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Yes, your leg is wet. No, it’s not raining. by @BloggersRUs

Yes, your leg is wet. No, it's not raining.

by Tom Sullivan


Still from Dirty Jobs.

The drama of the last few days (weeks/year?) has delayed my commenting on a post in New York magazine on the plight of workers. An employment report from the Organisation for Economic Co-operation and Development suggests that while macroeconomic conditions couldn't be much better for American workers, life is not getting any better for them.

Adding to a July 4 Washington Post report, Levitz writes, "Piddling wage gains ... have left the vast majority of our nation’s laborers with lower real hourly earnings than they had in May 2017." Economists looking to explain that round up the usual suspects: automation, lack of innovation, higher-paid baby boomers retiring and being replaced by lower-paid millennials, etc. Though not arguing the point explicitly, the OECD report suggests instead a political explanation, Levitz observes, writing, "American policymakers have chosen to design an economic system that leaves workers desperate and disempowered, for the sake of directing a higher share of economic growth to bosses and shareholders."

It's not impersonal economic forces keeping American workers treading water, but economic policy:

American workers are more likely to be poor (by the standards of their nation). In the United States, nearly 15 percent of workers earn less than half of the median wage. That gives the U.S. a higher “low-income rate” than any other developed nation besides Greece and Spain.

We also get fired more often — and with far less notice. Roughly one in five American workers leave their jobs each year, a turnover rate higher than those in all but a handful of other developed countries. And as the Washington Post’s Andrew Van Dam notes, that churn isn’t driven by entrepreneurial Americans quitting to pursue more profitable endeavors:

[D]ecade-old OECD research found that an unusually large amount of job turnover in the United States is due to firing and layoffs, and Labor Department figures show the rate of layoffs and firings hasn’t changed significantly since the research was conducted.
Not only do Americans get fired more than other workers; we also get less warning. Every developed nation besides the U.S. and Mexico requires companies to give individual workers at least a week’s notice before laying them off; the vast majority of countries require more than a month. But if you’re reading this from an office in the U.S., your boss is free to tell you to pack your things at any moment.

Our government does less for us when we’re out of work than just about anyone else’s. Many European countries have “active labor market policies” — programs that provide laid-off workers with opportunities to train for open positions. The United States, by contrast, does almost nothing to help its unemployed residents reintegrate into the labor force; no developed nation but Slovakia devotes a lower share of its wealth to such purposes. Meanwhile, a worker in the average U.S. state will stop receiving unemployment benefit payments after they’ve been out of a job for 26 weeks — workers in all but five other developed countries receive unemployment benefits for longer than that; in a few advanced nations, such benefits last for an unlimited duration.

Labor’s share of income has been falling faster in the U.S. than almost anywhere else. Between 1995 and 2013, workers’ share of national income in the U.S. dropped by eight percentage points — a steeper decline that in any other nation except for South Korea and Poland.

A chart from the 2018 World Inequality Report paints a stark contrast:

Don't pee on my leg and tell me it's raining

The sitting president may boast about low unemployment, but it recalls the joke about the tourism-driven economy where I live: "There are a lot of good jobs in [insert your town here]. I know people who have two or three." Those jobs pay doodly-squat. In part by design:

On Monday, a group of 10 state attorneys general and the District of Columbia announced an investigation into "no poach" agreements, as they are known, at eight national fast-food chains. The investigators are seeking additional information from Burger King, Wendy's, Arby's, Panera, Dunkin' Donuts, Five Guys, Little Caesars and Popeyes.

The goal of the probe is to help quantify how many people are affected and how it affects workers' ability to move up the ladder, says Josh Shapiro, Pennsylvania's attorney general.

"All you're doing there is holding people back; you're driving down wages and benefits and decreasing opportunity," Shapiro says. "We see that as being wrong, potentially violative of the law, which is why we are leading this investigation and trying to get to the bottom of it.

Wage growth has been slower than under George W. Bush and Bill Clinton, reports MarketWatch.

"[A]t the same time as they're able to admit that there are more jobs available in their area, [they're] equally likely or more likely to say that those jobs just don't pay what they used to, and that's a real problem," Democracy Corps managing director Nancy Zdunkewicz told Hill TV.

Social mobility has been stagnant since the 1970s, Drew Hanson writes at Forbes:

The chances of achieving the American Dream, which Stanford’s Raj Chetty defines as moving from the bottom fifth of income distribution to the top fifth, are almost twice as high in Canada than in the United States. Economic mobility is lower in the US than in most European countries.
The powerful, Hanson writes, have used their positions "to take an undeserved slice of the pie." Furthermore:
Recent research combines equality of opportunity and freedom of poverty to measure unfair inequality. From 1969 until 1980, levels of inequality in the US remained stable. From 1980 to 1995, total inequality increased but only weakly attributed to unfairness. From 1995 to 2012, inequality continued to increase, the majority of which due to unfairness. Overall, the amount of inequality explained by unfairness doubled from 1969 to 2012. Unfair inequality is higher in the US than any of the 31 European countries included in the study.
The chart above illustrates the trend.

As the president launches his trade war, he is not looking to help the American worker so much as find "wins" for himself. There are no indications any of his policies will do more to reverse inequality or restore the American Dream his supporters feel they have lost. That won't stop him from claiming he's worked wonders for them.

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