Employment Policy

A fascinating article by Steven Greenhouse on the case made by Ed Ott, chief of the NYC Central Labor Council, to do more for nonunionized workers:

Ed Ott, the executive director of the New York City Central Labor Council, an umbrella group for the city’s labor unions, has an unexpected and unnerving warning for New York’s more than one million union members.

He warns that their wages and living standards will be threatened unless the city’s unions do far more to lift the incomes and living standards of the city’s nonunion working poor, including restaurant workers, supermarket cashiers and taxi drivers.

“Going forward, if we don’t raise the standards for the lowest-paid workers in the city, and there are literally hundreds of thousands of them, our own levels that we achieved — of wages, pensions and time off — they’re not sustainable,” said Mr. Ott, whose group is a federation of 400 union locals. “For a working class that is going to be making minimum wage or slightly above, what’s going to happen is that as taxpayers, that will create a social base for an attack on our own standards.”

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Mr. Ott is glad that many union members — for instance, construction workers, telephone workers and teachers — have achieved middle-class status. But he voiced frustration that many unions showed little concern about lifting the status of low-wage nonunion workers. He made his remarks at a time when the number of nonunion workers has soared in traditionally union-dominated industries like construction and hotels.

Mr. Ott sees two working classes in New York: a unionized one that is doing well and a nonunion one that is struggling to get by.

“You see a working class on the subway at 6:30 in the morning and you see them at 8:30 at night heading home,” he said. “They work in the back of restaurants, they clean buildings nonunion, they’re child care workers, they’re in retail. Frankly, I marvel that these guys can find a way to live in this city. They work very hard. Most of these workers who work outside a union setting, they work more than one job or they work one job many hours.”

Mr. Ott said the union movement needed to work closely with less-well-off groups of workers — taxi drivers, domestic workers, restaurant workers, even freelance writers and computer workers — to help raise their living standards, not just for moral reasons but also for their own self-interest. “Every time you go to the bargaining table now, there’s downward pressure,” he said. “Even in the public sector, it’s ‘Any improvements you want, you have to pay for with concessions.’ That’s downward pressure, too.”

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From a speech by Barack Obama in Albuquerque yesterday:

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I’ll also stand up for paid leave. Today, 78 percent of workers covered by FMLA don’t take leave because it isn’t paid. That’s just not fair. You shouldn’t be punished for getting sick or dealing with a family crisis. That’s why I’ll require employers to provide all of their workers with seven paid sick days a year. And I’ll support a 50-state strategy to adopt paid-leave systems, and set aside $1.5 billion to fund it. I have a clear plan to expand paid leave and sick leave, Senator McCain doesn’t, and that’s a real difference in this election.

And at a time when folks are struggling with the rising price of everything from gas to groceries, I’ll provide working women with immediate relief. While Senator McCain wants to continue the Bush tax cuts for the wealthiest Americans who don’t need them and didn’t ask for them, I’ll pass a middle class tax cut of $1,000 for each working family. This will deliver tax relief for over 70 million working women. And we need to help folks at the bottom of the ladder. Almost 60 percent of Americans who benefited from raising the minimum wage were women. I won’t leave any working people behind. That’s why, unlike Senator McCain, I’ll index the minimum wage to inflation so that it goes up each year to keep pace with rising costs.

We can’t afford an economy where folks keep working harder for less. We can’t let the women in our workforce get paid even less for doing the same work. And we can’t keep pushing more and more of the burden on to the backs of working parents who are struggling to balance their jobs and their family. Because what binds us together, what makes us one American family, is that we stand up and fight for each other's dreams, and for the dreams of all of our children.

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A new study finds working overtime is associated with anxiety and depression:

Employees who work overtime are more likely to suffer from anxiety and depression, according to a study in the Journal of Occupational and Environmental Medicine.

Working overtime was associated with higher anxiety and depression scores among both men and women, particularly among workers on lower incomes and less-skilled workers, Elisabeth Kleppa from the University of Bergen in Norway found.

Earlier this week, the California Assembly passed legislation requiring employers to provide all workers with a minimum number of paid sick days. According to the official legislative summary, the bill would require employers to provide an hour of sick leave for every 30 hours worked. The legislation doesn't exempt small businesses, although employers with ten or fewer employees could limit employees to five days of paid sick leave in a year (larger employers could limit use to nine days). The bill now moves to the California Senate.

Via Economist's View, an interesting 2006 paper on the minimum wage and firm profitability. According to EV, the paper:

finds evidence that the minimum wage transfers income from owners to workers, i.e. that it reduces profit and increases wages, but it does not change the probability of a firm going out of business, and it does not reduce employment. Thus, this paper raises the possibility that an increase in the minimum wage reduces inequality without having much of an impact on aggregate activity or employment.

In a new map/chart book released today, Rebecca Ray, Hye Jin Rho, and I present state data on economic insecurity and job quality from the Bridging the Gaps project. Here's more from the press release:

The federal poverty line does a poor job of measuring economic insecurity in the United States according to a new report from the Center for Economic and Policy Research (CEPR). In the typical state, 22 percent of people in working families suffer from economic hardship because their earnings and income from other sources, including public work supports and other public benefits, fall below the basic needs budget standard for where they live. By comparison, only 12.6 percent of Americans live below the federal poverty line.

The report, "Working Families and Economic Insecurity in the States: The Role of Job Quality and Work Supports," synthesizes previous CEPR research using a new approach for measuring economic insecurity that addresses the major limitations of the poverty line and analyzes the state of economically insecure families across 45 states and the District of Columbia.

To determine how much income a working family needs to "make ends meet", the authors of the report use basic family budgets that take into account the actual costs of goods and services needed to have a decent standard of living, as well as the variations in these costs, depending on where one lives.

The researchers also examined the role of public work supports- programs such as child care assistance, the Earned Income Tax Credit, food stamps, health insurance provided through Medicaid and the State Children's Health Insurance Program, housing assistance, and income supplements provided through Temporary Assistance- in helping families achieve economic security.

"When measuring poverty, the government and most researchers do not take into account most public work supports," said report co-author Rebecca Ray. "By contrast, when we determine whether a family is able to make ends meet, we take into account the value of all of these benefits."

The report also shows that most economically insecure workers have jobs that pay low wages and provide few or no benefits or "bad Jobs". Only a minority of jobs nation-wide are "good jobs", in other words, ones that pay at least $17 an hour and provide health and retirement benefits.

"Public work supports play an important and largely unheralded role in promoting economic security and opportunity for working families," said Shawn Fremstad, a co-author of the report and Director of Bridging the Gaps, a CEPR initiative. "In the typical state, work supports close more than half of the hardship gap-the gap between a working family's income and the basic family budget for where they live".

The authors of the study point out, however, that substantial numbers of workers in low-paid jobs receive only modest or no help from work support programs.

According to the report, which uses data from the 2001-2003 Survey of Income and Program Participation (SIPP) and the basic family budgets developed by the Economic Policy Institute, the monthly income of the typical economically insecure family varies from $12,775 a year in Arkansas to $25,047 a year in New Hampshire.

A fantastic new paper from CEPR's John Schmitt on how unions boost the wages of low wage-workers:

Economic data have long demonstrated a substantial wage premium for unionized workers --on the order of 10 to 20 percent-- relative to non-union workers with similar characteristics. This paper uses a straightforward extension of standard statistical techniques to estimate the impact of unionization separately for workers at different wage levels, from the lowest to the highest paid workers.

Using national data for 2003 through 2007, we estimate that unionization raises the wages of the typical low-wage worker (one in the 10th percentile) by 20.6 percent, compared to 13.7 percent for the typical worker (one in the 50th percentile), and 6.1 percent for the typical high-wage worker (one in the 90th percentile). The traditional statistical approach applied to the same data produces an estimate of the average union wage premium of 11.9 percent, which is substantially lower than the union effect on low-wage workers (20.6 percent) and somewhat below the effect for the median- wage worker (13.7 percent).

Also worth noting, the report includes state-by-state data on union wage premium.

Robert Kuttner argues that publicly subsidized human-services jobs should be good-paying jobs with benefits:

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Here is a very straightforward proposal. Let's have a national policy to make every human-service job a good job -- one that pays a living wage with good benefits, and includes adequate training, professional status, and the prospect of advancement -- a career rather than casual labor.

These, after all, are jobs caring for our parents, our children, and ourselves. Transforming all human-service work into good jobs would not merely replenish the supply of decent work. It would vastly improve the quality of care delivered to the elderly at home or in institutions; to young children in pre-kindergartens or day-care facilities; and to sick people whether in hospitals, hospices, outpatient settings, or their homes.

These are also the jobs that cannot be outsourced. Even if we succeed in reviving American manufacturing, the process of automation means that America is almost certain to become even more of a service economy over time. Good service-sector jobs can help replace for good factory jobs.

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This effort would be part of two broader labor-policy shifts that America sorely needs. First, we need to reverse the trend toward casualization of labor that has been occurring for three decades. One of the great advances of the 20th century was regularization of the employment relationship. Through successful social struggle, growth of unions, and enactment of legislation, most jobs came to provide decent wages and fringe benefits. Workers could not be fired without cause. Loyalty to the firm was reciprocated. Grievance systems were created and respected. Economists termed these jobs primary labor-market jobs. Casual, secondary labor-market jobs, which paid less and offered no such guarantees, continued to exist, but they were the exception. In recent years, however, the shift to casual jobs has become the norm, and in low-paid human-service work, casual, high-turnover jobs are the industry standard.

Second, the upgrading of human-service work would reverse another insidious trend -- the employer's habit of trying to increase the efficiency of labor by fragmenting jobs into separate tasks and paying the lowest possible wage for each task -- a strategy known as Taylorism, after the early 20th-century "efficiency expert," Fredrick Winslow Taylor, who first recommended it.

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Over at Half Changed World, Elizabeth asks whether policies to promote flexible work—both part-time work and more flexible hours or locations for full-time workers—"should be framed as about caregiving or not" and outlines the pros and cons:

The arguments against making this a conversation about caregiving are:

• As long as flexible work is seen as a special privilege or accommodation for a limited population, it will be stigmatized—the mommy track.
• Moreover, special privileges create resentment among those who don't get them -- this is where you hear the stories from childless workers who complain that their colleagues with kids race out the door at 5.30, and assume that they're always available to work late.
• If we truly believe that business should only care what you achieve, not when or where you do it, this should apply to everyone, regardless of the reason they desire flexibility.

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The argument on the other side is that we shouldn't be afraid to say that caregiving is important. In the US, we often treat having children as a sort of expensive hobby -- something that people do for their own pleasure, and that doesn't incur any societal obligations. If it takes up all their time and money, they should have known what they were getting into. So, I have real misgivings about going down a path that says that it doesn't matter whether you want time off to care for a child or a sick parent or to train for a triathlon, write a novel, or sleep off your hangover.

I prefer a "targeting within universalism" approach to flexible work: all workers should have more flexibility at work, and additional protections/benefits should be available to certain categories of workers like caregivers, veterans, volunteers, etc. I don't have any problem with saying that caregiving is important, and don't believe government needs to be neutral about caregiving. But flexible work is about more than caregiving—it should be about improving people's quality of life by allowing for a better balance between work and the rest of one's life pursuits, including, but not limited to, caregiving.

Flexible work is also about "the eternal centre-left values of liberty, equality and solidarity." Liberty isn't something that stops at the door to the workplace, that's why we have a variety of basic protections for workers. As a nation's productivity and wealth increases, the freedom of its people should also increase.

A tip of the hat to the House Dems for what looks like an excellent new family leave insurance proposal. Some highlights from their summary:

• Provide all workers with 12 weeks of paid leave over a 12-month period to care for a new child, provide for an ill family member, treat their own illness, or deal with an exigency caused by the deployment of a member of the military;
• Provide these benefits through a new trust fund that is financed equally by employers and employees, who will each contribute 0.2% of the employee’s pay;
• Progressively tier the benefits so that a low wage worker (earning less than $30,000) will receive full or near full salary replacement, middle income workers ($30,000- $60,000) receive 55% wage replacement, and higher earners (over $60,000) receive 40-45%, with the benefit capped at approximately $800 per week;
• Administer the program through the Department of Labor which will contract with states to administer the program (similar to how the Unemployment Insurance program is run).

The proposal is self-financing, so even the deficit-obsessed should be able to support it.

A big problem with the current Family and Medical Leave Act, aside from the leave being unpaid, is that it doesn't provide leave to workers at businesses with less than 50 employees. From the summary, it's unclear whether this legislation would address that problem.

From our friends at the National Employment Law Project, an nice website that provides resources on extending unemployment insurance to provide relief to workers during the current economic downturn.

in a positive new development, the SacBee reports that California Gov. Arnold Schwarzenegger is now supporting legislation in the state assembly that would give private sector employees whose employers don't offer retirement plans the ability to save money in the state's retirement system for public employees.

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The proposal to open CalPERS to the private sector is contained in Assembly Bill 2940 by Assemblyman Kevin de León, D-Los Angeles.

AB 2940 would allow Californians whose employers don't offer retirement savings plans to put money into the California Employee Savings Program.

Employers without retirement plans could also participate.

The retirement plan, unlike 401(k) plans, could be taken by the worker from job to job. If the plan is approved by the Internal Revenue Service, CalPERS would administer it with fees paid by the account holders, at no expense to taxpayers.

Several other states have considered similar programs. But de León's office said California would be the first to put one in place.

"AB 2940 will make California the first state in the nation to offer secure and portable individual savings accounts to working people," de León said at a press conference Tuesday.

Almost half of all workers lack access to a retirement plan (either a defined benefit plan, like a traditional pension, or a defined contribution plan like a 401k). The California proposal isn't a complete solution to the retirement security problems workers face, but it's an essential foundation for broader reforms. The California proposal is basically a version of the Universal Voluntary Account system that Dean Baker details in this paper.

The cost of car insurance can be a major barrier to driving. And we know that people with access to a reliable, affordable car are more likely to be employed, earn more, and work more hours. We also know that low-wage workers drive fewer miles than higher income people, which makes transportation to work a regressive tax on employment. (For much information more on transportation and work, see our resource page on transportation and the labor market.)

Recently, we've been monitoring efforts in a couple states to reduce the cost of car insurance and we found this new article about pay-as-you-drive car insurance in the popular journal Democracy intriguing.

Pay-As-You-Drive Car Insurance
by Jason Bordoff

If you're like most Americans, you eat too much at all-you-can-eat buffets. With auto insurance, it's no different. Drivers who are similar in all respects—age, gender, driving record—pay roughly the same premiums whether they drive 5,000 or 50,000 miles per year, even though the likelihood of a collision increases with each mile. This "all-you-can-drive" pricing scheme imposes significant costs on society: more traffic accidents, congestion, air pollution, greenhouse gas emissions, and dependence on oil. It's also inequitable, as low-mileage drivers, particularly low-income people and women, subsidize high-mileage drivers.

Read More.

New Jersey's Senate approved paid leave legislation earlier this month, and today the State Assembly voted 46-30 to approve similar legislation. Workers will be eligible for up to six weeks of family leave to care for newborn and newly adopted children as well as seriously ill family members. According to state estimates, the average weekly benefit will be about $415 in 2009. Benefits will be financed through a .12% tax on wages—in 2008, the maximum annual assessment paid by a worker will be approximately 64 cents per week.

Conservative opponents of the legislation have made some particularly amusing and apocalyptic claims about the devastating consequences of letting parents take time off to care for newborn babies, while seeming completely oblivious to any potential benefits in the realm of family values. According to conservative Assemblyman Michael Doherty, family leave will: "destroy our state's already struggling economy" and wreak "havoc" on businesses. A leading business lobbyist called it a "reckless ... job-killing mandate." Apparently, family leave activates the same primitive part of the conservative brain as minimum wage laws, and in an earlier era, child labor and health and safety laws.

One limitation of the final legislation, if I'm understanding it right: paid family leave would be available to employees regardless of the size of their employer's business, but employees working for employers with fewer than 50 employees wouldn't have a right to get their jobs back (workers at larger firms are covered by the Family and Medical Leave Act, which provides protection against being terminated).

We’ve been studying sub-prime car financing for a couple of years. This issue has been largely off the radar in the mainstream media, but we’ve noticed more attention lately, as defaults increase.

From a blog cross-posted at the Reuter’s website:

Fitch Ratings, a credit rating company, reported today that the number of auto loans at least 60 days delinquent has hit a 10-month high in January, jumping 12% from December 2007 and 44% from January 2007. Overall, 0.77% of prime and subprime auto loans in the US were delinquent in January 2008.

Subprime delinquencies (for less-credit-worthy consumers) were 4.03% in January, up 10% from December 2007 and 43% from January 2007. They are at the highest rate since late 1997.

Auto loan delinquencies are on the upswing for many reasons, but among them are the more lenient credit standards in previous years, coupled with the housing slowdown and the possibility of a recession. Hylton Heard of Fitch said other than consumers receiving their tax refunds in the coming months, there appears to be little likelihood of this trend changing in the coming months.

(My emphasis.)

The Annie E. Casey Foundation recently produced a documentary outlining the issue of car financing for low-wage workers. The video is now available online and is accompanied by a discussion guide.

You can find more information about the video, and other resources, on our new car financing page. You’ll also find selected news reports about this issue too.