Salaries Could Be Squeezed For Some Time To Come

A new CBS MoneyWatch article confirms what Muskegon Critic pointed out the other day: Increased productivity does not translate into prosperity for average Americans.

In fact, MoneyWatch warns that a "combination of short-term factors and long-range changes may conspire to squeeze salaries for some time to come," and annual raises "could be in jeopardy."

So how did we get to this point? It turns out real wages have actually been flat for years.

Looking back, it turns out a decade’s worth of easy credit and faux real estate wealth obscured the fact that incomes for the majority of workers weren’t keeping up. After healthy salary growth of roughly 1.8 percent annually from 1995 to 2000, for example, inflation-adjusted, or real, wages for the median worker remained essentially flat from 2000 until 2007 when the recession started, according to government data (average wages increased roughly 2 percent, but that number is skewed by huge gains at the top). In fact, after the recovery in 2002, notes Shierholz, no real wage growth occurred at all for the median worker — despite an increase in productivity of 11 percent over the seven-year time frame. [emphasis added].

In other words, we've been working our tails off and have little to show for it. So who reaped the productivity gains?

Typically, companies and their shareholders.

And what do experts point to as the reason for our declining prosperity?

Shierholz and other economists attribute the disconnect between wages and output to declining unionization and the need to keep prices low in a competitive global environment.

The "kill the unions" and "outsource everything" crowd accomplished what they set out to do - drive wages down for average Americans. And the scenario for new jobs created doesn't look any rosier.

A 2009 analysis of figures from the U.S. Department of Labor showed that sectors that expanded through this decade have paid an average annual compensation of $55,300, compared with $65,100 for industries that are shrinking. This is partly because many of the newly-created positions are in service industries, which tend to be less organized and have less bargaining power. Think home healthcare and “green” jobs versus auto manufacturing and heavy industry.

In fact, six of the top 10 fastest-growing jobs are low wage.

There are steps Washington can take to start improving living standards for average Americans, but as long as people keep voting for anti-union, globalization embracing politicians, I don't see things changing.

Auto Industry Problems Prolong Nation's Misery

The NY Times has an article about our state's efforts to remake ourselves without "King Auto" that touches on things most of know - film incentives, green jobs, battery production, and worker retraining. It also touched on the fact that our problems are impacting the country as a whole.

On a broader level, the troubles of the auto industry are having a profound impact on the overall United States economy. The industry — with Michigan as its center — now accounts for only 1.5 percent of the nation’s economic output, down from 3 percent in 2007 and 5 percent at its peak in the 1950s.

The automakers have historically played a big part in ending recessions. Car companies, in the past, would increase production and add workers to satisfy pent-up consumer demand after a downturn. But now, the industry’s troubles may be prolonging the misery.

“If not for the problems in the auto industry, this recession would have been much milder,” said Ben Herzon, an economist at Macroeconomic Advisors, in St. Louis. [emphasis added]

Okay, that's something most of us know too, but I pointed it out for all the Limbaugh and Hewitt trolls that might be reading this. Hoping that GM or Chrysler fails is not in the best interest of the country. When we lose jobs, we lose money, and in turn we stop spending. When we stop spending, businesses lose money and they're forced to layoff people or cut wages. Unless you're independently wealthy, the pain will eventually trickle down to you too. Understand?

The Crime No One Talks About - Wage Theft

I haven't had much time to read lately, but Kim Bobo's book, Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid - And What We Can Do About It, will be the next one I pick up. Bobo is the Executive Director of Interfaith Worker Justice.

Here's a short synopsis from Joe's Union Review:

Bobo says wage theft in America is the crime wave no one talks about, and she is right. Billions of dollars' worth of wages are stolen from millions of workers in the United States every year. The scope of these abuses is as staggering as it is wrong - paying workers far less than the legal minimum wage, purposefully misclassifying employees as independent contractors, and illegally denying workers overtime pay. But now people are starting to take notice -- and it is my hope that they do so starting with this very good book.

Chapter 5: Organizing to Stop Wage Theft: Why Unions Matter, starts with a story of 39 year-old Mercedes Herrerra. She came to this country from Mexico, lives in Houston since 1994 and works as a janitor for staffing agencies cleaning buildings and sports facilities. Bobo says she was never paid for overtime!

Her employers would tell her, "There is no overtime. After 40 hours you work for someone else." (This is not legal).

The story continues that after Hurricanes Katrina and Rita, the worker was hired by a cleaning firm contracted to clean the Reliance Center. She was in charge of keeping the bathrooms clean. Her staffing agency charged her $100 per week for her shoes, gloves, masks, cleaning supplies, and shuttle rides to the Center. She wasn't told when she was hired that such charges would be taken from her paycheck. As a result, her hourly wage fell significantly below minimum wage. (This is not legal).

The lower paid workers in our country are treated like crap. Union activists have been saying this for a long time. Some claim we blow it out of proportion or distort the reality -- for Herrerra, according to Bobo, worse than the wages stolen was her ill treatment. Managers would scream at her and her colleagues. Some would tell workers they were old and worthless.

You can read more here and here. Ted Kennedy has said the book offers "bold, practical, and progressive solutions for how policymakers and advocates can end the growing crisis of wage theft in America."

(Cross-posted at Blogging for MI.)

One Corporations Way of Stimulating the Economy

They're putting more money in their employees paychecks.

Hobby Lobby Stores Inc. announced wage increases effective immediately for all full-time, hourly workers earning up to $13 an hour. For some employees, the pay hike can mean more than a $2 an hour raise.

The company also said it was raising its minimum pay to $10 per hour for full-time, hourly workers, up from whatever the minimum wage is in a state. In Michigan, it is $7.40.

Nationwide, the chain has more than 400 arts and crafts stores, with 15 in Michigan, and the increase will boost the pay of more than 6,900 employees, some by nearly $600 month. In Michigan, 75 percent of their employees are full-timers.

This is a great way to help stimulate the economy and build employee morale at the same time.

It's also nice to hear a CEO say this about his employees:

"Our employees are the backbone of our company, and we believe that giving them the opportunity to share in our success is the right thing to do," David Green, CEO and founder of Hobby Lobby, said in a statement.

"This is part of our continuing efforts to reward our employees for their hard work and integrate them into the growth of our company."

A store spokesperson said they took the action because “they have had a profitable year and want to pass that on to their employees.”

Hobby Lobby has a history of caring about their employees. When the the price of gasoline skyrocketed last year, they gave employees a permanent 25 cent per hour raise to help offset cost of living increases.

Kudos to Hobby Lobby!

Job Creation: Green Investment vs. Defense Spending

Republicans believe government spending does nothing to create jobs, unless we're spending money on defense. Actually, we're better off spending money on green investments according to Robert Pollin, professor of economics.

In fact, the green-investment agenda is a highly effective engine of job creation, much more so, for example, than two favored Republican forms of spending, military outlay and the oil industry.

Thus, for a given billion dollars of spending, the Obama green-investment program will generate about 17,000 jobs. Spending the same amount on the military will produce only 8,500 jobs, 50 percent less than green investments. Spending an additional $1 billion on the oil industry -- the "drill, baby, drill" agenda advanced by the McCain/Palin campaign -- will produce only 4,500, about one-fourth the total created by green investments.

Pollin says three factors are at play to explain why investment spending devoted to the green economy creates more jobs than military or oil spending.

Relative labor intensity. This means more spending on people and less on machines, buildings, supplies, and energy. In weatherizing a home, the machinery and supplies needed are relatively low, while the demand for construction workers is high. Drilling for oil requires huge amounts of sophisticated machinery and relatively few people to operate that equipment. A military base employs lots of people. But it also involves heavy equipment purchases and consumes lots of energy.

Domestic production versus imports and spending abroad. With Obama's green-investment agenda, well over 90 percent of total spending will occur within the U.S. economy. Energy-efficiency measures, such as building retrofits, public transportation, and upgrading the electrical grid, can only occur on-site. Weatherization projects for buildings in North Dakota can only be done in North Dakota. The New York City subway system must be upgraded in New York. By contrast, the U.S. now imports about 50 percent of all the oil it consumes, and about 20 percent of total spending within the oil industry occurs abroad. The proportion of the military budget spent abroad is even higher.

Differences in pay levels. The average annual pay for employees associated with the green investment, including both wages and benefits, is about $52,000. This is roughly 20 percent below the $65,000 average for both the military and oil industries. This means that a given amount of spending for workers in the green-investment areas yields more job creation at lower average wages -- stretching out a given sum of wage and benefit payments.

That last point about lower average wages isn't actually a bad thing according to Pollin, because many more jobs overall are being created and more money is going into more workers' pockets.

All told, the green-investment agenda still creates far more jobs paying over $16 an hour than either the military or the oil industry does -- 75 percent more than the military and three times more than the oil industry.

And in the green economy, even many of the relatively low-paying jobs in construction and manufacturing offer decent job ladders for entry-level workers. There are fewer such prospects for advancement in even lower low-paying service-sector jobs, such as those of janitors, waiters, and health-care assistants.

President Obama's economic stimulus program includes between $50 billion and $140 billion in clean-energy spending. That's a drop in the bucket compared to the $1339 billion the world spent on the military in 2007, of which we're responsible for 45 per cent of that total, distantly followed by the UK, China, France, and Japan each with 4 to 5 per cent of the world share. Instead of increasing defense spending by 8 percent next year, the President should take the $40 billion or so difference and put it toward green investment. It'll create new industries and put more people to work, and we'll still be a superpower.

G.M. Worker Loses Job, Writes Song

This is a bittersweet story from the Flint Journal. Greg Miles worked for General Motors' Grand Blanc Weld Tool Center for three decades, and then a few weeks ago he learned that his job had been outsourced to a foreign country. What did he do? He wrote a song, "Didn't Quit My Day Job, It Quit Me."

The lyrics came to him in a rush one Sunday afternoon.

In an hour, he scribbled the song on a yellow notepad. He spent a few weeks recording the song in the basement of his Waterford home.

The title comes from realizing that his job, designing tools for assembly lines, was outsourced to foreign countries. The job didn't go away; it just wasn't being done by U.S. workers anymore. [...]

Sitting next to the Irish flag hung on the basement wall, Miles sang in his warbly voice, strummed his Fender acoustic guitar and played his harmonica.

The song combines folk, rock and country.

"It's kind of like a country song, but it's not real twangy," Miles said.

The song has become something of an Internet sensation, and he's already been contacted by several local media outlets and asked to sing at a concert.

"I've never had more fun losing a job in my whole life," Miles said, laughing.

At least they didn't take away his sense of humor, and his talent for strumming that guitar. He's pretty darn good.

Check out this excerpt from his song, along with the YouTube video.

"Need to figure out what I am going to be
Might be a rock star or a pirate at sea
All I know is that this job is history"

"It started very slowly, our work shifted overseas
Began to pick up speed, it spread like some disease
Didn't know why they did this, they don't buy our cars over there"

"Need to figure out what I am going to be
A Wal-Mart greeter or pizza delivery
Do you want fries with that or super-size it please
I'll park that car sir, just give me your keys
All I know is that this job is history"

For his sake - and everyone else in the same situation - I hope the future brings him something better than a Wal-Mart greeter or pizza delivery job. You can't live the American Dream on those wages. Good luck, Greg.

(Cross-posted at Blogging for Michigan.)

Creating jobs in America is the whole point

Following up on my earlier post about the "Buy American" provisions in the stimulus package - provisions designed to stop the bleeding of jobs and to create new jobs here in America - is a post from Robert Reich that admonishes us not to "confuse American companies with American jobs."

The new stimulus bill, for example, requires that the money be used for production in the United States. Foreign governments, along with large U.S. multinationals concerned about possible foreign retaliation, charge this favors American-based companies. That's not quite true. Foreign companies are eligible to receive stimulus money for things they make here (as long as the nations where they're headquartered have signed the WTO procurement agreement). [...]

I'm not defending the "buy American" provisions of the stimulus bill. I'm just saying they're not the same as "buy from American companies." And although these provisions skate close to protectionism and risk foreign retaliation, at least a case can be made that if American taxpayers are footing the bill in order to create American jobs, the jobs should be created, well, here in America.

I added that emphasis because it's an important distinction. If we buy steel slabs produced in Canada or China, jobs will be created or maintained over there and fewer jobs will be created here, which defeats the whole purpose of the stimulus plan.

Reich also applied this line of reasoning to the auto bailout:

I’m not arguing against an auto bailout. But it ought to be focused on helping American auto workers rather than helping global auto companies headquartered in America. [And he points out that the Big Three themselves are global.] Why pay the Big Three billions of taxpayer dollars to stay afloat when, even after being bailed out, they cut tens of thousands of American jobs, slash wages, and shrink their American operations into small fractions of what they used to be?

That’s backwards. The auto bailout should help American autoworkers keep their jobs or get new ones that pay almost as well.

We're between a rock and a hard place place in this country. I agree with E.J. Dionne's opinion that "there are no good solutions for fixing the auto industry," but I also agree with USW President Leo Gerard who said...

Saving the domestic auto industry is crucial to the economic renewal of the U.S. The steel, glass, auto parts, tires, and paper industries produce products for this industry and employ a quarter million of our members alone.

Our livelihoods are all interconnected, and as Reich concluded, "Whether it’s stimulus or bailout, policy makers must remember that American companies aren’t the same as American workers – and our first responsibility is to the latter."

Absolutely. That's why spending money from the stimulus bill on products created here is so important. It keeps Americans working, helps restore our economy and may save our domestic auto industry. Isn't that the whole point?

Buy American, Buy Local

In spite of the U.S. Chamber of Commerce's opposition to the "Buy American" provisions in the stimulus bill, the progressive movement (i.e. unions, consumer groups, the blogosphere) won according to David Sirota.

First, the Buy America provisions survived the conference committee and remain in the stimulus package. These provisions, which were vehemently opposed by multinational corporate lobbyists, encourage government agencies to purchase American-made goods in spending the stimulus money, so as to make sure the money creates as big an economic multiplier effect for our economy as possible.

Second, I'm told by Capitol Hill sources that the Sanders-Grassley amendment prohibiting bailed-out banks from using taxpayer money to outsource jobs remains in the final bill. The amendment followed the Associated Press's report that many banks were using the cash in conjunction with their ongoing efforts to abuse the H-1B program and outsource information sector jobs.

Of course, you won't hear the Mackinac Center, Republicans, or conservative mouthpieces like Lesley Stahl singing the praises of Buy American. They argue we're being protectionists and other countries will look upon these provisions as hostile. That's garbage according to this CEO who told 60 Minutes...

"The whole purpose of your stimulus package, and it's the right purpose, is to stop the bleeding of jobs and to create new jobs here in America, not overseas, not in China, not in Europe," Dan DiMicco, the CEO of Nucor ...

DiMicco said that the counter argument - trade retaliation by other countries - is not true. "It's all garbage," he told Stahl. "People can say what they want. What we have around the world, all right, is a trade war against the United States that we have not showed up for."

DiMicco denied he is a protectionist. "I am a person who says there's no such thing as free trade. Free trade is an academic luxury the real world doesn't enjoy. If you want to study it at Harvard, study it at Harvard. It doesn't work in the real world. It has no application."

The EPI agrees: "These companies are self-interested, simply wanting unlimited access to imports, many of which are illegally subsidized and unfairly traded."

Our economy is badly crippled and people are hurting. Taxpayer money should be used to help Americans and put our own house in order first, and that means the government has to make sure the money isn't used to widen the trade deficit, not if it wants to create and preserve jobs.

Suppose the government spends, say, $100 billion on bridges and buildings, and that $500 million of that is used to buy steel. If it is used to buy imported steel, and if that $500 million doesn't come back to the United States in the form of demand for its exports, then you can subtract $500 million from the stimulus. And you can be pretty sure--given our current trade deficit--that something like that would happen. So, without a requirement that these government projects use domestic steel (with mills currently running at 43 percent capacity!), there is a very great possibility that the government would be throwing away money rather than doing anything about the problem. [emphasis added]

Republicans are hoping Obama fails. What better way to make sure that happens than to push to use the stimulus money to buy materials from foreign countries?

How do most Americans feel about the "Buy American" provisions? A national poll found that 84 percent favor the requirements and only 4 percent strongly oppose them. The overwhelming support was consistent regardless of gender, age, income level, education, or region, proving once again that Republicans are out of touch with mainstream America.

Republicans are out of touch with local Michigan communities too. A group in Genesee County says it's important to think about the American economy, and they're going even further with a campaign to buy local. A series of business leaders in Grand Blanc, Swartz Creek, Flint and other communities recorded a series of messages that play regularly on four radio stations that are part of the local Cumulus Radio Group.

Jet Kilmer, President of the Grand Blanc Chamber of Commerce, recorded one message that explains how 83% of money spent with a local merchant stays in the community vs. 43% spent outside. The message urges people to consider buying local, or to hire local contractors to do needed work.

And according to Crain's Detroit, "the state Agriculture Department projected that if Michigan households earmarked $10 a week in their grocery purchases to made-in-Michigan food products, it would generate $30 million a week in economic impact."

What's good for big business isn't always good for Americans. If we don't have jobs and decent wages, we won't be able to buy what they're selling no matter how much they mark it down. That's why we need to keep the stimulus money in this country. Americans should come first. Period.

We supported their war, tell them to support us

Conservatives are busy calling Congress trying to block Obama's stimulus plan. The word on the street is that calls are running 100 to 1 against the plan. We know Michigan Senators Levin and Stabenow support creating jobs for Americans and setting our country on the road to economic recovery, but they still need to hear from you. As someone commented on another blog yesterday, "Repubs are calling into our "safe" states also, we need to make our voices heard."

Please call 1-866-544-7573 (toll-free) and ask as many senators as you can reach to pass the American Recovery and Reinvestment Act. Be prepared to try several times. The lines are busy.

If you don't have to worry about using a toll-free number, you might have better success getting through with these:

Sen. Carl Levin at (202) 224-6221
Sen. Debbie Stabenow at (202) 224-4822
Via the Senate Switchboard at (202) 224-3121 (for people in other states)

What's at stake? Under the Senate version of the stimulus plan, this is what Michigan stands to gain:

Total - $19,975,801,863
School Modernization - $642,876,538
Higher Educ. Repair and Modernization - $125,670,301
Home Investments Partnership Program - $64,794,416
Highway Infrastructure Investment - $790,185,174
Mass Transit - $170,947,191
Public Housing Capital Funds - $53,135,372
Neighborhood Stabilization Program - $151,279,933
Homeless Prevention Fund - $55,062,292
Clean Water State Revolving Fund - $171,560,760
Drinking Water Revolving Fund - $69,200,000
State Fiscal Stabilization - $2,145,703,599
Title I Grants - $522,337,187
IDEA, Part B State Grants - $461,265,518
Pell Grants - $472,621,650
Training and Employment Services - $200,786,089
Weatherization Assistance Program - $148,292,700
State Energy Program - $13,775,009

And don't forget the thousands of jobs this spending will create in Michigan (and across the country).

We supported Republican's spending on their unnecessary and ill-begotten war in Iraq. Tell them to support economic recovery and jobs for Americans.

Jobless rolls climb, Republicans don't care

Unemployment rolls continue to soar.

The number of people remaining on the benefits roll after drawing an initial week of aid, or continued claims, rose 159,000 to a higher-than-forecast 4.776 million in the week ended January 17, the most recent week for which data is available.

The Labor Department said this was the highest reading since its records on this series began in 1967.

Jobs. People need jobs. Last Monday saw 77,000 layoffs in one day alone, and it seems as though no profession is safe:

IBM workers are shocked at job cuts straight after the company issued glowing fourth quarter financial results, says employee union Alliance@IBM.

The first cuts of an expected 16,000 layoffs have been made in the Software Group and Sales and Distribution in the US and Canada.

And four U.S. Bureau of Labor Statistics analysts predict that recent telecommunications advances, especially the internet, could theoretically put more than 30 million U.S. jobs at risk of being exported overseas.

The 160 occupations considered capable of being performed in other countries account for some 30.3 million workers, one-fifth of total U.S. employment and cover a wide array of job functions, pay rates and educational levels.

More than half of the vulnerable jobs in the BLS study are professional and related occupations, including computer and mathematical science occupations and architecture and engineering jobs, and many office and administrative support occupations also are considered susceptible.

Whether blue-collar or white-collar, President Obama and Democrats understand the gravity of our situation and devised a plan that would save or create more than 3 million jobs. House Republicans voted unanimously against that plan. Will Senate Republicans vote against jobs too?

UPDATE: Following the Republican's unanimous no vote, economist Lawrence Mishel said it's time to rescind the wasteful business tax cuts from the stimulus package.

The Wednesday night vote in the House on the economic recovery package is astonishing in that no Republicans voted for the legislation. This, despite there being large scale, and wasteful, business tax cuts in the legislation that were seemingly included solely to attract Republican votes.

The lesson that might be drawn is to not water down your own program in the hopes of attracting a bi-partisan coalition. It only makes sense now to remove those tax cuts from any Senate legislation to make the recovery effort more effective. It could matter a lot. The amount of stimulus in this fiscal year and next (through the end of September 2010) is $525 billion and the Senate bill provides for $107 billion of business tax cuts with limited effectiveness, leaving only $418 billion of real stimulus over the next eighteen months.

Filling the space taken by the business tax cuts with infrastructure and other spending that will create jobs could make the effort 25% more effective. The best economic and political logic now seem aligned.

Labor Gets an Early Christmas Gift

This is a good argument in favor of unions. h/t Kevin Drum

Felix Salmon, after noting that FedEx has announced across-the-board pay cuts for just about everyone:

There's been a huge shift in power in recent years from labor to capital: corporate profits have been rising much faster than wages for some time now. It makes sense that capital would make use of its newfound power to reduce labor costs in a deflationary environment of rising unemployment. During the boom, companies laid off workers because those workers demanded, and cost, too much money. Now that workers have lost their negotiating leverage, we might start seeing more across-the-board pay cuts.

Drum summed it up perfectly: Heads I win, tails you lose! In boom times you get laid off, in slack times you get your pay cut.

Labor may finally be gaining an ally in Washington. Rep. Hilda Solis of California will be nominated as labor secretary by President-elect Barack Obama. Solis co-sponsored the Employee Free Choice Act in the 110th Congress and earned a 100% rating from the AFL-CIO last year.

Maybe there really is a Santa Claus after all.

(More on Solis at BFM.)

Thanks for nothing, senators

Author and Free Press columnist Mitch Albom wrote a response to the senators who killed the auto loan deal last week and it's generating a lot of attention here in Michigan. (It's been recommended more than 1,000 times so far.) He pretty much expresses the collective outrage most of us have been feeling since Friday, starting with the title - Hey, you senators: Thanks for nothing.

Here's a sample of what Albom had to say. Click over to read the rest.

Kill the car, kill the country. History will show that when America was on its knees, a handful of lawmakers tried to cut off its feet. And blame the workers. How suddenly did the workers — a small percentage of a car’s cost — become justification for crushing an industry?

And when did Detroit become the symbol of economic dysfunction? Are you kidding? Have you looked in the mirror lately, Washington?

In a world where banks hemorrhaged trillions in a high-priced gamble called credit derivative swaps that YOU failed to regulate, how on earth do WE need to be punished? In a bailout era where you shoveled billions, with no demands, to banks and financial firms, why do WE need to be schooled on how to run a business?

Who is more dysfunctional in business than YOU? Who blows more money? Who wastes more trillions on favors, payback and pork?

At least in the auto industry, if folks don’t like what you make, they don’t have to buy it. In government, even your worst mistakes, we have to live with.

Ain't that the truth. Remember Iraq, senators? That was supposed to be cheap, and quick too. The only thing cheap about that mistake was the way you tried to cut corners and save money at the expense of our troops. From inadequate bullet proof vests and armored trucks to the horrid conditions at Walter Reed Hospital, you turned your backs on the soldiers just like you turned your back on middle-class jobs last week.

And don't try to sell us the idea that your vote was designed to protect taxpayer money. The same day the Free Press ran Albom's column, they also ran one by Susan Tompor describing the financially struggling Pension Benefit Guarantee Board, who may also find themselves needing a bailout. Allowing the Big 3 to fail would only add to the problem according to one expert:

He said that the PBGC could inherit more than $100 billion of pension obligations if Ford or GM filed for bankruptcy and the pension funds were turned over to the agency.

That $14-25 billion bridge loan is chump change by comparison. Add in unemployment compensation, increased Medicaid spending, the loss of tax revenues, etc., and that loan looks like a better deal by the moment.

Adding another 2-3 million people to the ranks of the unemployed is a huge mistake too. Obama wants to pass a stimulus package pushing $1 trillion dollars in order to create 2.5 million jobs, which won't even replace the jobs lost under the Bush administration. How does killing even more jobs help? Washington might as well double that package to $2 trillion if the Big 3 go down.

Thanks for nothing, senators. Do me a favor and take Albom's advice.

You’re so fond of the foreign model, why don’t you do what Japanese ministers do when they screw up the country’s finances?

They cut their salaries.

Or they resign in shame.

In order to resign in shame, these senators would have to feel some shame first. And in order to feel shame they would have to care. They don't.

Washington Should Protect U.S. Cars and U.S Jobs

Gettelfinger appeared before the Senate Banking Committee today in Washington and was asked a question that I can't recall now (I'll keep searching for the transcript), but I do remember he referred to the Level Field Institute when giving his answer. It's an interesting site with a wealth of information and statistics on quality, R&D, jobs, suppliers, etc. But more importantly, they have the facts you need if you want the car you buy to support jobs and investment in your community.

Here's some information I gathered from their pages.

Ford, GM and Chrysler sell about half the cars bought in the U.S., but they buy nearly 80% of the parts made here.

On average, Ford, GM and Chrysler cars use two and a half times more "domestic" parts.

GM and Toyota use approximately the same numbers of workers to build each car. The difference is, only 12% of Toyota's workforce is here. At GM, it's nearly 40%.

The bulk of Ford's engineering, design, financing and marketing are here, while Toyota conducts much of that work in Japan.

U.S. automakers invest more in R&D than any other industry - and Ford, GM and Chrysler invest approximately 80% of that spending here in the U.S.

Ford, GM and Chrysler spend nearly fifteen times more than the Energy Department spends on energy efficiency/alternative fuels programs.

Buying a Ford, GM or Chrysler supports about 6 times more U.S. jobs, on average, than buying a Hyundai - and 2.5 times more U.S. jobs, on average, than buying a Toyota. Does that mean the Big 3 are 6 times less efficient than Hyundai, or 2.5 times less efficient than Toyota? It's where the work gets done that matters most to U.S. jobs.

"Made in America" matters even more when you look at the men and women working for auto parts suppliers that serve automakers. These companies employ about twice as many Americans as the automakers themselves. And Ford, GM and Chrysler purchase nearly 80 percent of the parts these people make. Based on their market share, foreign automakers should be buying about twice what they are.

Tomorrow's jobs will depend, in part, on today's R&D, particularly in fuel efficiency and safety. The Japanese Automobile Manufacturers Association (JAMA), an association of 14 Japanese automakers doing business in America, notes that they collectively employ 3,600 R&D workers at 36 facilities nationwide. Honda operates 10 facilities employing 1,300 R&D professionals. Level Field welcomes these jobs, but more than 65,000 Americans (nearly 20 times JAMA's total) work in 215 automotive R&D facilities in Michigan alone.

Check out the Level Field Institute for yourself. I only touched on a few areas, but one thing is certain - the U.S. car industry is huge and allowing it to fail will kill jobs we'll never get back.

Gettelfinger touched on that today when he noted the following (I'm paraphrasing):

For every 2500 cars made in U.S. plants by the Big 3, approximately 78 people are employed to make them. If the domestic automakers fail and foreign makers in our country pick up their production, only 33 jobs will be created per 2500 cars. That's because the foreign automakers buy more of their parts from overseas. We'd still experience net job losses of about 45 jobs per 2500 cars produced.

Once those jobs go, they'll be gone forever, and foreign automakers will reap the profits. R&D will suffer too. Is that Washington's idea of putting America first?

(Cross-posted at Blogging for MI)

Republicans deny economic reality

Can you believe Republicans are actually trying to pin the blame on President Clinton for the drumbeat of bad economic news we hear day after day?

The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.

The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.

Reminder: George Bush is the only president to ever preside over an economy that has lost jobs, and now the people who probably need that credit card so they can fill up their gas tanks to hunt for jobs may be cut off.

Obama can't come to our rescue fast enough. We desperately need jobs in this country. High unemployment numbers continue to strain borrowers, leading to more foreclosures and delinquencies.

"The unemployment rate is highly correlated to consumer defaults," says Arpitha Bykere, an analyst at RGEMonitor.com, an economic consulting and research firm.

Well, duh! That's pretty simple to understand. If people aren't making money, they can't pay their bills, especially the big ones like mortgages. And according to Calculated Risk via the WSJ: Delinquent mortgages are set to nearly double in 2009.

TransUnion LLC ... predicted that the proportion of consumers with mortgages that are 60 days or more past-due will hit 7.17% in the fourth quarter of 2009.

That would be the highest level reached since the Chicago credit bureau ... first started tracking these statistics in 1992. It compares with an expected delinquency rate of 4.67% at the end of 2008. [...]

"There are a lot more loans that will be resetting throughout 2009 through 2011," says Ezra Becker, principal consultant in TransUnion's financial-services group, who notes that rising unemployment and depreciating home values are other contributing factors. "There may be an ongoing flow of consumers who may now be able to pay their mortgage but may not be able to a year from now."

Republicans willfully ignored warnings about the financial meltdown and now we're all paying the price, but you won't get them to admit they screwed up. It's never their fault.

Millionaire McCain doesn't care about average Joe

McCain didn't even try to hide his contempt for the middle-class when CNBC's Maria Bartiromo interviewed him yesterday. When asked about the Employee Free Choice Act, McCain said he would veto it “in a New York minute.”

I will do everything in my power to block such legislation. And imagine, Sen. Obama and Nancy Pelosi and Harry Reid pushing the union agenda, it would be very, very, very unfortunate.

Got that? McCain will do everything in his power to prevent you from having a job with good wages, health care and a retirement plan.

The Employee Free Choice Act would level the playing field for workers who say they'd join a union if they could, and there's a very good reason our young people may want to do just that - Unionization Substantially Improves the Pay and Benefits of Younger Workers.

According to the Center for Economic and Policy Research, a large wage and benefit advantage exists for young workers in unions relative to their non-union counterparts, and younger workers are earning about 10 percent less than their counterparts did in 1979, despite impressive gains in young workers' educational attainment over the same time period.

The report, "Unions and Upward Mobility for Young Workers," found that young unionized workers - those age 18 to 29 - earned, on average, 12.4 percent more than their non-union peers. In addition, young workers in unions were much more likely to have health insurance benefits and a pension plan.

The report, which analyzed data from the Census Bureau's Current Population Survey (CPS), found that unionization raises the pay of young workers by about $1.75 per hour. According to the report, young workers in unions were also 17 percentage points more likely to have employer-provided health insurance and 24 percentage points more likely to have an employer-provided pension plan than young workers who were not in unions.

Unionized workers in typically low-wage occupations benefited too.

Among young workers in the 15 lowest-paying occupations, union members earned 10.2 percent more than those workers who were not in unions. In the same low-wage occupations, unionized young people were 27 percentage points more likely to have employer-provided health insurance and 26 percentage points more likely to have a pension plan than their non-union counterparts.

Union jobs provide decent wages, health care and retirement security in return for our hard work. So, who really cares about the middle-class? Barack Obama said he will sign the Employee Free Choice Act. John McCain said he would veto it “in a New York minute.” That puts him at odds with the middle-class and those young people struggling to have a decent life. No wonder they're overwhelmingly siding with Barack Obama.

Bush=McCain=Norquist=No Jobs

The Bush administration claimed their tax cuts would create jobs. We're still waiting.

The number of newly laid off people signing up for jobless benefits last week climbed to its highest point in more than six years as companies cut back given the faltering economy.

The Labor Department reported Thursday that new applications filed for unemployment insurance rose by a seasonally adjusted 7,000 to 455,000 for the week ending Aug. 2. The increase left claims at their highest level since late March 2002.

The job picture hasn't been peachy keen since Bush took office. According to the EPI, the employment situation in 2000s business cycle was considerably weaker than that of the 1990s.

Specifically:

It took longer to regain pre-recession employment levels: Nearly four years passed before the number of jobs in the economy returned to the level reached prior to the recession of 2001. By comparison, after the recession of the early 1990s, it took just over two-and-a-half years to regain peak level employment.

Employment growth remained sluggish: Over the entire business cycle of the 2000s, job growth averaged only 0.6% per year—well below what was needed to keep up with labor force growth. By comparison, over the business cycle of the 1990s, annual job growth averaged 1.8%.

The employment-to-population ratio deteriorated: For the first business cycle on record, the employment-to-population ratio declined over the 2000s, dropping by 1.5 percentage points.2 Over the 1990s the employment-to-population ratio increased by 1.7 percentage points.

Those are pretty dismal figures, yet McCain is promising more of the same according to the Center for American Progress, who quote an old friend of his.

[John McCain] campaigned on being very good on taxes in this election cycle... that he will continue to make [the Bush tax cuts] permanent, that he will veto any tax increase, period, that he wants to cut the corporate rate from 35 percent to 25 percent, that he wants to have full expensing, that he wants to abolish the AMT .... In addition to being the Americans for Tax Reform’s entire agenda, that is a very pro-growth set of policies he has put forward, and he articulates why they are important. — Grover Norquist, President, Americans for Tax Reform, February 27, 2008

Pro-growth for the rich and famous, yes, but it leaves the rest of us behind.

(Cross-posted at Blogging for MI.)

Obama talks about fair trade

Obama addressed more than 1,000 people at Flint's Kettering University today. Christine from Blogging for Michigan attended and took some pictures that you can check out, and I helped do some live blogging and posted my comments there too.

Obama's speech was: "Renewing American Competitiveness." How appropriate for Flint and Michigan in general. Manufacturing jobs have been leaving here for years and being sent to places like Mexico and China, and along with those jobs went pensions and health care. Workers are ready for change because, as Obama noted, we've "lost confidence in that fundamental American promise that our children will have a better life than we do."

Click the link above to read his speech. There's something in there for everyone. Obama touches on health care (he states he will push for universal coverage), green jobs and energy policy, broadband access, education (college education must not be a privilege of the few – it should be a birthright of every single American), jobs, trade and more. Because trade is responsible for decimating manufacturing jobs here in Michigan, I pulled out that part of his speech for you to read.

But even as we welcome competition, we need to remember that our economic policies must be supported by strong and smart trade policies. I have said before, and will say again – I believe in free trade. It can save money for our consumers, generate business for U.S. exporters, and expand global wealth. But unlike George Bush and John McCain, I do not think that any trade agreement is a good trade agreement. I don't think an agreement that allows South Korea to import hundreds of thousands of cars into the U.S., but continues to restrict U.S. car exports into South Korea to a few thousand, is a smart deal. I don't think that trade agreements without labor or environmental agreements are in our long term interests

If we continue to let our trade policy be dictated by special interests, then American workers will continue to be undermined, and public support for robust trade will continue to erode. That might make sense to the Washington lobbyists who run Senator McCain's campaign, but it won't help our nation compete. Allowing subsidized and unfairly traded products to flood our markets is not free trade and it's not fair to the people of Michigan. We cannot stand by while countries manipulate currencies to promote exports, creating huge imbalances in the global economy. We cannot let foreign regulatory policies exclude American products. We cannot let enforcement of existing trade agreements take a backseat to the negotiation of new ones. Put simply, we need tougher negotiators on our side of the table – to strike bargains that are good not just for Wall Street, but also for Main Street.

I think that last sentence makes an important point. It's too late to put the genie back in the bottle and rescind NAFTA and other trade agreements, but there's no reason we can't change those agreements so that labor gets their fair share of the pie too.

This is how the system works now according to Ezra Klein:

Put broadly, opening ourselves up to trade is really good for people who buy things, and less good for people who make things. Now, a lot of folks both buy and make things, so the story is complicated. But one reason the elite classes are so hegemonically enamored with trade is that they don't really make anything at all, and so experience none of the downsides of trade. As Dean Baker likes to point out, we've structured our trade deals such that unskilled manufacturers face a lot of international competition while reporters, say, face almost none.

If we really value all work in this country, then tweaking these trade agreements is the only right thing to do.

McCain to Gov. Blunt: Wassup?

Missouri Gov. Matt Blount had been mentioned as a possible running mate for McCain; however, that was prior to InBev of Belgium's unsolicited bid to talk over St. Louis-based Anheuser-Busch. You see, McCain denounces protectionism, while Gov. Blunt favors it:

“I am strongly opposed to the sale of Anheuser-Busch and today’s offer to purchase the company is deeply troubling to me. I have said that while I am supportive of action to prevent the sale there is no immediate tool available at the state level to block it.

“I have directed the Department of Economic Development to explore every option and any opportunity we may have at the state level to help keep Anheuser-Busch where it belongs - in St. Louis, Missouri.”

Ironically, Blount recently criticized Obama for being a protectionist:

"Now is not the time to adopt the policies of Herbert Hoover -- of protectionism.

The sudden flip-flop is puzzling since Republicans have never been too concerned about sending jobs out of the country any other time. On the other hand, flip-flopping is a Republican trait typical of McCain too, so Blount may still have a chance after all.

Getting back to Anheuser-Busch, the Economist had the money quote about the possible sale:

Could anything symbolise America’s loss of economic supremacy more clearly than for its favourite beer to fall into foreign hands?

Gas prices continue to rise

(For my out-of-state friends, I cross-posted this at Blogging for Michigan, but I think you'll be able to identify with what I wrote unless gas prices are cheap where you live.)

According to AAA Michigan, gas prices are at an all-time high in Michigan, averaging $3.65 per gallon. The cheapest price is in the Flint area ($3.61 per gallon) and the highest average is in Marquette ($3.73 per gallon). And, for a short time today, oil prices briefly surged over $120 dollars a barrel.

The high prices have some people praying at the pump, and one 10-year-old boy in Burton wrote letters to several local officials asking them to do something. He's feeling the pain because his mother has stopped buying extra goodies when she goes shopping. We're all cutting back because of high gas prices.

Blame it on increased demand or our falling dollar, but it doesn't look like prices will go down anytime soon (if ever). However, there is some good news on the fuel economy front that could accomplish two things at once - bring jobs to Michigan and help automakers achieve the 31.6 mpg standard the NHTSA proposed they reach by 2015.

A surplus Delphi research lab in Macomb County's Shelby Township has been donated to an initiative that could help automakers meet stringent new federal fuel economy guidelines.

USAutoPARTs, expected to be up and running by June, will involve auto suppliers, state government, the U.S. Department of Energy and universities in clearing roadblocks on the path to energy efficiency.

If successful, the initiative could help create thousands of Michigan jobs and bring millions in federal research dollars to the state. [...]

The consortium will research a variety of "pre-competitive" areas, such as developing lighter-weight materials, improving engine combustion efficiency, and figuring out ways to heat and cool interiors without drawing power from the engine.

The U.S. Army's National Automotive Center in Warren is involved, along with Wayne State University. The school signed up to teach evening classes at USAutoPARTs, which will provide a place for colleges to educate students in new automotive technologies.

I guess this is one of those examples of turning lemons into lemonade, although I'm not quite sure that 10-year-old boy in Burton would see it that way.

Bush's job creation claims debunked

Economist Dean Baker disputes the New York Times claim that "Mr. Bush has spent much of his presidency riding high on claims of solid job growth."

Not so, says Baker. Job growth has actually been pretty bad through most of President Bush's time in office. How bad? President Bush comes in dead last in job creation among recent presidents, even falling behind his dad's dismal record. Ouch!


No wonder recent polls show Bush is the most unpopular president in modern American history.

(Cross-posted at BFM.)