Economy

Obama Just Changed the Most Racist Law in the Country

(flickr/uncgspecia)
You may have missed it, but yesterday President Obama dramatically altered one of the most racially damaging laws in America when the Department of Labor announced that it would extend minimum wage and overtime protections to home care workers. To say there's a backstory here would be a wild understatement. Seventy-five years ago, Franklin Roosevelt achieved a historic victory—but a morally compromised one—when he signed the Fair Labor Standards Act (FLSA) of 1938. The law created the modern labor regulations that we're all familiar with today, including the minimum wage, overtime pay, and much more. Yet getting the FLSA passed entailed a major concession to southern Democrats, who successfully fought to exclude agricultural and domestic workers. Why? Because, as legal scholar Juan Perea has shown in his illuminating history of the law, that exclusion was seen as crucial to preserving a southern way of life that hinged on exploiting cheap African-American labor—both in the fields...

Shutdown Report: How to Play Chicken and Lose

AP Images/J. Scott Applewhite
AP Images/J. Scott Applewhite R epublicans are likely to incur serious political damage in their effort to hold hostage continued funding of the government in exchange for deep spending cuts. This routine has become an annual ritual, and in the past President Barack Obama has been the first one to cave. The 2011 Budget Control Act, which includes the automatic sequester, is one bitter fruit of the president’s past failure to hang tough in the face of Republican extremist demands. But this time is different. The Tea Party Republicans, who dominate the GOP House Caucus, are demanding that President Obama de-fund the Affordable Care Act in exchange for their willingness to fund ordinary government spending in the new fiscal year, which begins October 1. But they picked the wrong demand. In the past, Obama was willing to make deep cuts in federal spending in order to get a budget deal with Republicans. The Affordable Care Act, however, is a nonnegotiable for the president. It’s his...

We Shall Overwhelm

AP Images/J. Scott Applewhite
AP Images/J. Scott Applewhite F our years ago, the modern Tea Party seemed to emerge from nowhere, leaving journalists bewildered and the public with few reference points to understand seemingly spontaneous rallies by middle-class people seeking lower tax rates. A search for the phrase “tea party” in connection with “politics” in major newspapers yielded fewer than 100 mentions in 2008—and when the words did appear linked together, they suggested studied formality and decorum. The next year, they appeared more than 1,500 times, often connected to “protest demonstration.” But little was spontaneous about the new party. “Social movements that explicitly defend the interests of the rich and the almost-rich have been a recurring feature of American politics,” Isaac William Martin, a sociologist at the University of California, San Diego, reminds us in his new book, Rich People’s Movements: Grassroots Campaigns to Untax the One Percent . “Such movements shook the American polity before the...

Time to Give America a Raise

AP Photo/Louie Balukoff
I t’s been a good week for the nation’s numerous poverty-wage workers. They’ve been way overdue for a good week. On Tuesday, the Labor Department issued a much anticipated and delayed extension of the federal minimum wage and overtime regulations to the nation’s 2 million homecare workers. Last Thursday, the California legislature passed (and Governor Jerry Brown pledged to sign) a bill that raised the mega-state’s minimum wage from $8-an-hour to $10. Taken together, these two measures limiting poverty-wage work underscore a host of significant changes to the political economy. The Labor Department’s extension of the minimum wage recognizes the growth of homecare as an industry increasingly like any other, with agencies big and small, many relying on partial government subsidies, employing millions of workers. It also signals the continuing extension of federal work standards beyond those that originally covered white men disproportionately. When the Fair Labor Standards Act (which...

A Long Way from the End of Men

AP Photo/Mark Lennihan
AP Photo/Patrick Semansky T hough we’ve technically been recovering from the Great Recession since late 2009, the poverty rate in the United States has been stuck at about 15 percent since 2010. New data released yesterday from the Census Bureau showed that last year wasn’t much better. Poverty rates held steady at the highest levels in a generation. Median incomes have fallen in the last ten years by more than 11 percent. Coupled with recent studies showing that most of the recovery’s gains have gone to the top 1 percent of income earners, the data on poverty confirms what many already knew: Inequality is growing, and the middle class is dying. That’s especially true when you examine the status of women and racial minorities. The median incomes for Asian and white families last year were $68,636 and $57,009 respectively. For Hispanics and blacks, they were $39,005 and $33,321. These incomes are statistically unchanged from 2011, which means that if the economy is growing, the average...

Homeowners vs. Big Bad Banks

AP Photo/Paul Sakuma, File
AP Photo/Michael Dwyer, File I n June, six former employees of Bank of America's loan-modification department testified in court that since 2009, they had been instructed to lie to struggling homeowners, hide their financial documents, and push them into foreclosure. In the most egregious example, the employees said they were offered Target gift cards as a bonus for more foreclosures, which generated lucrative fees for the bank. The employees, who were in charge of implementing the government’s Home Affordable Modification Program (HAMP) at the bank, described the same deceptive practices across the country. Two weeks ago, U.S. District Court Judge Rya Zobel dismissed the case , denying class-action certification to 43 homeowners in 26 states who suffered because of similar conduct. “Plaintiffs have plausibly alleged that Bank of America utterly failed to administer its HAMP modifications in a timely and efficient way,” Zobel agreed, adding that vulnerable homeowners had to wade...

Did Summers Spoil It for Yellen?

AP Images/Mark Lennihan
AP Images/Mark Lennihan Now that Larry Summers is out of contention for chairman of the Federal Reserve, the nomination of Janet Yellen should be assured. Unfortunately, Yellen still is far from a safe bet. Her qualifications, certainly, are not in doubt. Yellen is currently vice chair of the Fed and before that she was president of the Federal Reserve Bank of San Francisco. She has had a distinguished academic career, which she interrupted to serve as chair of President Clinton’s Council of Economic Advisers, and after that, as a governor of the Federal Reserve. Yellen is better positioned than any other woman to break the glass ceiling that has kept the Fed from having any female chair throughout its century-long history. Yellen, who began her scholarly career as a labor economist, has also been outspoken about the need for the Fed to continue its policy of economic stimulus to help strengthen the faltering economic recovery. Nobel Laureate Joseph Stiglitz, who preceded her as chair...

Could You Live on $11,940 a Year?

A couple of months ago, Fox News host Neil Cavuto went on a rant against fast-food workers striking for higher wages, explaining that when he was but a wee pup of 16, he went to work at an Arthur Treacher's restaurant for a mere $2 an hour, setting him on the road to becoming the vigorous and well-remunerated cheerleader for capitalism he is today. For all his economic acumen, Cavuto seemed to forget that there's a thing called "inflation," and the two bucks he earned in 1974 would today be worth $9.47. That's less than the striking fast-food workers are asking for (they want $15 an hour), but significantly more than the $7.25 today's minimum-wage workers make. Not to mention the fact that so many of them are not teenagers but adults trying to survive and support families. (According to the Economic Policy Institute, 88 percent of those who would benefit from an increase in the minimum wage are over the age of 20; that and much more data on the topic can be found here .) Yesterday,...

Larry Summers and the Economists’ “Greed Exception”

AP Images/J. Scott Applewhite
AP Images/J. Scott Applewhite I t is said that the late economist Milton Friedman was once asked how much money it would take for him to change his position that humans are primarily motivated by greed, which was at the core of his free-market fundamentalism. Friedman wisely dodged the question. He understood that if he said he could not be bought, it would undercut his economic theory. In order to avoid doing so, he would have had to admit that he, like everyone else, had his price. Lawrence Summers is certainly not a Milton Friedman conservative. But of the top candidates to succeed Ben Bernanke as chairman of the Federal Reserve, he is the leading exponent of free-market dogma. He was an architect of financial deregulation, and champions unfettered global trade and limiting government intervention in the economy. He has also become wealthy selling his services to corporate bankers and brokers who benefit from such policies. Summers and his supporters insist that his ties to Wall...

Mobile Phones Continue Inexorable Conquest of Globe

Flickr/Kohei314
Yesterday, Apple released its new iPhones, one a slightly updated version of the iPhone 5 with a fingerprint reader, and one a cheaper version ("unapologetically plastic," in the term the PR wizards came up with) meant to attract new customers in developing countries. In case you didn't catch any of the eight zillion articles written about the release, minds remained rather unblown. Apple may still be an unstoppable engine of profit, but there are only so many times you can tweak a product and convince people it's totally revolutionary (not that that will stop Apple cultists from standing in line to get the latest version). In any case, this is as good a time as any to step back and look at the remarkable spread of mobile phones across the Earth. There are few other technologies that have found their way into so many hands in so short a time. Mobile phones actually date back to the 1940s, when AT&T set up a system that would allow truckers to make calls from certain cities and...

The Summers Dossier

AP Images/J. Scott Applewhite
To: President Obama From: Your Political Team Re: Larry Summers Vetting Report Dear Mr. President, Welcome home. You have several immense challenges in the coming days and weeks: marshaling support for the Syria attack, dealing with the next artificial budget crisis contrived by the Republicans, and continuing to move forward with implementation of the Affordable Care Act against fierce partisan opposition. This memo on Larry Summers’s confirmation as Federal Reserve Chairman is written with all that in mind. The staff investigation of Summers in anticipation of a potentially bruising confirmation hearing is now complete, and you face a tricky decision. On the one hand, there is no single smoking gun that disqualifies him outright. With a lot of political heavy lifting, we might get Summers confirmed. On the other hand, it would eat up a lot of political capital and credibility at a time when we are seeking to rebuild both, not to incur political debts needlessly. Here are Summers’s...

When Giving It the Old College Try Fails

Almost half of Americans drop out of college and are left with debt. Is it time for a bigger investment in vocational training for young people? 

AP Images/Jae C. Hong
AP Images/Jae C. Hong J esse Bonds graduated from high school in 2002 in Clinton, Arkansas, a town of 2,600 people on the southern edge of the Ozarks. He tried college for half a semester, but found the computer-programming courses he enrolled in too advanced. After that, he worked for the state’s power utility for about six months building substations, but his crew was laid off once the work was complete. He was looking for a new career when he was hired as an electrician at a new hospital being built in 2003, and when the work was done he realized he wanted to continue working as an electrician. He decided to enroll in ITT Technical Institute to get a two-year degree in electronics engineering. “I saw all the commercials and stuff,” he says. “And I got into the admissions office and they’re like, ‘Oh you scored the highest of anybody that’s come through here on this test in the last couple of years. You’ll be perfect for this program.’” In retrospect, Bonds realizes they were doing...

Why Supersized CEO Pay Is the Worst—in Three Charts

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Flickr/seadigs A t the Institute for Policy Studies, we’ve tallied the top 25 highest-paid CEOs for each of the past 20 years. That’s a total of 500 richly rewarded executives—each one of whom made more in a week than average workers could make in a year. We’re told CEOs deserve these massive rewards because they add exceptional “value” to their businesses. They’re getting “paid for performance.” Really? Hmm. Let’s consult the numbers. Institute for Policy Studies Let’s start with the firms that led our nation into financial crisis. Of the 500 places on our annual top-paid lists, 112 are filled by Wall Street CEOs who drove their companies to bankruptcy or bailout in 2008. Richard Fuld of Lehman Brothers made the top 25 highest-paid list for eight consecutive years until his firm’s bankruptcy precipitated the financial crisis. And how about CEOs who end up getting fired? No one could possibly consider them “high performers.” Yet fired CEOs make up another 39 names on the highest-paid...

One Way to End the School-to-Prison Pipeline

Since the Great Recession began in 2007, no one’s had more trouble finding work than low-income Asian, black, and Hispanic male teenagers. That’s the main idea in two recent articles in The Wall Street Journal (available here and here ) that rely on research from Andrew Sum, a professor who produces a remarkable number of papers for Northeastern University’s Center for Labor Market Studies (CLMS). As Ben Casselman, author of The Wall Street Journal articles, notes, working during the summer is not only a way for high schoolers to earn money. People who held jobs in their teens are more likely to graduate from high school, and to be employed and have higher earnings in their early 20s than people who didn’t find paid work during the summer, according to a CLMS paper titled “The Continued Crisis in Teen Employment in the U.S. and Massachusetts.” Also worth noting, in that and other CLMS papers, are connections between jobless teenagers and high-school graduation rates that should catch...

The Socialists Who Made the March on Washington

AP Photo/Eddie Adams
AP Photo, File The Team Assembles “I n 1956, when I was a student at Brooklyn College, Mike Harrington told Tom [Kahn, another Brooklyn College student] and me to go up to this office in Manhattan, on 57 th Street, to work with Bayard Rustin,” Rachelle Horowitz remembers. Harrington (who was to author The Other America , which sparked the War on Poverty), Horowitz, and Kahn were all members of the Young People’s Socialist League, a democratic socialist organization of no more than several hundred members nationally. Rustin, their elder, boasted a longer left pedigree: a brief sojourn in the Communist Party in the ’30s, then—repudiating the Communists and affiliating himself with the Socialist Party—working for socialist A.J. Muste’s Fellowship of Reconciliation; founding the Congress of Racial Equality with fellow socialist James Farmer in 1942; doing time in Leavenworth during World War II for protesting the segregation of the armed forces; traveling to India to study nonviolent...

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