Week In Review

A Weekly Column by Bill Onasch
September 12, 2011

A Sequel Straight To Television
President Obama took office amidst growing anxiety about the Great Recession inherited from the previous administration. Within his first month in the White House the man exuding Hope got Congressional approval of an 825 billion dollar stimulus package. He promised, “Over the next two years, this plan will save or create 3.5 million jobs.”

But his next bold early step–“saving” the American auto industry–ran counter to this goal. The restructuring imposed by the White House on General Motors and Chrysler in the massive financial bailout and prepackaged expedited bankruptcy, had devastating impact on jobs far beyond those two companies. Including losses among suppliers, dealerships, and rail and truck workers, permanent job elimination totals swelled to about 100,000.

When the February 2009 stimulus was enacted the official unemployment rate was 8.1 percent. Eight months later it had shot up to 10.1. Today, long after the Recession was declared over, it stands at 9.1

Whether or not you want to credit Obama policies, the 1½ year Great Recession officially ended in June, 2009. The GDP has grown. Corporate profits have been setting new records. Big Business is sitting on a mountain of cash reserves. Even GM and Chrysler are again profitable and have repaid some of their bailout loans.

Yet the official unemployment rate has consistently hovered around nine percent. The “real” unemployment rate--which includes those working part-time or temporary jobs because they can’t find steady full-time ones, as well as those who in despair have given up active job-search–has flat lined around sixteen percent. It has been a truly jobless recovery on a scale not seen in living memory.

Why are bosses not hiring? The Chamber of Commerce and the cracked teapots will tell you high taxes and burdensome government regulations are job-killers. This is, of course, nonsense. Previous periods of prosperity, when the late, lamented “middle class” flourished, were times of much higher tax rates than today. And we have been in a continuous stream of deregulation since the Carter administration.

Neither taxes nor government incentives make much difference in private sector hiring decisions. Motoko Rich writes in the New York Times, “....few executives are saying that President Obama’s jobs plan — while welcome — will change their minds any time soon.”

A fact that seems to have eluded even Nobel Prize winning economists and heads of union federations is–capitalists only hire workers when they think doing so will enhance their bottom line. So far they have expanded profits without need for significant hiring in the USA for two main reasons:

* Since Bill Clinton brought us the NAFTA leap forward to Globalization, much of the hiring they have done to supply U.S. market demand has been abroad. Aside from the odd prototype lost in San Francisco bars, there are, for example, no Apple I-Phones made in this country.

* Great gains in productivity of American workers have allowed expansion of domestic industry and commerce without increasing the workforce. This is facilitated by the historic low union density in the private sector–only about seven percent–as well as the willingness of most union officials to promote concessions in wages, benefits and work rules to the employers.

The public sector is not driven by the same dynamics as the private. At least until recently, its components were not expected to show a profit. Anything that was truly profitable was long ago privatized. Until the Great Recession hit, the public sector experienced steady growth to serve an expanding population.

That, of course, changed rapidly as income, sales, and property tax revenue plummeted with mass layoffs and foreclosures beginning in 2007. Mlns of public sector workers have now lost jobs or work hours. The Federal government currently has a hiring freeze. The public corporation known as the US Postal Service claims to be on the brink of collapse, and is seeking permission to eliminate as many as 220,000 workers while abrogating union contracts and pension promises. Government is far from being the employer of last resort.

Even more now than during the Great Recession, the mood of the working class majority is marked by a mixture of anger, anxiety, and pessimism. They have no confidence in the President and are even more disgusted with Congress. They don’t see much difference between either of the two parties ordained to lead the nation. Since there are a lot more of these folks than the contented rich, this is of some concern to the politicians--above all to a President who must seek reelection next year. That’s why the pregame show for the NFL opener was delayed last Thursday while the President spoke to a joint session of Congress and a gallery filled with bankers, bosses, brass hats–and Mr Labor, Richard Trumka.

For the second time since taking office President Obama came to Congress with a program to put the unemployed back to work. The current proposal is a little more than half the size of the earlier one. Like the health insurance mandate that the GOP calls ObamaCare, passed last year, the details of the new American Jobs Act are vague, to be announced.

55 percent of the package is labeled “tax cuts.” Most of this, 175 billion, is a continuation of an already reduced collection of employee Social Security payroll tax--4.2 percent instead of the established 6.2. This embezzlement of funds for the retired and disabled had been due to expire at the end of 2011. (They claim the money will be put back some day–but so does every embezzler.) Also, for the first time, employers can take the same cut in their share of Social Security tax if they either hire new workers or give present workers a raise. 65 billion is set aside for this boss windfall. Eight billion of the new scheme would be for bonuses of up to 4,000 dollars to employers hiring new workers who have been jobless for six months or longer.

49 billion is projected for desperately needed extended unemployment compensation for those long term unemployed who will be destitute without it.

140 billion is designated for a grab bag labeled “infrastructure and local aid.” Some of it would–somewhat belatedly--go for keeping teachers, firefighters and cops, threatened with layoff, on the job.

One project the President highlighted, drawing a vigorous head nod of approval from Vice-President Biden, was emulation of Georgia Works. Don Lee and Jim Puzzanghera describe it in a Los Angeles Times article,

“Participants in Georgia Works receive as much as 24 hours of job training a week for up to eight weeks from private companies, with a stipend of $240 to offset childcare and transportation expenses during the period. Companies do not have to pay the participants during the training....But critics worry that such programs offer little more than free work to employers. AFL-CIO President Richard Trumka wrote to Labor Secretary Hilda Solis this month asking for an investigation into whether Georgia Works complies with federal labor laws, which require people to be paid unless they are receiving legitimate training.”

Most of the rest would be allocated to construction or renovation projects–a proverbial drop in the bucket of urgent infrastructure needs. But these are Big Government programs that equipment suppliers such as Caterpillar and Goodyear can endorse and there would be thousands of union construction workers on projects at election time.

The extra fifteen bucks a week the average worker takes home instead of paying in to the Social Security fund is hardly going to fuel a surge in consumer spending. Nor will free labor during dubious “training.” Even the good paying construction jobs will be short-term.

As a recipient of ill-gotten gains from what the Republican front runner called the Social Security “ponzi scheme,” I am not only concerned about major funding for the American Jobs Act coming from the payroll tax supposedly dedicated to its future. The President also used his speech to endorse the sentiment, if not the colorful language, of Perry’s warning to the younger generations. Once again Obama told a national television audience that Social Security and Medicare need to be “fixed” by the deficit super-committee in order to “save” them. Our kids can’t expect to live as high on the hog as us old-timers today.

Incredibly, AFL-CIO President Richard Trumka issued an immediate statement after the speech he attended as an honored guest urging Congress to support “all elements” of Obama’s proposals. The federation is already mobilizing big time to build support for Obama’s cynical promises of jobs as a reelection ploy. It is little wonder that union officials now have a lower approval rating in the polls than even Congress.

The private sector is not the engine for jobs, as the President says, much less a “big job machine,” as Mit Romney declares. The private sector has long failed to produce decent paying secure jobs for all who want and need one. There’s no reason to expect this to change–certainly this shrunken sequel to stimulus won’t do the trick.

What can we do to get enough jobs? I’ll discuss that next time.

NNU KC Vigil
Registered Nurses at Kansas City’s HCA-owned Research Medical Center joined National Nurses United in September of 2010--a year ago--and they still don't have a contract. Management won't budge and is blocking safe nurse-to-patient ratios and protections against workplace violence. NNU is asking for solidarity in a vigil at the facility, 2316 East Meyer Blvd, Tuesday, September 13, 6PM. Along with Kansas City Jobs with Justice and others, I plan to be present and I hope to see our readers from the area there.

In Brief...
¶ A New York Times story written on the night of the President’s speech said, “Republicans and Democrats are no longer fighting over whether to tackle the popular entitlement programs — Medicare, Medicaid and Social Security — but over how to do it.”
¶ An informative
Los Angeles Times article begins, “U.S. workers whose wages stagnated over the last decade also saw their health insurance degrade, even as medical costs gobbled up a growing share of their income, two new studies show. An estimated 29 mln adults who had health insurance lacked adequate coverage in 2010, leaving them exposed to medical expenses such as high deductibles that they couldn't afford...”
Labor Notes reports on a refreshing West Coast picket line experience,
Longshore Workers Dump Scab Grain to Protect Jobs.
¶ UNITE HERE members have been conducting strikes at
Hyatt Hotels in four cities.
¶ The
BBC reports, “The head of Britain's biggest union has urged a campaign of strikes and civil disobedience to fight government cuts. Speaking on the eve of the TUC congress, Unite leader Len McCluskey said no form of protest should be ruled out including ‘direct action.’”

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That’s all for this week.

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