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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A simple economic question

As the US President seeks to close our borders and retrench from global markets, there is a simple question to ask. Let’s set aside what’s right or wrong from a humanity and safety standpoint. Let’s focus on a simple economic one.

Do we grow our economy more by letting people bring their ideas, work ethic and entrepreneurial spirit to our country and making it easier to do business with us, or do we accomplish more economic growth by closing our borders and forcing other countries and businesses therein to look to other markets for sales and supplies?

This thought struck me Sunday morning as I caught the Women’s Open Championship in the UK. What struck me is there were not any American golfers among the top two pages of the leader board. Thinking back to the World Cup in Russia last month, the American team was not present for this global event.

I recognize these are sporting events, but they are metaphors. If you don’t keep up, the world will move on. But, not keeping up does hit our economy, as well. In the US, unemployment is low, but we are having a hard time filling higher tech manufacturing jobs. US customer service jobs abound in Asia and the Philippines. And, many of our IT jobs are being done by people in India or who have moved here from such locations.

The first book which spoke to this is The World is Flat,” by Thomas Friedman. We live in a global economy with a global workforce. Employers need the best, cheapest talent they can find. The more commoditized the job, the pendulum swings to cheapest. The less commoditized, the pendulum swings to best. If we cannot fill the jobs here, they will be filled elsewhere. And, it should be noted that companies are leasing robots for $18 an hour, if they cannot fill the job.

We must be mindful of a key data point, immigration is accretive to our economy. Since Innovation is portable, new talent coming here brings more innovation. And, jobs are created around the Innovation. So, we need to be welcoming with better governance over immigration.

We also need to be easier to work with than we have become. When an entity makes it more difficult and less profitable to partner with, its trading partners look to other sources of sales and supplies. This has been happening for the last several months. And, as one farmer said, a subsidy won’t help if the customers go away.

Sadly, this issue has now been politicized, with fear and over-emphasis of causes. As I briefly noted above, the key reasons some areas are suffering are due to chasing cheaper labor and technology. The last issue is the larger concern as a CFO noted  in the book “The Rich and the Rest of Us,” by Cornel West and Tavis Smiley, “employers would do without employees if they could.”

So, look back at the simple economic question. What kind of country do we want to be? Then, add in the seasonings of doing the right thing and being safer. Global commerce actually makes the world safer, as you are less likely to go to war with your trading partners.

 

The working homeless I see

With holiday season upon us, I wanted to remind folks that the holidays can overshadow many folks who are doing so much with so little. I volunteer to help with working homeless families as they climb a ladder back to self-sufficiency. We help them along the way, but they are the ones who must climb the rungs of the ladder.

When I speak to groups of people about the folks we help, whether it is a Sunday school class, church service, United Way function, business group or company community relations effort, the audience is always surprised when I say our homeless families work. I usually let that sink in before proceeding.

In fact, 85% – 95% of our families are parented by a single working mother, the fastest growing population of homeless people nationwide. And, about a third of those mothers are escaping a domestic violence situation. Think about that for a second. A woman and family has the additional trauma of being homeless on top of the physical and mental abuse. Our social workers have a process they use with our families called Trauma Informed Care. They understand what the mother and family is going through, while still helping them be more accountable.

Our families are homeless because of reduced hours, a lost job from several, a healthcare crisis, a car issue, daycare costs or because of the domestic violence issues noted above. We help our families by providing temporary shelter for about 60 – 90 days as they get their sea legs underneath them. Then, we help them move to an apartment where we subsidize the rent with the family paying 30% of their income toward rent and utilities. We pair them with a clinical social worker and, if they desire, a Hope Team which is a group of one or more couples that help mentor the family.

Our families exit our program, on average, after twenty-one months with 80% – 90% being self-sufficient, meaning they no longer need our subsidy. And, we measure success after they leave, so we know that 80% – 90% of the families who left housed are still housed on their own after two years of leaving our program. This shows that people need a helping hand to get back on their feet, but truly want to be on their own. I mention this as there are some in our country that believe everyone needing help is a malingerer.

My experience shatters many of those misconceptions. Here are three:

  • People in poverty are lazy. Not true. The people I work with tend to work their fannies off in one or more jobs.
  • People in poverty are less virtuous and are being punished. Not true. The people I see tend to cling to their faith and are more pious than the church members who help them. These volunteers take away more than give.
  • People in poverty are substance abusers. No more than anyone else and in fact to a lesser degree. The State of Florida drug tested welfare recipients until the policy was ruled unconstitutional. The data from this short lived process revealed that people on welfare had less than 1/2 the rate of substance abuse than general society’s rate.

Poverty is merely the lack of money, period.

So, as we celebrate Christmas and other holidays, let’s remember that many are not so lucky. They are doing the best they can. The hole is deep, but they can climb out of it, with a little help. Let’s help them climb the ladder.

 

 

The best of religion – creating community conversations around differences

Last night, my wife and I attended one of a series of “talks” around improving racial relations. It is a weekly chat sponsored by a multi-faith group based in our city. In essence, it is facilitated small group and large group discussions on breaking down barriers and listening to others who do not look like you do. It was well done and very meaningful.

To hear stories about small and large examples of racism is very important. To hear about how assumptions can be made and, if not corrected, can be become more concrete in the eyes of the beholder. Children learn lessons whether you want them to or not, even when you try to do the right thing. So, it is imperative to have open conversations about treating people like you want to be treated and listening to comments, so that they can be reinforced or amended.

Yet, it is we adults that need to do better. A few themes we discussed include:

– do not indict a group for the actions of a few;

– recognize that small sleights can be hurtful, as well;

– try to walk in another person’s shoes; understand that a white person has more liberty to go anywhere, while a black man, even when dressed-up, has restricted access;

– shine a light on hateful speech or behavior; tolerance must be viewed toward a greater good, so it is OK to be less tolerant of those who use words to demean and diminish;

– speak up and speak out to people who share your skin color who are indicting others who are different; a white person’s voice will be listened to when admonishing the behavior of fellow white people;

– be the change you want to see and see people for whom they are; and

– recognize that racial injustice is also the result of a larger poverty issue, which affects people of all colors.

There are many more lessons that were conveyed during the session, but one of my takeaways is this is religion at its finest. Welcoming, including and helping. Let me end with one more tidbit on how religion can help provide solutions and create a welcoming dialogue. The Kindness Blog is a compilation of good news stories from around the world. People need to read this blog to balance the many negative stories that we are bombarded with. Their latest post, which can be linked to below, is evidence of the best of religion.

Jesus said it so well in his Golden Rule. Treat others like you want to be treated. If we do this, we are way ahead in the game. So, welcome, include and help.

http://kindnessblog.com/2015/07/07/walked-past-a-church-yesterday-had-this-poster-on-the-door/

That is what people do

I was re-watching a wonderful movie called “The Book Thief.” The story is about an adopted girl who survives in Poland post the invasion by Nazi Germany. She learns from her step-father (and step-mother) about treating others with kindness and humanity as they hide a Jewish friend in their basement and he speaks out in favor of a half-Jewish man who is being taken away by the soldiers. When she does something similar, her step-mother says “you are just like your father.” When she asks why is that so bad, she adds to her question, by saying “That is what people do.”

In our increasingly adversarial world where helping people becomes harder given the politicization of every issue, we sometimes lose sight of what people do. I often quote Gandhi who noted that a society’s greatness is measured by how it takes care of the least fortunate. In the Christian bible it is noted that “there but by the grace of God go I,” when describing the need to help those less fortunate. And, Jesus noted when you help people who have the least, you are honoring him.

When there is a tragedy, a flood, fire, hurricane, earthquake, mudslide,tornado or tsunami, we eagerly help people in need. Yet, today when people are in need because of generational poverty in areas where opportunities do not exist and hope is hard to find, we tend to define groups as less worthy. We seem to look to pat reasons why they are in poverty oftentimes blaming the victims of poverty more than we should or if at all. As I have noted, many of the poor I work with as a volunteer, have multiple jobs and work their fannies off.

We need to look rationally at the conditions that cause poverty and make sustainable efforts to remedy these conditions. This takes a longer level of commitment, as decades old problems can rarely be solved overnight. I ask that we look into our hearts as well as our heads to do what people do and help those in need. Help them find ways to climb ladders out of poverty. But, show the desire to help that we each have smoldering within us.

That is what people do. To do otherwise, is not very humanitarian.

Blackbird singing in the dead of night

The title is from a line of The Beatles song “Blackbird” which is a tribute to the struggle for African-Americans for their civil rights. The song was sung by Paul McCartney with writing credits to both him and John Lennon, although McCartney was the lead.

Blackbird singing in the dead of night
Take these broken wings and learn to fly
All your life
You were only waiting for this moment to arise

Blackbird singing in the dead of night
Take these sunken eyes and learn to see
All your life
You were only waiting for this moment to be free

Blackbird fly, blackbird fly
Into the light of the dark black night

Blackbird fly, blackbird fly
Into the light of the dark black night

Blackbird singing in the dead of night
Take these broken wings and learn to fly
All your life
You were only waiting for this moment to arise
You were only waiting for this moment to arise
You were only waiting for this moment to arise

Here is what McCartney said about the origin of the song in an interview in 2002.

“I’ve got a poetry book out called Blackbird Singing…..I was in Scotland playing on my guitar, and I remembered this whole idea of ‘you were only waiting for this moment to arise’ was about, you know, the black people’s struggle in the southern states, and I was using the symbolism of a blackbird. It’s not really about a blackbird whose wings are broken, you know, it’s a bit more symbolic.”

I added McCartney’s quote as I wanted the clarity around what the song means. African-Americans are still fighting an uphill struggle for their civil rights. What has happened in Ferguson, Cleveland, New Jersey, Charleston, Charlotte and Baltimore is tragic, but evidence of the disenfranchisement of African-Americans. The lack of opportunity, the malaise, the maltreatment, the deterioration of the neighborhood, the lack of respect given to people of color in our country continues.

I have noted before that Warren Buffett has said he was born lucky. He was born a white male in America. All three components of that phrase are important – white, male and America. Yes, he worked hard, but he was afforded opportunities that African-Americans do not get.  Not only do many whites like me have a hard time knowing the challenges of being black, but we also do not fully realize the advantages of being white. As I wrote recently, as a white man, there are not too many places I cannot go no matter how I am dressed. But, there are far too many stories of how a black man can be dressed in his Sunday best, yet still be stopped by the police and think “be careful as this may be the last thing I do on earth.”

I would encourage three things. First, please do not look at those committing violence and rioting as indicative of the African-American community. The community knows this is not the path forward. Second, people who look like me need to do our best to understand the challenges we have in America for people of color, but also for all people in poverty. Third, as always, talk is cheap. These issues are complex and solutions have to address many underlying concerns. There are no sound byte answers as some politicians have espoused.

I mention this last point as we must address the wide disparity in American between the “haves” and “have-nots.” This is not just an African-American issue. It is an American issue, as most people on food stamps are white. Please re-read this previous sentence. Poverty exists in urban areas, in rural areas and even in the suburbs. We have to stop the “war on poor people” and make this a “war on poverty.”

We must invest in our infrastructure and deteriorated assets repurposing them. This will spawn jobs as well in places where it is needed. We must revise our minimum wage to be consistent with a living wage for one person, which varies, but is just over $10 an hour. We must invest in education at all levels. We must embrace the Affordable Care Act as it is helping so many people and fully implement it through Medicaid expansion in the remaining 20 odd states. For some politicians to say we have a poverty problem and be against the ACA is hypocritical and shortsighted, especially when it is working pretty well.

Remember McCartney’s words and lets help these folks with broken wings learn to fly. To do otherwise, goes against what our country is all about and any of the teachings found in religious texts.

Some voices from real people in need

“I work. I have always worked, but need to find another job where the hours are more predictable, so I can be there for my kids, attend school events, help them with their homework.” – a single homeless mother, now housed with a temporary rent-subsidy.

“They have cut my hours at work, so I need to find a second job, so that I can feed my kids and pay rent.” – a single homeless mother, now housed with a temporary rent-subsidy.

“Two professionals helping me were talking about me, in front of me, as if I could not understand them. Since I did not know middle class English, people would not ask for my opinion. I grew up a migrant worker picking crops. I did not know I did not speak middle class English.” – a former homeless person, who is now a Ph.D. helping people in need.

“People who have never lived in poverty, do not know what it is like to have to decide on whether to eat or pay rent. They say why don’t you get a job? I have a job. I have more than one and I work hard.” – a homeless father, now housed with a temporary rent-subsidy.

“My husband is no longer a part of the picture. We are on our own doing the best we can, but it is hard with only person working.” – a domestic violence victim and homeless mother, now housed with a temporary rent-subsidy.

“I never thought it could happen to us. We both have college degrees, but when my wife was also laid off, we had to come here and get help. We did not know how.” – a father of a homeless family who is now housed with a temporary rent-subsidy.

“When your poor, you feel like you do not belong. How do you think a kid feels when she goes to school on picture day and her envelope is empty? Or, at the book fair, when the teacher compliments the person in front of her on the book they chose and skips over her.” – a former homeless person who is now a Ph.D. helping people in need.

“I made a bad decision when I was a teenager and now have a criminal record. Can you help me get considered for this job? I just need an opportunity to tell my story.” – a single homeless mother now in housing with a temporary rent-subsidy.

“I am embarrassed that I cannot keep a roof over my kids’ heads. They say they understand, but it is not fair that they have to.” – a single homeless father living out of his van with his two kids.

“We did not know this until later, but our daughter was volunteering at a food bank helping people in need. Mind you, we live in a tent in a homeless village, but she was volunteering to help others after school.” – a homeless family, who is now housed with a temporary rent subsidy.

We need to walk in other people’s shoes to understand why they are in poverty. It is not laziness, as the homeless people I see work their fannies off.  It is not due to lack of virtue, as the people I see are more devout than others as their faith is all they have. It is mostly not due to substance abuse, as the homeless have no greater degree of substance abuse than the general population. Poverty is the lack of money. This lens is critical. Let’s understand this and help people climb ladders to self-sufficiency.