Friday, October 26, 2007

Great Release on San Diego Fires

From our friends at Center for Policy Iniatives, just a great piece about the public failings that may be exacerbating the fires in San Diego


Center for Policy Initiatives
For Immediate Release October 26, 2007
Contact: Susan Duerksen (619) 804-1950
Donald Cohen (619) 708-3367
Murtaza Baxamusa (619) 358-3805

Chronically Underfunded Safety Services Heighten San Diego's Fire Risk

Emergency Responders Perform Heroically Despite Official Neglect

San Diego— As wildfires devastated San Diego neighborhoods this week, chronic and systematic underfunding of public safety services left the region needlessly vulnerable to the destruction. That is the conclusion of the Center on Policy Initiatives (CPI), a non-profit research organization based in San Diego.

“Although this is a region with extreme natural fire hazards, anti-tax politics have led to an undersupply of fire stations, equipment and personnel to adequately fight fires,” said CPI president Donald Cohen. “Our 2005 study, The Bottom Line, documented that San Diego's per capita spending on fire protection is the third lowest among large California cities, and the number of firefighters per 1,000 residents is the lowest.”

The full text of the report is available online here.

Then-San Diego Fire Chief Jeff Bowman resigned last year because the city refused to fund additional firefighters and equipment he said were needed after the disastrous Cedar fire of 2003. For the city's size, Bowman said, San Diego is short 22 fire stations and hundreds of firefighters.

The city has failed to implement many of the recommendations for increased funding in reports following the 2003 fire by both the city's own staff and a state Blue Ribbon Fire Commission. The city budget in 2005 identified a long-term need for $478 million in new funding for public safety services -- a need that remains unfilled. Only one station and seven firefighters were added to the city budget this year.
Just this spring, Mayor of Jerry Sanders refused to give firefighters any pay raise while giving all other city employees cost of living increases.

"San Diego firefighters were beginning to look for jobs elsewhere because of low morale and inadequate resources," Cohen said. “They have performed heroically despite repeated failures by the City to invest in public safety. Together with other emergency responders, they have done an outstanding job in responding with new systems, efficient coordination between agencies, orderly evacuations and round-the-clock shifts.”

San Diego County does not have a countywide fire department, but depends on a patchwork of 17 municipal fire departments, 28 special fire districts and many volunteer agencies. A 2003 report from the San Diego Local Agency Formation Commission detailed the funding difficulties faced by these agencies because of Proposition 13 restrictions and voter reluctance to approve tax measures.

Sunday, October 21, 2007

Sunday nugget

Good story in today's times about potential economic slowdown in New York, yields this nugget:
"All told, financial-services firms based in New York have announced job cuts of 42,404 this year, according to Challenger, Gray & Christmas, a job-placement consulting firm in Chicago."

Friday, October 05, 2007

Creeping Unemployment Rate Points to Still Unsure Job Market as Manufacturing, Construction and Credit Sectors Still Lagging

Today’s Labor Department figures show payrolls turning around from August, as the economy added 110,000 jobs in September.

There are still plenty of reasons to worry about trends in the labor market, and hardship they are causing for workers in key parts of the economy. Even with the up tick last month, job growth has slowed. The economy added an average of 97,000 jobs a month in the 3rd quarter of 2007 as compared to 202,000 jobs a month last year at this time.

The slowdown is in large part due to a contraction in construction and manufacturing, which continued to shed jobs in September and have each dropped more than 100,000 jobs since January. The housing crunch has also sliced payrolls by 30,000 in the lending and mortgage sector since July. With new housing construction stalled, employment in these sectors is unlikely to recover soon.

The slowdown in growth is now showing up in the unemployment rate, which has creeped back up to 4.7%., the highest rate since August of last year. If job growth does not pick up steam, the unemployment rate will continue to increase and cut off demand needed to keep the US out of a recession.

The increase in unemployment so far has occurred among workers with a high school degree or less, as college educated worker’s employment has held steady overall. For example, the unemployment rate for workers without a high school degree now stands at 7.4% up from 6.5% a year.

This steep increase is particularly troubling given recent data from the GAO, which found that such low-earning workers were only a third as likely to receive unemployment benefits as high wage workers. Congress is currently considering legislation (S. 1871) to spur major improvements to unemployment program that would close these gaps.

Thursday, October 04, 2007

Fighting Out of a Tough Spot

Last week, the UAW struck General Motors. The first thing I did when I got home was to checkout my hometown papers from Detroit. Naively, I thought I’d find some sympathy. Rather, all I witnessed were some familiar old saws about how the union was harking back to the 1970s (the last national GM strike) and how GM was just trying to do those things it needed to do to compete in today’s marketplace. In the articles and comments, there was a lot of schadenfreude (why should auto workers have it so good, when so many other blue collar workers have been forced to accept such bad conditions) and a general sense of worker powerlessness that casts strikes as things of the past.

The strike is over and the details are coming out. The UAW appears to have done pretty damn good by going on strike, thank you very much.

There’s relentless pressure for the US automakers to slash labor costs and offshore assembly to Mexico and Brazil for the US market. Wall Street, with allies in the intelligentsia and media, had browbeaten the union and demanded that they accept massive cuts in their pay and security. In the face of that, the UAW negotiated cash bonuses for its core workers over the life of the contract and agreements to hire temporary workers as union members (insourcing not outsourcing), and only accepted reduced wages for new workers in some non-core positions. There are some small plant closings in the deal, but the contract also includes several new important investments like a new engine plant in Flint (many engine plants have been closed in the US) and a commitment to build a new electric car in the United States.

The UAW has agreed to establish a Voluntary Employee Benefit Agreement (VEBA) trust fund. This would allow GM to offload all its retiree health costs from its books with a one-time cash payment to an organization run by the union and trustees. The VEBA is a risk to the union, but the bottom line is that UAW retirees have a mechanism to keep their health care when they retire.

So, the naysayers should apologize to the UAW for dismissing them so easily. GM seemed to be playing cat and mouse, asking for the VEBA and trying to string the UAW along on other issues. Maybe they thought the UAW wouldn't go on strike. There was risk in doing so - GM could have jammed the UAW and fought them on job security and wages to the bitter end. Instead, the UAW used the strike to wake GM up and get a workable deal done. With it workers could go back to work on reasonable terms, and put the pressure on management to design marketable cars and rebuild ceded market share.

The focus was on the core fight – keeping decently paid middle class jobs in the United States, while making compromises that need to be done when negotiating with a struggling company. Given the role of the auto sector in defining the middle class, it was a bigger fight than just the UAW. Lets give credit to a modern labor union that balanced confrontation and pragmatic compromise.

Wednesday, September 19, 2007

No Mexican Trucks - Score One For Living Wages and Public Safety

Hope folks caught the really significant victory for living wage jobs won by the Teamsters and their allies. The Bush Administration had proposed allowing Mexican trucks to make long hauls across the border and across country, but the Senate and House handily overturned the proposals by denying funds to implement the rules.

I was especially ticked by conventional wisdom that chided the Teamsters and the Sierra Club as protectionists and self-serving for opposing the change, and called on Congress to fulfill the promise of NAFTA by allowing long haulers to drop off goods in all three countries.

There was no real promise of NAFTA for workers in Mexico, the U.S. or Canada. On the Mexican side, such a real promise would have to included massive economic development aid and freer borders for labor to migrate. Never happened. What we got was a one sided deal, that allowed companies to place production in Mexico when it was profitable (without making long-term investment) and for U.S. imports to snuff out traditional agriculture and other native grown Mexican businesses. The other ‘promise’ of NAFTA was that their would be meaningful labor and environmental standards, so that companies couldn’t reap massive profits by simply bringing US-banned union-busting and hazardous environment practices to Mexico. Never happened.

That’s why it was so heartening to see Congress just say no to the further NAFTA-ization of the economy. If the Mexican truck rules had gone through, we would have lost one more source of good blue collar living wage jobs that are unlikely to come back. Moreover, it would be one more example where the NAFTA regime would have been allowed to over-rule decades of hard fought regulations that protected American drivers (including truckers) from accidents and poor emissions. When all the world order gives us is half-baked globalization (termed second-best globalization in a brilliant article by Daniel Rodrik), sometimes all we can do is just say no.

Wages - It's All About the Leverage

Last week, the New York Times’ David Leonhardt presents an article talking about the all-too-real disconnect between family bottom lines and the growth in the economy. The story is familiar, real wages have stood still from 2003 to the second quarter of 2007 as the economy has grown gangbusters. What little gains we’ve since then are likely to be erased if job growth continues to slow. This astounds economists like Lawrence Katz who throw up their hands and say that we just need white hot growth and truly full employment to get higher wages. I don’t disagree with the need to have macroeconomic policies geared towards full employment – and that full employment in today’s super deregulated workplace is something at 4.0% or below.

While I really like David’s reporting, what disappointed me about the article was the lack of perspective on why this has happened and potential solutions – with the article meekly pointing to a potential decline in the number of college degrees in the country. In my mind, its not really a mystery why economic growth is not going to workers. The disconnect has occured through a precipitous decline in wage-setting power of US workers and the government through wage floors.

On one hand, you have the precipitous drop in unionization rates in the economy which allows firms to attract employees at lower prices at lower and middle ends of the spectrum. On the other hand, you have a tremendous weakening of the wage floor. Not only do workers face a declining value of the minimum wage but the watering down of overtime rules. To make matters worse, one in ten companies misclassify their workforce as independent contractors which totally exempts them from any kind of wage rules. But perhaps most importantly, you have the impact of fear. Companies of all stripes can point to globalization and the availability of cheaper workers overseas to instill an omnipresent anxiety that parallelizes workers from demanding pay raises. NAFTA and the WTO have aided and abetted the destruction of living wage jobs to the benefit of the very top of the economic spectrum.

We need sympathetic reporters to start identifying these causes—because they lead to potential prominent solutions that can rebalance the economy, rather than pointing to more nebulous economic forces. There are proposals all over Congress that would get us on the right traack-- Employee Free Choice Act, the increase in the minimum wage, various proposals to cut off scofflaw employers, and tough stands on unfair trade deals could start to rebalance the economy to give workers the leverage to turn their productivity into real gains in their paycheck. But, we still have a long way to go in convincing the media and the public that these solutions can start to reverse the tide. Editorial after editorial talks about the decline in the middle class but rarely mention even big ticket items like EFCA. When liberal pundits pine for the ‘natural economic gains’ produced when the economy becomes red hot like it did in the late 1990s, we are going to be sorely disappointed. Today’s workforce needs the tools to fight for its fair share of the pie in all stages of the business cycle.

Friday, September 07, 2007

Recession on the Horizon?

Today, for the first time in four years the economy has experienced negative job growth. In August 2007 the economy reportedly lost approximately 4,000 private sector jobs. Of greater concern is the ob creation trend over the past few months­in January of 2007 the economy created 162,000 jobs, dropping quickly to only 69,000 in June, 68,000 in July, and finally to negative 4,000 in August, the lowest since August 2003.

The recent job creation patterns, working in tandem with troubles in the housing market, wide-spread fluctuations in the stock market, are raising a real possibility that the job market expansion may be nearing the end. Economists are still divided about the risk of a full-blown recession, but today's numbers seem to be pushing many over the edge as reported here in the New York Times. The US economy is in a tight balancing act--with the rest of the world's growth pull the US out of the hangover in the housing and credit markets. I think there is a real chance that world demand could inject enough stimulus into the US to pull us along in a state of slow growht versus recesson. However, Louis Uchitelle and others have written about the danger of an economy based on leveraged buyouts and re-organizations and short-term profits versus innovation. That's the kind of an economy that could short circuit when the credit bubble bursts.

If we do dip into recession, it will be one of the most disappointing expansion on record. For example, the nation’s factories have lost 215,000 jobs over the year and is still down 1.8 million jobs from the end of the last recession. By this point in the last recovery, manufacturing employment had completely recovered all of its losses.

We'll see in the next few months. Should job creation remain stagnant, decrease even further, or fail to keep pace with individuals seeking employment, the national unemployment level and unemployment rate will increase in the months to come (they were stagnant in August). I've noticed an uptick in the unemployment insurance figures in many states and the nation as well, there are already 2.55 million people collecting unemployment checks, which is 100,000 more than last year at the same time. One bright spot, as stated below, Congress has some real chances to take action while the storm clouds are gathering but the thunder has yet to begin.

Friday, August 31, 2007

Thoughts on Labor Day 2007

Ah, Labor Day. The last chance for families like mine to grab the last bites of summer.

But, maybe for the first time in years, more people might be thinking about the Labor in Labor Day.

That’s because nearly a decade in, the rules of the 21st century economy are disturbing. Those at the very top of the economic pyramid with capital to invest are making billions—and I’m talking about single people, like private equity leaders Stephen Schwartzman of the Blackstone Group and Henry Kravis who are worth more than $2 billion each. Yes, the world is flat. Corporations can reap great profits by moving money and labor around the globe—but it’s increasingly clear that these gains are not reaching average Americans.

The rest of us are stuck with stagnant incomes and ever seeming increasing costs for the goods that bring a quality life like health care and education. To be exact, a recent report from the Economic Policy Institute shows that the average worker's wages have been stagnant for seven years. Hard working Americans are being tossed from good jobs in factories and computer rooms by the global economic regime. The fastest growing occupations are at the bottom of the service sector, where living wages and job security are hard to find.

This gilded age may be reaching a tipping point. Average Americans, and even some leading economists, are no longer buying the conventional wisdom that the invisible hand of capitalism can be trusted to guard the nation’s promise of economic opportunity.

The last time in American history when incomes grew so far apart was the 1920s—a period whose collapse spurred sweeping legislation like the Fair Labor Standards Act (which established the minimum wage), the Social Security Act and the National Labor Relations Act which set up structures that gave working people a chance a shot at sharing the wealth of the nation. Will today’s inequality lead to a similar see change for policies addressing the conditions of working people?

Both in States and in Congress, we are seeing the first signs of a new wave of policies that can deliver opportunity to Americans in today’s workforce.

We are getting serious about policies that improve the quality of jobs, like increases to the federal minimum wage and even better standards in some states. What’s more heartening is states are taking action in key sectors of the economy. According to the Department of Labor, the single fastest growing occupation in the next ten years is projected to be home health aides, but the average home health aid makes less than $9 per hour and don’t have the right to overtime pay under federal law. But in Iowa, California and Illinois, changes in employment law have given these workers the right to join a union and aides in these states are making progress towards living wages and benefits.

Moreover, Congress is seriously considering legislation that would give laid off workers a serious chance to return to the middle class. Key proposals would transform the limited Trade Adjustment Assistance program (started in 1974) into a new powerful program of assistance that allows far greater numbers of workers impacted by globalization to maintain their health benefits and income while they retrain for new careers, and provides federal new economic aid to communities and firms suffering as a result of trade losses. Another similar bill would modernize the unemployment benefit program, which currently only covers a third of the jobless.

Ten years ago, such policy changes might have been derided as caves to unions or special interests. But today, they might be just what are needed to save the economy.

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