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Republicans

Unemployed Workers Fight Early COVID Benefit Cuts

by Gregory N. Heires August 9, 2021

written by Gregory N. Heires

By GREGORY N. HEIRES

Unemployed workers and advocacy groups are mobilizing against state plans to carry out early cuts in the federal government’s extra pandemic unemployment benefits.

At least seven states face lawsuits over the cuts. In some instances, the fightback is succeeding.

In July, a judge in Maryland rejected Republican Gov. Larry Hogan’s appeal of a lawsuit that blocked the state’s plan to cut off benefits.

In Indiana, a judge ruled on June 25 that the state must continue to provide the COVID unemployment benefit to 230,000 unemployed workers until a lawsuit challenging the early termination of the compensation is decided.

Another fightback effort includes a Facebook group of 1,800 Tennesseans suing Gov. Bill Lee and the State of Tennessee to stop federal unemployment benefits more than two months before the program expires.

In June, the grassroots groups Unemployed Workers Union of Ohio and Unemployed Action Ohio, with support from the Ohio Organizing Collaborative, held a news conference at the Statehouse to protest Governor Mike DeWine’s benefit cuts. The Ohio Organizing Collaborative is reaching out to unemployed workers online to join its campaign to block the cuts.

Cuts Fail to Spur Hiring

The federal government’s extra $300 benefit is scheduled to expire in September. But 26 states—all but two led by Republican governors–have already begun to eliminate it. More than 4.7 million workers will lose the $300 supplement in the 26 states, according to the National Employment Law Project (NELP).

But the attack on unemployment benefits goes beyond the $300 cut. Twenty-two states are also cutting other federal pandemic benefits as well as state benefits. That will leave 2.3 million workers without any federal and state unemployment assistance at all, according to NELP.

The governors say they are carrying out the cuts to spur hiring. But so far, there is little evidence that the cuts are having that impact. About a month after two dozen GOP-led states began slashing the federal government’s extra benefit, a group of Morgan Stanley economists found the cuts had little effect on the labor market. “It appears that generous unemployment benefits are likely no more of a factor than other impediments, including childcare, transportation, and health concerns, to workplace re-entry,” Morgan Stanley economists wrote.

“Conservative cuts in unemployment benefits make it harder for people to reflect on whether they want to go back to work, even as COVID cases are rising and even while average wages stay low,” said Frank Stricker, author of “American Unemployment: Past, Present, and Future and a board member of the full-employment advocacy group National Jobs for All Network.

“Despite the stories about employers having to raise pay to attract workers, real hourly wages (in purchasing power) have fallen more than 2% over the year. The shortage of workers is not short enough to increase wages faster than prices. Making more people seek work right away means less pressure for employers to raise pay.”

In his podcast, Economic Update, economist Richard D. Wolff charged that the Republican-led states were answering the call of businesses to make workers return to their jobs while providing inadequate compensation.

“Labor Shortage?” Wolff said. “Listen, Jack. You raise the wages, the shortage will vanish.”

NJFAN Chair Trudy Goldberg echoed Wolff’s criticism of the cuts and expressed support for the grassroots groups in Ohio and other states fighting to block them.

In June, President Joe Biden said it “makes sense” for the federal government to stick with its plan for the benefits to expire in September. It’s the Republican-led states that are double-crossing millions of workers.

This article appeared Aug. 6 in the Jobs for All Newsletter.

The New Crossroads blogger Gregory N. Heires is the editor of the Jobs for All Newsletter and a former president of the Metro NY Labor Communications Council.

August 9, 2021 0 comment

The Conservative War on America

by Gregory N. Heires April 5, 2021

written by Gregory N. Heires

By GREGORY N. HEIRES

Our rigged political system and economy are products of decades of bad public policies and corporate practices. These actions have produced the greatest inequality since the Great Depression, killed off unions, and dramatically increased the concentration of political power in the hands of a political elite.

“Evil Geniuses: The Unmaking of America: A Recent History” by Kurt Andersen tells the story of how corporate interests, conservative politicians, and right-wing professionals worked together to change the rules of the game to help the rich get off at the expense of the rest of us.

Evil Geniuses: The Unmaking of America:
A Recent History

By Kurt Andersen
Random House; 464 pages
August 2020
Hardcover: $26.99
ISBN 10: 1984801341 /
ISBN 13: 9781984801340

In addition to lifting government regulations and attacking government programs, these “evil geniuses” counted on the support of Republicans and Democrats alike. As they shifted the political consensus to the right, they aimed to erase the legacy of the New Deal.

The Cultural Divide

Andersen dates the country’s shift to the right to the cultural divide that emerged in the 1970s. A backlash to the civil rights movement, Vietnam War protests, the 1960s counterculture, the women’s movement, liberal social policies, and a mass nostalgia for the romanticized 1950s created the political climate for conservative change, he argues.

In 1971, corporate lawyer Lewis F. Powell Jr., who later became a U.S. Supreme Court justice, laid out a fight-back strategy for Corporate America in a confidential memo, “Attack on American Free Enterprise System,” to the U.S. Chamber of Commerce.

The memo discussed how the free enterprise system was being undermined by the liberal media, colleges, the pulpit, intellectual and literary journals, socialists, communists, the arts and sciences, and politicians.

“The painfully sad truth,” the memo stated, “is that business, including the boards of directors and the top executives of corporations great and small and business organizations at all levels, often have responded — if at all — by appeasement, ineptitude, and ignoring the problem.”

Powell urged the Chamber of Commerce and its corporate and political supporters to respond to the assault on free enterprise by creating a nationwide network of think tanks, university beachheads, and sympathetic media devoted to creating and publicizing conservative public policy and ultimately winning political power.

One of the guiding lights of the fight-back was economist Milton Friedman. He promoted the doctrine that the pursuit of maximum profits was the central purpose of economic activity, reinforcing the conservatives’ moral argument for rapacious capitalism. This perspective was embodied by the trader portrayed by Michael Douglas in the film “Wall Street,” who proclaimed, “Greed is good.”

Beginning in the 1980s, right-wing professionals and corporate interests started in earnest to build up the infrastructure of the nationwide network proposed by Powell to create the ideological justification and blueprints for tearing apart the post-World War II political consensus that had built upon New Deal policies and supported for programs like Medicare, Medicaid, and the War Against Poverty.

Eventually, the evil geniuses behind this agenda triumphed. Democrats lost the lock on the power they held in the U.S. House of Representatives and the U.S. Senate. Republicans swept to power in statehouses and county and local governments.

Democratic Complicity

Yet Democrats aren’t blameless. Politicians and college-educated professionals from both sides of the political aisle increasingly bought into the notion of being “socially liberal but fiscally conservative.”

An early convert was Gary Hart, whose 1974 stump speech for the U.S. Senate was called “The End of the New Deal.” As a New Democrat, President Bill Clinton would later declare that “the era of big government is over.” His vice president, Al Gore, spoke of “reinventing government,” which provided the rationale for contracting out and privatizing government services. Clinton dismantled the Aid to Families with Dependent Children (AFDC) for poor mothers and children, a program that had existed for decades.This forced single moms to participate in work programs to receive benefits and imposed restrictions on how long assistance was available. Clinton also signed legislation to toughen criminal law, which led to a dramatic increase in incarceration, especially of African Americans.

Our Unfair and Broken Economy

The cost of all of this?

Over the past 40 years, we have witnessed a systemic economic squeeze on the middle class and the poor due to anti-worker corporate practices and the erosion of progressive public policy.

The share of wealth owned by the richest 1 percent of the population has doubled. The collective net worth of the bottom half of the country fell to nearly zero. The median weekly pay for full-time workers has increased by only 0.1 percent a year. The wages of ordinary Americans no longer rise alongside productivity. The fruits of productivity have gone to the top 10 percent, whose incomes have kept up with productivity.

Along with wages, upward mobility has stagnated. The privatization of student loans has saddled college graduates with about one-and-a-half times the debt ($11.5 trillion in 2019) of credit cardholders. Political resistance has blocked increases in the federal minimum wage, which has declined 31percent since 1968. Today, workers earning the federal minimum wage have the present equivalent of $6,800 less per year to spend on food, rent, and other essentials than did their counterparts 50 years ago. Traditional pensions have largely been replaced by risky 401(k) savings plans.

Thanks to the success of the Right, a majority of states have anti-union right-to-work laws. In 2019, the share of U.S. workers represented by unions was —10.3 percent — below its level four decades ago. According to the Economic Policy Institute, research shows that this de-unionization accounts for a sizable share of the growth in inequality over those years — around 13–20 percent for women and 33–37 percent for men. Working people are now losing on the order of $200 billion per year due to the erosion of union coverage over the last four decades — with that money being redistributed upward to the rich, EPI says.

But the Right’s triumph has not only been an economic one. Virtually all of President Donald Trump’s judicial appointees came from the Federalist Society, a group of conservatives and libertarian lawyers founded in 1982. Conservative media feed the public with conservative dogma. Over decades, corporations have steadily shifted the burden of health costs to their employees. The changing political climate culminated with Trump’s election, which helped create the political climate favorable to the neo-fascist and white supremacist coup attempt we witnessed on Jan. 6.

A New Progressive Era?

So, what is to be done?

Andersen recounts how, in many respects, he embraced the move to the right but has now grown disenchanted, morally outraged, and more progressive as he witnessed the social, political, cultural, and economic wreckage caused by the conservative cabal he describes. Yet, he appears cautiously hopeful that the right-wing agenda has run its course.

Indeed, “Evil Geniuses” raises the question of whether the United States has reached a transition point that will result in a paradigm shift in which the country will enter a more progressive, more inclusive era. Will, the current division within the Republican Party enable the Democrats to expand upon the gains they made in the 2020 elections? Or do we face a deepening threat of white supremacy and fascism along with conservative public policies that benefit the wealthy at the expense of the rest of us?

“For Americans now,” Andersen asks, “will surviving a year (or more) of radical uncertainty help persuade a majority to make radical changes in our political economy to reduce their chronic economic uncertainty and insecurity? Or will Americans remain hunkered forever, as confused and anxious and paralyzed as we were before 2020, descend into digital feudalism, forgo a renaissance, and retreat into cocoons of comfortable cultural stasis providing the illusion that nothing much is changing or ever can change?”

Meanwhile, now that the Democratic Party has won control of the U.S. Congress and the White House, many of us are asking whether the political will is there to ensure that needed major changes–health care, police, labor law reform; a federal jobs guarantee; paid family leave; addressing structural racism; child care; fairer taxes; affordable housing; the elimination of college debt, among others–are carried out. How deep is the legacy of the neoliberal New Democrats within the party? How effective will Republicans be at blocking reform? Can we eliminate the neo-fascist threat?

This isn’t a moment for the country’s movement for economic, political, and social justice to let down its guard.

The New Crossroads blogger Gregory N. Heires is a former president of the NY Metro Labor Communications Council. This review originally was published in the April edition of the Jobs for All Newsletter, which is available at https://njfac.org.

April 5, 2021 0 comment

News

Government-Sponsored Retirement Plans for Private-Sector Workers Fall Short

by Gregory N. Heires October 6, 2019

written by Gregory N. Heires

By GREGORY N. HEIRES

State and local governments are stepping in to help ordinary Americans save for their retirement as corporations continue to abandon their responsibility to help and the Trump administration takes steps to undermine the ability of workers to save.

But the initiatives–while laudable examples of the positive role government can play in our society–fall short of fully addressing the country’s looming retirement crisis.

The new retirement plans for private-sector workers don’t come close to matching the richness of traditional retirement plans once common in companies willing–or forced by unions–to invest enough to ensure their workers have a dignified retirement.

What’s more, these government-promoted plans let employers completely off the hook and put the entire burden of retirement savings and investment management on workers. Such cost shifting to employees mirrors what employers are doing with their health benefits, where workers no longer make modest contributions but are stuck with a typical tab of $6,000 for a family plan that costs $20,000.

The Sad Death of Traditional Pensions

Today, public-sector workers are basically the only class of workers who are guaranteed a steady retirement income based on their years of services and salary. Thus, while the new model constitutes a positive modest step to address the country’s retirement crisis, it nevertheless puts another nail in the coffin of traditional—or defined benefit—pensions enjoyed only by public employees and a lucky few in the private sector.

In September, New York City unveiled its plan to help private-sector workers save for their retirement years. The plan requires participating workers to put aside 3 percent of their salary toward their retirement.

Officials, including Mayor Bill de Blasio, gleefully pointed out that the plan would have no cost for employers, whose only obligation would be to offer their employees an opportunity to participate.

The city would assume the estimated $1 million to $3 million in start-up costs during the first few years. The program would then be self-sustaining, relying on the investments returns of workers. The proposal is now in the hands of the Democratic-controlled City Council, which is widely expected to approve the legislation.

In 2017, Oregon became the first state in the county to address the retirement crisis. That year, it introduced the pilot program for its OregonSaves program. Some 7,500 people were enrolled by the first quarter of 2018.

Under the state-sponsored retirement program, participants agree to an automatic 5 percent deduction from their paycheck, and they are charged a maintenance fee of 1 percent of their assets each year. They are permitted to increase the percentage of their paycheck deduction.

All employers with at least 50 employees must register for the plan by 2021. Other employers can register voluntarily.

In recent years, over 30 states have considered legislation that would establish a state-run retirement plan. So far, Oregon, California, Illinois, Connecticut, Maryland and Massachusetts are the only states that have enacted legislation establishing a state-run plan program.

With the modest employee contribution rates, though, these plans unfortunately will fall short of matching the benefit typically provided by traditional retirement plans, which require substantial contributions from employers. Defined-benefit plans require funding obligations as high as 20 percent of the value of payroll. Some financial analysts say that workers need to save that percentage of their pay to be able to maintain their lifestyle when they retire.

The Financial Squeeze

Putting aside the structure of retirement plans, a key issue here is, of course, affordability.

Simply put, coping with decades of stagnant wages resulting from the loss of their share of productivity gains, millions of American workers are too financially squeezed to be able to accumulate sufficient savings for their retirement.

The Federal Reserve Bank’s annual study on the economic well-being of U.S. households in 2018 offers a bleak picture of the financial health of the typical American family, and it suggests why millions of people are not saving enough (if anything) for their retirement.

The study reports that, if faced with an unexpected expense of $400, 27 percent of Americans would borrow or sell something to pay for the expense, and 12 percent would not be able to cover the expense at all.

Nearly half of Americans approaching retirement have less than $25,000 in savings, according to a survey by the Employee Benefit Research Institute. One out of four workers do not even have $1,000 socked away.

More than two-thirds of Latino workers don’t have retirement accounts, according to the National Institute on Retirement Security. Sixty-percent of blacks don’t.

Nearly 25 percent of workers say they expert they won’t be able to retire. Thirty-six percent of Americans don’t feel they will be able to enjoy a comfortable retirement, according to a Gallup poll.

“I don’t want work until I die,” said Onza Lynch, a truck driver who works for a company that collects carton waste from businesses, at the Sept. 23 rally and press conference in which de Blasio announced New York City’s plan. The Bronx resident, who has six children, said he lacks retirement savings even though he has worked for 30 years, starting out as a teenager.

“We need a new law like this for people like me,” Lynch said.

Social Security to the Rescue?

Probably the easiest way to address the retirement crisis would be to expand Social Security. The American public generally loves the program, and using it to fix the retirement crisis would make the need to create a new program—one run by the government or a public-private partnership—unnecessary.

Fifty-four million depend on Social Security – one out of every six people, according to the advocacy group Strengthen Social Security. About two out of three seniors depend on Social Security for most of their income, and one-third of seniors rely on it for at least 90 percent of their income.

Social Security’s benefits are modest, but vital, Strengthen Social Security points out. The average benefit is about $13,000 a year—less than full-time, minimum-wage work.

Supported by 200 Democrats, the Social Security 2100 Act would be a very positive step forward to address the retirement crisis.

The proposal would increase the contribution rate to 7.4 percent from 6.2 percent and would be gradually phased in from 2020 to 2043. For the average worker, this would cost an estimated 50 cents more per week every year.

The average benefit would be boosted by 2 percent. The increase would be funded by raising the cap on payroll taxes on wages to $400,000. Currently, the cap is only $132,900.

The leading three Democratic presidential candidates—Joe Biden, Bernie Sanders, and Elizabeth Warren—call for expanding the benefit by making the wealthy contribute more.

Meanwhile, we can’t count on the Trump administration to do anything significant to start to deal with the retirement crisis. His Treasury Department shut down a program established by the Obama administration—myRA—to help people who did not have access to a workplace savings plan.

What’s troublesome is that many Republicans would still love to resurrect President George W. Bush’s failed proposal to privatize Social Security.
Will the spread of government-sponsored individual retirement accounts serve as ammunition for conservatives to push again for the privatization of Social Security?

That certainly would lead Chilean dictator Gen. Augusto Pinochet
to smile in his grave.

His government was the pioneer of a global movement to privatize social security. But that hasn’t worked out well for Chilean retirees.

They were promised their investment accounts would give them a benefit worth 70 percent of their pre-retirement income while in fact they typically have a monthly benefit of $400, with many workers getting only between $160 and $260.

Here in the United States, the government-sponsored plans would appear more likely to match the investment returns of the Chilean model rather than the benefits of the nearly extinct defined-benefit pensions. Our retirement crisis demands a better solution.

October 6, 2019 0 comment

Economics Income Inequality Labor Issues News Politics Safety Net

A Quarter Century Without a Raise

by Gregory N. Heires March 4, 2014

written by Gregory N. Heires

By GREGORY N. HEIRES

Wouldn’t it be just lovely to go nearly a quarter century without a raise?

Astonishingly, that’s what restaurant servers–whose wage floor is set by the federal government–face.

Despite opposition from Republicans and business groups, President Barack Obama is picking up his campaign for an increase of the minimum wage. Largely lost in the debate over Obama’s initiative, the need to raise the subminimum wage for tipped workers, a group that also includes bartenders and busboys, is finally getting some attention.

“Somehow the subminimum wage has fallen through the cracks,” said Dean Baker, co-director of the Center for Economic and Policy Research, noting that the U.S. Congress failed to boost the subminimum wage in the latest instances in which it hiked the minimum wage.

“Now at least the subminimum wage is receiving a little more attention,” he said.

The so-called tipped wage has been stuck at $2.13 an hour since 1991. The federal minimum wage is $7.25 an hour.

A bill proposed by Sen. Tom Harkin (D-IA) and Rep. George Miller (D-Calif.) would raise the minimum wage to $10.10 an hour by 2016. The bill calls for an increase in the subminimum wage to at least $7.10 an hour by 2019.

The subminimum wage for tipped workers was created in 1966. That year, the Federal Fair Labor Standards Act was amended to extend wage protections to restaurant, hotel and other service workers. The change created a “tip credit” that allows employers to use customer tips as a credit toward the regular minimum wage.

Employer Abuse

When the tipped minimum wage was created, it amounted to 50 percent of the minimum wage. Because it was frozen in 1991, the subminimum wage is now worth only 29 percent of the minimum wage.

Theoretically, employers are supposed to make up for any shortfall when tips and the base pay fall below the minimum wage. But in practice, workers cannot count on that because abuses are common. In fact, tipped workers cannot even count on receiving the $2.13 minimum pay.

In an editorial on Feb. 17, the Boston Globe noted that a 2009 study of restaurants in Chicago, Los Angeles and New York found that 25 percent of the workers didn’t even receive the tipped minimum, and 12 percent reported that their employer or supervisor stole their tips. In 2012, a Massachusetts federal appeals court ordered Starbucks to pay baristas $12 million in tips pocketed illegally by managers.

Nowadays, the notion of the subminimum wage seems a bit peculiar, even absurd. In what other business besides restaurants do employers expect their customers to pick up the wages of their employees? When the subminimum wage was created in the 1960, restaurant jobs were perceived by many to be the work of teenagers who weren’t the breadwinners of families.

But Amy Traub, a senior policy analyst at the research institution Demos, points out that today many restaurant employees come from low-income families.

“Many of the tipped workers tend to be women and that makes it easier to overlook their situation,” Traub said.

About 70 percent of restaurant workers are women, according to Katie McGinty, a Democratic candidate for governor in Pennsylvania, who is the daughter of a restaurant hostess. They earn an average of 50 cents less per hour than their male counterparts, according to federal figures.

McGinty believes the subminimum wage should be scrapped.

“Tipped workers, who often work several jobs to support their families, should be paid at least a minimum wage for the hard work they do,” McGinty said, when she called for an end to the subminimum wage last month.

Many states have chosen not to wait federal action and have gone ahead to raise their subminimum wage. And seven states have prohibited a separate tipped minimum wage.

All told, 26 states have higher subminimum wages than what’s mandated by the federal government according to Sylvia A. Allegretto of the Institute for Research on Labor and Employment at the University of California, Berkeley. For instance, the tipped minimum is more than $9 an hour in Oregon and Washington.

The National Restaurant Association is fighting the increase of the subminimum wages.

Scott DeFife, the group’s executive vice president for policy and government affairs, says tipped employees at restaurants “are among the highest-paid employees in the establishment, regularly earning $16 to $22 an hour.” He adds, “Nobody is making $2.13 an hour.”

Besides ignoring the evidence that employers often shortchange workers, the association is exaggerating and misrepresenting what typical restaurant workers earn, according to advocates.

Nearly 40 percent of restaurant workers earn at or below the minimum wage, even when tipped wages are included in their pay, according to a study by the Aspen Institute. The median income for food and beverage serving workers was $8.84 an hour in 2012, according to the U.S. Bureau of Labor Statistics.

Stagnant and Falling Wages

The plight of tipped workers is yet another story about how most workers are being wacked by stagnating and falling wages in the country. Low-wage jobs, including restaurant work, make up the fast-growing sectors in the economy. Since 1991, full-service restaurant employment grew by 72 percent, while employment in the private sector increased by 22 percent, Allegretto points out.

More than 10 million workers are employed in the restaurant industry, according to Restaurant Opportunities Centers United, which is lobbying for a higher tipped minimum wage. Many servers cannot afford to feed their families, according to ROC. Servers rely on food stamps at twice the rate of other workers, and they are three times as likely to live in poverty.

“The National Restaurant Association has been writing itself exemptions from fair wages for decades, subjecting millions of workers to poverty,” said Saru Jayaraman, co-founder and co-director of ROC.

“The corporate restaurant industry can absolutely afford to pay its workers better, but won’t do so voluntarily. Tipped workers are counting on their government to hold the private sector accountable to livable wages.”

March 4, 2014 0 comment

Economics Labor Issues Safety Net Social Security Taxes

Expand–Don’t Cut–Social Security

by Gregory N. Heires August 19, 2013

written by Gregory N. Heires

By GREGORY N. HEIRES

With a growing acceptance that millions of Americans will face a retirement crisis, the deficit hawks’ call for cutting Social Security is losing credibility.

As the federal deficit continues to fall and the baby-boom generation enters retirement with insufficient savings to maintain their standard of living, the deficit hawks will be exposed as callous anti-tax advocates and drum majors for the 1 percent if they persist in their attack on Social Security. But the Right’s campaign to reduce benefits has always been based more on a conservative and anti-government ideology than facts. With its own funding stream, some argue that Social Security doesn’t technically contribute to the deficit anyway.

As the United States continues to become more economically polarized, we should be talking about expanding Social Security rather than reducing benefits and forcing the cash-strapped poor and middle class to contribute more.

Two compelling arguments exist for expanding Social Security.

First, more and more Americans will need to rely on Social Security because they are unable to sock away enough savings to support their current lifestyle. Decades of stagnant and falling wages have left them unable to build up their nest eggs as employers have whittled away their benefits.

Second, the destruction of traditional, defined-benefit pensions and the failure of the 401(k) experiment means that Social Security will be the principal source of income for more and more retirees and therefore should be strengthened rather than cut.

The Retirement Crisis

Let’s take a look at the first point.

For decades, the 1 percent has waged an economic war on the rest of us.

The Right has never accepted Franklin D. Roosevelt’s New Deal, which created the middle class during the post World War II years. And it has done everything it can to undermine the New Deal from the beginning.

Beginning with the Carter years in the ‘70s with the attack on government regulations, conservative class warriors started to achieve major victories–and ordinary Americans started to feel the impact in their pocketbooks. The 1 percent and their allies have been on a roll ever since President Ronald Reagan broke the air traffic controllers union in 1981.

The emergence of right-wing think tanks helped move the country to the right and create a growing acceptance of a conservative economic and political agenda that unfortunately was often supported by Democrats. Besides deregulation, this agenda included destroying unions; exporting U.S. jobs overseas; containing the growth of the federal minimum wage; breaking down the regulatory barrier between commercial and investment banks; reducing the taxes of corporations and the rich; replacing traditional pensions with the 401(k) and similar, defined contribution savings plans; ending welfare and forcing the poor into workfare and capping their lifetime benefits, and chipping away benefits like health care.

The result? A slow but steady decline of the standard of living of the vast majority of Americans who face a big financial pinch–strangulation?–in their retirement.

Signs of the looming retirement crisis:

• About half of Americans lack an employer-provided retirement plans. Millions don’t have enough cash and wealth to retire in dignity. The 2008 and 2009 financial crisis exposed the weak foundation of our economy and has forced many baby boomers to work longer than they expected.

• Just over half of adult Americans have accumulated little savings, meaning that they will have to rely on Social Security for their entire retirement income. The share of households at risk of not being able to maintain their pre-retirement standard of living after age 65 increased from 44 percent in 2007 to 53 percent in 2010, according to the Center for Retirement Research at Boston College.

The median financial net worth of American households of all ages, excluding homes and cars, is $10,890, according to New York University economist Edward N. Wolff,. The figure is $61,300 for households headed by those in the 55-to-64 year bracket. Financial planners say you should have at least ten times your annual income in savings if you wish to maintain your current lifestyle during your retirement.

• The percentage of Americans with defined benefit pensions, which guarantee a steady stream of income during retirement, has plummeted as employers have replaced them with less rich 401(k) plans. In 1980, about 40 percent of private-sector workers were covered by such plans, compared to 15 percent in 2006, according to Dept. of Labor data cited by an April report by the New America Foundation that calls for the expansion of Social Security.

• The 401(k) experiment has failed. The typical worker approaching retirement needs about $250,000 in a 401(k), according to the public policy institution Demos. Most accounts don’t come close. The average is closer to $98,000, which is only a little more than a third of the recommended amount.

Strengthen Social Security

The economic squeeze on ordinary Americans makes it ludicrous to consider President Barack Obama’s “chained CPI” plan, which would reduce benefits by changing the consumer price index used to calculate the cost-of-living increases for beneficiaries. Other proposals popular in the Washington beltway include increasing the retirement age and raising contributions—steps that would fall on the backs of the poor and middle class.

So, the grim retirement prospects of millions of Americans cry out for government action. Certainly, we can’t expect corporations to respond in the low-wage and union-free Age of Wal-Mart.

Proposals exist to create a new government-supported retirement savings plan.

But the most immediate and easiest solution would to expand the Social Security system. Two thirds of seniors rely on Social Security for more than half of their income. Why not simply expand it instead of creating another program? What should be done to improve Social Security?

We should begin by recognizing that Social Security is fundamentally sound and that the talk about its demise is bunk.

First of all, Social Security is a very efficient program. Its administrative costs–about 2 percent of its total costs–are far below those of the parasitical financial industry, which has profited handsomely from the 401(k) hoax. Privatization would only lead to waste–Wall Street administrative costs and profits.

If Social Security collapses, it will be because conservatives succeed in defunding the system, which actually can be bolstered by minor changes. The system has not missed a single payment since its creation in 1935.

Social Security’s reserves are expected to run out in 2033, according to the latest trustees report After that, the system would be able to pay for 75 percent of the benefits until 2086. But nearly 90 percent of the current shortfall could be met by eliminating the cap on the payroll tax used to fund benefits, according to the Social Security Administration. Currently, both employers and employees pay 6.2 percent on earnings, which are capped at 113,700.

Possible Solutions

Recently, a couple of proposals to expand Social Security have emerged. Hopefully, this will mark the beginning of a shift in the public debate.

In March, Sen. Tom Harkin (Dem.-IA) introduced The Strengthening Social Security Act of 2013, which calls for increasing benefits for everyone by $70 a month.
The legislation would pay for the increase by raising the cap and adopting an inflation formula that more accurately reflects the cost of living increase of seniors than the current COLA or “chained CPI.” The new formula would, for example, better account for health care expenses.

The Harkin legislation has the support of the AFL-CIO, American Federation of State, County and Municipal Employees, the Alliance for Retired Americans, Campaign for Community Change, the National Organization for Women (NOW), the National Education Association, Paralyzed Veterans of America, Strengthen Social Security Coalition, Social Security Works, the United Automobile Aerospace & Agricultural Implement Workers of America (UAW), and United Steelworkers.

“The American Dream promises that if you work hard and play by the rules you’ll be able to save for retirement and enjoy your golden years with your grandchildren,” Harkin said when he introduced the legislation. “We must ensure that, after a lifetime of hard work, Americans are able to retire with dignity and financial independence. This legislation helps to achieve that goal.”

The New American Foundation plan–written by Michael Lind, policy director, Economic Growth Program, New America Foundation, Steven Hill, researcher and author, publisher, Steven-Hill.com, Robert Hiltonsmith, policy analyst, Demos, Joshua Freedman, policy analyst, Economic Growth Program, New America Foundation–calls for restructuring Social Security and devoting one plan to retirement and a second on to disability.

“Retirement security is often thought of as three-legged ‘stool’ consisting of Social Security, employer retirement plans, and private savings,” the report says. “Social Security has been far more stable and successful than the other two legs of the stool. The reliance on these other legs of the system has resulted in a retirement security crisis for most Americans.”

August 19, 2013 0 comment

AFL-CIO Labor Issues News Politics

Bye Bye Overtime?

by Gregory N. Heires April 25, 2013

written by Gregory N. Heires

By GREGORY N. HEIRES

If Republicans get their way, private-sector workers can expect to have their overtime pay curtailed.

A Republican-backed bill under consideration in the U.S. House of Representatives would allow employers to offer hourly workers the option of taking compensatory time instead of receiving time-and-a-half overtime pay.

Workers would have the right to decline the offer. But the new arrangement would clearly tip the balance of workplace power to supervisors.

Workers who now regularly enjoy paid overtime would likely suffer pay cuts as their employers assign work to others willing to accept comp time instead of the extra compensation.

The proposed Working Families Flexibility Act (H.R. 1406) would amend the Fair Labor Standards Act so that it would no longer require private-sector employers to pay hourly employees who work more than 40 hours at time-and-a-half their regular rate.

The legislation, introduced April 9 by Rep. Martha Roby (R-Ala.), would permit employers to offer their workers comp time at a rate of 1.5 hours per hour of overtime worked. Both parties would need to agree in writing to the comp time arrangement.

Republican-supporters say the measure would encourage flexibility in the workplace and describe it as family-friendly. But clearly, the proposed law would undermine the intent of the FSLA, which aims to discourage employers from overworking their employees and to expand job opportunities to workers.

Able to circumvent mandatory overtime, employers will be able to boost earnings. With a new supply of workers accepting comp time, they will have less reason for hiring. So, we’re talking about job-killing legislation.

The AFL-CIO views the bill as part of the four-decade-old effort by Republicans to end the 40-hour workweek.

Worse yet, opponents say the bill reflects a grander scheme of anti-labor conservatives who seek to roll back worker protections and benefits built up over decades by unions and progressives. That effort includes stripping the collective bargaining rights of government workers, eroding public-employee pensions, crushing industrial unions, shifting the cost of health-care coverage to workers, and putting troubled municipalities under the control of unaccountable financial managers who can throw out union contracts.

“For some workers, having extra paid time off is actually more valuable than money,” said Roby, when the Subcommittee on Workforce Protections of the House Education and the Workforce Committee approved the bill on April 11. “The law shouldn’t make it more difficult for working people to budget their time so they can see their child hit a home run or attend a parent-teacher conference.”

The committee vote reflected party lines. Twenty-three Republicans supported the bill, and 14 Democrats opposed it. Republicans have introduced the bill in previous sessions.

The ranking member of the subcommittee, Rep. Joe Courtney (D-Conn.), suggested that the proposed law is nothing less than an attempt to cheat workers out of their overtime pay.

“We are wasting committee time debating legislation that forces workers to compromise their paycheck in order to have more time off work,” he said.

“This bill has nothing to do with promoting workplace flexibility,” Courtney said. “It is about not paying overtime. It is about saying to hourly workers already struggling to make ends meet–if you need time off to care for a sick child or attend a school concert, you need to work extra hours, forgo the earned overtime pay, and then, as long as it is not disruptive to your employer, you may get some time off.”

“Quite simply, H.R. 1406 would be a step in the wrong direction,” said Judith L. Lichtman, senior advisor of the National Partnership for Women & Families, in her testimony before the House subcommittee.

Instead of building on the success of policies such as the Family Medical Leave Act, she said that, “paid sick days standards and a fair minimum wage which provide workers and their families with the time off and the financial stability they need, this ‘flexibility’ bill offers forced choices and false promises.”

Posted on www.thenewcrossroads.com on April25, 2013.

April 25, 2013 0 comment

Economics Income Inequality News Politics Safety Net

Economic Fairness: Raise the Minimum Wage

by Gregory N. Heires February 21, 2013

written by Gregory N. Heires

By GREGORY N. HEIRES
Shortly after President Barack Obama called for raising the minimum wage in his State of the Union Address, members of the Party of No lined up to denounce his proposal.

Republican leaders exposed their class interest as they declared that an increase in the minimum wage—whose real value is significantly below what it was a half century ago—would be bad for business, the economy and even workers. Their party line was also filled with mistruths, distortions and callousness.

In effect, these naysayers are declaring that the minimum-wage workers and others who make up the working poor—around 50 million people—don’t deserve to have a decent standard of living. Maybe that’s only to be expected, considering that the Republican Party’s 2012 presidential candidate, Mitt Romney, wrote off 47 million voters, “the takers,” whom he characterized as social leeches dependent on government generosity outside the GOP voting bloc.

“I don’t think a minimum wage law works,” said Sen. Marco Rubio (R-Fla.).

“I want people to make a lot more than $9,” Rubio said. “Nine dollars is not enough. The problem is that you can’t do that by mandating it in the minimum wage laws. Minimum wage laws have never worked in terms of helping the middle class attain more prosperity.”

U.S. House Speaker John Boehner (R-Ohio), appearing at a news conference with Senate Majority Leader Mitch McConnell (R-Ky.), said increasing the minimum wage would actually hurt the working poor. “When you raise the price of employment, guess what happens? You get less of it,” he said.

“A lot of people who are being paid the minimum wage are being paid that because they come to the workforce with no skills,” Boehner said. “And this makes it harder for them to acquire the skills they need in order to climb that ladder successfully.”

Sen. McConnell launched into an ideological rather than a substantive attack of the proposal.

He described Obama’s address as “pedestrian, liberal boilerplate.” Ignoring the poor’s need for an immediate improvement in their living standard, McConnell said that Obama “spoke of workers’ minimum wages, instead of their maximum potential.”

Rubio’s comments reflected an ideologically driven view that we all will prosper if we allow the free market to operate on its own. But his position falls flat on its face once reality stares you in the face.

As the federal government has allowed the real value of the minimum wage to fall over decades, the invisible hand of the market has clearly failed to boost the pay of workers.

Boehner apparently believes that the minimum wage is bad because it discourages workers from building up their skills. Actually, what’s occurred in the last three decades is that business practices and poor public policy—downsizing, privatization, trade policies that have encouraged the export of U.S. jobs, cutbacks in the public sector, the attack on private-sector unions, technological unemployment, the erosion of the minimum wage and globalization—have combined to eliminate millions of good jobs in the United States. Today, the prospects for U.S. workers are poor because most future opportunities are in low-paying jobs in the social-service sector.

As the debate over the minimum wage unfolds, we should expect conservatives to argue that an increase will hurt small businesses, kill jobs and only helps teenagers.

But these conservative arguments aren’t very persuasive and are a bit misleading:

•Studies about the impact of the minimum on employment aren’t conclusive. But by and large they show that modest increases in the minimum wage haven’t resulted in insignificant job losses. •Two-thirds of low-wage earners work for big companies, which are better able than small businesses to absorb modest pay increases.

•Though teen-agers are commonly identified as minimum-wage workers, a recent Economic Policy Institute report found that nearly 90 percent of workers paid the minimum wage are 20 years old or older. More than a third are married and over 25 percent are parents, according to the report.

No, raising the minimum wage doesn’t amount to unsound public policy.

Raising the minimum wage would be good for economy. It would be a great help to the working poor. Obama’s proposal reflects government’s appropriate role of correcting the injustices of the free-market economy.

So, what are some of the most compelling arguments for raising the minimum wage?

First, economists cite the drop in value of the minimum wage as one of the major factors explaining the declining and stagnating incomes that have walloped the poor and middle class over the past 30 years. Raising the minimum raise would significantly increase the household income of the working poor and attack one of the principal factors driving the erosion of income of nearly everyone by the 1 percent.

Second, the decline of the minimum wage has hurt the standard of living of millions of Americans and immigrants by forcing them to take on second and even third jobs to get by.

Third, the lowering of the minimum wage has hurt the economy by curtailing the purchasing power of the working poor. Compared to higher-income groups, the working poor spend a greater percentage of their increases in their disposable income.

Fourth, raising the minimum wage is a matter of economic fairness. Low-wage workers have especially come out short as economic inequality has risen in recent decades.

The Republican arguments against the minimum wage are particularly offensive given that Obama’s proposal is very modest—even inadequate, according to liberal and leftist critics.

Only 5.2 percent of hourly workers, or 3.8 million workers, are paid minimum wage or less. While the percentage of the work force paid the minimum wage is not that high, the minimum wage provides a benchmark for setting the pay rates of millions of low-wage workers.

The last increase in the minimum wage occurred in 2009. The minimum wage would now be $21.72 an hour if it had increased at the same rate as productivity, according to according to a 2012 study of the Center for Economic and Policy Research.

The CEPR study also found that the minimum wage would be $10.52 an hour if it had kept up with inflation since its real value peaked in 1968. Obama’s proposal would link increases in the federal minimum wage to the rate of inflation.

But apart from the technical arguments in favor of raising the minimum wage, the government should boost it from $7.25 to $9 an hour simply because that’s the right thing to do. As Obama said in his State of the Union Address: “Today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong.”

Why doesn’t the Party of No just have a heart and agree to help out the working poor?

www.thenewcrossroads Posted on February 21, 2013

February 21, 2013 0 comment

The New Crossroads

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Economic Fairness: Raise the Minimum Wage

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