President Trump was so delighted by the May jobs report that he tipped off investors by tweeting while the information was still embargoed. The news— more than 220,000 new jobs, unemployment down to 3.8 percent, the lowest in 18 years — was undoubtedly strong. The Economic Policy Institute hailed “the economy’s steady march towards full employment,” noting that most of the drop in unemployment came from workers finding new jobs and only about one-third from workers leaving the workforce. Wages are finally beginning to budge, though the growth rates still don’t keep up with the rising cost of basics such as health care and education. The last time the U.S. economy enjoyed across the board wage growth was in 2000, when the economy also neared full employment levels. The cheery numbers, however, should not blind us to the harsh reality facing most Americans. The United States is one of the richest nations in the world, yet many of its citizens live in misery. Consider: “About 40 million live in poverty, 18.5 million in extreme poverty, and 5.3 million live in Third World conditions of absolute poverty. It has the highest youth poverty rate in the [industrialized world] and the highest infant mortality rates. . . . Its citizens live shorter and sicker lives compared to those living in all other rich democracies, . . . and it has the world’s highest incarceration rate, one of the lowest levels of voter registrations in among [Organization for Economic Cooperation and Development] countries and the highest obesity levels in the developed world. The United States has the highest rate of income inequality among Western countries.”
The quotes come from the official “Report of the Special Rapporteur on extreme poverty and human rights on his mission to the United States of America,” on behalf of the U.N. Human Rights Council. Special Rapporteur Philip Alston notes that for the poorest Americans the situation is getting worse. “For almost five decades the overall policy response has been neglectful at best, but the policies pursued over the past year seem deliberately designed to remove basic protections from the poorest, punish those who are not in employment and make even basic health care into a privilege to be earned rather than a right of citizenship.” [emphasis added]. Although Alston’s report is rigorously documented, many will ignore its findings and scorn the U.N. for messing in our affairs. Consider then the recent “Report on Economic Well-Being of U.S. Households” from the authoritative Board of Governors of the Federal Reserve, a bastion of the financial establishment. The report concludes that while surveys show Americans are feeling increasingly okay about their financial situation, 4 in 10 adults don’t have savings to cover an unexpected expense of $400. More than 1 in 5 are not able to pay their monthly expenses. More than 1 in 4 skipped necessary medical care because they could not afford the cost. A detailed study by the United Way found that 43 out of 100 households cannot afford the basics to live. They aren’t earning enough to pay for the combined costs of housing, food, child care, health care, transportation and a cellphone.
The harsh reality is that America is a wealthy country with millions of struggling people. Compared with their peers in other industrialized nations, Americans live shorter, more stressful, less healthy lives while working longer hours with fewer vacations. Our stunning decline in life expectancy is largely because of diseases of despair — addiction, suicide and depression. Extreme inequality not only immiserates Americans, it corrupts and undermines our democracy. Overt and covert disenfranchisement has disproportionately hurt the impoverished and people of color. “It is thus unsurprising,” the U.N. special rapporteur writes, “that the United States has one of the lowest turnout rates in elections among developed countries.” Similarly, the International Monetary Fund warns that the extreme inequality is bad not only for the poor and the middle class but also for society as a whole with high poverty levels “creating disparities in the education system, hampering human capital formation and eating into future productivity.”
Trump promised to end the “carnage.” His policies, however, only contribute to the decline. His signature achievement — the tax cuts — will add to inequality. He opposes raising the minimum wage. His administrative and judicial appointees are working to undermine worker rights and free up corporate executive suites. His tax bill gives multinationals incentives to ship jobs abroad. His budgets and efforts to roll back regulation undermine protection of U.S. consumers, workers and communities. His forays into the health-care system will leave millions more without affordable health care. And even though the country’s water systems, roads, bridges and trains are aged and crumbling, Trump has shelved his promised infrastructure plan. So celebrate the good economy, hope that job growth continues and wages finally begin to rise. But don’t buy the hype. If there is not a dramatic turn in course, the next downturn will erase what gains there have been and leave most Americans in worse straits. For all of his “America First” bluster, Trump’s misplaced priorities will only add to the misery.
The headline number, 2.2 percent GDP growth in the first quarter of 2018, was not encouraging. Economic growth has slowed steadily for three consecutive quarters, and the most recent one was the slowest in a year. Digging further into the data, the report shows consumers pulling back. From January through March, consumer spending grew at barely a 1 percent rate, compared to the last three months of 2017. Residential investment, measured by home sales, did even worse in the first quarter this year, falling at a 2 percent annual rate. The new income data also show that the 2017 corporate tax cuts, thus far, have done little for average Americans. In fact, over the first four months of this year, wage and salary growth slowed to 0.275 percent on a monthly basis, compared to 0.325 percent throughout 2017. Strikingly, the BEA data also show that corporate profits slowed in early 2018, for the third consecutive quarter. In the first three months of this year, the pre-tax profits of U.S. corporations came in at an annual rate of $2.2 trillion, which was $12.4 billion less than the last three months of 2017. But it is crystal clear the tax cuts are fulfilling their basic purpose, as federal tax on those profits declined at an annual rate of $84.5 billion, nearly seven times as much as those profits themselves. Unless there is a real investment boom, GDP and consumer spending eventually overtake employment, and job growth slows tool. If this mediocre expansion receives a nasty shock from a trade war, a crisis for the euro, or sharp increases in energy prices, which are all plausible developments today, it will be time to prepare for the coming recession.
For decades we’ve seen unmistakable trends where big corporations have gained more power & profits relative to their workers. Labor lacks an influential voice in DC compared to large corporate donors: trump-megadonors-gop-
Worker power has already suffered death by a thousand cuts, some political, others judicial and regulatory; some at the hands of a changing domestic workplace, others stemming from relentless global forces. Corporate America recognized these trends early on and capitalized on them ruthlessly. Labor organizations were ill equipped to do so and have been on the defensive for the past four decades. Two trends demonstrate the decline of labor and the ascent of business. Since 1979, after-tax corporate profits as a share of gross domestic product have grown by 22.8 percent, while the share of nonfarm business sector income going to labor has dropped by 10.3 percent. In response to my query, Martha McCluskey, a professor of law at the University at Buffalo, emailed: The decline in worker bargaining power in the United States is the cumulative effect of numerous small and large changes over recent decades reaching into almost every area of law and policy. This combines with a decline in the enforcement of existing laws that could protect workers’ bargaining power — laws protecting unions, laws against wage theft, nondiscrimination laws, and more. The “small and large changes over recent decades” to which McCluskey refers increase the clout of corporate management and reduce the power of workers over wages, benefits and job security. Among these changes is the requirement that employees sign what are known as “noncompete” and “no-raid” agreements, both of which restrict workers’ ability to extract pay hikes by threatening to take similar jobs at competing companies.
Trump’s appointees to the National Labor Relations Board have clearly signaled their plans to kill pro-worker regulations adopted during the Obama administration. So, too, apparently, has the Supreme Court. For the time being, at least, the problems of the least skilled workers in the labor market will fester. In the 2016 election, Trump profited from the conviction of rural and working-class voters that they were on a downward trajectory. If anything, Trump appears to be gambling that letting those voters’ lives continue to languish will work to his advantage in 2020. Trump’s trade policies show signs of backfiring and his proposals do nothing to address the long-term phenomena that may prove to be most destructive of low-skill employment: automation, particularly roboticization. Trump campaigned as the ally of the white working class, but any notion that he would take its side as it faces off against employers is a gross misjudgment. His administration has turned the executive branch, the federal courts and the regulatory agencies into the sworn enemy of workers, organized and unorganized. Trump is indisputably indifferent to the plight of anyone in the bottom half of the income distribution: look at his appointments, look at his record in office, look back at his business career and look at the man himself.
Other worries are expressed in bernanke-economy-wile-e-
When President Donald Trump signed the Tax Cuts and Jobs Act of 2017 into law this past December, the country was divided on just what effect the cuts would have on the American economy. Critics called it a “blatant scam” and a “corporate handout” that would further the wealth gap while enriching corporations and the wealthy. Republicans argued the bill would reinvigorate the economy and, in the process, create a plethora of new jobs. Five months later and the results seem to favor the detractors. Just as some argued, corporations used their savings to buy back shares from investors, which accounted for 60 percent of the funds, while only 15 percent went to employees. These buybacks are of historic levels, and recent analysis shows that only 4.3 percent of workers for Fortune 500 businesses are receiving any bonus at all. The bill was a gamble for Republicans, who were able to reward their wealthy donor base with sizable tax cuts but needed desperately for the public to buy into the narrative that the bill’s personal benefits outweighed increasing the national debt by $2.2 trillion over the next decade and ballooning the 2018 budget alone by nearly a quarter of a trillion dollars.Recent surveys suggest that the narrative isn’t necessarily taking hold. A March CNBC survey found that 52 percent of Americans hadn’t seen an increase in their paychecks resulting from the bill. Another by Politico/Morning Consult discovered that only 25 percent of respondents had actually noticed a positive difference. It’s quite possible that perception is due to other factors, including higher prices at the gas pump, which analyst Ellen Zentner believes could eliminate up to one-third of the tax cut’s benefit for working Americans, but those higher gas prices are just another way Donald Trump’s policies hurt the working class and middle class. Tensions with Iran have led to a volatile fuel market, and with Trump’s numerous trade wars, consumers are likely to see an increase in the prices of products from trade partners like China, which produces most of the low-priced goods shoppers rely on. In retrospect, it’s bewildering that Trump ran and won on a faux-populist platform promising to return power to the working people. As he focused on the issue in his inauguration, he said, “Washington flourished, but the people did not share its wealth. Politicians prospered, but the jobs left and the factories closed.” Just as on the campaign trail, Trump was attempting to ensconce himself as a populist hero of sorts, a new kind of president who would level the balance of power and return America to a past that treated its voters better. The messenger was new in that a billionaire who flew in his own planes and lived in gaudy skyscrapers had never before promised working-class people a return to their old lives. But the promise itself was one they’ve heard for decades.
In other relevant links from the newsfeeds, the U.S. economy today presents many challenges. This next article shows a workforce ill-prepared for modern-day jobs, while as a society we’ve done a poor job of crafting initiatives for providing the needed education & training: north-america-is-unp
For older folks, it looks like heavy debt is messing up many a retirement: this-growing-problem-threatens
Health Care & Entitlements Costs
The financial future of the part of Medicare that pays older Americans’ hospital bills has deteriorated significantly, according to an annual government report that forecasts that the trust fund will be depleted by 2026 — three years sooner than expected a year ago. The report, issued Tuesday by a quartet of Trump administration officials who are trustees for Medicare and Social Security, reveals that policy changes ushered in by the president and the Republican Congress are weakening the financial underpinnings of the already fragile insurance program. According to the report, less money will be flowing into the hospital-care trust fund in part because the tax law passed this year will cause the government to collect less in income taxes. In addition, lower wages last year will translate into lower payroll taxes. As revenue slips, hospital expenses will increase, the report says. A senior government official who briefed reporters on it said that part of that increase is because the tax law will, starting next year, end enforcement of the Affordable Care Act’s requirement that most Americans carry health insurance. As a result, hospitals are predicted to have more uninsured patients, in turn requiring the Medicare program to pay more for such uncompensated care.
The annual reckoning of the stability of the nation’s two largest entitlement programs amplifies earlier warnings that both are unsustainable over time. It also urges Congress to revise the programs to ward off the shortfalls soon to “minimize adverse impacts” on the tens of millions of elderly and other vulnerable people who rely on the government help. From administration to administration, the trustees’ report has for many years been a cautionary note about the financial fragility of the two main programs designed to buffer Americans from poverty in their older years. For more than two decades, presidents of both political parties and Congress have sporadically assembled high-level commissions to explore ways to prolong the solvency of one or both programs. None has led to major changes.
AMERICA’S ECONOMY is in robust condition, as new Labor Department data showing unemployment at 3.8 percent confirms. America’s long-term finances, however, are not in such good shape, as another federal report, this one out Tuesday from the trustees who oversee Social Security and Medicare, reminds us. If present trends continue, the trust funds that pay retirement and disability benefits under the former program will, when taken together, run out in 2034; the Hospital Insurance Trust Fund under the latter will be exhausted in 2026, three years earlier than the trustees forecast last year. The Trump administration’s response, essentially, is to take credit for the booming economy and cite it as a reason not to worry about the two biggest entitlement programs in the federal budget. “The Administration’s economic agenda — tax cuts, regulatory reform, and improved trade agreements — will generate the long-term growth needed to help secure these programs and lead them to a more stable path,” Treasury Secretary Steven Mnuchin said in a statement. That’s what he would say, given that fiscally irresponsible Republican policies, those ballyhooed tax cuts included, will add $1.6 trillion to the federal deficit over the next 10 years, according to the Congressional Budget Office. When, inevitably, the United States does not grow its way out of this problem, revenue will have to be raised, and Social Security and Medicare may face sudden, sharp cuts along with other worthy programs: defense, research, infrastructure. A brutal politics of austerity will ensue. In our aging society, all of that will have to occur in the context of a growing ratio between retirees and the working-age population.
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