Relevant and even prescient commentary on news, politics and the economy.

Where Have All the Unions Gone and Where Are All the Jobs?*

Economics is a simple field. Just about everything can be described in terms of supply and demand. If the supply of something is scarce but the demand for it is strong, its price rises. On the other hand, if there is a lot of supply but little demand, its price will go down.

Now, buyers and sellers can engage in certain strategies to weight the scales. For example, sellers of a product can band together (perhaps by buying each other out) to achieve some amount of monopoly power. Conversely, buyers of a product can collude to bid down the cost of purchasing.

This is, of course, true for the market for labor. And in the labor market, one classic way for sellers of labor (i.e., workers) to raise their bargaining power, and therefore their pay, is to band together into unions. What makes unions effective is that:

1. Union members commit to acting in concert
2. While it is easy for a company with a 1,000 person assembly line to replace a few people at a time without missing a beat, replacing all 1,000 at once would seriously crimp operations.

As a result, the cost of workforce dissatisfaction to a company with a unionized workforce is greater than the cost of workforce of dissatisfaction to a company without a unionized workforce. Therefore, a company with unionized workforce will, all else being equal, be willing to make greater concessions on pay and working conditions than the same company would be if its workforce was not unionized.

But a union is not a guarantee of anything. After all, a union can be broken. And all you need to break is to make sure there is a sufficiently large, inexpensive workforce capable of replacing the unionized workforce. There might be short term pain, but on paper at least, after that its all profit.

Which brings me to this story in the NY Times. Its about a small town in Iowa heavily reliant on the meat packing industry. Despite the Times’ clear and omnipresent bias that more immigration is always a positive thing, the following paragraph provides a good summary of the entire piece:

At that point, Mr. Smith returned to do night cleanup, earning $5.50 an hour with no benefits, but a vast majority of his former co-workers were turned away, he said, because the new owner did not want to hire union supporters. Instead, the company began actively recruiting in Mexico and immigrant communities in Texas and California.

If there are enough low-skilled immigrants, unions cannot compete. They chose to turn a blind eye toward illegal immigration because they felt it was good for business. Democrats also understood that decades ago and sided with unions. This is because Democrats felt it was good for society if factory workers could enjoy a middle class lifestyle. In the past decade, Democrats have changed. (The reason for this may be the subject of a future post.)

But regardless of politics, the facts are simple: except in very limited circumstances, one cannot simultaneously have strong both unions and virtually unrestricted immigration.

* With apologies to Bonnie Tyler. And my sympathies to American workers who also need a hero.

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May jobs report: nothing more nor less than a decent late cycle report

May jobs report: nothing more nor less than a decent late cycle report

HEADLINES:

  • +138,000 jobs added
  • U3 unemployment rate down -0.1% from 4.4% to 4.3%
  • U6 underemployment rate down -0.2% from 8.6% to 8.4%

Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates

  • Not in Labor Force, but Want a Job Now: down -146,000 from 5.707 million to 5.561 million
  • Part time for economic reasons: down -53,000 from 5.272 million to 5.219 million
  • Employment/population ratio ages 25-54: down -0.2% from 78.6% to 78.4%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.03 from $21.97 to $22.00,  up +2.5% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

Holding Trump accountable on manufacturing and mining jobs

Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?

  • Manufacturing jobs fell by -1,000 for an average of +2500 vs. the last severn years of Obama’s presidency in which an average of 10,300 manufacturing jobs were added each month.
  • Coal mining jobs rose by +400 for an average of +300 vs. the last severn years of Obama’s presidency in which an average of -300 jobs were lost each month

March was revised downward by -29,000. April was also revised downward by -37,000, for a net change of -66,000.

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Gas prices on verge of turning negative YoY

Gas prices on verge of turning negative YoY

There are two important aspects to the inflation rate right now. One, as Dean Baker reminds us today, is that most of core inflation has been caused by housing, via “owners equivalent rent.”  Take that out, and inflation is only 1%:


The second important aspect is that almost all the variation in headline inflation is due to the price of gas.
At the beginning of this year, I thought one of the big issues would be whether gas prices would continue to increase off their January 2016 bottom at a similar rate as they did last year, or whether the increase would be more subdued. We have a pretty definitive answer at least for now, and it is the latter.

Here’s the graph of gas prices since the beginning of 2014:

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Small Pieces of Academia

I’ve recently stumbled on a twitter account called New Real Peer Review. The twitter account is largely (but not entirely) dedicated to posting abstracts of journal articles and links to the papers. Here’s one such abstract:

This article explores the formation of a tranimal, hippopotamus alter-ego. Confronting transgender with transpecies, the author claims that his hippopotamus “identity” allowed him to (verbally) escape, all at once, several sets of categorization that govern human bodies (“gender,” “sexuality,” age). He starts with an account of how his metaphorical hippo-self is collectively produced and performed, distinguishing the subjective, the intersubjective and the social. The article then investigates the politics of equating transgender and transpecies, critically examining the question of the inclusion of “xenogenders” in the trans political movement. Finally, the author returns to the magical power of metaphors, arguing that metaphors do materialize insofar as the flesh does not remain unchanged by them. Analogizing his hippo-self to a “cut” as theorized by Eva Hayward – a regeneration of the boundaries of the self – he offers a final crossing to the world of fiction by showing how the His Dark Materialstrilogy outlines an aesthetics of porosity, which suggests that the self is, as much as a novel, a work of fiction.

The author has gotten an appointment as a visiting scholar at the U of Arizona. Here is the announcement from the Gender and Women’s Studies department:

GWS and the UA Institute for LGBT Studies welcome visiting scholar! Florentin Félix Morin is a French student who just started his PhD this year at Université Paris 8. He works at the intersection of Trans Studies and Animal Studies, focusing on tranimal body modifications, practices and subjectivities. He is beyond excited to be in Tucson for the Spring semester, benefit from all the department’s and the Institute’s activities, conduct fieldwork in the US, and meet everyone! (He uses the name ‘Felix’ in English.)

Welcome, Felix.  The U of A GWS department faculty also includes Professor Whitney Stark. Here’s the abstract of “Reconfiguring Quantum Identities,” a paper she recently wrote:

In this semimanifesto, I approach how understandings of quantum physics and cyborgian bodies can (or always already do) ally with feminist anti-oppression practices long in use. The idea of the body (whether biological, social, or of work) is not stagnant, and new materialist feminisms help to recognize how multiple phenomena work together to behave in what can become legible at any given moment as a body. By utilizing the materiality of conceptions about connectivity often thought to be merely theoretical, by taking a critical look at the noncentralized and multiple movements of quantum physics, and by dehierarchizing the necessity of linear bodies through time, it becomes possible to reconfigure structures of value, longevity, and subjectivity in ways explicitly aligned with anti-oppression practices and identity politics. Combining intersectionality and quantum physics can provide for differing perspectives on organizing practices long used by marginalized people, for enabling apparatuses that allow for new possibilities of safer spaces, and for practices of accountability.

I’ve always had a lay interest in physics, but Stark’s paper covers ground that is new to me.

Here’s some more college news.

To wrap up this post, I think it behooves society to a pay a bit more attention to what is happening on college campuses these days. After all, we (the public) are usually funding a big part of it, and colleges can be the tip of the cultural-change spear.  I am pretty sure most people don’t want to end up where some of academia is trying to lead us.

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Trump Administration’s Infrastructure Plan

Via International Business Times (via RSN):

Trump Administration’s Infrastructure Plan Involves Privatizing America’s Assets and Selling Them to Goldman Sachs>/a>

President Donald Trump’s administration this week touted an infrastructure plan that would sell off public assets to private financial firms. Left unsaid in the White House promotional materials was any mention that the Trump aide who is overseeing the initiative comes from a Wall Street firm that says it is seeking to buy up the very same kind of assets the Trump administration plans to sell off.

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Ted Cruz failed to properly disclose Goldman Sachs loans: FEC

Via Salon, another Goldman Sachs story:

Ted Cruz failed to properly disclose Goldman Sachs loans: FEC

This has not been a good week for Republican Sen. Ted Cruz of Texas. First he is the butt of a cutting joke by Democratic Sen. Al Franken of Minnesota (who told “USA Today” that “I like Ted Cruz probably more than my colleagues like Ted Cruz, and I hate Ted Cruz”), and now the Federal Election Commission has ruled against him — unanimously, no less.

The three Republican FEC members joined the two Democrats to find that Cruz failed to properly account for loans he had received from two banks, Goldman Sachs and Citigroup, during the 2012 election, according to a report by Bloomberg. Cruz borrowed $1.1 million worth of loans from the banks during his Senate campaign in Texas, with the FEC determining that Cruz had loaned his campaign $800,000 from Goldman Sachs (where his wife Heidi works) and $264,000 from Citigroup.

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Fighting Zombies with Zombies

Fighting Zombies with Zombies

Larry Mishel and Josh Bivens enlist zombie government policy ponies in their battle against “the zombie robot argument“:

Technological change and automation absolutely can, and have, displaced particular workers in particular economic sectors. But technology and automation also create dynamics (for example, falling relative prices of goods and services produced with fewer workers) that help create jobs in other sectors. And even when automation’s job-generating and job-displacing forces don’t balance out, government policy can largely ensure that automation does not lead to rising overall unemployment.

The catch here is that the displacement of workers by technology and the investment that re-absorbs workers displaced by technology are largely, but not entirely, independent factors. “Government policy” in the quoted paragraph is just another name for investment. Hans Neisser observed in his 1942 article on technological unemployment that “it is impossible to predict the outcome of the race between the two [investment and displacement] on purely theoretical grounds.”

The conclusion is inevitable: there is no mechanism within the framework of rational economic analysis that, in any situation, would secure the full absorption of displaced workers and render “permanent” technological unemployment in any sense impossible.

The “robot apocalypse” is neither impossible nor inevitable. It is probably unlikely, but unlikely things do happen, especially when people become complacent about the impossibility of unlikely things happening.

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Trucking And Blue-Collar Woes

Paul Krugman talks unions:

Trucking And Blue-Collar Woes

MAY 23, 2017 5:11 PM May 23, 2017

What with everything else going on, this Trip Gabriel essay on truckers hasn’t gotten as much attention as it should. But it’s awesome — and says a lot about what is and isn’t behind the decline of blue-collar wages.

Trucking used to be a well-paying occupation. Here are wages of transportation and warehousing workers in today’s dollars, which have fallen by a third since the early 1970s:

Photo


Why? This is neither a trade nor a technology story. We’re not importing Chinese trucking services; robot truck drivers are a possible future, but not here yet. The article mentions workers displaced from manufacturing, but that’s a pretty thin reed. What it doesn’t mention is the obvious thing: unions.

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