 78,000 bridges than it can create the close to 9 million jobs needed to match growth in the labor force since the start of the recession. Well-designed public policies alone will not convince young people — or Americans more generally — of the need for a progressive economic agenda modeled on the WPA. We must also literally map the interventions of the past. Only by making the legacy of public investment more visible can we push back against myths that mute the powerful role government has repeatedly played in leading economic recovery.

Elizabeth Pearson is a Roosevelt Institute | Pipeline Fellow and a PhD candidate at UC Berkeley.

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The WPA Had a Low Price Tag but a Lasting Legacy

Apr 8, 2013Ellen Chesler

The WPA looks like a small investment by today's standards, but it remade the country.

There’s hardly a community in the United States without a park, bridge, school, or library constructed by the WPA. Just think of the built legacy right here in New York: Hunter’s College’s handsome mid-century modern building on Park Avenue; LaGuardia Airport; the bucolic parkways, enduring beachfront facilities and swimming pools of Robert Moses; stunning murals in public spaces throughout the city.

The WPA looks like a small investment by today's standards, but it remade the country.

There’s hardly a community in the United States without a park, bridge, school, or library constructed by the WPA. Just think of the built legacy right here in New York: Hunter’s College’s handsome mid-century modern building on Park Avenue; LaGuardia Airport; the bucolic parkways, enduring beachfront facilities and swimming pools of Robert Moses; stunning murals in public spaces throughout the city.

So it is actually surprising to learn on this anniversary that the entire federal appropriation for the legislation in 1935 was only $4.9 billion. And total spending across the country reached only $13.4 billion before the program expired in 1943, when wartime conscription and the recovery of private industry and manufacturing finally ended the unemployment crisis brought on by the Great Depression.

Of course, money went a lot further back then. Salaries at 30 hours per week were pegged to prevailing wages and varied considerably by region, ranging from $20 to $100 per month. Federal spending on some WPA projects also leveraged state and local funds, adding by one estimate up to another 10-30 percent in investment. All together the program funded some 8 million jobs and put a meaningful dent in the number of unemployed who were looking for and able to work.

This was far from a foundation for state socialism or a “seed bed for Communists,” as some of the program’s strongest critics on the right then described it. Spending was also, by and large, not politically motivated or determined by partisanship, as many feared it would be – with jobs distributed across party lines and, just as meaningfully, across ethnic and racial divides, even in the south. To placate unions skeptics on the left, no formal job training was allowed, and yet evaluations of projects demonstrated high levels of efficiency and little corruption or waste.

Yet the WPA was most definitely a watershed in the history of American state building. The country’s entire GDP was only $860 billion in 1935. Of that, a mere 5 percent or so represented total government spending, and most of that money paid for local school teachers, police, fire, and sanitation.

Federal Social Security expenditures were just ramping up. Defense spending was still negligible, with U.S. foreign policy focused mainly on being a “good neighbor” as FDR memorably put it. Even as the president promised to invest in public works and social welfare to reboot the economy, he also committed to rebalance the budget, and by attempting to do so in his second term actually prolonged the economic downturn. More public works, not less, would have been a good thing, stimulating and vastly expanding the private economy, as World War II wound up doing only a few years later.

Today, U.S. government spending, inclusive of local, state, and federal, domestic, foreign, and military expenditures, represents some 40 percent of our giant $13.67 trillion GDP. Years of Republican presidencies notwithstanding, we live in a mixed-economy and a country remade by Franklin Roosevelt.

This 78th anniversary of the WPA inspires us to find in our history a model for increased investment in public works today, perhaps leveraging the private sector, not just hard-strapped states and municipalities. With the WPA as a model, federal resources can easily capitalize a U.S. infrastructure bank, which could in turn raise capital in markets across the globe. The financial structure is not complicated. All we need is the political will.

Might it be helpful to remind deficit hawks that Roosevelt was reelected in 1936 with 60 percent of the popular vote and 98 percent of the electoral vote in 1936, with a budget in deficit but the WPA underway?

Ellen Chesler is a Senior Fellow at the Roosevelt Institute and author of Woman of Valor: Margaret Sanger and the Birth Control Movement in America.

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

Apr 8, 2013David B. Woolner

Today's Congress needs to step up as it did in the 1930s to address high unemployment and crumbling infrastructure.

Today's Congress needs to step up as it did in the 1930s to address high unemployment and crumbling infrastructure.

To those who say that our expenditures for Public Works and other means for recovery are a waste that we cannot afford, I answer that no country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance. Morally, it is the greatest menace to our social order. Some people try to tell me that we must make up our minds that for the future we shall permanently have millions of unemployed… But…I stand or fall by my refusal to accept as a necessary condition of our future a permanent army of unemployed. On the contrary, we must make it a national principle that we will not tolerate a large army of unemployed and that we will arrange our national economy to end our present unemployment as soon as we can and then to take wise measures against its return. I do not want to think that it is the destiny of any American to remain permanently on relief rolls.—Franklin D. Roosevelt, September 30, 1934

One of the most alarming statistics about America’s persistently high unemployment rate over the past four years is the large number of long-term unemployed. Current estimates by the Bureau of Labor Statistics put the total number of these largely forgotten workers at 4.8 million people—or roughly 40 percent of the total number of jobless Americans. Unlike previous recessions, where there was a good deal of movement in and out of the job market, loss of employment is much more serious in today’s Great Recession, as an individual’s chances of getting back to work are much lower. This leads to what one recent article terms a “loss of skills, loss of trust, and loss of networks,” all of which exacerbates the problem.

Worse still, there seems to be little political will to tackle this problem in Washington, as any serious effort to address the issue of the long-term unemployed has been sidelined by the endless budget debates in Congress and the sky-is-falling rhetoric of the extreme right, which remains ideologically opposed to government intervention in the economy. Perhaps the great symbol of this callous indifference can be found in the fact that while the recent sequester did not result in any loss of pay among the members of Congress, the long-term unemployed will see their benefits cut by 10 percent.

In the meantime, a recent report by the American Society for Civil Engineers notes that while there has been a slight improvement in the overall state of America’s infrastructure in the past four years, the current state of our nation’s roads, bridges, water systems, energy grid, and other transportation networks remains dismally low—receiving a grade of D+ as opposed to the nearly failing grade of D- four years ago. Thanks to this persistent neglect and Congress’s reluctance to appropriate the funds needed to fix our crumbling roads and other facilities, the U.S. now ranks 25th in the world in terms of infrastructure, far behind the rest of the industrialized world.

This juxtaposition of long-term unemployment and a failing infrastructure is not unlike the situation that Franklin Roosevelt faced in 1935 when, in a bold and unprecedented effort to alleviate the suffering of the long-term unemployed, FDR pushed Congress to pass the Emergency Relief Appropriations Act. It was through this piece of legislation passed 78 years ago today that Congress appropriated the funds FDR needed to launch the most ambitious public works program in American history—the Works Progress Administration, or WPA.

As the generation that lived through the Great Depression passes away, fewer and fewer Americans may be aware of what a great debt this nation owes to this remarkable government program. Indeed, the WPA not only employed 8.5 million people, it also built much of the infrastructure we still use today. How many New Yorkers, for example, are aware that the WPA is responsible for the construction of the Lincoln Tunnel, Tri-borough Bridge, the Belt, Grand Central, and Henry Hudson Parkways, the East River (FDR) Drive, or LaGuardia Airport? How many Chicagoans know that Midway Airport and much of Lake Shore Drive were built by the WPA? What about the fabled “river walk” of San Antonio, Texas? Do the residents of this community know that this critical piece and driver of much of their local economy was conceived and constructed by WPA architects and engineers? Are the people of New Jersey aware that they owe the Palisades Parkway to the WPA? What about those of us who have enjoyed the beauty of a drive along the Blue Ridge Parkway in North Carolina – are we aware that it too was built by the WPA? And what about Los Angeles International Airport or the Glendale Viaduct and countless other public works projects in California? Or the many WPA constructed buildings, parks, and other facilities constructed in New Mexico and other parts of the Southwest?

This list could go on and on, for before it was through the WPA would construct nearly 600,000 miles of rural roads, 67,000 miles of urban streets, 122,000 bridges, 1,000 tunnels, 1,050 airfields, 500 water treatment plants, 1,500 sewage treatment plants, 36,900 schools, 2,552 hospitals, 2,700 firehouses, and nearly 20,000 other state, county, and local government buildings. Most importantly, it would also give meaningful employment to millions of skilled and unskilled workers, providing our nation with the infrastructure it needed to become the most efficient and productive economy in the world and the long-term unemployed with the one thing they needed above all else—a job.

Seventy-eight years ago, our leaders in Congress had the courage and vision to engage in what FDR called “bold, persistent, experimentation.” In the face of the worst economic crisis in our history, they came to recognize that there are times when government itself must step in to provide employment if the free market fails to do so. They had no plans “to take the country down the path to socialism” as some critics charged, or to make the WPA into a permanent institution. What they did see was a need—a critical need to provide employment and to secure the skills of an entire generation of workers, juxtaposed with an equally important need to bring America’s rickety 19th century infrastructure into the modern world. They understood that this would cost money, but they also understood that in the long run this investment—even if it required deficit spending—would pay off.

They were right. Just ask any member of the “greatest generation” who lived through the seemingly massive federal investments and spending of the 1930s and 40s and then went on to enjoy the largest expansion of the American middle class in our nation’s history. Or ask yourself, the next time you land at LaGuardia Airport or enjoy an evening out among the many shops, cafes, and restaurants that cluster around San Antonio’s River Walk.

If today’s Congress had the same vision and courage that existed in Washington in 1935, it would see that with nearly 5 million people suffering the ill effects of long-term unemployment, and with an infrastructure that is now ranked 25th in the world, the least it could do is get behind President Obama’s nearly forgotten call for a modest $50 billion in spending for infrastructure. But unfortunately it does not appear that today’s Congress—particularly the conservative membership of the House—possesses anything like the vision of its counterparts in 1935. This is very bad news, for as FDR remarked about the “generation of self-seekers” that brought the country to ruin in 1933, “they have no vision, and when there is no vision, the people perish.”

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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Putting a Check on Using Credit Reports Against Job Seekers

Mar 12, 2013

The economy plummets. You lose your job. Soon, you start to find it hard to make ends meet. You start putting things on your credit card. Then you fall behind in your card payments. All the while you’ve been desperately looking for a new job. Little do you know that being behind on credit card payments may stand between you and a job – the very thing that could get you back on the road to financial health.

The economy plummets. You lose your job. Soon, you start to find it hard to make ends meet. You start putting things on your credit card. Then you fall behind in your card payments. All the while you’ve been desperately looking for a new job. Little do you know that being behind on credit card payments may stand between you and a job – the very thing that could get you back on the road to financial health.

If it sounds like a Catch-22, well, it is. Yet running a credit check on a potential employee is not only legal – it’s common practice, as a new survey and report from our friends at Demos found out. Demos spoke with nearly 1,000 low and middle-income households who carry credit card debt and found that one in four had a prospective employer run a credit check on them. One in ten had been told they wouldn’t be hired because of what the employer found there.

So what’s to be done? The report urges city and state governments to pass bans on using credit checks for hiring purposes, following in the footsteps of eight states that have done just that. Our government should also stop using this practice itself to set a good example. The report also urges regulators at the CFPB, FTC, and EEOC to crack down on credit reporting agencies and better protect consumers.

Read the full report here.

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Raising the Minimum Wage is a Step Toward Economic Freedom

Feb 20, 2013Annette Bernhardt

Opponents of a minimum wage increase imagine an economic reality very different from the one millions of American workers experience.

Opponents of a minimum wage increase imagine an economic reality very different from the one millions of American workers experience.

The good news from last week is that President Obama called for raising the federal minimum wage – long overdue and desperately needed for low-wage workers who have seen their real earnings decline during the recovery. The bad news is that his announcement set off a flurry of blogging on the economics of the minimum wage, and, predictably, not a small amount of armchair theorizing.

One particular contribution seems innocuous at first, but in fact frames the issue in an unhelpful and potentially misleading way. In his research round-up last Thursday, Matt Yglesias argued that the best case against raising the minimum wage might be economic freedom:

You've got a guy who wants to give someone $8 to do something that'll take an hour and another guy who wants $8 and is happy to do the thing in exchange for the money. Now Barack Obama's going to fine them for agreeing to trade $8 for the work? Seems perverse. In the real world, obviously, the perversity of this is greatly mitigated by the existence of formal exemptions and weak enforcement. If you pay a neighbor's son $10 to mow your lawn and it takes him 70 minutes, you're going to be able to get away with it even in a world of a $9 minimum wage. Which is probably as it should be.

In this theoretical world, the informal economy is a place where teenagers happily mow lawns and babysit for a little extra cash. But in the real America, we are talking about a large and growing sector of unregulated work, where every day, millions of adults work for subminimum wages and no overtime, often in unsafe and hazardous workplaces. Far from peripheral, this sector spans the core industries of our economy, from hotel housekeepers, dishwashers, retail sales workers, domestic workers, and home health aides to janitors, meat processing workers, taxi drivers, warehouse workers, and construction laborers.

And the violations of employment and labor laws are systemic. A landmark 2008 study of more than 4,000 low-wage workers in New York, Chicago, and Los Angeles found that 26 percent had been paid less than the minimum wage in the preceding week, 76 percent had been underpaid for their overtime hours, and 70 percent did not receive any pay at all when they came in early or stayed late after their shift. Also important for this discussion: when workers made a complaint to their employer about wages or working conditions, 43 percent were retaliated against. Not surprisingly, many more never complained in the first place, out of fear that they’d be fired or turned over to the immigration authorities.

So this is not a world where workers are “happy to do the thing” for subminimum wages. It is not a world where workers and employers come to the wage negotiation with anything even vaguely resembling the equal power one would need to call it economic freedom. (And how low are we willing to go, by the way? Some have called for states to be allowed to experiment with $5 an hour minimum wages – but why stop there? What about $1 an hour? Or abolishing child labor laws, as a 2011 Missouri bill would have done?)

Moreover, this is not a world where weak enforcement of our laws is a good thing. Between 1980 and 2007, the number of federal wage and hour inspectors declined by 31 percent and the number of enforcement actions fell by 61 percent. By contrast, the civilian labor force grew 52 percent during this same period. And while the U.S. Department of Labor has added more investigators under the Obama administration, the current federal staffing level of 1,006 is still below its 1980 peak. (The picture looks even worse for enforcement of health and safety laws.)

In the same vein, there is nothing to cheer about when, for example, 2.5 million home care workers are exempted from minimum wage and overtime protections, which has driven down job quality, increased turnover, and caused staffing shortages in this critical industry.

So let me suggest a different definition of economic freedom. Under this definition, economic freedom means being able to earn a living wage, being able to pay for electricity and rent, being able to afford child care and health care, being able to save for college, and being able to put enough aside for retirement. In short, “freedom from want,” which not coincidentally comes to us from FDR, the father of the minimum wage.

Back then, the fight was to set a strong wage floor and enforce it, against arguments that businesses couldn’t compete without child labor and sweatshops. Now the fight is to set a strong wage floor and enforce it, against arguments that multinational corporations with billions a year in profits can’t afford to raise their wages to the poverty line. In both cases, the stakes remain the same: the strength of our families, our economy, and our respect for the labor of others.

Annette Bernhardt is a Fellow at the Roosevelt Institute and policy co-director of the National Employment Law Project.

 

Housekeeper image via Shutterstock.com.

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Won't Somebody Please (Not) Think of the Children? On the Benefits of Pre-K for Parents.

Feb 15, 2013Mike Konczal

I wrote a piece I was pretty happy with in The American Prospect called "The Great Society's Next Frontier." Given that health care had passed and wasn't going to be overturned, the question was what would be the next battles for the liberal project. Rather than showing the exhaustion of the liberal project, I found the recent State of the Union a nice checklist of things that have been done, as well as new areas to take the project next, with some markers for a longer-term agenda.

At the Prospect I noted that a mix of "predistribution" and redistribution to expand opportunities while boosting wages were going to be an important part, and two of the ideas that addressed those issues were present in President Obama's State of the Union address: a higher minimum wage and pre-K. Pre-K is going to be a big topic, and this Boston Review symposium by James Heckman is a great place to read what experts are saying.

There's a big debate starting about how good pre-K would be for the kids involved. Would it make them smarter, more capable adults, less likely to have pathological behaviors later in life and more likely to develop a rich range of capabilities and opportunities? There is also the conversation on what that will mean for the economy as a whole. Will an additional year of schooling make us an economically richer country? Will it be a better investment than the stock market?

But there's a very interested party missing from this conversation, and that is parents themselves, particularly mothers who are working or would like to be. As my colleague Bryce Covert notes, pre-K "would also be hugely important in helping parents of all incomes go to work and know that their children are in good hands."

I'm not sure what research has or has not been done on this topic, but here are some fascinating things. A 2011 report from UC Berkeley's Labor Center on the "Economic Impacts of Early Care and Education in California" highlighted some important points. Having access to a dedicated, high-quality preschool can reduce absenteeism and turnover for working parents. Child care arrangements often break down, usually on short notice, which causes work absences as well as other problems. Headaches over child care issues can reduce productivity.

This is a fascinating experiment, from the Labor Center report:

A study of public employees in New York City who were provided with child care subsidies found that the employees had a 17.8 percent decrease in disciplinary action compared to a control group that did not receive the subsidy. Overwhelmingly, those in the subsidy group reported leaving work less often, concentrating better at work, being more productive at work, and using fewer sick days to deal with child care issues.

Fathers can and do stay home with young children, but women are more likely to do this. And this will impact women's existence in the labor market. The OECD shows that the wage gap is significantly higher for women with children and notes that the United States' public investment in child care (ages 0-5) is 0.4 percent of GDP, compared the average OECD of 0.7 percent. Lack of child care access also impacts whether women start businesses and whether they have career arcs that take full advantage of their talents.
 
This strikes me as a politically volatile point to make, if only because few people make it. Why is that? Patrick Caldwell had a piece recently in The American Prospect about the Right's obsession with an Obama re-election campaign tool called "The Life of Julia." The online infographic showed how government structures and counterbalances the risks and opportunities we face over the course of our lives. The Right, correctly, understands this as a challenge to its vision of the primacy of the (patriarchal) family and the market as having complete dominion over those risks. Using the state to give parents, and especially women, more opportunities to inhabit other roles, either in the market or not, is going to run straight into the Right's worldview.
 
I noticed a bit of this on the Left as well, specifically the parts of the Left that are distrustful of public education. In the debate over "unschooling" (lefty homeschooling, usually as a critique of the conformity of public education), Dana Goldstein pointed out the class bias in this critique. She noted "more than 70 percent of mothers with children under the age of 18 are in the workforce. One-third of all children and one-half of low-income children are being raised by a single parent. Fewer than one-half of young children, and only about one-third of low-income kids, are read to daily by an adult. Surely, this isn’t the picture of a nation ready to 'self-educate' its kids." Having an additional year of school is a major boon for parents when you understand the stresses they face.
 
But again, I'm outside the policy topics I hang outside my wonk door. What's your take?
 
Follow or contact the Rortybomb blog:
  

 

I wrote a piece I was pretty happy with in The American Prospect called "The Great Society's Next Frontier." Given that health care had passed and wasn't going to be overturned, the question was what would be the next battles for the liberal project. Rather than showing the exhaustion of the liberal project, I found the recent State of the Union a nice checklist of things that have been done, as well as new areas to take the project next, with some markers for a longer-term agenda.

At the Prospect I noted that a mix of "predistribution" and redistribution to expand opportunities while boosting wages were going to be an important part, and two of the ideas that addressed those issues were present in President Obama's State of the Union address: a higher minimum wage and pre-K. Pre-K is going to be a big topic, and this Boston Review symposium by James Heckman is a great place to read what experts are saying.

There's a big debate starting about how good pre-K would be for the kids involved. Would it make them smarter, more capable adults, less likely to have pathological behaviors later in life and more likely to develop a rich range of capabilities and opportunities? There is also the conversation on what that will mean for the economy as a whole. Will an additional year of schooling make us an economically richer country? Will it be a better investment than the stock market?

But there's a very interested party missing from this conversation, and that is parents themselves, particularly mothers who are working or would like to be. As my colleague Bryce Covert notes, pre-K "would also be hugely important in helping parents of all incomes go to work and know that their children are in good hands."

I'm not sure what research has or has not been done on this topic, but here are some fascinating things. A 2011 report from UC Berkeley's Labor Center on the "Economic Impacts of Early Care and Education in California" highlighted some important points. Having access to a dedicated, high-quality preschool can reduce absenteeism and turnover for working parents. Child care arrangements often break down, usually on short notice, which causes work absences as well as other problems. Headaches over child care issues can reduce productivity.

This is a fascinating experiment, from the Labor Center report:

A study of public employees in New York City who were provided with child care subsidies found that the employees had a 17.8 percent decrease in disciplinary action compared to a control group that did not receive the subsidy. Overwhelmingly, those in the subsidy group reported leaving work less often, concentrating better at work, being more productive at work, and using fewer sick days to deal with child care issues.

Fathers can and do stay home with young children, but women are more likely to do this. And this will impact women's existence in the labor market. The OECD shows that the wage gap is significantly higher for women with children and notes that the United States' public investment in child care (ages 0-5) is 0.4 percent of GDP, compared the average OECD of 0.7 percent. Lack of child care access also impacts whether women start businesses and whether they have career arcs that take full advantage of their talents.
 
This strikes me as a politically volatile point to make, if only because few people make it. Why is that? Patrick Caldwell had a piece recently in The American Prospect about the Right's obsession with an Obama re-election campaign tool called "The Life of Julia." The online infographic showed how government structures and counterbalances the risks and opportunities we face over the course of our lives. The Right, correctly, understands this as a challenge to its vision of the primacy of the (patriarchal) family and the market as having complete dominion over those risks. Using the state to give parents, and especially women, more opportunities to inhabit other roles, either in the market or not, is going to run straight into the Right's worldview.
 
I noticed a bit of this on the Left as well, specifically the parts of the Left that are distrustful of public education. In the debate over "unschooling" (lefty homeschooling, usually as a critique of the conformity of public education), Dana Goldstein pointed out the class bias in this critique. She noted "more than 70 percent of mothers with children under the age of 18 are in the workforce. One-third of all children and one-half of low-income children are being raised by a single parent. Fewer than one-half of young children, and only about one-third of low-income kids, are read to daily by an adult. Surely, this isn’t the picture of a nation ready to 'self-educate' its kids." Having an additional year of school is a major boon for parents when you understand the stresses they face.
 
But again, I'm outside the policy topics I hang outside my wonk door. What's your take?
 
Follow or contact the Rortybomb blog:
  

 

Mother and child image via Shutterstock.com.

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Interview with Dube; EITC and Minimum Wage as Complements

Feb 15, 2013Mike Konczal

I have an interview at the American Prospect with Arindrajit Dube on the minimum wage as a policy mechanism. I learned a ton doing it, and I hope you check it out!

Meanwhile there's a lot of great material on the minimum wage coming out. Jared Bernstein addresses four of the key arguments for the minimum wage here. John Schmitt of CEPR has a great overview on the various theories on why a minimum wage hike shows little or not impact on unemployment here (wonkblog summary here).

I still notice many people arguing that we should just raise the earned income tax credit (EITC) for the working poor rather than raising the minimum wage. I brought it up in the interview, but it is worth mentioning again here, even in loud, bold text:

The EITC partially subsidizes employers, and as such the minimum wage is an excellent way to combat this. So it complements, rather than substitutes, for an EITC.

Economists love to tell people that who pays a tax is independent of who Congress wants to pay it. The "Tax These Evil Corporations Act" might fall entirely on people buying stuff from those firms instead of their shareholders. (If you like the jargon, economists say the tax incidence is independent of legislative intent.)

But suddenly when the tax is a tax credit, specifically an earned income tax credit, that tax magically goes exactly where Congress wants it to go. Technically it means that economists just assume that demand is perfectly elastic in low-wage markets, which is a bold assumption. If not, part of the tax is passed on, in this case to employers, who capture it in the form of lower wages. And since those who get the EITC are in the same labor market as those who don't, these wage declines extend to people who don't even get the EITC! Jesse Rothstein did an estimate finding that for every dollar of EITC, a worker's wage only goes up 73 cents. That's a big capture by employers.

If you want some elaborate theory, David Lee and Emmanuel Saez have a paper arguing that when this is the case (and if the EITC works primarily by bringing people into working, via an extensive margin, which it does), the minimum wage is an excellent complement to low-wage government transfers tied to work.

Or as Dube says, "We have different polices designed for different distributional goals. We need to think not in terms of a single policy, but instead think in terms of what is the right portfolio of policies given the range of objectives you have." The minimum wage is an excellent tool to boost the efficacy of government transfers, and it should be raised and tied to a cost of living raise. There's no magic bullets - there's just a variety of tools that reinforce each other.

Follow or contact the Rortybomb blog:
  

 

I have an interview at the American Prospect with Arindrajit Dube on the minimum wage as a policy mechanism. I learned a ton doing it, and I hope you check it out!

Meanwhile there's a lot of great material on the minimum wage coming out. Jared Bernstein addresses four of the key arguments for the minimum wage here. John Schmitt of CEPR has a great overview on the various theories on why a minimum wage hike shows little or not impact on unemployment here (wonkblog summary here).

I still notice many people arguing that we should just raise the earned income tax credit (EITC) for the working poor rather than raising the minimum wage. I brought it up in the interview, but it is worth mentioning again here, even in loud, bold text:

The EITC partially subsidizes employers, and as such the minimum wage is an excellent way to combat this. So it complements, rather than substitutes, for an EITC.

Economists love to tell people that who pays a tax is independent of who Congress wants to pay it. The "Tax These Evil Corporations Act" might fall entirely on people buying stuff from those firms instead of their shareholders. (If you like the jargon, economists say the tax incidence is independent of legislative intent.)

But suddenly when the tax is a tax credit, specifically an earned income tax credit, that tax magically goes exactly where Congress wants it to go. Technically it means that economists just assume that demand is perfectly elastic in low-wage markets, which is a bold assumption. If not, part of the tax is passed on, in this case to employers, who capture it in the form of lower wages. And since those who get the EITC are in the same labor market as those who don't, these wage declines extend to people who don't even get the EITC! Jesse Rothstein did an estimate finding that for every dollar of EITC, a worker's wage only goes up 73 cents. That's a big capture by employers.

If you want some elaborate theory, David Lee and Emmanuel Saez have a paper arguing that when this is the case (and if the EITC works primarily by bringing people into working, via an extensive margin, which it does), the minimum wage is an excellent complement to low-wage government transfers tied to work.

Or as Dube says, "We have different polices designed for different distributional goals. We need to think not in terms of a single policy, but instead think in terms of what is the right portfolio of policies given the range of objectives you have." The minimum wage is an excellent tool to boost the efficacy of government transfers, and it should be raised and tied to a cost of living raise. There's no magic bullets - there's just a variety of tools that reinforce each other.

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Roosevelt Reacts: How the State of the Union Could Be Even Stronger

Feb 13, 2013

President Obama laid out some strong progressive ideas, but there's lots more work to be done.

Richard Kirsch, Roosevelt Institute Senior Fellow:

Two years ago, progressive groups came together to develop the Progressive Economic Narrative. And last night, at the very beginning of his State of the Union address, the president began with our story, ending with our central metaphor:

President Obama laid out some strong progressive ideas, but there's lots more work to be done.

Richard Kirsch, Roosevelt Institute Senior Fellow:

Two years ago, progressive groups came together to develop the Progressive Economic Narrative. And last night, at the very beginning of his State of the Union address, the president began with our story, ending with our central metaphor:

Our economy is adding jobs, but too many people still can’t find full-time employment. Corporate profits have skyrocketed to all-time highs, but for more than a decade, wages and incomes have barely budged. It is our generation’s task, then, to reignite the true engine of America’s economic growth: a rising, thriving middle class.

Then he said the way we build that middle-class economic engine is by following the same path we laid out: government investment in research, infrastructure, energy and education. And he added at least some substance on good jobs, with his minimum wage proposal. This is a battle of ideas and policies we should welcome. 

Dante Barry, Chapter Services Coordinator & Summer Academy Fellowship Coordinator at the Campus Network:

Last night, the president announced a new Presidential Voting Commission, an ambiguous and amorphous idea to address the "voter experience" on Election Day, chaired by lawyers from the Obama and Romney campaigns. I am pleased that he decided to tackle this problem, yet I am also disheartened to see the efforts to take bold action on voting reform do not include a large amount of input from the communities represented, suppressed, and deterred. This commission should provide forward-thinking recommendations and take bold action to support our most sacred right for any American: one voice, one vote. We have a responsibility to provide access and opportunity for every American to vote in a way that reflects this country's progress and values with 21st century innovation and technology. 

Thomas Ferguson, Roosevelt Institute Senior Fellow and Professor of Political Science, University of Massachusetts:

What you think of the president’s speech depends on what you think the real state of our union is. I think that we are five years into an economic crisis that is barely improving thanks to a huge deficiency in aggregate demand for goods and services. All over the globe, that crisis is toppling governments, fanning competitive depreciations, and, if you look closely, stimulating arms races, especially in Northeast Asia, where governments are pushing back more vigorously against the economic crisis than in our own country. Against this standard, the president’s proposals look pretty weak. Spending $50 or even $100 billion on infrastructure is a drop in the bucket. Raising the minimum wage is an excellent idea, but it won’t solve the aggregate demand problem. We’ll just have to see about climate change, but acknowledging the problem is just a first baby step. And the problem of medical costs is fundamentally a problem of monopolistic practices and limited information. If you don’t name that situation and deal with it, you have no real hope of delivering better care at lower cost. The president didn’t. To all of this, of course, there is a ready answer: If you don’t like these proposals, wait till you see those of the Republicans. And, this, alas, is equally true. Except when it comes to drones and killing Americans without due process.

Bryce Covert, Editor of Next New Deal:

Women were decisive in helping elect President Obama to a second term, and last night he began to start thanking them for their support. Perhaps the most important policy he proposed was his call for universal preschool, an enormous yet desperately needed program that would not only help children, but also help their working parents -- and let's be real, mothers still do the majority of work in caring for children -- go to their jobs knowing their children are taken care of. But he also put forward some other key policies that, if they were to be passed, would mean a lot to the country's women workers. He called for a raise in the minimum wage to $9 an hour and to have it indexed to inflation so that it doesn't continue to stagnate as it has for the past three years. Women absolutely need a raise in the minimum wage. They make up two-thirds of the workers who make such low pay. He unfortunately didn't call for a raise in the tipped minimum wage, which has been stuck at $2.13 for 20 years and would give a huge boost to the 64 percent of waiters who are women. But he did take aim at another problem affecting women's pay: salary secrecy. He called for the passage of the Paycheck Fairness Act, which would build on the Lilly Ledbetter Act to get rid of the ban at half of all companies on discussing salary. Women first have to know what their coworkers are making before they can root out discrimination. All three of these policies would actually be huge steps forward in combatting the gender wage gap, as balancing children and work, making the minimum wage, and being forced into secrecy about paychecks are big factors.

Jordan Fraade, D.C. Pipeline member:

In terms of its delivery, the State of the Union felt like a victory lap: President Obama seems more confident and confrontational, a little bit feisty, and vindicated by the election. But despite this tone, the speech’s policy proposals seemed to focus on incremental change with a few major exceptions (universal Pre-K is a pretty big deal). The president kept coming back to the idea of making government “smarter,” not larger or smaller. His proposal for a “Fix-It-First” program for infrastructure is typical of this approach to policy, and in this case, it’s a good move. Putting people to work doing things like rebuilding deficient infrastructure and revitalizing abandoned urban neighborhoods is a far smarter way to plan for the future than building new highways to the suburbs and encouraging sprawl, which has been standard U.S. policy for over 60 years. However, along with his comments on mortgage relief and homeownership, I would have liked to see President Obama propose something to help renters as well, who are disproportionately urban, minority, and young and end up subsidizing homeowners through the tax code. Millennials, who graduated into a bad economy and a bottomed-out housing market, have largely had no choice but to pay the rent that’s asked of them, since tight credit and low salaries have made buying a home nearly impossible. The president, whose administration is filled with smart growth advocates, likely knows all of this already. His Millennial supporters would surely appreciate it if he acted on it during the next four years.

Mike Malloy, Campus Network member and student at Michigan State University:

In recent years, two Republican strategies to weaken the Democratic voting base have emerged at the state level: voter restriction and attacks on labor. Unfortunately—and unsurprisingly—President Obama neglected both in his speech last night. The president's eagerness to see bipartisan cooperation is commendable. But failing to expose partisan games undermines his bipartisan vision, enables the misleading of the public, and hurts targeted groups.

The president spoke about “improving the voting experience,” addressing logistical issues that caused long waits in November. Why not address attempts to supress voters by requiring special identification and limiting early voting, both intended to obstruct Democratic voters? The president could still champion convenient voting efforts and—in a perfect world—even call for both parties to end gerrymandering.

Likewise, despite emphasizing manufacturing and proposing a new minimum wage, the president did not mention organized labor, including the right-to-work laws and collective bargaining restrictions Republican state legislatures have passed to weaken unions' political influence. Acknowledging the problematic worker pension and benefit costs state and local governments face, President Obama might have called for a renegotiation of contracts while reaffirming the rights of workers, acknowledging the views of both parties. Instead, the president's silence continued a trend of staying quiet on labor issues. This likely stems from the unpopularity of unions, but it also reinforces that negative view.

The president's pursuit of bipartisanship cooperation is truly admirable. But in order to achieve it, he should call attention to egregious acts of partisan gamesmanship in addition to finding common goals.

Tim Price, Deputy Editor of Next New Deal

There were a lot of takeaways from last night's State of the Union, but the most striking to me is that after the last four years, President Obama still has the ability to surprise us. After what many viewed as an uncharacteristically progressive inauguration speech, there was potential for the president to retreat into his reflexively centrist comfort zone -- and there were hints of that, like his insistence that nothing he wants to do should add to the deficit, or the questionable decision to lead off the night by talking about entitlement reform. But for the most part, he exceeded expectations and behaved like post-2012 Obama, who seems much more comfortable pushing the boundaries of the debate now that he knows he won't be running for anything again. Who expected him to even mention the minimum wage or universal pre-K, let alone highlight them as major policy proposals, before the prepared text began to leak last night? We still have a long way to go before the solutions on the table measure up to the challenges we face, but at least we're having the conversation.

Where Obama defied expectations, Republicans met them, to their detriment and ours. Whether the topic was jobs, immigration, voting rights, or protecting women from violence, John Boehner kept his hands at his sides and grimaced as if he were sitting on a tack -- except that would at least have motivated him to stand up. In his response, Republican rising star Marco Rubio rehashed every tired anti-government argument you've heard a thousand times before and offered bold ideas like... tax cuts. It's obvious that they have nothing new to offer and are hoping mindless obstruction will be a winning strategy like it was in 2010. But that was a different time and a different economy, and the president's message to them last night was clear and forceful: we're all tired of your shtick. What else have you got?

Tarsi Dunlop,  D.C. Pipeline leader:

President Barack Obama highlighted the importance of investment last night: in America, in the middle class, and in future generations. He also talked about the return on investment, which is particularly pertinent when it comes to expanding access to early childhood education. Access to high-quality Pre-K education is one of the most effective ways to ensure that all children are prepared for academic success in K-12 and then ultimately for college and careers. If children are not reading at grade level by third grade, they are at a higher risk of falling behind and dropping out by the time they reach high school. Early childhood education offers early exposure to vocabulary, numbers, and helps children learn how to socialize with others. An additional benefit for families is that access to Pre-K education allows both parents to earn an income while offering children a safe and engaging learning environment. Outside high-quality daycare is expensive, and many parents don't have several hundred dollars a week to pay for it, something that the president noted last night. While expanding early childhood education is not cheap, there is a significant lifelong return on investment over the course of a lifetime, as the president pointed out: boosting graduation rates, reducing teen pregnancy and violent crime, increasing the likelihood of students holding a job, and having more stable families of their own. Ideally, as this proposal gains traction, the president’s definition of "working with states" should not involve competitive grant funding. This implementation method puts resource-strapped districts and states at a disadvantage in applying for funding and creates winners and losers. Best practices already exist for statewide programs, with effective public-private partnerships, that can and should be replicated. In the spirit of progressive values and ideals, dollars and investment should reflect an equal and fair commitment to each child, regardless of external circumstances. 

Michelle Tham, Campus Network member and student at American University:

Obama's speech mentioned the success in natural gas and how further investments must be funneled into the renewable energy sector. However, by not mentioning intellectual property rights, Obama misses the target of the conversation on renewable energy. Alternative energy resources is one topic that all countries are willing to share information on, except the United States. Foreign firms from Europe invest in China and India because their IPR (intellectual property rights) are less stringent, which allows the flow of information and design to flourish. China is the leading producer in solar panels because its designs are more affordable than American-based solar panels. Wind technology is China's third largest energy source domestically -- after coal and natural gas. Therefore, in order to increase innovative ideas, Obama needs more open trade policies with different countries and needs to encourage cooperation, not only in diplomatic relations, but in commercial relations as well. Technology transfers are occurring in commercial levels and the government's role is to facilitate such transaction. 

Naomi Ahsan,  D.C. Pipeline leader:

In his inaugural address, the president broke with the rhetoric of politics as usual to lay out his philosophy for good government in a very genuine manner. He used this new voice again in his State of the Union address and listed several legislative priorities within the overarching objectives of addressing poverty and gender justice. The first was raising the federal minimum wage. His description of how a family fully employed with honest work at the minimum wage can still be living in poverty captures the rationale for supporting welfare programs. The president also noted that persistent poverty has emerged as a geographically-defined phenomenon within the U.S. and called for direct community development efforts as well as making high-quality preschool available to every child. This would help break the cycle of poverty, particularly in distressed neighborhoods. Children from low-income families are already less likely to graduate high school and they start kindergarten demonstrably behind better-off peers on developmental milestones leading up to literacy. Making quality preschool universal would show that we have learned from seeing programs like Head Start and Jumpstart dramatically improve underprivileged children's educational prospects by providing extra support at the pre-kindergarten level. It is also important to recognize the connection between gender inequality and poverty: women account for about 62 percent of those earning the minimum wage and often are taking financial responsibility for leading families. Fair pay for these women workers contributes to the health and opportunity of children and families as a whole. I was impressed that the President was offering informed and thoughtful solutions for the growing issue of poverty, which has great potential for benefiting the economy and is deserving of the national attention that too often goes to deficit reduction.

Florence Otaigbe, Campus Network member and student at Michigan State University:

As a staunch supporter of President Barack Obama, my first reaction was that I couldn’t agree more with his introductory remarks on how America is now stronger than ever before. There is no disagreement when it comes to the matter of progress. The disagreement comes in trying to push progress further. During his address, the president laid out various proposals for his next term. Ranging from education to gun control, the president hit the nail on the head. Yet in spite of these great ideas, it’s up to Congress and the people for any change to occur. That’s where my reaction turns less optimistic. I truly believe that there is a great divide in Washington D.C. that is starting to reach the point of no return. Both sides are polarized like never before, and it’s really hard to reach a consensus on anything. I just don’t see how the country can advance when there is so much tension among the people who enable that advancement. There’s much more room for change in America, but most of that rests with most of our leaders in D.C. Without their cohesion, it’s likely that America will remain stagnant, and that is not what we want for our country.

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Obama’s Second Inaugural Should Reject the “Job Creators” Vision of Capitalism

Jan 18, 2013John Paul Rollert

Now is the time to articulate a vision of capitalism that doesn't rely on the Visible Hand.

An inaugural address finds presidents at their most philosophical. Policy prescriptions are neither expected nor desired, and the solemnity of the occasion lends itself to reflection.

Now is the time to articulate a vision of capitalism that doesn't rely on the Visible Hand.

An inaugural address finds presidents at their most philosophical. Policy prescriptions are neither expected nor desired, and the solemnity of the occasion lends itself to reflection.

But a second inaugural address differs from the first in one important way, for it must respond to recent history. A newly installed president, without any real responsibility for the larger events that saw his election, can indulge in hopeful prophecy, but a re-elected president owns the immediate past. It, and not his address, is prologue to a second term, and so, especially in troubled times, his speech must take shape around present challenges.

The financial crisis cast a long shadow over President Obama’s first term.  Yet in his battle to deliver the economy from a steep financial downturn, he stumbled into a war of sorts over how capitalism works. This is a conflict the president would no doubt have rather avoided—the presidency is challenging enough without having to convince a substantial portion of the electorate that your aim is not to subvert capitalism but to save it from itself. However, the deep disagreement over how the crisis came about, much less how it might be resolved, made an ideological debate over the very nature of capitalism all but unavoidable.

What exactly is the nub of the disagreement? During the election, everything Republicans believed to be wrong with the president’s approach to economic policy was epitomized by the “You didn’t build that” remark. The remark came amid off-the-cuff comments President Obama made at a campaign rally in July. A first-time listener might be forgiven for mistaking the endlessly disputed that, but a review of the transcript clearly shows it refers to public infrastructure—roads, bridges, educational institutions, and the like—that is necessary, if not sufficient, for a private enterprise to thrive.

At the time, some Republicans tried to twist the remark to suggest that Obama believed that business owners don’t actually have a hand in building their own businesses, a contention that was not implausible so much as incoherent. However, shrewder observers insisted that the significance of the remark lay beyond its plain meaning. “It’s an explanation,” Paul Ryan declared in a campaign stop at the site of the remark. “It tells us why our economy is not growing like it should. It tells us the mindset that he’s using to lead our government. It tells us that he believes in a government-centered society and a government-driven economy.” For Ryan and others, it suggested that President Obama rejected the “job creators” vision of economic development favored by Republicans, or what one might call the Visible Hand theory of capitalism.

This theory finds its first and most formidable expression in the work of Joseph Schumpeter, the mid-20th century Austrian economist who cast the entrepreneur as the action hero of economic growth. As far back as Adam Smith, economists had regarded the serene stasis of perfect competition as a kind of endpoint for capitalism. But Schumpeter believed this ideal blinded them not only to the chaotic reality of capitalism but to the revolutionary power of instability to pull or, more accurately, yank an economy ahead.

“Economic progress, in capitalist society, means turmoil,” he declared in his classic work Capitalism, Socialism, and Democracy. The system “is incessantly being revolutionized from within by new enterprise, i.e., by the intrusion of new commodities or new methods of production or new commercial opportunities into the industrial structure.” The people who fomented such destabilizing changes were Schumpeter’s entrepreneurs. Their efforts constituted a “distinct economic function,” one that gave rise to new possibilities in the capitalist order even as they foreclosed old ones.

Especially in Schumpeter’s early writings, the entrepreneurial class embodies the Visible Hand of capitalism. In his first book, The Theory of Economic Development, Schumpeter celebrates the entrepreneur as a “man of action,” a larger than life individual whose keen intellect, swashbuckling spirit, and stubborn irreverence toward the commercial status quo made his activity “the greatest and most splendid element that economic life offers to the observer.”

But though he never yielded pride of place in Schumpeter’s system, the entrepreneur evolved from a class of superman, distinct and identifiable, to a spirit of sorts that animated capitalism. That evolution is captured by the very way in which Schumpeter emphasized the impact of the entrepreneur. Early on he terms it “creative construction” before changing to the always-capitalized “Creative Destruction,” a subtle revision that prized the secondary consequences of entrepreneurial endeavors over their self-conscious aims.

The shift in emphasis coincided with a greater awareness by Schumpeter of what he called the “cultural performance” of capitalism, its tendency to subvert traditional ways of life and undermine social cohesion. “[O]ne may care less for the efficiency of the capitalist process in producing economic and cultural values,” he candidly admitted, “than for the kind of human beings that it turns out and then leaves to their own devices, free to a make a mess of their lives.”

Ayn Rand’s radical individualism made her the natural person to adopt Schumpeter’s vision and relieve it of its social qualms. Though she never acknowledged her debt to Schumpeter, Rand also locates the engine of capitalism in an “exceptional minority who lift the whole of a free society to the level of their own achievements.”

This passage comes from What Is Capitalism?, an essay published in 1965, 15 years after Schumpeter’s death. In it, Rand provides an eye-opening description of the just deserts implied by her vision of capitalism:

The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all their brains.

In other words, to the victors can’t go spoils enough.

Rand’s ethics of achievement, together with Schumpeter’s opinion of the essential place of the entrepreneur, provide the Visible Hand its moral license and theoretical integrity. In the 2012 campaign, it found an impassioned spokesman in Paul Ryan, whose speech at the Republican National Convention was a celebration of this vision. “With tax fairness and regulatory reform,” he pledged, “we'll put government back on the side of the men and women who create jobs, and the men and women who need jobs.”

Yet even among those sympathetic to the Republican ticket, the unavoidable elitism of the Visible Hand left some feeling cold. “In Ryan’s intellectual bubble, there are job creators and entrepreneurs on one side and parasites on the other,” wrote Scott Galupo of The American Conservative the morning after Ryan’s speech. “There is no account of the vast gray expanse of janitors, waitresses, hotel front-desk clerks, nurses, highway maintenance workers, airport baggage handlers and taxi-drivers. They work hard, but at the end of the day, what can they be said to have ‘built’?”  

The answer, of course, is nothing—at least nothing essential to economic development. What so struck Adam Smith about the commercial system he described, “the assistance and co-operation of many thousands,” is entirely taken for granted. The daily labors of a nation are a mere fait accompli to the executive decisions of a few.

Such a vision sits uncomfortably amid democratic values of equality, empathy, and the inherent dignity of the individual, but it becomes intolerable when the theory underpinning it becomes a pretense for naked privilege. Whatever the merits of Schumpeter’s theory of entrepreneurship, his “job creators” were a class defined by spirit, not tax status. To the degree that Republicans conflate the two, they make a travesty of Visible Hand.

An aristocracy of talents is no doubt preferable to the politics of plutocracy, but neither one is commensurate with a vision of capitalism that takes as its point of departure, and its final destination, a concern for the common good. President Obama recognizes this. “Ever since” the financial crisis began, he said in his most powerful speech of the 2012 campaign, “there has been a raging debate over the best way to restore growth and prosperity; balance and fairness.” This isn’t “just another political debate,” he continued. “This is the defining issue of our time.”

And it will only continue to be, what with the upcoming battles over the sequester and the debt ceiling in addition to ongoing debates over entitlement reform, budget deficits, and tax rates. President Obama’s second inaugural address provides him a unique opportunity to describe the challenges of a common capitalism and to put forward a vision of economic development that doesn’t see us waiting on the deliverance of an enlightened few, but one in which there is dignity and place for everyone to lend a hand. 

John Paul Rollert is an Adjunct Assistant Professor of Behavioral Science at the University of Chicago Booth School of Business.

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Dorian Warren on the Significance of the Walmart Strikes

Dec 4, 2012

You may have heard that on Black Friday, hundreds of Walmart workers went on strike. But at such a large employer, what does that really mean? In the latest episode of the Roosevelt Institute's Bloggingheads series, Fireside Chats, Fellow Dorian Warren talks with labor journalist Josh Eidelson about the significance of the strikes:

You may have heard that on Black Friday, hundreds of Walmart workers went on strike. But at such a large employer, what does that really mean? In the latest episode of the Roosevelt Institute's Bloggingheads series, Fireside Chats, Fellow Dorian Warren talks with labor journalist Josh Eidelson about the significance of the strikes:

Dorian points out that "Walmart is the largest private employer in the United States," with "over 3,000 stores and 4.1 million workers." That means the Walmart way has a huge impact on the rest of the sector -- and the economy. And just what does that look like? "That model is a model of low wages, of what’s called flexible scheduling…workers not even being able to work full time even though they might want to, of workers having to go to the state, to government for different kinds of support," Dorian says.

Check out the full video below for more on the fire in Bangladesh and whether 2012 is the year of the strike:

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