We Can't Afford Teachers?

A friend posted the following on Facebook:

My son's teacher, pink-slipped

Last week, California's budget cuts put a pink slip in the hand on my son's teacher, Irma Navarette, one of the best educators I've ever met.

Robert Reich put it this way:

"Last year, America’s top thirteen hedge-fund managers earned an average of $1 billion each. One of them took home $5 billion. Much of their income is taxed as capital gains – at 15 percent – due to a tax loophole that Republican members of Congress have steadfastly guarded.

If the earnings of those thirteen hedge-fund managers were taxed as ordinary income, the revenues generated would pay the salaries and benefits of 300,000 teachers. Who is more valuable to our society – thirteen hedge-fund managers or 300,000 teachers? Let’s make the question even simpler. Who is more valuable: One hedge fund manager or one teacher?"

Again...

Again, some media outlets (notably Forbes magazine and The O'Reilly Factor) are blaming budget crisis on politicians who "made pension promises to the public employee unions that cannot be met".

No mention whatsover that these pension funds were drained by a crashing stock market. They are trying to manipulate our anger and direct it to the politicians and to the unions and away from regulation of Wall Street. Wall Street does not want regulation.

O'Reilly says that Walker's Wisconsin is an example of how democracy works. Though he freely admits that the public is wary of Governor Walker's attack on unions. Governor Walker says his limiting of collective bargaining and paring down of union benefits will create 250,000 jobs.

Really?

Yes, this is the same supply side economics that reduced wages and benefits for workers over the last couple of decades and brought about at least one "jobless recovery". Shall we call Walker's move the last test of supply side theory?

O'Reilly says that if Walker fails to create those jobs that then he deserves to be voted out. Will he hold him accountable to that?

It is hard to see how paring down paychecks in Wisconsin will create the demand to support those new jobs.

Having O'Reilly swing his support to unions over supply-siders would be an interesting paradigm shift.

I have always suspected that O'Reilly, like many of the talking heads of the right, ride on the wave of resentment of the beleaguered working class purely for personal economic gain, while being the agents of big money. If the public anger begins to shift I think O'Reilly will go wherever it leads. The Fox Network makes big money by manipulating and riding public anger.

Like Dorothy in the Wizard of Oz, I think soon the American public will see the man behind the curtain in the Emerald City of capitalism. I think many of them have already. Perhaps ironically Governor Walker is to credit for making the contradictions of his economic theory more obvious.

Only One Reason

There is only one reason for right to work legislation or limits on collective bargaining. It is to reduce the wages and benefits of all workers--union or not. No employer or politician fights for these measures so that they can raise workers wages or provide them with more benefits or to work for a fairer deal for their employees. It is all about a concentration of wealth and power.

When they remove provisions of contracts that have been negotiated with the workers it is to drive more money into the hands of the wealthy to remove the limits on their concentration of their wealth.

Regarding workers in the public sector: it is not about balancing a budget. The unions have agreed to economic concessions. Just before these take-aways from workers tax breaks for the wealthy added millions to budget shortfalls.

It is all about transferring wealth from those who create it to those who hoard it. It all adds up to increasing the gap between the tiny minority of the super rich and the vast majority of working people.

In the end this system is unworkable. It starves our economic engine of the fuel that it needs to run--wages.

Layoffs, decreased wages will only deepen the economic crisis.

Mark Shields on Unions

Inside Washington on Public Broadcasting hosted a panel discussion on various issues one of which centered around the protests in Wisconsin over the Governor's attempt to limit collective bargaining rights for state employees.

Mark Shields a noted commentator and columnist was uncharacteristically passionate about the role of unions in the United States.

Here is the transcript in part:

MR. SHIELDS: Let’s be very blunt. The United States workers would never have had a five-day work week, an eight-hour work day. We would never have had minimum wage laws, child labor laws, health and pension benefits, without the skill, the passion, the commitment, and the clout of organized labor. Owners and employers just didn’t voluntarily wake up one morning and say, let’s be nice to the workers. So unions made a difference in America’s landscape. Do they make a difference every day? You better believe it.

At the same time, the same people, my good friend Evan, whom I respect enormously, endorses and embraces private sector unions, which now have fallen in strength to the point where they represent one out of 12 workers. They’re defanged. They’re basically powerless, okay? When they represented 35 percent of workers, a generation ago, not Evan, but many on the right said, they were a threat to American democracy. They’re a threat to the American way of life. Now public employees have the same right to collective bargain that any employee does. And it’s that simple. How does a school teacher, a lone school teacher negotiate with the city of New York or the city of Milwaukee. You’ve got to pool your resources to do that.

…..

MR. SHIELDS: Here’s the rub. Yes. This is ground zero in the fight for collective bargaining for unions. But here’s the rub. Between 1989 and 2009, the average hourly wage – the median hourly wage for the American male fell by 2 percent – fell by 2 percent. All of the concentration was in the top 1 percent, 56 percent of all the economic growth was in the top 1 percent. Thirty six percent was in the top one-tenth of 1 percent. The bottom 90 percent got 16 percent. That’s why this tension exists right now.

People in Wisconsin have had their own lives decimated and threatened and they bought into, quite frankly, the specious argument that the enemy is not the economic system that’s rigged against them with a tax system that’s exploitative. Somehow it’s a social worker [who wants to protect her rights to collective bargaining.]

Sharing the Pain

Gasoline and home heating oil prices are rising in advance of anticipated disruptions in availability.

Yet employees and pensioners are asked to accept freezes in cost of living increases for increases that have already happened.

Is there a double standard for the ordinary person vs. a huge corporation?

Exxon Oil registered the largest profit of any corporation every in the last quarter of 2009 yet there is little talk of regulation, freezes or cut-backs on government benefits for industry there. (Halts on drilling in the Gulf are being lifted even as baby dolphins drift up onto Gulf beaches.)

The people who are pushing freezes and cut-backs on wages, benefits, jobs and collective bargaining rights for the working class are against regulation of industry and business.

Public employees have to "share the pain" with taxpayers?

Can we "share the pain" with Corporate America?

Abundant Wealth

It is so strange that there are all of these budget stand-offs when we live in a country of such abundant wealth.

It is hard for me to believe that we cannot keep a disabled senior on social security pension warm in his home for the winter.

Or that a friend cannot afford to take her heart medication since she lost her job.

I walk to the harbor and look at money tied up to moorings bobbing up and down in the water and vacation homes worth millions lining the shoreline that are lived in only part of the year.

It will take a lot to convince me when a Senator or a Governor says, "We can't afford to pay these benefits or we can't keep these government employees on our payroll."

Will There Be Another "Jobless Recovery"?

Lunch conversation with some of my work mates last week was on the issue of hiring.

People were hoping that with an uptick in holiday spending more people would be hired to help out with the work. Folks are tired from working long hours through the summer and into the peak Christmas season. Even part time workers have been pressured into cranking up their hours. Yes, it's good for paying the bills, but hard on the families--particularly parents that do not have much flexibility with childcare arrangements.

My friends were hoping that the company would hire some of the temps brought on for the seasonal rush as permanent full time employees.

My guess is that they will not.

Why do I think that? History.

The bounce back from recession of the early '00's has been called "the jobless recovery". Economic activity increased but hiring did not.

The company that we work for is a good reflection of what goes on in the country at large.

During the recession of the '00's sales remained flat. To increase profits the company decided to increase market share--to go out and grab business from their competition.

Before this time labor costs--the wages and benefits that workers receive--had made up more than half of the company's annual budget. The company decided to bring labor cost down and shift their budget toward marketing and advertising.

They made this shift by laying off employees, increasing production quotas and decreasing benefits for those who remained.

After the layoffs the budget for advertising and marketing was well over 50% and labor costs were well below 50% of the budget.

Accrual of vacation and sick pay was reduced. Employees picked up larger percentages of health insurance costs.

The government reported in the next year that US productivity increased but that families were working longer hours to maintain the same standard of living which they had previously enjoyed.
That was no surprise to me. That was what I and my fellow employees were doing.

This trend has continued through the current period. All of this is consistent with "supply side" economics as advanced by the Regan administration in the 1980's.

The widespread corporate strategy of laying off workers of course did nothing to stimulate the economy. Though some of our competitors went out of business, company sales remained flat.

As the economy increased a little in the middle of the decade economists began to worry about "the jobless recovery". They knew that a strong recovery could not happen without either an increase in wages or an increase in employment and neither was happening.

This still remains a concern of most economic analysts.

Will the recent increase in sales and profit cause our company--and others--to hire new employees?

Most stockholders are looking for larger profits and more return on their investments to make up for their losses in the Great Recession of 2008-9. There is still great fear about the future of the economy.

Companies will be much slower I think to hire.

What incentive to they have to hire? With unemployment high labor costs are low--they have a pool of people desperate to work under any conditions.

I think companies are going to play it conservatively--still shifting their attention toward increasing market share, being competitive, rewarding stockholders and reducing labor costs.

Yes, hiring would stimulate demand and lift the economy but what corporate leader is going to go down that road? Our current version of capitalism encourages the short-term gain over the overall good.

In fact a report today reveals that US companies have created more jobs overseas than they have domestically. Labor is cheaper there and with the infusion of new cash flowing into foreign investments the rate of growth of those economies exceed that in the US.

This does not bode well for the worker or for the economy. The gap between the wealthy and the working class will continue to grow until we whose labor generates those profits organize and demand a greater share of the wealth which we create.

Will there be another "jobless recovery"? I do not think such a thing is possible.