Creating Decent Jobs

The Role of Unions

By Jeannette Wicks-Lim

The turmoil of the current recession is deflecting attention from a longer-term challenge facing the U.S. economy: how to create decent jobs. Even before the recession, nearly two-thirds of U.S. jobs failed the “decent job” test—they paid too little to cover a small family’s basic needs. Between now and 2016, the strongest job growth will be largely in low-pay occupations, according to Department of Labor projections. So barring any structural changes, the U.S. economy will be no better at producing jobs that can support a worker and his or her family at a very basic living standard in 2016 than it was in 2006.

Collective bargaining through labor unions could brighten this forecast, raising the quality of future jobs even if the economy continues to produce the same types of jobs. Bringing the unionized share of the U.S. workforce back up to around its level in the 1970s—admittedly no easy task—would lift an estimated 2.5 million additional jobs over the decent-job threshold in 2016.

A reasonable definition of a decent job is one with the minimum pay and benefits necessary to provide a healthy and safe standard of living for a small family. This benchmark is substantially above the U.S. Census Bureau’s official poverty threshold, widely viewed as far too low. Based on very basic family budgets the Economic Policy Institute has developed, a decent job has to pay at least $17 an hour with health and retirement benefits, or $22 an hour without.

A recent Labor Department report examines trends through 2006 to predict the jobs picture in 2016. Here are the ten occupations slated to add the most jobs: orderlies and nursing/home-health aides; registered nurses; retail salespersons; customer service representatives; food preparation and serving workers; general office clerks; personal/home-care aides; postsecondary teachers; janitors; and accounting clerks. In only two—RNs and postsecondary teachers—do the majority of existing jobs meet the decent job standard. The other eight fall short.

It’s no surprise, then, that an analysis of the complete 2016 jobs projection shows little change in the overall proportion of decent jobs. By my estimates, in 2016 some 35.2% of all jobs will meet this standard, barely changed from the 2006 figure of 34.8%. These projections pre-date the current recession, and so reveal a long-term problem likely to persist well after the economy revives.

If we cannot count on a raft of novel, more lucrative occupations in the next several years, then expanding the number of decent jobs will require improving the compensation of jobs in existing occupations. Unions enable workers to do exactly that. Suppose union representation rose by a meaningful amount, say 10 percentage points to about 24%, by 2016. The proportion of decent jobs in 2016 would rise by an estimated 1.5 percentage points to 36.7%, representing an additional 2.5 million decent jobs. This is four times the projected increase if union representation levels remain the same.

But what about globalization? Forget about more decent jobs—how can U.S. workers stop decent jobs from disappearing in an increasingly integrated world economy with a large supply of labor that is cheaper than any in the United States, whether unionized or not?

One answer is to focus on jobs that are not off-shore-able and on sectors in which U.S.-based firms have a competitive edge. Clean energy initiatives fit the bill: they involve activities that can only be done locally such as retrofitting buildings, plus, renewable energy is an area where U.S.-based firms’ technological edge counts.

This strategy has another potential benefit for workers: greater international solidarity. By reducing the pressure they face from the global “race to the bottom,” robust clean-energy job growth would better position U.S. workers to focus on cross-border organizing that can raise the floor of the global labor market.

What would it take to bring an additional 10% of U.S. workers into unions? That is the subject of another article. But the fact that the Employee Free Choice Act, which would make it easier for workers to join unions, is under serious consideration in Congress gives reason for hope. Any policies that expand opportunities for workers to join unions would help ensure that employment growth in the coming years produces decent jobs.

Jeannette Wicks-Lim is an economist at the Political Economy Research Institute, UMass Amherst.

Sources: Creating Decent Jobs in the United States: The Role of Labor Unions and Collective Bargaining, peri.umass.edu; Constance F. Citro and Robert T. Michael, eds., Measuring Poverty: A New Approach, National Academy Press, 1995; Arlene Dohm and Lyn Shniper, “Employment outlook 2006-2016: Occupational employment projections to 2016,” Monthly Labor Review, Nov. 2007; David Howell, Dean Baker, Andrew Glyn, and John Schmitt, “Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence,” Capitalism and Society 2(1), 2007; James Heckman, “Comments on ‘Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence’,” Capitalism and Society (2)1, 2007; James Lin and Jared Bernstein, What We Need To Get By, Economic Policy Institute, 2008.

Economic Rights, Then and Now

January 11th, 2010 marks the 66th anniversary of FDR’s Economic Bill of Rights.

By Susan Feiner

Economic security today? Yes. FDR’s January 11,1944 State of the Union Address unveiled a “Second Bill of Rights under which a new basis of security and prosperity can be established for all—regardless of station, race, or creed.” Roosevelt, citing “accepted, self-evident economic truths,” called economic security the “foundation of true individual freedom.” He continued, “equality in the pursuit of happiness” requires the right to “a useful job” that “provide(s) adequate food and clothing and recreation,” “a decent home” and, “adequate protection from the economic fears of old age, sickness, accident, and unemployment.”

That was 66 years ago.

Today’s unemployment—nearly 30 million people when you include those working part-time and those so discouraged they’ve stopped looking—rivals that of the Great Depression. Record numbers of households—their earnings stuck at 1998 levels—are worried about food and clothing. Recreation? Forget it. And for the millions whose homes are foreclosed decent housing is a distant memory.

Is it possible that economic policy makers don’t understand the magnitude of the crisis facing Americans whose livelihoods depend on jobs? Don’t they care? Or does economic ideology so blind them that they can’t see what was so obvious to FDR? “ ‘Necessitous men are not free men.’ People who are hungry and out of a job are the stuff of which dictatorships are made.” We ignore this at our peril. Today, as in 1944, “the grave dangers of ‘rightist reaction’” threaten economic security and political freedom. With insight and prescience FDR warned that if we return to business-as-usual after we have “conquered our enemies on the battlefields abroad, we shall have yielded to the spirit of Fascism here at home.”

Insecurity breeds Fascism. Too many of us begin each day staring anxiety in the face. Only the richest Americans enjoy an acceptable measure of economic security. With security in their pockets and billions (of our tax dollars) in their bank bonuses, they leisurely contemplate which mansion to live in, how much to spend on designer clothing, where to sip champagne, and who to hire to wash their clothes and tend their intimate needs. While the rest of us—checkbooks empty and shelves bare—worry about meeting our basic human needs.

What policy levers must we pull today to ensure economic rights proposed in the 1940s?

According to the Center on Budget and Policy Priorities the states face combined budget gaps of around $350 billion for fiscal years 2010 and 2011. The states, unlike the federal government, cannot run deficits. Moreover, when states cut spending to balance their budgets, the ensuing job losses cause further declines in tax revenues, necessitating more spending cuts. Forcing the states to run balanced budgets in times of extreme economic duress creates a vicious cycle of rising unemployment, falling tax collections, job cuts and more unemployment.

The federal government is the only economic actor with both the resources and power to counter this downward spiral. Yes, this means deficit spending.

If the Federal government stepped in with the $350 billion needed to balance state budgets, the states could hire 15 million (or one-half of all the currently unemployed) at $25,000 per year.

The alternative is worse! If the federal government does not step in—does not provide state grants sufficient to prevent further spending cuts—the resulting unemployment will create the same federal deficit, but we’ll have nothing to show for it!

The arithmetic is simple, the logic straightforward, the policy direct. Only fiscal dinosaurs and rightwing class warriors don’t get it.

President Roosevelt knew that significant federal spending was the key to economic security.

Deficits be damned. Full speed ahead!

Susan Feiner is a professor of economics and of women’s and gender studies at the University of Southern Maine.

Do the Right Thing

A message to House Democrats: This is your moment of truth. You can do the right thing and pass the Senate health care bill. Or you can look for an easy way out, make excuses and fail the test of history.

Tuesday’s Republican victory in the Massachusetts special election means that Democrats can’t send a modified health care bill back to the Senate. That’s a shame because the bill that would have emerged from House-Senate negotiations would have been better than the bill the Senate has already passed. But the Senate bill is much, much better than nothing. And all that has to happen to make it law is for the House to pass the same bill, and send it to President Obama’s desk.

Right now, Nancy Pelosi, the speaker of the House, says that she doesn’t have the votes to pass the Senate bill. But there is no good alternative.

Some are urging Democrats to scale back their proposals in the hope of gaining Republican support. But anyone who thinks that would work must have spent the past year living on another planet.

The fact is that the Senate bill is a centrist document, which moderate Republicans should find entirely acceptable. In fact, it’s very similar to the plan Mitt Romney introduced in Massachusetts just a few years ago. Yet it has faced lock-step opposition from the G.O.P., which is determined to prevent Democrats from achieving any successes. Why would this change now that Republicans think they’re on a roll?

Alternatively, some call for breaking the health care plan into pieces so that the Senate can vote the popular pieces into law. But anyone who thinks that would work hasn’t paid attention to the actual policy issues.

Think of health care reform as being like a three-legged stool. You would, rightly, ridicule anyone who proposed saving money by leaving off one or two of the legs. Well, those who propose doing only the popular pieces of health care reform deserve the same kind of ridicule. Reform won’t work unless all the essential pieces are in place.

Suppose, for example, that Congress took the advice of those who want to ban insurance discrimination on the basis of medical history, and stopped there. What would happen next? The answer, as any health care economist will tell you, is that if Congress didn’t simultaneously require that healthy people buy insurance, there would be a “death spiral”: healthier Americans would choose not to buy insurance, leading to high premiums for those who remain, driving out more people, and so on.

And if Congress tried to avoid the death spiral by requiring that healthy Americans buy insurance, it would have to offer financial aid to lower-income families to make that insurance affordable — aid at least as generous as that in the Senate bill. There just isn’t any way to do reform on a smaller scale.

So reaching out to Republicans won’t work, and neither will trying to pass only the crowd-pleasing pieces of reform. What about the suggestion that Democrats use reconciliation — the Senate procedure for finalizing budget legislation, which bypasses the filibuster — to enact health reform?

That’s a real option, which may become necessary (and could be used to improve the Senate bill after the fact). But reconciliation, which is basically limited to matters of taxing and spending, probably can’t be used to enact many important aspects of reform. In fact, it’s not even clear if it could be used to ban discrimination based on medical history.

Finally, some Democrats want to just give up on the whole thing.

That would be an act of utter political folly. It wouldn’t protect Democrats from charges that they voted for “socialist” health care — remember, both houses of Congress have already passed reform. All it would do is solidify the public perception of Democrats as hapless and ineffectual.

And anyway, politics is supposed to be about achieving something more than your own re-election. America desperately needs health care reform; it would be a betrayal of trust if Democrats fold simply because they hope (wrongly) that this would slightly reduce their losses in the midterm elections.

Now, part of Democrats’ problem since Tuesday’s special election has been that they have been waiting in vain for leadership from the White House, where Mr. Obama has conspicuously failed to rise to the occasion.

But members of Congress, who were sent to Washington to serve the public, don’t have the right to hide behind the president’s passivity.

Bear in mind that the horrors of health insurance — outrageous premiums, coverage denied to those who need it most and dropped when you actually get sick — will get only worse if reform fails, and insurance companies know that they’re off the hook. And voters will blame politicians who, when they had a chance to do something, made excuses instead.

Ladies and gentlemen, the nation is waiting. Stop whining, and do what needs to be done.

What Didn’t Happen

Lately many people have been second-guessing the Obama administration’s political strategy. The conventional wisdom seems to be that President Obama tried to do too much — in particular, that he should have put health care on one side and focused on the economy.

I disagree. The Obama administration’s troubles are the result not of excessive ambition, but of policy and political misjudgments. The stimulus was too small; policy toward the banks wasn’t tough enough; and Mr. Obama didn’t do what Ronald Reagan, who also faced a poor economy early in his administration, did — namely, shelter himself from criticism with a narrative that placed the blame on previous administrations.

About the stimulus: it has surely helped. Without it, unemployment would be much higher than it is. But the administration’s program clearly wasn’t big enough to produce job gains in 2009.

Why was the stimulus underpowered? A number of economists (myself included) called for a stimulus substantially bigger than the one the administration ended up proposing. According to The New Yorker’s Ryan Lizza, however, in December 2008 Mr. Obama’s top economic and political advisers concluded that a bigger stimulus was neither economically necessary nor politically feasible.

Their political judgment may or may not have been correct; their economic judgment obviously wasn’t. Whatever led to this misjudgment, however, it wasn’t failure to focus on the issue: in late 2008 and early 2009 the Obama team was focused on little else. The administration wasn’t distracted; it was just wrong.

The same can be said about policy toward the banks. Some economists defend the administration’s decision not to take a harder line on banks, arguing that the banks are earning their way back to financial health. But the light-touch approach to the financial industry further entrenched the power of the very institutions that caused the crisis, even as it failed to revive lending: bailed-out banks have been reducing, not increasing, their loan balances. And it has had disastrous political consequences: the administration has placed itself on the wrong side of popular rage over bailouts and bonuses.

Finally, about that narrative: It’s instructive to compare Mr. Obama’s rhetorical stance on the economy with that of Ronald Reagan. It’s often forgotten now, but unemployment actually soared after Reagan’s 1981 tax cut. Reagan, however, had a ready answer for critics: everything going wrong was the result of the failed policies of the past. In effect, Reagan spent his first few years in office continuing to run against Jimmy Carter.

Mr. Obama could have done the same — with, I’d argue, considerably more justice. He could have pointed out, repeatedly, that the continuing troubles of America’s economy are the result of a financial crisis that developed under the Bush administration, and was at least in part the result of the Bush administration’s refusal to regulate the banks.

But he didn’t. Maybe he still dreams of bridging the partisan divide; maybe he fears the ire of pundits who consider blaming your predecessor for current problems uncouth — if you’re a Democrat. (It’s O.K. if you’re a Republican.) Whatever the reason, Mr. Obama has allowed the public to forget, with remarkable speed, that the economy’s troubles didn’t start on his watch.

So where do complaints of an excessively broad agenda fit into all this? Could the administration have made a midcourse correction on economic policy if it hadn’t been fighting battles on health care? Probably not. One key argument of those pushing for a bigger stimulus plan was that there would be no second chance: if unemployment remained high, they warned, people would conclude that stimulus doesn’t work rather than that we needed a bigger dose. And so it has proved.

It’s important to remember, also, how important health care reform is to the Democratic base. Some activists have been left disillusioned by the compromises made to get legislation through the Senate — but they would have been even more disillusioned if Democrats had simply punted on the issue.

And politics should be about more than winning elections. Even if health care reform loses Democrats’ votes (which is questionable), it’s the right thing to do.

So what comes next?

At this point Mr. Obama probably can’t do much about job creation. He can, however, push hard on financial reform, and seek to put himself back on the right side of public anger by portraying Republicans as the enemies of reform — which they are.

And meanwhile, Democrats have to do whatever it takes to enact a health care bill. Passing such a bill won’t be their political salvation — but not passing a bill would surely be their political doom.