Sunday, December 31, 2017

Labor Line

March 2017___________________________________

Labor line has job news and commentary with a one stop short cut for America’s job markets and job related data including the latest data from the Bureau of Labor Statistics.

This month's job and employment summary data are below. This month's inflation data is below.

The Establishment Job Report and Establishment Job Details for data released March 10, 2017.

American Job Market The Chronicle

Current Job and Employment Data

Jobs
Total Non-Farm Establishment Jobs up 235,000 to 145,798,000
Total Private Jobs up 227,000 to 123,474,000
Total Government Employment up 8,000 to 22,324,000

Employment Note
Civilian Non-Institutional Population up 164,000 to 254,246,000
Civilian Labor Force up 340,000 to 160,056,000
Employed up 447,000 to 152,528,000
Employed Men up 128,000 to 81,141,000
Employed Women up 319,000 to 71,388,000
Unemployed down 107,000 to 7,528,000
Not in the Labor Force down 176,000 to 94,190,000

Unemployment Rate was down .1 % to 4.7% or 7,528/160,056
Labor Force Participation Rate was up .1% to 63.0%, or 160,056/254,246

Prices and inflation measured by the Consumer Price Index (CPI) for all Urban Consumers was up by a monthly average of 1.26 percent for 2016.

The March CPI report for the 12 months ending with February, shows the

CPI for All Items was up 2.7%
CPI for Food and Beverages was up .1%
CPI for Housing was up 3.2%
CPI for Apparel was up .4%
CPI for Transportation including gasoline was up 6.3%
CPI for Medical Care was up 3.5%
CPI for Recreation was up 1.5%
CPI for Education was up 2.7%
CPI for Communication was down 2.7%

This Month’s Establishment Jobs Press Report

NEARLY THE SAME

The Bureau of Labor Statistics published its March report for jobs in February. The labor force increased by 340 thousand as a result of normal population growth and 176 thousand new entrants to the labor force. Employment improved by 444 thousand as a result of the new entrants finding jobs and a decline in the unemployed of 107 thousand. Both changes helped to lower the unemployment rate by .1 percent from 4.8 percent to 4.7 percent. The participation rate was up a second month; up .1 percent to 63.0 percent.

The seasonally adjusted total of establishment employment was up 235 thousand for February. The increase was a total of 132 thousand more private service sector jobs and 95 thousand more jobs in goods production employment. The 227 thousand private sector jobs total combined with an increase of 8 thousand government service jobs accounts for the total increase.

All three subsectors of goods production had more jobs. Construction jobs improved by 58 thousand across all construction sub sectors for February, a second month where all subsectors increased. Residential specialty contractors added 36.4 thousand jobs. Heavy and engineering employment added another 15.1 thousand jobs. Manufacturing had a net increase of 28 thousand new jobs. Durable goods were up 10 thousand jobs; non-durable goods added 18 thousand jobs. Machinery did the best among durable goods with 6.8 thousand new jobs; motor vehicle and parts manufacturing lost 3.5 thousand jobs, a most unusual decline. Among non-durable goods food processing added 8.8 thousand jobs against losses across most other non-durable sub sectors. Natural resources added 8 thousand jobs, a second month of gain.

Government service employment added a net of 8 thousand jobs. The federal government added 2 thousand jobs while state government dropped 3 thousand jobs and local government picked up 9 thousand jobs. Private education added a seasonally adjusted 29.3 thousand jobs, an unusually big increase; public education edged upward 1.7 thousand jobs. State education was off 3.2 thousand but local public schools were up 4.9 thousand jobs. The net increase for public and private education employment was 31 thousand.

Professional and business services had the biggest increase in service employment for February with 37.5 thousand new jobs. The professional and technical service sub sector picked up 20.3 thousand jobs of the total increase, management of companies added 5.1 thousand jobs with administration and support services including waste management added a net of 12.1 thousand jobs.

Among professional and technical services computer systems design and related services added 5.5 thousand jobs, a so-so month for computing. Architectural and engineering services added 4.5 thousand jobs. Management and technical consulting added 6.3 thousand jobs. Among administrative and support services, employment services added 5.1 thousand jobs; investigation and security services added 2.6 thousand jobs, but other administrative sub sectors had small declines.

Health Care added 32.5 thousand jobs with modest gains in all four major sub-sectors. Ambulatory care had 18.3 thousand new jobs; hospitals a modest 6.3 thousand new jobs; nursing and residential care employment jobs were up only 2.2 thousand. The smallest of the four health care sub sectors in social assistance added 5.7 thousand jobs. The February growth rate in health care employment was only 2.02 percent, well below the fifteen year trend now at 2.37 percent.

Trade, Transportation and Utilities dropped 8 thousand in jobs in a poor month for jobs. Seasonally adjusted retail trade was down a hefty 26 thousand jobs. Wholesale trade offset the decrease with a 9.9 thousand gain, but trade jobs did poorly in February. Transportation had a net of 8.8 thousand jobs with 10.6 thousand new jobs in truck transportation offset by other small losses in modal transportation and warehousing and storage. Utilities lost a thousand jobs, a second month of decline.

Leisure and hospitality added 26 thousand jobs for February, less than last month and slightly less than average months. Arts, entertainment and recreation added 5.7 thousand jobs, a second month of increase. Food services, mostly restaurants, added 16.7 thousand jobs while accommodations picked up 3.6 thousand jobs, a good month for accommodations, but less so for restaurants.

Information services did not lose jobs, but only managed to hold their total of 2.7 million jobs in February. Financial activities had a typical gain adding a net of 7 thousand new jobs, but way down from last month. Finance and insurance added 2.2 thousand jobs while the insurance carriers sub sector added 3.2 against small losses in banking subsectors. Real estate and rental leasing added 4.8 thousand new jobs with 7.1 thousand new jobs in real estate offset by small losses in rental and leasing sub sectors.

The category, other services, added just over 8 thousand jobs for February, less than last month but still a good month. Two of three sub sectors added jobs; repair and maintenance services, 3.3 thousand jobs; personal and laundry services, 6.2 thousand jobs; non-profit organizations were off 1.3 thousand jobs.

The February establishment employment was up 235 thousand at an annual growth rate of 1.94 percent, a tiny bit better than last month. One month of a new president does not make a trend or establish a sign of change in the job situation. This month is virtually the same as last month, although the pickup in construction and manufacturing is better than most months.

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February Details

Non Farm Total +235
The Bureau of Labor Statistics (BLS) reported Non-Farm employment for establishments increased from January by 235 thousand jobs for a(n) February total of 145.798 million. (Note 1 below) An increase of 235 thousand each month for the next 12 months represents an annual growth rate of 1.94%. The annual growth rate from a year ago beginning February 2016 was +1.64%; the average annual growth rate from 5 years ago beginning February 2012 was +1.77%; from 15 years ago beginning February 2002 it was .73%. America needs growth around 1.5 percent a year to keep itself employed.

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Sector breakdown for 12 Sectors in 000’s of jobs

1. Natural Resources +9
Natural Resources jobs including logging and mining were up 9 thousand from January at 680 thousand jobs in February. An increase of 9 thousand jobs each month for the next 12 months would be an annual growth rate of +16.1 percent. Natural resource jobs are down 30 thousand for the 12 months just ended. Jobs in the 1990’s totaled around 770 thousand. Job growth here will be small compared to America’s job needs. This is the smallest of 12 major sectors of the economy with .5 percent of establishment jobs.

2. Construction +58
Construction jobs were up 58 thousand from January with 6.881 million jobs in February. An increase of 58 thousand jobs each month for the next 12 months would be an annual growth rate of +10.2 percent. Construction jobs are up 219 thousand for the 12 months just ended. The growth rate for the last 5 years is +4.11%. Construction jobs rank 9th among the 12 sectors with 4.6 percent of non-farm employment.

3. Manufacturing +28
Manufacturing jobs were up 28 thousand from January with 12.382 million jobs in February. An increase of 28 thousand jobs each month for the next 12 months would be an annual growth rate of +2.72 percent. Manufacturing jobs were up for the last 12 months by 7 thousand. The growth rate for the last 5 years is +.87%; for the last 15 years by -1.49%. In 1994, manufacturing ranked 2nd but now ranks 6th among 12 major sectors in the economy with 8.5 percent of establishment jobs.

4. Trade, Transportation & Utility -8
Trade, both wholesale and retail, transportation and utility employment was down 8 thousand from January at 27,401 million jobs in February. A decrease of 8 thousand each month for the next 12 months would be an annual growth rate of -.35 percent. Jobs are up by 278 thousand for the last 12 months. Growth rates for the last 5 years are +1.55 percent. Jobs in these sectors rank first as the biggest sectors with combined employment of 18.9 percent of total establishment employment.

5. Information Services +0
Information Services employment stayed the same from January at 2.759 million jobs in February. An increase of 0 thousand each month for the next 12 months would be an annual growth rate of 0 percent. (Note 2 below) Jobs are down by 14 thousand for the last 12 months. Information jobs reached 3.7 million at the end of 2000, but started dropping, reaching 3 million by 2004, but now creeps up to the 2.75 million range. Information Services is a small sector ranking 11th of 12 with 1.9 percent of establishment jobs.

6. Financial Activities +7
Financial Activities jobs were up 7 thousand from January at 8.403 million in February. An increase of 7 thousand each month for the next 12 months would be an annual growth rate of + 1.0 percent. Jobs are up 190 thousand for the last 12 months. (Note 3 below)This sector also includes real estate as well as real estate lending. Financial Services has been growing slowly with many months of negative growth. The long term growth rates are now at a 5 year growth rate of +1.65 percent, and a 15 year growth rate of +.39 percent. Financial activities rank 8 of 12 with 5.8 percent of establishment jobs.

7. Business & Professional Services +37
Business and Professional Service jobs went up 37 thousand from January to 20.499 million in February. An increase of 37 thousand each month for the next 12 months would be an annual growth rate of +2.17 percent. Jobs are up 597 thousand for the last 12 months. Note 4 The annual growth rate for the last 5 years was 2.92 percent. It ranks as 2nd among the 12 sectors now. It was third in May 1993, when manufacturing was bigger and second rank now with 14.1 percent of establishment employment.

8. Education including public and private +31
Education jobs went up 31 thousand jobs from January at 13.997 million in February. These include public and private education. An increase of 31 thousand jobs each month for the next 12 months would be an annual growth rate of +2.66 percent. Jobs are up 179 thousand for the last 12 months. (note 5) The 15 year growth rate equals +.82 percent, slower than the national average. Education ranks 4th among 12 sectors with 9.6 percent of establishment jobs.

9. Health Care +33
Health care jobs were up 33 thousand from January to 19.326 million in February. An increase of 33 thousand each month for the next 12 months would be an annual growth rate of +2.02 percent. Jobs are up 441 thousand for the last 12 months. (note 6) The current month was below long term trends and less than growth from a year ago when the annual growth rate was +2.34 percent. Health care has been growing at +2.37 percent annual rate for the last 15 years, a rate greater than the national rate. Health care ranks 3rd of 12 with 13.3 percent of establishment jobs.

10. Leisure and hospitality +26
Leisure and hospitality jobs went up 26 thousand from January to 15.794 million in February. An increase of 26 thousand each month for the next 12 months would be an annual growth rate of +1.98 percent. Jobs are up 306 thousand for the last 12 months. (note 7) The 5 year growth rate is 2.97%. More than 80 percent of leisure and hospitality are accommodations and restaurants assuring that most of the new jobs are in restaurants. Leisure and hospitality ranks 4th of 12 with 10.8 percent of establishment jobs. It moved up from 7th in the 1990’s to 5th in the last few years.

11. Other
Other Service jobs, which include repair, maintenance, personal services and non-profit organizations went up 8 thousand from January to 5.721 million jobs in February. An increase of 8 thousand each month for the next 12 months would be an annual growth rate of +1.68 percent. Jobs are up 70 thousand for the last 12 months. (note 8) Other services had +1.11 percent growth for the last 5 years. These sectors rank 10th of 12 with 3.9 percent of total non-farm establishment jobs.

12. Government, excluding education +7
Government service employment was up 7 thousand from January to 11.956 million jobs in February. An increase of 7 thousand each month for the next 12 months would be an annual growth rate of +.72 percent. Jobs are up 120 thousand for the last 12 months. (note 9) Government jobs excluding education tend to increase slowly but surely with a 15 year growth rate of +.20 percent. Government, excluding education, ranks 7th of 12 with 8.2 percent of total non-farm establishment jobs.

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Sector Notes___________________________

(1) The total cited above is non-farm establishment employment that counts jobs and not people. If one person has two jobs then two jobs are counted. It excludes agricultural employment and the self employed. Out of a total of people employed agricultural employment typically has about 1.5 percent, the self employed about 6.8 percent, the rest make up wage and salary employment. Jobs and people employed are close to the same, but not identical numbers because jobs are not the same as people employed: some hold two jobs. Remember all these totals are jobs. back

(2) Information Services is part of the new North American Industry Classification System(NAICS). It includes firms or establishments in publishing, motion picture & sound recording, broadcasting, Internet publishing and broadcasting, telecommunications, ISPs, web search portals, data processing, libraries, archives and a few others.back

(3) Financial Activities includes deposit and non-deposit credit firms, most of which are still known as banks, savings and loan and credit unions, but also real estate firms and general and commercial rental and leasing.back

(4) Business and Professional services includes the professional areas such as legal services, architecture, engineering, computing, advertising and supporting services including office services, facilities support, services to buildings, security services, employment agencies and so on.back

(5) Education includes private and public education. Therefore education job totals include public schools and colleges as well as private schools and colleges. back

(6) Health care includes ambulatory care, private hospitals, nursing and residential care, and social services including child care. back

(7) Leisure and hospitality has establishment with arts, entertainment and recreation which has performing arts, spectator sports, gambling, fitness centers and others, which are the leisure part. The hospitality part has accommodations, motels, hotels, RV parks, and full service and fast food restaurants. back

(8) Other is a smorgasbord of repair and maintenance services, especially car repair, personal services and non-profit services of organizations like foundations, social advocacy and civic groups, and business, professional, labor unions, political groups and political parties. back

(9) Government job totals include federal, state, and local government administrative work but without education jobs. back

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Notes

Jobs are not the same as employment because jobs are counted once but one person could have two jobs adding one to employment but two to jobs. Also the employment numbers include agricultural workers, the self employed, unpaid family workers, household workers and those on unpaid leave. Jobs are establishment jobs and non-other. back

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Friday, March 17, 2017

Doctrinaire Paul Ryan – True Believer

Doctrinaire Paul Ryan – True Believer

A Washington Post editorial of March 16, 2017 quoted House Speaker Paul Ryan discussing the need to end the Affordable Care Act. With health care he said “You need to have an individual market where people care about what things cost, where people have real freedom, where those providers of health-care services, be they insurers, doctors or hospitals and everybody in between, compete against each other for our business based on value, based on price, based on quality, based on outcome.” . . . “We’re going to have a free market, and you buy what you want to buy.”

What Ryan said could be quoted from any college economics text of which I have read many in more than twenty years teaching university economics. Economics in American colleges walks a fine line between education and indoctrination; Mr. Ryan provides a doctrinaire rendition of textbook theory.

The need for health care varies with age, and depends on random risk of illness or injury. The expansion of private health insurance in the 1950’s caused problems with random risk. All free market insurance must have people pay premiums into a risk pool that generates a reserve fund to pay losses. Insurance companies employ mathematicians to analyze actuarial data on mortality: accidents, sickness, disability, retirement and other risks. Actuarial data are necessary to construct probability tables that will determine the premium payments to charge that will generate cash reserves to pay future losses.

Someone who already has heart disease or diabetes when they apply for insurance has a health problem, but they are not insurable in a free market private health care system because they are not a risk, they are a certainty. To use insurance jargon they have a pre-existing condition. In effect, their probability of loss is guaranteed and their premium would have to equal the cost of treatment to avoid draining the reserve fund.

In the early 1950’s insurance companies started marketing group policies in large numbers and defined a risk pool through the work place. People started buying health insurance and hence joining a risk pool through their employer. One trouble with a health care risk pool that depends on jobs comes at retirement, when people lose their employer sponsored health insurance. Age and the likelihood of pre-existing conditions assure it will be difficult or impossible for retirees to re-enter a risk pool and buy insurance.

A second trouble with a health care risk pool that depends on jobs is that not everyone has one, or has one they can keep until age 65 or into retirement. Layoffs and unemployment are not just loss of income, but removal from health insurance and a risk pool they may have entered long ago when they were young and healthy.

If everyone entered a common risk pool at birth and stayed in the same national risk pool until death then all Americans would share in the risks of all our injury and illness over their lifetime. The Affordable Care Act requires insurers to accept a national risk pool by offering at least one policy at a price that reflects a risk pool started after birth and continued to death. Ending the funding for policies under the Affordable Care Act in effect terminates the national risk pool.

It does not matter if Congress leaves the requirement that prevents insurance companies from turning down applicants with preexisting conditions because they remain a certainty of loss, not an insurable risk; charges will have to cover the cost of known treatment.

Others without pre-existing conditions, who are not insured through government assistance or an employer risk pool, apply for insurance at the mercy of an insurance company, which can put them in whatever risk pool they choose and charge any price they want.

Private health insurance companies do not have the ability to define a national risk pool, nor the incentive to use a national risk pool when so much health insurance has tax subsidies available through employer risk pools. Health insurers have the incentive to assemble risk pools with the healthiest people they can find, and avoid the sick, those with pre-existing conditions and those with low wages unable to afford health care. The Republican plan to end the Affordable Care Act has an especially crude and unethical side when millions of Americans enjoy substantial tax subsidies through their employer sponsored health care. However, the 24 million the Congressional Budget Office thinks will lose coverage will still have to pay income taxes that subsidize other people’s health care, including Mr. Ryan.

There is nothing in an economic system of private markets and free competition that will move private health insurance to provide health care insurance for everyone. I cannot tell if Mr. Ryan knows free markets fail in health insurance or if he is a true believer in the capitalist secular religion. I do know leaders in positions of responsibility and power take steps to benefit the larger society. In health care leadership Mr. Ryan and the Republicans fail. So much for Trump helping the down and out in the working class.


Wednesday, February 8, 2017

The Trump Job Fantasies

The Trump Job Fantasies

I notice claims made on various Internet sites that Donald Trump expects to create 25 million jobs. Assuming he means during his period in office over the next four years it is worthwhile explaining why that will not happen: why it is fantasy.

If the adult civilian population over the age of 16 continues to grow at the same annual rate as it has since 1990 America will add a little under 2.5 million people a year to the adult population. If every single one of them enters the labor force and finds a job that will be only 10 million jobs over four years. If people enter the labor force to look for work at the same labor force participation rate as the last eight years and they find jobs, then the increase of new jobs will be 6.6 million: far short of 25 million.

To have 25 million new jobs we need first to have 18.4 million more people enter the labor force in addition to normal population growth. That requires an increase in the labor force participation rate from its current 62.7 to 72.5 percent. My data files go back to 1950 and the labor force participation rate has never been that high. For most of that time it remained below 66 percent and the participation rate continues to decline as it has been for more than a decade.

Even if an unprecedented 25 million people enter the labor force it does not mean they will find jobs. Establishment employment has to grow as well and it will have to grow at rates not recorded since the Bureau of Labor Statistics started producing establishment data in 1939. The highest four year, or 48 month interval, of new jobs for every single month for data from 1939 to the present shows only five times with as many as 13 million new jobs. All five were in President Carters term of office in 1979.

Obama took office during a severe Bush recession but created 11.5 million jobs during his eight years. During the eight years of the Reagan Administration establishment employment increased by 16.1 million jobs; in the first Bush Administration establishment jobs increased by 2.7 million; in the Clinton Administration over eight years the increase was 22.9 million new jobs; in the second Bush administration George left office after eight years with just 1.3 million new jobs. The second Bush years had immense tax cuts that created a bubble of expansion, but accelerated income inequality and ended by hurting production and job growth.

Trump will not create 25 million jobs in four years. Republican threats to health care and education if carried out all but guarantee a failure to create more jobs, much less the fantasy millions Trump talks about.

Saturday, December 10, 2016

Behold Mr. Puzder, Secretary of Labor

I just heard Mr. Trump has nominated a man named Andrew Puzder to be the new Secretary of Labor. He was described in the Washington Post [Labor Department pick is a critic of $15 minimum wage, WP, December 9, 2016] as an executive of two fast food restaurants: Hardee’s and Carl’s Jr. The article called him a supporter for the Trump policy of “lowering taxes for corporations and the wealthy and loosening regulations for businesses can boost job creation” the standard slogan of Republicans for decades.

Several other comments outlined in the article stand out. First, the article said Mr. Pudzer is an “opponent of the Affordable Care Act, claiming higher health premiums have left consumers with less money to spend and hurt the restaurant business.” Apparently Mr. Pudzer prefers to have Americans eat hamburgers and french fries as a substitute for health care coverage since that will increase profits in his fast food empire.

However, Mr. Trump promised to create jobs so Mr. Pudzer might like to know that 28.4 percent of new jobs since 1990 have come in the health care industry. The share of America’s establishment employment in health care as published by the Bureau of Labor Statistics has increased just under 5 percent since 1990 to 13.3 percent of establishment jobs, both percents more than any other industry sector. The fast food industry has 2.9 percent of establishment jobs, up only .67 percent since 1990. If new jobs are the Trump goal, then health care is the best sector, not to mention the higher pay in health care than the low wage fast food industry.

The Washington Post article also quoted a previous comment of Mr. Pudzer that new overtime rules “add to the extensive regulatory maze the Obama Administration has imposed on employers.” The overtime rules are part of administration of the Fair Labor Standards Act. The current rules he ridicules were drafted by the George W. Bush Administration in 2003 specifically to eliminate overtime pay for millions of Americans. President Obama has proposed changing one, and only one, number but nothing else. He wants to raise eligibility for overtime from a salary of $23,660 to $47,776 to make several million people eligible for overtime pay that are denied overtime by people like Mr. Pudzer.

Mr. Pudzer also opposes raising the minimum wage, but that too is part of regulations written for the Fair Labor Standards Act and so the rules he ridicules are the exact rules that allow him to keep wages low and convert costs to profits to put in his pocket. I would say his views show a conflict of interest since he expects to profit from a government policy he intends to control.

Mr. Puzder also invoked a standard corporate threat against higher wages. He said it “encourages automation!” We learn fast food executives are investing in automation and considering machines that could tackle simple tasks such as taking customer orders. “If you’re making labor more expensive and automation less expensive- this is not rocket science.”

Organized labor lost jobs to automation in the 19th century. Over the last thirty years millions have been forced out of jobs from computer automation, but fast food wages are already so low his work force can leave him to be self employed mowing grass or baby sitting compared to the pathetic wages he pays. He ought to remember a bully needs better threats.

A hundred years ago there was no fast food industry but people who worked in low skill, low paid jobs called themselves wage slaves. Apparently the working class voted for Mr. Trump, but Mr. Puzder’s comments give the clearest sign yet the working class will continue to be wage slaves in the Trump Administration.

Saturday, November 5, 2016

History, Politics, the working class, and the vote for 2016

The Sorry State of the working class

On April 13, 2016 the New York Times ran an op-ed piece entitled “Foiling Obama, Congress Made Trump.” Republican successfully blocked every effort Obama made to benefit the working class with constructive proposals: a cut in the payroll tax, an infrastructure bank to create construction jobs, a larger child tax credit, community college investments, an expanded earned income tax credit, making retirement plans portable across employers, tax credits for manufacturing communities, wage insurance.

Presidential election night commentary repeatedly mentioned the angry working class and how they voted for Donald Trump, apparently in large enough numbers to swing a few key states and the election. Many of the Trump voters were characterized as working class whites with a high school education struggling to get by on low paid jobs. A corporate decision to close a factory and move to Mexico or China often figured in their low income and loss of employment. The loss of jobs then figured in the collapse of their local housing market and empty strip malls sprinkled about in cities and towns across the mid western states.

Trump campaigned with many Democratic proposals the Republican establishment hates and blocked during the Obama years. He attacked American business moving jobs overseas during the campaign along with the NAFTA trade agreement. Neither the Republican or Democratic parties or any of its presidents have ever challenged the absolute right of corporate America to shut down plants and operations in the United States and move them to Mexico or China or anywhere they want to go. Neither party does a thing to slow it down, or appears to care about places like Detroit, decimated by autocratic corporate decisions. The best the Democrats have ever done is to offer trade assistance or retraining for those who lose their jobs.

For Trump to keep his promises to the people who elected him he will have to fight the Republican Party establishment and propose more aggressive policies than the modest efforts of the Democrats. The Democrats have already organized an agenda around his campaign pledges in what shapes up into a three cornered discussion, that is if Trump really meant what he said during the campaign.

The Trump and Democratic proposals can help generate new spending which in turn helps create jobs, but they do almost nothing to stem the surplus of labor or fix the policies accepted by both parties. More spending won’t be enough; the supply of labor has to be addressed.

Trump’s proposals include a demand to cut immigration and reduce the supply of professional foreign labor under the H1-b program, but H-1b is only one of several other programs that bring in foreign labor. Otherwise I have heard nothing about changes to the Fair Labor Standards Act. President Obama tried to amend the overtime rules and get more people a chance to earn time and half for work over forty hours, but the Republicans howled against it and filed suits to stop it.

As of now the minimum wage remains at $7.25 an hour for a forty-hour week and anyone earning over $23,660 has no right to overtime if an employer chooses to put them on a salary. Two people working sixty hour weeks equal three people working forty hour weeks. Unpaid overtime helps restrict new jobs and add to the already massive oversupply of labor. Two decades of higher productivity has eliminated millions of jobs and helped generate an even bigger surplus of labor working a forty-hour week. The full time workweek will need to be decreased to 30 hours phased in over several years.

Trump will have to lower federal income taxes on the modest wages and salaries of the low paid working class. In 2015 a single person earning $25,000 had to pay $1,743.75 in federal income tax even though it is not possible to live on such a low salary and that is before social security and state taxes. A couple both earning $25,000 pay $3,487.50 in federal income tax. If their income had been corporate dividends they would have paid nothing, not a cent in federal taxes.

It was the working class that put Trump in office, but it will be easy to tell if they get something for it. They got nothing from Reagan or the two Bush presidents. Republicans are pickpockets, but Trump refuses to sound like a Republican so maybe now will be different. Maybe.

Tuesday, October 11, 2016

The Middle Class, the Working Class and American Politics

The Middle Class, the Working Class and American Politics

The term middle class works especially well for millionaires and billionaires. They find it useful as a way to get families and individuals to envy the rich and identify with them. People who think their middle class are more likely to feel superior to people identified as working class.

Many stories in the media cite middle class criteria for you to evaluate your personal status. Are you in the middle class? Money Watch published a typical list on the Internet. It lists eight criteria: 1. You earn between $36,000 and $109,000 a year, 2. You own a home, 3. You have a secure job, 4. You have health insurance, 5. You invest for retirement, 6. You went to college, 7. You take family vacations and 8. You think you’re middle class.

It’s instructive that five of the eight criteria – 1, 2, 4, 5, 6 and 7 - apply to how much you earn and what you can afford. In a consumer oriented society business wants everyone to define themselves and their class by what they earn, own and buy. People who compare their income with others might forget about job rights and what they go through to earn a living.

Equating class to what you earn and buy ignores the power to control the political system. If you answer yes to the following four statements you are in the privileged upper class. If you answer no, then you are in the working class.

1. You sit on the board of directors of an American corporation with more than $100 million in assets.
2. Your lawyer and accountant have set up your non-profit foundation that gives away more than a million dollars a year.
3. You do not pay more than 15 percent marginal personal income tax and have in one or more years in the past decade paid no federal personal income tax.
4. You can easily support yourself and your family in the manner you expect without working for a wage or salary.

Political power determines the economic rules that allow and perpetuate the upper class. As Warren Buffet likes to tell the press from time to time wage earners pay taxes at more than double the rate he pays for corporate stock dividends or capital gains. If we define the working class as people who have to support themselves working for a wage or salary, the current tax rules create a decided disadvantage for the working class. I am unaware of working class influence on Congress that might change that.

There is a famous quote of Jay Gould, the American tycoon from the 19th century: "I can hire one half the working class to kill the other half." Back in the 19th century tycoons like Jay Gould did hire working class guards to shoot at picketing strikers; Mr. Gould was not making idle threats. Lately Governors like Scott Walker of Wisconsin get the under paid, over worked, over taxed members of the working class to attack public school teachers who they are encouraged to think are over paid and privileged members of the middle class. The working class who vote for a Scott Walker vote for a politician who steadily works to lower their standard of living.

The working class has always been divided because some people think they’re in the middle class when there’s no such thing as the middle class. The term is deliberate deception and diversion. If you work for wages, or you’re retired and live on the savings and Social Security from your wages, you’re in the working class. Your income means nothing in that classification; it’s how you earn a living, not how much. If Americans know who they are, there will be changes in American politics that uplift the miserable and powerless lot of wage earners.

What class are you in?

Monday, September 26, 2016

Donald Trump on Coal Mining Jobs

Donald Trump on Coal Mining Jobs

Lately I heard Candidate Trump blaming the Democrats for the loss of jobs in coal mining. Since he does not believe in global warming it follows that enforcement of clean air regulations for coal fired electric plants makes people like Hillary Clinton responsible for these job losses.

Maybe not.

Back in the early 1920’s just under 800,000 worked as coal miners in the coal industry. It was a time when inter city transportation came entirely from the use coal burning, steam locomotives. It was a time when nearly everyone used coal for home heating. It was a time when the steel industry needed mountains of coal. It was early in the mechanizing use of high productivity machinery.

It was also the beginning of the mordant and mournful decline in coal mining jobs. By 1990 the coal industry employed 136 thousand in surface and underground mining of bituminous coal and anthracite coal. Steam locomotives are gone; few heat their homes with coal; the steel industry uses scrap in electric furnaces. By the end of 2000 jobs were down to 71.6 thousand; by the end of 2010 they recovered to 84.3 thousand; by the end of 2015 the coal industry was down to 60.7 thousand jobs; by August 2016 jobs were 52.4 thousand.

Just over 64 percent of the jobs in coal mining are in construction, extraction and material moving occupations and five of these occupations are partly to mostly specialized to the coal industry. These five are continuous mining machine operators, mine cutting and channeling machine operators, roof bolters, loading machine operators in underground mining and shuttle car operators.

All employed in these occupations operate highly productive mining machinery; they do not use a pick and shovel. For example, 90 percent of shuttle car operators work in the coal industry. The median wage reported for 2015 was $55,320 and that wage has increased faster than inflation since 2008, right after the Obama administration took office. Given the specialized nature of the work it would be next to impossible for laid off shuttle car operators to find a similar job in another industry and similarly for the other four occupations mentioned above.

Other occupations in the coal industry in management, finance, construction, maintenance and repair have employment in many industries and those losing these jobs in the coal industry can seek employment in many other industries just like the rest of us. Since the end of 2008 the five specialized coal mining occupations have lost an average of 859 jobs a year through 2015.

It is worth mentioning that employment in oil and gas extraction and support activities for oil and gas extraction have increased in the years of the Obama presidency from 2008 to 2015 by 27.1 percent, or an additional 102.2 thousand jobs, more than the loss of coal industry jobs. Even if we assume the last eight years of decline in coal demand results solely from clean air regulations applied to coal fired power plants, there is no need to weigh clean air against the loss of jobs in this instance. It doesn’t matter what Trump says or does; coal employment will not be going up, no matter how dirty the air.