A new word for an old problem

Wages in the US for the common worker have been stagnant for going on forty years. This disenfranchisement did not happen over just the last ten years. It is the culmination of various events and actions and not due solely to one or two causes or solvable by bumper sticker solutions. Yet, we have a new word for a major cause courtesy of the Economic Policy Institute – monopsony.

In essence, monopsony is the sister of monopoly. It is an employer who has so much clout in a region or area, it can suppress wages to its workforce. It can also move jobs away more readily be it through off-shoring, outsourcing, downsizing or relocation. This movement of jobs adds to an employer’s ability to manage wage increases. In essence, the word monopsony highlights the goal and ability of employers to chase cheap labor.

Per the EPI, much of the wage stagnation after 1970 has occurred at the low-end of the wage spectrum. An economist noted on a talk show to get an idea of what has happened, stand up and put both arms out in front of you parallel to the ground. The left one represents the bottom 90% and the right one the top 10%. Move the left one up at an angle by one inch, then move the right one up by twenty inches. That disparity illustrates what has transpired over these forty years in wage differential.

I have written before the efforts by the current President to create fear of immigration and trade deficits as the reasons for disenfranchisement in various areas over look the main two drivers – chasing cheap labor and technology improvements. Immigration is actually accretive to the economy, even illegal immigration as there are many jobs that Americans have said they don’t want.

But, if the President wants to solve an illegal immigration problem, he should begin with punishing employers who hire these workers. I have noted before about a textile company who went bankrupt and closed its doors. When career counseling people said in an auditorium full of workers that you had to have a Social Security Number to get access to benefits, 1/3 of the audience got up and left. The construction, agricultural and restaurant industries would have severe issues if these immigration wells dried up.

Yet, the two main drivers of wage stagnation and good paying jobs do not get talked about – chasing cheap labor and technology gains. An unnamed CFO said in the book “The Rich and the Rest of Us,” an employer would get by with no employees if it could. So, robotic machinery has been displacing workers for many years. And, now it is becoming even more efficient and affordable. We do much more manufacturing in the US today than in 1980, but with much fewer workers.

Yet, with these tools and possible actions available to an employer who has a monopsony in an area, good paying jobs are fewer in number. Mind you, high-tech manufacturing and similar jobs exist, but they are not in the same number with so much competition for wages. I make this last point as the disenfranchisement is real and not made up. To his credit, Trump went out and visited these areas. But, what they did not realize, he was selling on fear, over-simplifying the causes and highlighting the wrong major ones.

The disenfranchisement in the western world has a visual called the “elephant curve,” with a side view of an elephant with his trunk raised. The body of elephant is wage growth for the emerging and burgeoning international markets. The raised trunk reveals the rapid wage growth for the top 10% in the western world. The trough between the raised trunk and body, reveals the stagnation in wages in the western world.

So, immigration and global trade have an impact, but the key drivers are chasing cheap labor and technology. And, the last one will grow even faster than before. Yet, chasing cheap labor will continue to be a driver as well. It is the culmination of pounding on unions to weaken their voice. It is the active fight to keep minimum wages down over time. It is making tax changes dating back to the 1980s (and last December) that are more advantageous to the top 10%, giving them a chance to invest in technology and places to house cheaper labor. It is threatening to move jobs to gain wage limits.

Since the housing recession in 2008 and early 2009, we have seen unemployment decline and stay down. Wages have gone up some, but not near enough to track other increases in costs. We need to be discussing retraining impacted workers building off some success stories around the country. We need to renovate and repurpose deteriorated assets to create new jobs. We need to invest more in our infrastructure and jobs of the future. We need to stabilize the ability for employees, whose hours are limited, to get affordable healthcare, since employers hire more part-time and contractual employees to restrict them from joining their healthcare plans.

The disenfranchised employees and areas need a real voice who will speak to real causes, not over-stated ones. Monopsony is a hard word to say and is a hard word on these people. They deserve better than what they have been hearing.

 

 

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Environmental Punishment Agency

In spite of all of the damage being done to the United States and its relationships with allies, I have feared from the outset the damage the US President would do to the environment and our planet.

The word “Protection” no longer applies to defining the mission of the EPA. The “P” has been replaced by “Punishment.” Between the President and two industry favoring EPA directors (not to mention a transition plan climate change denier), the environment is becoming a bigger pool to pee in.

It started out with the attack on scientists who study and developed world-class data and reports on climate change. Access to these reports were removed from the government webpages and many scientists were reassigned to non-science positions which they had to take or were fired. Why? If your position is so grounded, why must you remove the other side’s arguments?

On top of rolling back numerous regulations that governed industry, several major changes also occurred:

– the compliance with the Clean Power Plan has been eliminated.

– the US is one of three countries to not support the Paris Climate Change Accord.

– the Clean Waters Act was greatly changed from a regulatory standpoint, unwinding changes made by Obama and both Bushes.

– And, this week, coal companies have greater license to let mercury and other pollutants escape (after they already made changes to comply with the 2011 requirement). The reason is the value of lives and dollar savings due to just the mercury change were less than the cost (yet that is subterfuge as the savings of lives and dollars due to other pollutants dwarfs the cost). I won’t even dignify the comment of the value of life being lost.

The legacy of this President will haunt our country and planet for a long time. Good actions are being taken in spite of this President’s efforts, but so much more could be done. I would encourage all voters, but especially young ones, to challenge all politicians about their environmental stance. This must be the issue of 2019 or we will lose momentum. To me, this is beyond horrible stewardship. It is malfeasance.

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Note to Readers: Check out Gronda’s post on the influence of ALEC on the US effort to deregulate the EPA.

Dark Monies From ALEC Associated Corporations Is Root Cause Of De-Regulation Of EPA Rules

 

It is time to govern

Now that the elections are over, it is time to put away the rhetoric and focus on governance. This used to be how it was done, until we segmented the news into various markets. The past twenty years or so, we seem to govern off the campaign rhetoric rather than facts and collaboration has become a dirty word.

As an Independent voter, who has been a member of both parties, the governing off rhetoric and lack of collaboration need to stop. Neither side owns all the good ideas and both sides have some bad ones. And, we need to focus on the underlying truths and facts rather than tweets and who wins a public relations battle over an issue. Process matters – when politicians deviate from process, it is for political reasons.

In this spirit, here are the issues that this voter thinks we should focus on. Many voters have voiced agreement on some of these, but some issues just don’t get due attention.

– we should stabilize and shore up the ACA which most Americans favor: funding commitments to insurers will stabilize premiums, as will expanding Medicaid and considering the expansion of Medicare down to age 55, 60 or 62.

– we should ditch the harmful tariffs and work with our allies and the WTO to pressure China to stop the intellectual capital theft. Tariffs hurt consumers and producers, especially our farmers.

– we should address infrastructure needs which are many, doing so as we have done in the past with a blend of business, venture capital and federal, state and local government funding.

– we should recognize that the two biggest threats to our planet per the World Economic Forum are our water crisis and climate change, which exacerbates the first issue: strides have been made, but we need to reassume our global leadership role on climate change and focus on measures to address both.

– we should add more governance around gun control issues: Gun-owners and non-gun owners have voiced agreement on measures that would help. It should be noted most gun-owners do not belong to the NRA, so the NRA’s political activism against reasonable change should be noted, but not over-emphasized.

– The deficit and debt are building to a point of huge reckoning. It has been eight years since the Simpson-Bowles Deficit Resuction Committee report was shelved. It was shelved because it recommended $2 in expense cuts to every $1 in revenue increases. It was shelved because neither party had the political courage to roll up their sleeves and make tough decisions – we cannot get there with only expense cuts or revenue increases, needing both.

– We should stop the lack of civil discourse and beating up on the media. The media’s role is vital to our democracy. Pay attention to where your news comes from. Be wary of opinion disguised as news. Tweets are not long enough to show context or subtlety and are an easy way to misinform, as a result. To this end, it is vital for our democracy to return to appropriate Congressional oversight. We are not a kingdom.

If anything, we must have our politicians work together. The crime bill the President is pushing and that passed the House is not perfect, but is a bipartisan effort. It makes steps forward. Let’s make needed improvements and get something done. And, that is what Americans want most from our politicians – stop the grandstanding and get stuff done.

 

 

Two Americans win Nobel Economics prize on Climate Change work

Per an article this morning in Reuters, “Americans William Nordhaus and Paul Romer, pioneers in adapting economic theory to take better account of environmental issues and technological progress, shared the 2018 Nobel Economics Prize on Monday.”

Romer, with New York University, and Nordhaus, with Yale, developed models on the economic impact of dealing with climate change. Reuters cited the Nobel Academy in Stockholm, “‘Their findings have significantly broadened the scope of economic analysis by constructing models that explain how the market economy interacts with nature and knowledge.'”

This news is important as Americans still provide global leadership inspite of the dearth of leadership in the White House and EPA. America is moving forward on renewable energy, but our efforts are in spite of the absence and antagonistic actions of federal leadership. Arguably, more than any other issue, voters must ask their candidates where the stand on climate change actions and protecting the environment.

It is interesting that this came today as the headline article in The Charlotte Observer is “NC Leaders share concern about climate change.” These are 60 business, advocacy, former government and university leaders who have been brought together to speak to various problems. 45 of them responded to the question of climate change and, of the 45, only two naysayed climate change – one called it a hoax, while the other said it is real, but the jury is out on man’s influence. Think about that – 43 out of 45 define the problem and offer solutions.

Per these leaders, ideas include ceasing building on lands prone to flooding. NC has had two 500 year floods in two years, the same with Houston, Texas. Miami may be inescapably lost to continued flooding due to rising seas and porous limestone. The term we must understand as well is “sunny day flooding,” which happens more and more throughout the year.

These Nobel prize winners note we have to address the problem now while the costs are more manageable and can be sustained. The best teachers are the Dutch, as they have managed sea water encroachment for years. But, the impact also includes more and intense forest fires and the faster depletion of already dear water sources.

We have major problems occurring that Washington is not talking about and, in some cases, is making it worse. We must address climate change and invest more in  renewable energy, consider better coastal and flood plain building and consider a carbon tax. We must address fresh water loss that is hastened by climate change that is affecting farmers and other Americans. And, we must address pollution by companies and the growing mountain of plastic.

There are economic models that call to mind the old Fram oil filter commercial – you can pay me now or pay me later. Now, is far cheaper. Ask your politicians more questions and vote accordingly. If they do not admit there are problems, do not vote for them.

Capitalism and socialism coexists

On more than one occasion, I have seen letters to the editor speak of setting up beachheads in the coming election around capitalism vs. socialism. To me, this is a name-calling gimmick to persuade a voter who does not do much homework. Voters that are prone to listen to name-calling as debate will buy into this logic time and again. The irony in this debate is the United States’ economy is a blend of “fettered” capitalism with socialistic underpinnings. So, both co-exist here.

For readers in the either camp, this observation probably surprises them, especially those who are gung-ho capitalists. But, the word in quotes is also important as we do not have unfettered capitalism. If we did, the US President would have run out of money long ago with his many bankruptcies. I believe in capitalism as well, but we need to understand why we ventured down the path of the socialistic underpinnings.

These underpinnings spoke to a nation that was in a great depression and who seemingly got lost in poverty later on. Social security is a low-income weighted pension, disability and survivor benefit program that is funded equally by employers and individuals. To determine the base level benefit, 90% of average wages are used for the earlier wages then added to 32% of the next tier of wages which are added to 15% of the highest wages up to a limit.

In the 1960s, LBJ’s “War on Poverty” added Medicare and Medicaid to the mix, with Medicare helping retirees and Medicaid focusing on people in poverty. Then, we can mix equal measures of unemployment benefits, workers’ compensation and food stamps which are now called SNAP benefits. Each of these programs are forms of “social insurance” benefits. That is socialism designed to keep people fed, housed and protected.

Taking this a step further, utilities are so needed to our communities, they are either co-ops or fettered capitalistic models where rate increases must get approved by a state governing board. Companies like Duke Energy and Con-Ed must get permission before they change their rates. For the co-op model, the customers own the business.

But, the word “fettered” enters into the mix on other businesses as well. To prevent monopolies, insider trading, interlocking boards, collusion, the misuse of insider knowledge by investors, etc. rules are set up to provide governors on capitalism. Then, there is that bankruptcy thing, where a business or person can claim bankruptcy to pay debtors what they can and restart. I use the President as an example, but his experience is a good one, as he filed for bankruptcy six times on various investments.

I want people to think about our country in this context. We want people to earn their keep and be fully functioning tax paying citizens. Yet, we have programs in place to keep them out of the ditch. As we considering changes to programs, we should consider what they are accomplishing and how changes could make them more effective. And, we must understand that things must be paid for, so how do we get the best return on the investment into those stated goals?

For those that have followed my blog for some time, you know I have been involved for many years in helping homeless working families find a path back to self-sustainability. We help the homeless climb a ladder, but they climb it. Yet, we are also successful in keeping people housed on their own after two years of leaving our program because we measure things and make improvements. The ultimate goal is self-sustainability, so we measure how we can be the best financial stewards toward helping people achieve that purpose.

We need social underpinnings to help people be fed, housed and protected. Some need to be temporary in nature, while others are longer term like Medicare and Social Security. There is a cost-benefit to these equations, but we should understand that we have poverty problem in our country. We must also understand technology advances will continue to change the paradigm on employment as it has throughout the industrial age placing additional pressures to even more wage earners. Not providing ladders out of poverty or ways to avoid it would be a bad path to follow for our country.

 

Questions for Campaigning Republican Legislators

Our diligent and thorough blogging friend, Gronda, wrote a post regarding answers to questions that Republican Party leadership provided GOP candidates. Most of the questions are of many of the messes the President finds himself in of his making, but truly miss the boat on where Republicans and the President have failed to address larger US and global issues.

There is plenty to ask about of these legislators. Here are a few of my questions:

– why are you allowing the easier maltreatment of our environment by industry?

– why are you supporting leaving the Paris Climate Change Accord ignoring the rest of the world?

– why have you failed to address our water concerns in Flint and similar places?

– why have you not only ignored our rapidly rising and expensive debt, but made it worse?

– why have you stood by and let the President trash and cut our diplomacy staff and bully our allies?

– why are we placing tariffs on everyone, without concern for past failures and ignoring better channels to address China involving our allies?

– why have you not listened to Americans and improve the ACA actually harming it instead?

– why have you not done anything to materially address gun governance?

– why have you allowed a President to trash our hard working people in important government departments to create an illusion of conspiracy to save his hind end?

– why have you tolerated a President who believes the civil rights of whites matter more than that of other races?

– why are we doing things to make our poverty problem worse, not better?

– why have we not addressed infrastructure with our significant needs and resulting job creation when interest rates were lower?

That is a start. These folks have a lot to answer to. To be frank, all Americans should be asking these questions, but if I were a young person, I would be even more alarmed. Just with climate change and growing debt, this party is screwing our youth.

But, there is so much more. I am an Independent voter who left the GOP over ten years ago because of their failure to speak to the truth on real problems – Trump has made it worse and his followers have been conned to believe the opposite.

Two interesting climate change stories

In the sea of news about all things Trump, we lose sight of other things going on. Two stories caught my eye this week about climate change that deserve more oxygen, pun intended. On Monday, The Charlotte Observer published a front page story called “Rising sea erodes property values at beaches.”

Per the Observer, “Scientists have found that $7.4 billion was lost in home values across North Carolina, South Carolina, Virginia, Georgia and Florida because of sea level rise flooding from 2005 to 2017.

“Scientists at First Street Foundation – a technology nonprofit dedicated to increasing awareness of seal level rise – used data from the National Oceanic and Atmospheric Administration, US Geological Survey, local governments, the National Weather Service and the US Army Corps of Engineers to estimate flood risks.”

The “peer reviewed” study showed 616,626 homes lost value during this time. Per the Observer, “The study is the first of its kind to show depreciation of homes values has already taken place in the United States…” The article noted this is a concern to not only the homeowners, but the municipalities and counties where property taxes have (and will) decline through reevaluation.

Last week, an article in Yahoo Finance called “Kids around the world are suing governments over climate change – and it’s working,” it was noted the US Ninth Circuit Court of Appeals allowed a US lawsuit to move ahead.

As reported in Yahoo, “Back in 2015, a group of 21 young Americans decided to sue the US government over climate change. In Juliana v. US, the plaintiffs argue that the government has violated ‘the youngest generation’s constitutional rights to life, liberty, and property’ by adopting policies that promote the use of fossil fuels—despite the knowledge that carbon dioxide emissions are a primary cause of global warming.

“That might sound like an extreme claim. But in the years since, the lawsuit has kept succeeding against all odds. The Ninth Circuit Court of Appeals on July 20 denied the Trump administration’s attempt to dismiss the suit, and the case remains set for trial 0n October 29.” Yahoo notes the plaintiffs range in age from 11 to 22.

These two stories stand on their own. The first confirms with peer reviewed data, climate change is impacting coastal properties now and has been for at least twelve years. This is not a future thing. Most of this burden has been borne by the state of Florida, which is interesting as their governor forbid his staff from mentioning the words climate change or global warming in speeches or articles.

The second says these kids get it. The US government is lax on doing definitive measures and planning to address climate change. I am reminded of the multi-partisan plan developed by Denmark to address climate change impact over the long term, as it had to last beyond the current leadership. The kids have gotten to the next step with the Ninth Circuit Court saying their case has merit. Well done to all. It is sad the kids have to resort to this kind of measure when adult leaders fail to act or accept funding based on them not acting.