Labor Union Blog

With official unemployment at 10.2 percent, creating new jobs is a critical part of any economic recovery. But huge state and local budget shortfalls caused by the nation’s economic crisis will make joblessness worse unless state governments receive massive amounts of aid, according to a new report. 

The report by Ethan Pollack, an Economic Policy Institute (EPI) policy analyst, says the recession has led to much lower tax revenues for state and local governments. Unlike the federal government, state and local governments must balance their budgets by law. So state and local policymakers are cutting spending and raising taxes, steps that will lead to lower consumer demand and more unemployment.

At an EPI forum yesterday to release the report, Trenton [N.J.] Mayor Douglas Palmer said mayors and governors could use additional federal stimulus money to create jobs now, improve the nation’s infrastructure and help small businesses—all of which would have lasting economic and environmental benefits.

Metropolitan economies now account for 86 percent of national employment, 90 percent of workers’ income and 90 percent of our gross domestic product, Pollack said. Mayors lead these metro economies that drive the nation, Palmer said. To reverse the current economic situation and create jobs, the only way to do so is to invest in these metro economies.

In the EPI report, Pollack says states face a two-year $357 billion budget shortfall for the fiscal years 2010 and 2011, while local governments face an additional $80 billion deficit. The American Recovery and Reinvestment Act provided much-needed relief, but its $106 billion in aid to states fills only about 25 percent of the shortfall. The rest of the budget must be balanced by spending cuts and tax increases. Click here to read the report, “Dire States: State and Local Budget Relief Needed to Prevent Job Losses and Ensure a Robust Recovery.”

State and local spending cuts can be particularly harmful to the economy, Palmer and Pollack said. Not only do they deprive citizens of needed public services like health care, transportation, education and safety, they also fall disproportionately on the backs of those with low incomes. Businesses’ sales fall, forcing firms to slash wages or lay off workers, and these workers then cut their own consumer spending. As a result, each dollar of spending reduction by state and local governments leads to $1.41 in lost economic activity.

Without additional state and local budget relief, current and future shortfalls will cause millions of job losses and likely contribute to a drawn-out and painful recovery.

Pollack put it this way:

At this point, Congress has a choice. On the one hand, it can do nothing, thereby forcing states and local governments to cut budgets and raise taxes by hundreds of billions of dollars over the next few years. The result will be a drag on the economy that will at best lead to a long, painful, and relatively jobless recovery and at worst cause enough damage that the economy reverses course and begins to contract again.

The 2009 report to Congress by the bipartisan U.S.-China Economic and Security Review Commission (USCC) is a call to action for the United States to move aggressively against China’s illegal moves in the global economy and to create an industrial strategy to rebuild our manufacturing base, several experts said today.

During a telephone press conference sponsored by the Campaign for America’s Future, Carolyn Bartholomew said China has developed a plan to build national wealth and increase its power and influence in the world and the United States has not.    

Bartholomew, who chairs the USCC, said the commission found that China employs a wide range of subsidies that include land, loans, energy, water and tax incentives to attract foreign manufacturers for the production and export of higher technology products. State-owned banks also provide massive loans to industries producing over capacity. Click here to read the report.

As AFL-CIO President Richard Trumka says:

The report drives home the point that the Chinese government’s export-led manufacturing strategy is driven by a full range of subsidies, many of which are illegal under both the WTO [World Trade Organization] and our own trade agreements with China. These industrial policies begin with the most important illegal subsidy of all—the continuing substantial undervaluation of the Chinese currency. 

Bartholomew warned that a side product of our growing trade deficit with China is that as more business goes abroad, the technology that we have developed for aircraft, computer chips and other products go with it. She related how the Army recently had a problem buying domestically made triggers for its rifles because the tool-and-die industry is so decimated.  

Clyde Prestowitz, president of the Economic Strategy Institute, just returned from a trip to China and said the reality of the global economy is that some countries like China don’t always play by the rules of free trade. Although the United States should not emulate China’s illegal actions, lawmakers should develop a deliberate and well-planned strategy to build national wealth, create jobs and protect our national security, he said.

Writing on the Campaign for America’s Future website, Scott Paul, executive director of the Alliance for American Manufacturing, says Obama should have insisted that China play by the global rules of free trade.

China, I believe, wants to be treated with the dignity and respect of a rising economic power. The Obama administration should have made clear exactly how that could have been accomplished: playing by the rules of global trade, achieving balance in its current account, and taking steps to ensure that more Chinese are able to share in the country’s prosperity.

 Trumka says the 2009 report

makes it clear that the United States needs a new strategic approach to our relationship with China as part of our nation’s economic strategy. Such an approach must begin by responding vigorously to the problems created by the Chinese economic strategy of massive trade subsidies.

Working America members in Louisiana and in several other states wrote thousands of letters to their senators urging them to pass health care reform now.

In Louisiana, Maine, North Dakota, Delaware, Arkansas and Indiana this week, Working America members and union volunteers are sending a message to their senators: You need to pass real health care reform.

Working America and union members delivered thousands of handwritten letters to senators in these key states. On Tuesday in Louisiana, Wednesday in Arkansas and yesterday in four other states, these activists brought more than 15,000 letters to their senators in support of health care reform that expands coverage, doesn’t raise costs for middle-class families because it doesn’t tax their benefits and includes a public health insurance option to help hold insurance companies accountable.

You can join the fight and demand a Senate                                                                                                                                               debate on health care reform here.

The Senate’s health care bill, launched yesterday, still has flaws, but it’s moving in the right direction, and the Senate will be voting tomorrow night on whether to proceed with debate. Debating and voting on a bill in the Senate are critical and necessary steps toward passing health care reform and improving the lives of millions of working families, both those with and those without insurance today.

State and local union leaders and activists were also in Washington, D.C., yesterday visiting members of Congress to ask them to pass health care reform. This is the time when grassroots activity will matter the most, so contact your senators today.

“U.S. Chamber of Greed” is a nice short tweet to start the day with a NotMyChamber Tweet-a-Thon.

Get set to join a tweet-a-thon Friday, at 10 a.m. EST, to help launch the #notmychamber campaign spearheaded by the worker advocacy group, American Rights at Work.

If you are on Twitter, starting at 10 a.m., sign the organization’s “Not My Chamber” act.ly petition at http://act.ly/1cc or by tweeting: RT @araw petition @chamberpost: The U.S. #Chamber doesn’t represent me. It’s Not My Chamber! http://act.ly/1cc #notmychamber (RT to sign!)

If you don’t use Twitter (and can understand nary a word of the previous paragraph), you can sign the “Not My Chamber” pledge here: www.notmychamber.org. Already, 20,301 people and 3,102 business owners have signed the pledge.

With its nearly $100 million lobbying budget, the Chamber of Commerce is actively fighting issues like aid to jobless workers, paid sick leave and creation of an agency to watchdog the interests of consumers. Most recently, it tried to kill health care reform by hiring a paid gun to call health care reform “a job-killer.” The Chamber has “U.S.” at the front of its name but relentlessly promotes trade and jobs policies that send good U.S. jobs overseas.
So, don’t stop at one tweet. Here are some samples to send out throughout the day:

1. US #Chamber of Commerce reconsidering junk “study” to attack healthcare reform. http://bit.ly/3ZXfbP #notmychamber
2. Apple, Nike, Johnson & Johnson rejected the U.S. #Chamber over global warming. I agree: they’re #NotMyChamber http://act.ly/1cc
3. Over 3,000 businesses have joined with Apple, Nike, PG&E to speak against the #Chamber on climate change! http://act.ly/1cc #notmychamber
4. US #Chamber demands that employees give up their legal rights to press charges if they are raped. #NotMyChamber http://bit.ly/2ierXS
5. The US #Chamber of Commerce doesn’t believe in climate change. #NotMyChamber
6. US #Chamber tops the charts at $34M in lobbying in ONE QUARTER! http://bit.ly/2RaJl3
7. US #Chamber of Commerce has 300k members. In September, it was 3 million. Quite a difference! #NotMyChamber http://bit.ly/M3d3g
8. US #Chamber of Commerce leads spending against health care reform: $24M total last month http://bit.ly/2uXhtf It’s #NotMyChamber.
9. The US #Chamber opposes emergency H1N1 sick leave. It’s #NotMyChamber http://bit.ly/1rlnL5

Wall Street doesn’t look back at the disaster it wrecked on Main Street.

Goldman Sachs, one of the Wall Street firms that got the H1N1 flu shot well ahead of millions of America’s school children, sent this health tip in a memo to its pampered, out-of-touch execs: “Resist the urge to open your own car door; let your driver do it.”

Yo, Jeeves. While you’re at it, dust around the edges of those massive CEO pay packages. Because according to a report released today by the Government Accountability Office (GAO), top executives at four companies that jettisoned their employee pension plans received $49.5 million in retirement and severance benefits in the years before the companies filed for bankruptcy, while retirees saw their benefits cut by as much as two-thirds.

Yet Wall Street bankers are making that cash flow keeps coming: Yesterday, writes David Dayen, Senate Republicans bowed low before their corporate masters and delayed a move by Sen. Chris Dodd (D-Conn.) to immediately take up a bill that would freeze all credit card rates, charges and fee increases.

The freeze would be in effect until the CARD Act, a bill passed earlier this year, became law. Because of the time lag between passage of the CARD Act—which prevents arbitrary interest rate, fee and finance charge increases on existing balances—and its implementation next year, credit card companies have been jacking up their rates in what Dodd described as “a last-ditch attempt” to pad their profits until all of the provisions of the CARD Act became effective.

Back on Main Street, the scene is bleak. Not only do we not have any drivers to open our limo doors, millions of us—more than 26 million unemployed or underemployed—don’t have jobs. And by January, 1 million people without work also will be without unemployment insurance—unless Congress acts fast to extend unemployment aid.

Now you’d think throwing a lifeline to people—to voters—would be a no-brainer. But seems many of the same Republican senators who blocked a freeze on credit card interest rates are likely to be those who block a vote on extending aid to jobless workers. They did it this fall, stalling passage of unemployment aid for weeks. Guess they haven’t figured out that if they want U.S. consumers to pay outrageous interest rates on credit cards, they need money to do so.

Extending unemployment aid to people without jobs is one of five points the AFL-CIO union movement and our allies are pushing for in our jobs initiative announced this week. The others include:  

• Rebuild America’s schools, roads and energy systems.
• Increase aid to state and local governments to maintain vital services.
• Fund jobs in our communities.
• Put TARP funds to work for Main Street.

We’ll take this message to the White House as part of President Barack Obama’s Dec. 3 Jobs Summit. Already, AFL-CIO President Richard Trumka met earlier this week with House Democrats to explain our plan, which will “create or save” 2 million jobs over the next year.

Because America’s workers don’t need limo drivers. They need jobs.

After he was elected AFL-CIO president in September, Richard Trumka traveled around the country on a listening tour. Here’s one story he heard, which he described this week as the AFL-CIO, along with several key allies, launched a jobs initiative to help get our nation back to work.

Last summer at an event in Ohio, I met a young woman who is facing this crisis head-on. Lacey, who is not yet 20 years old, wants to become a teacher. But after her dad’s factory closed and he was laid off, she had to put off her hopes of attending college to help her parents keep a roof over their heads. Lacey took a job in a school cafeteria—until the state budget got cut, and she got laid off, too.

After months in which she and her father were both searching for jobs, Lacey said she felt lucky to find a part-time fast food job that pays half of what the cafeteria paid. Lacey has more unemployed friends than friends with jobs, and, like a third of workers her age, she’s still living with her parents. Here’s what Lacey said to me that day:

I wanted to be a teacher to help children get the education they need to get ahead. But now I feel like I’m just going backward myself. I’m really scared for the kids my age. We want to work. We need jobs.

For many Washington insiders, Lacey’s life is hard to fathom. They’re obsessed with the GDP and fixated on the budget deficit (as opposed to the trade deficit, which, if it were addressed, would improve the U.S. jobs situation). The fact that more than 26 million Americans are unemployed or underemployed just isn’t registering. And who in D.C. can grasp that there are just no jobs in this country—that, in fact, there is more than six workers for every one job?

Yet as we found in our recent survey of young people, “Young Workers: A Lost Decade,” the recession is flushing their earning power and their futures down the drain:

• More than one in three young workers say they are currently living at home with their parents.
• 31 percent of young workers reports being uninsured, up from 24 percent without health insurance coverage 10 years ago.
• One-third of young workers cannot pay the bills and seven in 10 do not have enough saved to cover two months of living expenses.

Brad DeLong, an economist at the University of California-Berkeley, has described the debilitating effects of the oxymoronic “jobless recovery” on young people: Every 1 percent increase in unemployment results in the loss of 7 percent of income for young people entering the job market.

Overall, the long-term damage of an ongoing recession, says Economic Policy Institute (EPI) economist John Irons, seriously damages the chances unemployed workers will get jobs. Irons cites a study in which some 35 percent of jobless workers don’t have jobs two years later and 13 percent had only part-time jobs. Meanwhile, 13 percent of those who did find full-time work were paid less than at the job they lost.

David Dayen lists the five points in our jobs proposal here. We’re pushing it with our partners: the NAACP; National Council of La Raza (NCLR); Leadership Conference on Civil Rights (LCCR); and the Center for Community Change. Together, we’re trying to light a fire under lawmakers on Capitol Hill—who, if they don’t act fast, likely will get a close up and personal look at the unemployment line themselves. We plan to press the White House and Congress to act on these recommendations immediately, starting at President Barack Obama’s Dec. 3 Jobs Summit.

Speaking at yesterday’s event, LCCR President Wade Henderson said the nation’s jobs crisis requires urgent attention—because it’s not just an economic imperative to put people to work, it’s a moral responsibility:

Make no mistake, for us this is the civil rights issue of the moment. Unless we resolve the national job crisis, it will make it hard to address all of our other priorities.

The 2008 campaigns mobilized young people and turned them out to vote. Lawmakers have an obligation to ensure they—and our nation—have a future. As Trumka says:

We owe Lacey our support. We owe Lacey and millions like her a future to be hopeful about—not one to be feared. Lacey and her generation could find their future permanently stunted, their potential never fully met. That’s unacceptable. We can’t afford to let that happen.

This is a cross-post from the Firedoglake blog.