Progressive Policy Institute » Labor

Why America Needs a New Deal for Labor and Business

The Progressive Policy Institute — Tue, 06 Sep 2011 13:59:52 +0000

Just before Labor Day, PPI’s President Will Marshall had an opinion piece in The Atlantic, in which he proposed reorienting the relationship of organized labor. Rather than adversaries, they should be partners. Here’s an excerpt:

President Obama is cobbling together a new jobs package for September, but it won’t be enough to revive the economy. Instead of offering another grab-bag of micro-initiatives, the administration needs to embrace a different model for growth that stimulates production rather than consumption, saving rather than borrowing and exports rather than imports.

This strategy emphasizes investment in the nation’s physical, human and knowledge capital–infrastructure, skilled workers and new technology. That’s a better way to raise U.S. wages and living standards than a new jolt of fiscal stimulus.

Getting consumers spending again will boost demand, but much of it will leak overseas via rising imports, stimulating foreign rather than U.S. production. In a world awash with cheap labor, where technology gaps are narrowing rapidly, a wealthy society like ours can thrive only by speeding the pace of economic innovation and capturing its value in jobs that stay in America.

The shift from a consumer-oriented to a producer-centered society won’t happen without a new partnership between labor and business–and a shift in outlook among workers themselves. Organized or not, U.S. workers should think of themselves first and foremost as producers rather than consumers. They have a compelling interest in keeping the companies they work for competitive, and in supporting a new economic policy framework that enables investment, entrepreneurship and domestic production. This reality points to new relations between workers and companies, and new political alliances.

A GRAND BARGAIN FOR LABOR

In the post-war compact of the 1950s and 1960s, workers offered loyalty and labor offered peace to companies in return for stable jobs with decent pay and benefits. But the deal between labor and capital changed as globalization took hold. Workers gave up job security; in return, they got low consumer prices and access to easy credit. Despite access to cheap foreign goods, however, real incomes fell for most households, as real wages dropped and job growth in most parts of the private sector virtually disappeared. Easy credit was used to fund consumption rather than investment in human capital.

Now, at a time when America’s economic preeminence cannot be taken for granted, the interests of workers are converging with those of companies, foreign and domestic, that want to invest in the U.S. economy. In a new compact for competitiveness, workers would pay more attention to innovation, workplace flexibility and productivity gains. Companies would invest more in upgrading workers’ skills, help them balance the pressures of work and family, and pay them middle class wages and benefits.

Two unions are pointing the way toward such a bargain: the United Auto Workers (UAW) and the Communications Workers of America (CWA).

Read the rest by clicking here to find out how. Read Marshall’s full policy briefing on the subject by clicking here.

Labor Boosted by Proposed Merger

Will Marshall — Thu, 24 Mar 2011 16:01:47 +0000

America’s embattled labor movement hasn’t had much to celebrate lately, so it’s worth noting when a major union welcomes a business mega-merger.

The Communications Workers of America strongly endorsed AT&T’s proposed $39 billion acquisition of T-Mobile. Deals this big – the merger would create the nation’s largest mobile-phone carrier, with about 39 percent of the market – have to run a bruising, multiple-agency regulatory gauntlet. Some consumer groups worry that it will reduce competition in the lucrative telecommunication sector, dampening incentives for innovation and possibly pushing up consumer prices.

No doubt the deal merits close scrutiny. But having one of America’s largest private unions (700,000 strong) in its corner can’t hurt AT&T’s chances.

C.W.A. represents 42,000 AT&T wireless workers and regards the company as reasonably friendly to unions. The merger gives it a better shot at organizing T-Mobile workers in the U.S. and in Germany (the company is owned by Deutsche Telekom, whose stock zoomed after the announcement.) For those workers, being absorbed into AT&T will mean “better employment security and a management record of full neutrality toward union membership and a bargaining voice,” said C.W.A. president Larry Cohen.

This rare bit of good news for organized labor follows successful efforts by Republican governors in several states to curtail public workers’ right to collective bargaining. Although polls show majorities of Americans are opposed to denying bargaining rights, high profile battles in Wisconsin, Indiana and New Jersey have drawn the public’s attention to the adverse impact on state budgets of generous compensation schemes for state employees, especially pension and health care benefits.

This is a huge problem for organized labor, which in recent decades has experienced growth only in the public sector. The picture is especially dismal in the private sector, where less than eight percent of workers are unionized.

If they are going to reverse their long pattern of decline, U.S. labor unions need to redefine their economic role and relevance to American workers in a post-industrial economy. Cohen’s statement pointed to a mission that would be good for both U.S. workers and employers: building modern infrastructure to underpin America’s ability to win in global markets. “For more than a decade, the United States has continued to drop behind nearly every other developed economy on broadband speed and build out,” he said.

In fact, a big national infrastructure push represents common ground on which big labor and big business can meet. In an “odd couple” pairing last week, AFL-CIO President Rich Trumka and Tom Donahue, head of the U.S. Chamber of Commerce, showed up to endorse a new proposal for a national infrastructure bank. Drafted by a bipartisan group of U.S. Senators including John Kerry, Mark Warner and Kay Baily Hutchinson, the bank would leverage billions of private investments in new transport, energy and water projects.

If labor and business can get behind an ambitious project for “internal national building,” our equally polarized political parties surely should be able to follow their example. And that bodes well for an American economic comeback.

Twilight of Collective Bargaining?

Will Marshall — Wed, 23 Feb 2011 01:19:27 +0000

The Battle of Madison is in full cry, as labor and its progressive allies rally to block Wisconsin Governor Scott Walker’s plan to curb union bargaining power. The leftish Nation magazine calls it “Labor’s Last Stand.”

That’s a tad melodramatic; unions probably aren’t headed for extinction. But the traditional model of collective bargaining looks increasingly like an anachronism that may not survive this political donnybrook.

Like most states, Wisconsin is facing serious budget shortfalls. But Walker, a first-term Republican, isn’t just calling for givebacks from state employees. In addition to asking workers to chip in more for their health and pension benefits, he wants the legislature to pass a bill that would restrict their bargaining rights to the subject of wages. And he’s not alone: other GOP Governors, including John Kasich of Ohio, plan to follow suit.

Many Republicans blame states’ budget woes on generous labor contracts, which they see as creating a privileged class of public sector workers sheltered from the vicissitudes of the “real” economy. “Unionized public employees are making more money, receiving more generous benefits, and enjoying greater job security than the working families forced to pay for it with ever-higher taxes, deficits and debt,” Republican presidential aspirant Tim Pawlenty wrote recently in the Wall Street Journal.

This has incensed liberals, who note that it was Wall Street bankers and speculators, not bureaucrats, who plunged the nation into the fiscal crisis and the Great Recession. They say Walker is exploiting the fiscal crisis to aim a dagger at the heart of the only part of labor that has grown in recent decades: public sector unions. (More than 36 percent of public employees belong to unions, compared to just 7 percent of private sector workers.) Democrats view the GOP bid to strip public employees of collective bargaining rights as an attempt to topple a key pillar of the party’s progressive coalition.

In this view, what’s happening in Wisconsin and elsewhere is a political power play, pure and simple. Says Paul Krugman:

You don’t have to love unions, you don’t have to believe that their policy positions are always right, to recognize that they’re among the few influential players in our political system representing the interests of middle- and working-class Americans, as opposed to the wealthy. Indeed, if America has become more oligarchic and less democratic over the last 30 years — which it has — that’s to an important extent due to the decline of private-sector unions. Given this reality, it’s important to have institutions that can act as counterweights to the power of big money. And unions are among the most important of these institutions.

But things aren’t quite this simple, for three reasons.

First, Krugman conflates public and private unionism. Where public sector unions are concerned, the “boss” isn’t some private oligarch, it’s the government — ultimately the public. Unlike private unions, they get to pick the people on the other side of the bargaining table by funneling union dues into their political campaigns. Even if union leaders and lawmakers were saints, such an arrangement inevitably would put the public interest and the interests of government workers in tension. That is why no less a liberal paladin than Franklin D. Roosevelt opposed public sector unions, saying “The process of collective bargaining, as usually understood, cannot be transplanted in the public service.”

Second, progressives should acknowledge that many states have gone overboard in negotiating generous compensation packages for public employees. For example, the states are carrying about $1 trillion in unfunded pension liabilities on their books. Many pay a higher percentage of their workers’ health care premiums than private employers typically do. It rankles private sector workers to see states go into debt to provide public employees with pay and benefits (not to mention job stability) that are beyond their reach.

Third, progressives need to improve the quality of public services even as they reduce the cost of government. Collective bargaining agreements often impede the quest for flexibility, innovation, and higher productivity in the public sector. A classic example is teacher tenure, which makes it difficult for public school systems to get rid of ineffective teachers or to pay good ones on the basis of superior performance.

There’s no doubt that progressives must defend workers’ right to organize to protect their mutual interests. But organized labor also needs to evolve alternatives to the traditional collective bargaining model, which no longer fits the modes and organization of work in a post-industrial, globalized economy, and arguably has always been problematic in the public sector for the reasons that gave FDR pause.

Unlike private firms, high labor costs can’t drive government out of business or overseas. But running deficits to give workers what looks like special treatment can drive down public confidence in government. That’s why public employees need to develop new strategies that reconcile basic job protections with the need for a more effective, accessible, and fiscally responsible government.

Washington Independent: Outdated Tariff Systems Means the Poor Pay More

Steven Chlapecka — Wed, 02 Jun 2010 22:21:53 +0000

In the Washington Independent, Will Marshall explains how tariffs on low-cost goods are ineffective in the globalized marketplace:

[...] the argument that lowering or abolishing tariffs on low-cost products will cost jobs speaks more to the need to invest in training programs for low-skilled American workers. “It’s a challenge to protectionists. It does redistribute the pattern of job creation,” he acknowledged. But the genie is already out of the bottle when it comes to globalization, he said, and companies have already moved the bulk of their labor-intensive production offshore. Leaving high tariffs on cheap imported goods isn’t going to stop them from appearing on discount and dollar-store shelves, it’s just going to penalize the consumers who buy them.

“It’s easy to overlook, easy to ignore because people without political voice or power are the most affected,” he said.

Read the full article.

Brain Gain: Why We Should Grant Visas to Immigrant Entrepreneurs

Dane Stangler — Tue, 13 Apr 2010 12:15:55 +0000

A recent post highlighted the importance of new and young companies to job creation in the U.S., implicitly raising an important question for policy makers: How can we increase the number of startups? Assuming it can be done, such an increase would not solve all of the economic challenges facing this country, but it would certainly help. New companies not only create millions of jobs across all sectors of the economy — they also introduce product and process innovations, boosting overall productivity.

Saying startups are important is one thing, of course; actually designing policies to increase their number is something else entirely. Before making any recommendations, for example, we need to know more about the universe of startups. Are they more prominent in some sectors than others? Does the impact of new companies differ across sectors or geographic regions? Should policy focus on encouraging more new firms, or on enhancing the growth of those already in existence? How would any such policies affect established companies, large and small?

Policymaking around entrepreneurship is evidently not clear-cut as there is still quite a bit we do not understand regarding startups. In the coming weeks we will try to explore these questions and illuminate the world of startups for policymakers. We’ll start with the lowest-hanging fruit of all, though one that may seem like poison to some in Washington: immigration.

It’s commonly accepted that the United States is a nation of immigrants, settled and populated by those fleeing persecution, seeking commercial opportunities in a new land or looking for a fresh start. We have always recognized the important contributions of immigrants to the U.S. economy, from entrepreneurs like Samuel Slater (textile mills) to Andrew Carnegie (steel) to Andy Bechtolsheim (Sun Microsystems) to the laborers and workers who built this country with their hands.

Recently, researchers have begun to paint a broader picture of the economic role of immigrant entrepreneurs. For example, Vivek Wadhwa and his research team have found that, from 1995 to 2006, fully one-quarter of new technology and engineering companies in the U.S. were founded by immigrants. In Silicon Valley, the figure was one-half. These firms constitute only a sliver of all companies, yet contribute an outstanding number of jobs and innovations to the economy.

It makes sense, then, that if we are seeking to increase the number of new companies started each year in the U.S., we might look to immigrants. It turns out that Sens. John Kerry (D-MA) and Richard Lugar (R-IN) are thinking precisely along these lines, introducing the StartUp Visa Act (PDF) in the Senate. This bill would grant a two-year visa to immigrant entrepreneurs who are able to raise $250,000 from an American investor and can create at least five jobs in two years. Without question, such a visa is a good idea and this legislation hopefully paves the way for future actions that would reduce the pecuniary threshold and focus more on job creation.

Quite naturally, however, the promotion of immigrant entrepreneurs arouses suspicion among those on the right who harbor nativist views, and those on the left who perceive progressive immigration policies as a threat to American labor. Such views take the precisely wrong perspective: immigration, as we have seen, is a core American value. Immigrant entrepreneurs, moreover, come to the U.S. to make jobs for Americans, not take them.

Further, many of those who promote immigration as a way to boost economic growth narrowly focus on “high-skilled” entrepreneurs, those who might start technology companies. Clearly, as Wadhwa’s research indicates, such companies are important to American innovation. But we exclude non-technology entrepreneurs at our peril — every new company, including those founded by immigrants, represents pursuit of the American dream. By closing our borders to immigrants in general or welcoming only those with certain skills, we leave out many who will start new firms in other industries. If not in the United States, they will go elsewhere to start their companies and create jobs.

Entrepreneurs are implicit in Emma Lazarus’ poem: “Give me your tired, your poor/Your huddled masses yearning to breathe free.” Entrepreneurs start from nothing and work endlessly to build their companies, expressing their individual freedom through commerce. Why should we want to exclude them from the home of entrepreneurial capitalism?

Reviving the Labor Market with Middle-Skill Jobs

Harry Holzer — Wed, 07 Apr 2010 16:20:25 +0000

Download the report.

The importance of worker education and skills to labor market success in the U.S. has never been clearer than it is now. The current economic downturn has hit all groups quite hard, but especially those with the least education and fewest skills. And as the labor market slowly begins to recover this year, we will be reminded of a basic fact of economic life: Workers increasingly need meaningful postsecondary education or training to find jobs that pay enough to sustain a middle-class lifestyle.

To its credit, the Obama administration recognizes how essential education and skills are in expanding labor market success, and has created some important initiatives to improve outcomes for all groups — especially the disadvantaged, who suffer the most from “achievement gaps” that open early in life. The administration’s Race to the Top fund creates strong incentives and financial support for school reforms in the K-12 system. Its American Graduation Initiative will provide grants for innovation in community colleges designed to improve both attendance and graduation rates. And the government has hiked Pell Grants by a considerable amount, as part of recently enacted reforms in the funding of federal student loan programs.

But are these initiatives enough, or should we be casting a wider net when dealing with various kinds of skill gaps and their role in labor markets? We need to consider the many levels at which shortfalls in education and skills plague American workers, and then determine the appropriate range of remedies for these problems.

Specifically, we need to prepare American youth and adults not only for jobs requiring four years of college and graduate study, but also for those we call “middle-skill” jobs — jobs that require something beyond a high school diploma but less than a bachelor’s degree. These jobs frequently pay well and are in high demand in the U.S. labor market, but too few workers now have the skills to fill them. A range of policy interventions to improve the skill levels and workforce-relevant credentials among Americans can raise the numbers of good jobs they can fill, and provide a gateway to the middle class that is now often closed for so many.

The Scale of Our Challenge

About a quarter of all American youth still drop out of high school each year.¹ The research shows that some do so because of poor basic skills, but others are driven by boredom and the lack of any observed relevance of their high school coursework to their future earnings prospects.² Of course, by dropping out, they create a self-fulfilling prophecy in which their earnings prospects are certain to be poor throughout their lives. Many will withdraw from the labor market altogether — especially under the current circumstances of a severe downturn and likely slow recovery. For some groups of dropouts (like young African-Americans), the odds of becoming incarcerated and parenting outside of marriage will be enormous, generating huge costs to themselves and to the rest of society.

Another quarter of American youth fail to attain any postsecondary education beyond high school graduation.³ They leave school without occupational skills or work experience that the labor market rewards, and with no plans for enhancing those skills. Both their employment rates and earnings levels after leaving school will be limited for many years, as they move from one unrewarding job to the next.

Among those who attend college — whether two- or four-year — dropout rates are also very high. Fewer than 60 percent of students in four-year colleges graduate within six years.⁴ For those who attend community college, the odds of emerging with any type of credential after six years are even lower, below 50 percent.⁵ This is particularly true for minority and disadvantaged students, both youth and adults. Indeed, it is likely that a large majority of newly funded Pell Grant recipients will attend college, get stuck in remedial classes and drop out before obtaining any meaningful credential.

Even among those who finish, the labor market value of the certificates and associates degrees they acquire vary enormously, with too many students obtaining credentials that the market does not particularly value or reward.⁶ Our community and four-year colleges often lack any direct ties to our workforce development systems, and do not provide students with available information on career progressions or labor market opportunities. And many colleges do not face incentives or financial support for expanding capacity in areas of strong market demand, especially in the technical areas where instructors and equipment are relatively more costly to obtain.

Building Up the Middle-Skill Market

Our labor market generates strong rewards on average for those with college and, especially, graduate degrees, particularly in the “STEM” fields (science, technology, engineering and math). Improving student attainments in these areas is important for maintaining a competitive economy. But it is also striking that, over time, there remains strong demand in the U.S. for many middle-skill jobs.

Contrary to the popular view that we are developing a “dumbbell” labor market or an “hourglass” economy — with a shrinking middle and an expanding top and bottom — my work with Robert Lerman points to continuing strong demand and good pay in a wide range of jobs and sectors at the middle of the labor market. Indeed, a wide range of evidence shows that employers often have difficulty filling these middle-skill jobs, even when wages are rising and the job market is not very tight.

What kinds of jobs are these, and where are they located? In health and elder care, there will continue to be strong demand for nurses (including licensed practical nurses and certified nursing assistants) and many other kinds of technicians and aides. In construction (which will recover, albeit slowly, from the bursting of the housing bubble), there are frequent shortages in the skilled crafts. In manufacturing — despite a long-term decline in employment — demand remains quite strong for skilled workers, like machinists and even for welders.

A wide variety of economic sectors generate demands for technicians in equipment installation, maintenance and repair. A shift to a “greener” economy will generate many such jobs, as will increased federal spending on the repair and modernization of infrastructure. And in several diverse parts of the service sector, there is a strong need for well-trained personnel: police and firefighters, legal aid and protective service employees, and even cooks and chefs in restaurants.

Many of these jobs pay well enough to help support a middle-class lifestyle, and would be within reach of many of our high school graduates and dropouts who currently flounder in the job market and in life. It’s a tragic irony that over two million Americans are incarcerated on any given day — and several times that number are permanently scarred by criminal records — because many never saw pathways to good-paying jobs, while employers frequently can’t find enough trained welders, electricians and plumbers when they need them.

Of course, strong basic skills are required in all of these areas. No one would argue against the need to close the “achievement gaps” in youth literacy and numeracy skills — or that young people should be better prepared to handle college-level work. Still, the many levels at which educational outcomes are weak, along with the lack of occupational training and relevant workplace experience for so many who will likely not attend or complete college, suggests the need for a broader approach — one that prepares young people for labor market opportunities, wherever they appear.

A Range of Fixes

Both federal and state governments need to implement a range of policies that will reduce high school dropout rates and encourage young people and adults to develop the skills needed to obtain a postsecondary credential and succeed in the workforce. Different policies are appropriate for different groups; there is no magic bullet, and one size does not fit all.

Research is now generating a body of statistical evidence on “what works” in enhancing educational and employment outcomes for different populations.

First, it is clear that high-quality career and technical education in secondary and postsecondary schools can generate strong payoffs for at-risk youth. The Career Academies, which operate at 1,500 high schools nationwide, provide students with occupational training and work experience in a particular economic sector, even while they take academic courses and curricula. Evidence suggests that the Academies strongly reduce dropout rates among at-risk youth and improve their earnings for many years afterwards without discouraging students from obtaining postsecondary education. Other models, like Tech Prep and other apprenticeship programs, provide strong payoffs by moving young people directly from high school into community or technical colleges and offering them relevant work experience.

For youth who have already dropped out of school, the successful models are less clear. Intensive remediation efforts in a variety of settings — including the military model of the National Guard Challenge program — show some promise. But we also know that the provision of paid work experience to low-income young people is often critical for maintaining their interest and participation because they so value the upfront rewards of compensation. And systemic approaches that combine a range of services with educational and employment opportunities for young people, such as those in the Youth Opportunities program for poor neighborhoods implemented at the end of the Clinton administration, have generated successful outcomes.⁷

Second, workforce training for disadvantaged adults with some decent basic skills can be very successful if it generates a postsecondary credential and targets a strong sector of the economy that provides good-paying jobs. Indeed, sectoral training, in which workers are connected to employers and obtain work experience while they receive training, has shown some very strong results. Career pathway models, which combine classroom curricula and work experience leading to occupational certifications at a variety of levels, are also very promising.

Often, an active “intermediary” is needed to assist trainees with making connections to the labor market and obtaining the necessary support services (like child care and transportation) along the way. State-level training grants and technical assistance to employers in these sectors can often encourage them to train more of their incumbent workers and generate pathways into better-paying work within existing firms. Indeed, states like Pennsylvania, which have actively targeted key economic sectors and integrated their workforce and economic strategies, will likely reap major rewards as their labor markets recover in the next few years.

Third, we are learning what generates greater success in improving the odds of certificate or degree completion for disadvantaged students in community colleges. Performance-based financial aid (above and beyond the Pell Grant), which might include stipends, mandatory support services and small “learning communities” of students, all seem to help.

Further, programs that integrate remedial education and occupational training seem to generate higher success rates for disadvantaged students. One such approach, the well-known I-BEST program in the state of Washington, integrates basic adult education with occupational training (from two teachers) in each class; statistical evidence so far indicates that it has a potentially strong impact on educational outcomes. New curricular developments, like modular classes and “stackable credentials,” might help as well.

Fourth, under the very best circumstances, millions of low-income youth and adults will still end up in the many low-paying jobs that our economy now creates. We need stronger pay incentives to make sure these workers remain attached to the labor market under these circumstances. The Earned Income Tax Credit played a huge role in encouraging low-income single mothers to take jobs under welfare reform, and would likely have similar success in rewarding disadvantaged childless adults and non-custodial fathers when they work. And subsidized work for ex-offenders in the form of “transitional jobs” reduces their recidivism and raises work effort, at least in the short term.

Conclusion

What all of this suggests is that a broader set of educational and employment supports must be provided to encourage further success at all these levels. Reforms in the K-12 system remain critical and greater funding for Pell Grants will help.

But these should not be done in isolation from efforts to expand high-quality career and technical education, and better integrate education, workforce and economic development systems. Enhanced financial support for both youth and adults in a wide range of postsecondary education institutions, including community and technical colleges and apprenticeship programs, must be linked to a broader range of labor market information and services for them, while the systems themselves must be made more responsive to labor market realities. And expanding both educational opportunities and work supports for at-risk or disconnected youth and adults — including those still in high school as well as those who have dropped out of school and the labor market — are critical as well.

Any public resources expended in such efforts should be based on evidence of best practices and tied to further rigorous evaluation. In the current fiscal situation, such resources are scarce. But the social and economic costs of not making the needed investments in the skills of our youth and adults are enormous, while the payoffs to successful efforts in these realms can be quite impressive.

____

1 James Heckman and Paul LaFontaine, “The American High School Graduation Rate: Trends and Levels.” IZA Discussion Paper No. 3216, December 2007.

2 Robert Lerman, “Career-Focused Education and Training for Youth,” in H. Holzer and D. Nightingale eds. Reshaping the American Workforce in a Changing Economy. Washington, D.C.: Urban Institute Press, 2007.

3 See Heckman and LaFontaine, op cit.

4 Frederick M. Hess, et. al., “Diplomas and Dropouts: Which Colleges Actually Graduate Their Students (and Which Don’t),” American Enterprise Institute, June 2009; available at http://www.aei.org/paper/100019.

5 Thomas Bailey, et al., “Is Student Success Labeled Institutional Failure? Student Goals and Graduation Rates in the Accountability Debate at Community Colleges,” Community College Research Center, Teachers College, Columbia University, 2006. Of those students entering in any year, 36 percent earn degrees and certificates while another 13 percent have transferred elsewhere but not yet earned a degree.

6 Louis Jacobson and Christine Mokher, “Pathways to Boosting the Earnings of Low-Income Workers by Increasing their Educational Attainment,” The Hudson Institute and CNA, January 2009.

7 See “Youth Opportunity Grant Initiative: Executive Summary,” Decision Information Resources, March 2008. Report submitted to Employment and Training Administration, U.S. Department of Labor, Washington, D.C. The evaluation evidence showed increases in secondary school enrollments and in labor force participation rates for youth in the high-poverty neighborhoods receiving these grants.

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Progressives and Poker

Ed Kilgore — Fri, 19 Mar 2010 15:02:19 +0000

There’s been some interesting talk going on this week involving a post mortem assessment of “the Left’s” strategy on health reform, particularly in terms of the ultimate emptiness of threats from progressive House Democrats that they would vote against any bill that didn’t include a “robust” public option.

Glenn Greenwald argues that progressives have once again exposed–and possibly even increased — their “powerlessness” within the Democratic Party. Chris Bowers challenges the premise by arguing that progressives did secure significant changes in the Senate bill, most notably the agreement to “fix” it, which certainly wasn’t the path of least resistance.

Meanwhile, Armando of Talk Left has compared the lack of leverage of progressives over items like the public option to the success of the labor movement in forcing concessions on the “Cadillac tax.” And Nate Silver has responded by arguing that progressive threats didn’t work because they weren’t credible in the first place.

I think everyone in this debate would agree that it’s generally a bad idea in politics to make threats you are entirely unwilling to carry out, but the real division of opinion is on whether such threats should be tempered or in fact intensified. But Nate makes one point that bears repeating: the political value of aggressiveness and posturing can and often does get exaggerated.

It feels good to assert that progressives just need to be tougher — perhaps even to the point of feigning irrationality. These arguments are not necessarily wrong — a reputation for being tougher bargainers would help at the margins — but it misdiagnoses the problem on health care. The progressive bloc failed not because of any reputational deficiency on the part of the progressives but because their bluff was too transparent — they claimed to be willing to wager enormous stakes (health care reform) to win a relatively small pot (the public option). That would have been beyond the capacity of any poker player — or activist — to pull off.

I’ve never much liked the strain of progressive analysis that endlessly promotes “fighting” and “spine” and “cojones” as the answers to every Democratic political problem. Sometimes “brains” or “heart” are more important, and moreover, if politics is reduced to a willingness to project brute force, the bad guys are going to win every time; it’s like getting into a selfishness competition with the Right — we’ll never win. But in any event, however you feel about the Will to Power theory of politics, Nate’s right, people aren’t all stupid, and macho posturing by progressives when it doesn’t make sense isn’t going to convince anybody. Poker playing is a relatively small and overrated part of politics. Real conviction and strategies based on conveying those convictions to friends and potential friends are the best building blocks for successful strategy.

This item is cross-posted at The Democratic Strategist.

The Wait Is Over

Elbert Ventura — Thu, 18 Mar 2010 14:53:15 +0000

It took longer than expected, but the wait was worth it. The CBO score for the Senate health care reform bill and amendments that the House will vote on this weekend is now out (well, in leaked form anyway) and the numbers, at first glance, look good for reform’s prospects.

According to House Majority Leader Steny Hoyer, the legislation got slapped with a price tag of $940 billion over the next decade, more expensive than the Senate version, which makes sense since expanding coverage is one of the fixes the House wants to enact. But the CBO reportedly said the legislation would cut the deficit by $130 billion over the next decade and $1.2 trillion the decade after that — steeper deficit cuts than the Senate bill had. As Ezra Klein summed it up, “that’s more deficit reduction than either the House or Senate bill, and more coverage than the Senate bill.” Hoyer noted that it’s the biggest deficit reduction act since the 1993 Clinton budget.

It’ll be interesting to see how the bill achieves that goal. There had been word in the last 24 hours that the excise tax on Cadillac plans — something labor unions had opposed — had to be tweaked to make sure the legislation met its deficit-reduction aims. Will a more robust excise tax on high-end plans weaken labor’s support for the bill? One thing is certain: with the release of the CBO’s numbers, moderate Democrats concerned about the fiscal impact of the bill can now rest easier and support it.

One wait is over, but another one begins. With the official release of the CBO score later today, the clock officially begins on the 72-hour window that Democrats had promised to give members before voting on the legislation. This pegs the vote for Sunday — though Republicans have promised to pull out all the stops to delay the process.

The Clinton Boom Was Real — Then Bush Happened

Will Marshall — Thu, 07 Jan 2010 16:29:54 +0000

Most progressives were happy to say goodbye to the “aughts,” as dismal a decade as America has endured since the snake-bitten 1970s. But they may be surprised to learn that the U.S. economy’s poor performance on George W. Bush’s watch was actually Bill Clinton’s fault.

So says Michael Lind, who rang in a new year with a retrospective blast on Salon this week against the “New Democrat” policies of the 1990s.

If you lived through the Clinton years, you might recall them as flush times. Some basic facts: The economy grew briskly, creating 18 million new jobs; rapid innovation, especially in information technology and online commerce, bred new businesses and helped to raise productivity in old ones; unemployment stayed low despite a steady influx of immigrants and women coming off welfare rolls; markets rose as the percentage of Americans owning stock jumped 50 percent; homeownership reached a record high (nearly 70 percent); the poverty rate shrank significantly; and the United States ran budget surpluses for the first time in three decades.

Not bad, right? Well, as reimagined by Lind, the 1990s were another “lost decade,” just like the Bush years, with their successive dot.com and housing bubbles, regressive tax breaks, zooming federal deficits and of course, the grand finale – the near-meltdown of U.S. financial markets in the fall of 2008 along with the worst recession since 1982. If the comparison seems, well, strained, no matter. Lind’s real target is what he calls the myth of the “New Economy,” an illusion conjured by Clintonites (PPI comes in for honorable mention here) to justify “neoliberal” policies.

Breaking Down the New Economy

Specifically, Lind takes issue with New Democrats’ claims that the IT revolution helped to spur more robust productivity growth. This is not a terribly controversial point among economists. For example, a 2003 review of over 50 scholarly studies (PDF) by Jason Dedrick, Vijay Guraxani and Kenneth L. Kraemer (cited in Rob Atkinson’s 2007 report “Digital Prosperity“) reached this conclusion: “At both the firm and the country level, greater investment in IT is associated with greater productivity growth.”

It’s true that economist Michael Mandel, a PPI friend and prominent advocate of innovation-centered growth, has argued that U.S. productivity gains after 1998 were overstated. But the fact remains that labor productivity, which grew at an average of only 1.46 percent per year between 1973 and 1995, grew to nearly three percent annually afterwards. That spurt helped to produce the prosperity of the second half of the 1990s, a period which saw incomes grow in a “picket fence” pattern, meaning that all segments of the population saw roughly equal advances. For those years, at least, relative wage inequality narrowed.

Yet rather than give Clinton credit for economic results in the years when his policies actually were in force, Lind invokes the poor performance of the 2000s to condemn the policies of the 1990s. George W. Bush, arguably the worst economic manager since Herbert Hoover, is oddly absent from this revisionist fable.

And what about all the money gushing into the United States during the ‘90s from foreign investors? In Lind’s telling, New Democrats naively assumed that money was chasing higher returns, when in reality foreign lenders were trying to drive up the dollar’s value to make their country’s goods more competitive. Currency manipulation, especially by China, is obviously a problem today. But in the 1990s, the U.S. was not only innovating furiously, it was also growing faster than Europe and Japan, making it a natural magnet for foreign investment.

Finally, Lind challenges the notion that skills gaps are related to wage inequality. There are reams of economic studies showing strong positive returns to educational attainment. (For an excellent discussion, see chapter eight in Creating an Opportunity Society, by Ron Haskins and Isabel Sawhill.) He is probably right that skills disparities alone don’t account for the growth in income inequality over the last several decades, but it seems perverse to argue that Clinton and his allies, as well as President Obama, are mistaken in wanting to see more Americans attend college.

Blaming the New Dems for GOP Sins

As a quick perusal of our website will confirm, PPI in the latter part of the 1990s published a raft of reports that a) documented the rise in relative inequality and b) proposed an array of innovative policies aimed at “expanding the winners’ circle” to include more working Americans. And perhaps Lind has forgotten that Clinton, in his first budget, raised taxes on the wealthy to restore progressivity and thus reduce after-tax inequality. He also got Congress to pass a massive expansion of the “work bonus” (earned income tax credit) for low-wage workers.

The causes of inequality are a subject of lively dispute among economists, but Lind is not hobbled by doubts. The reasons, he asserts, are to be found in the decline of unions, an eroding minimum wage, and unskilled immigrants. Yet by his own account, inequality really took off in the 1970s, when unions were relatively strong. (Plus, it’s strange to blame Democratic policies for growing inequality since 1980, since Democrats controlled the White House for only eight of those 28 years). Moreover, it should be obvious that falling union membership is the consequence, not the cause, of a massive shift in the U.S. employment base from manufacturing to services.

Because it affects only a small proportion of workers (including lots of kids working at part-time jobs), the minimum wage is a slender reed on which to hang the revival of good, middle-class wages in America. And there’s scant evidence to support Lind’s claim that immigration, legal or otherwise, has exerted significant downward pressure on native workers’ wages. The tide of unskilled immigration does have an impact on workers who don’t graduate from high school, but not a very large one.

The problem with Lind’s attempted deconstruction of the “New Economy” narrative is that it ignores a whole herd of elephants in the room, namely big structural changes in what U.S. firms do and how work is organized. Consider this description by Rob Shapiro, a key architect of the Clinton economic policies:

For the first time ever, U.S. businesses have been investing more in the development and use of ideas and other intangible assets than in physical assets of property, plant and equipment. Moreover, most of the value the economy now produces comes from those intangible assets. In 1984, the book value of the 150 largest U.S. companies—what their physical assets would bring on the open market—accounted for 75 percent of their stock market value; by 2005, it was equal to just 36 percent of the their market capitalization. The idea-based economy has gone from metaphor to reality.

We are left at last with the question of motive. Why is Lind so intent on rewriting the history of the most successful Democratic president in our lifetime, and raising doubts about the economic competence of the first majority-vote winning Democrat – Barack Obama — in the White House since LBJ?

Some progressives find it hard to forgive Bill Clinton for forcing them to acknowledge past mistakes. But failing to recognize your own successes may be even worse.

This item is cross-posted on Salon.

A Missed Opportunity on Lobbying

Lee Drutman — Tue, 01 Dec 2009 15:15:09 +0000

The Obama administration is continuing its troubling zero-tolerance and zero-nuance policy for lobbyists. In so doing, it is both misunderstanding the problem of lobbying and missing an opportunity for a meaningful solution.

As the Washington Post reported last week, “Hundreds, if not thousands, of lobbyists are likely to be ejected from federal advisory panels as part of a little-noticed initiative by the Obama administration to curb K Street’s influence in Washington, according to White House officials and lobbying experts.”

Undoubtedly, these advisory panels (the Post estimates there are “nearly 1,000 panels with total membership exceeding 60,000 people”) are full of lobbyists representing narrow and well-funded special interests. This is indeed a problem.

But it is a tricky problem to solve because many of these lobbyists are actually incredibly knowledgeable about arcane policy areas. Getting rid of them means these panels lose valuable policy expertise. And if there are particular industries or companies who want to participate in these advisory panels, presumably they will still find ways to have representatives who are not technically “lobbyists” (meaning only that they have not registered as lobbyists).

Unfortunately, the Obama approach is a blunt instrument that treats all lobbyists as interchangeably nefarious. This is simply not the case. And worse, it misses the real problem, which is the problem of balance. I’ve estimated that for every one lobbyist representing a public interest group or a union, there are now 16 lobbyists representing a business or business association. It just isn’t a fair fight, and it’s no wonder that many people have real concerns about the role that lobbyists play.

Here’s a better idea: Instead of banning lobbyists from participating on advisory councils altogether, the Obama administration could take a good, hard look at these panels and ensure that they have balanced representation. The administration could press advisory boards to take steps to consider all sides of an issue before making recommendations, such as setting up processes for outreach to interests who might not have the resources to pay lobbyists to represent them on boards.

The best public policy will emerge when the greatest diversity of perspectives gets incorporated, and when the most knowledgeable people participate. This should be the goal of the administration. Focusing on whether or not members of these panels are “lobbyists” is just fixating on a label. It would be much better to look at who actually participates and what they contribute.

The views expressed in this piece do not necessarily reflect those of the Progressive Policy Institute.