Apparently, the "fiscal cliff" is no cliffhanger. Howard Kurtz writes that Americans are "tuning out" the "fiscal cliff" debates in Washington because "the players haven’t gotten serious," about making a deal. Maybe it's because we know a "made for TV drama" when we see one. Maybe it's because, back in the real economy, we've got bigger problems to deal with. Or maybe it's because Main Street America has plenty at stake in these negotiations, and none of the players have gotten serious about concerns in the real economy.
Here are a couple of charts making the rounds that illustrate some of those concerns, and infographic that shows what's really at stake.
Barry Riholtz shared this chart from the monthly NFP report, showing that low-wage sectors are driving job growth.
This report showed a continuation of a trend I find to be unhealthy: The outside contribution of low wage sectors to the NFP report.
Leisure and hospitality, health care and social assistance, retail and temporary jobs — all low wage sectors — have been responsible for over half (51%) of the private sector job growth the last year.
Weak wage growth is function of slack in the labor force and a lack of negotiating power amongst job holders and seekers.
This isn't news, really. We've known for a while that low-wage jobs are dominating the "recovery." We know that low wages are bad news, because low-wages come at a high cost for low-wage earners, and the rest of us.
At the Wall Street Journal, Neil Shah posted a chart showing another unhealthy trend: expanding credit card debt.
Americans ramped up their credit-card use in October. Revolving credit, which includes credit-card debt, rose a seasonally adjusted $3.4 billion, or 4.7% at an annualized rate, from September to $857.6 billion, the highest level since May. Overall consumer borrowing rose an annualized 6.2% in October to $2.75 trillion. That suggests consumers are growing more willing to borrow for big-ticket items.
It's not all holiday shopping, either. Americans are whipping out their credit cards at record rate to pay for "big-ticket items" like cars and school tuition. Consumer borrowing on autos and student loans increase by $14.2 billion from October to September.
Those increases partly reflect grim realities of the real economy. Many Americans have lost jobs and are heading back to school to get training for what they hope will be new careers, and paying for it with credit. Americans working harder, earning less, and paying more — which means something has to give. So, more and more Americans turn to credit cards to pay for necessities, not fun. And, as always, low-wage workers get hit the hardest, and are forced to use credit cards to pay for everyday necessities like gas and food. As one executive at a credit card processing firm put it, "It's a cash flow problem. "
None of this is news, really. We know that low-wage jobs have dominated the "recovery." We know that low-wages are bad news for the economy, because those low wages come at a high cost to low-wage workers, and the rest of us too. We know that declining wages were paralleled by the decline of unionized labor, which is the primary reason for "the lack of negotiating power amongst job holders and seekers."
But we aren't hearing much about that as Washington obsesses over a "fiscal cliff" of its own creation. Yes, today President Obama stopped huddling with John Boehner, and took his message to Michigan, where organized labor is under siege as Republicans attempt to push "right-to-work" legislation through the state legislature. And, to his credit, Obama made the connection between organized labor and decent wages.
President Barack Obama weighed in on the contentious labor battle playing out in Michigan, condemning the Republican push to make Michigan a so-called "right-to-work" state as nothing more than a partisan maneuver that will hurt the working class.
"We should do everything we can to keep creating good middle-class jobs that help folks rebuild security for their families," Obama said Monday in a speech at the Daimler Detroit Diesel plant.
"And by the way, what we shouldn't do -- I've just got to say this -- what we shouldn't be doing is trying to take away your rights to bargain for better wages and working conditions," he added to loud applause from the audience. "We shouldn't be doing that. The so-called 'right-to-work' laws -- they don't have to do with economics, they have everything to do with politics. What they're really talking about is giving you the right to work for less money."
Michigan is set to become the 24th right-to-work state, with Gov. Rick Snyder (R) poised to sign the controversial bill after it was fast-tracked by the GOP-controlled legislature. Thousands of union supporters protested at the state capitol in Lansing last week, and more protests are planned for Tuesday.
But there's a lot more at stake than we're hearing about from anybody in Washington, as Hatty Lee illustrated in an infographic at Colorlines.
During his Michigan factory visit, Obama declared, "We should do everything we can to keep creating good middle-class jobs that help folks rebuild security for their families. He's right. But an economy that works for the middle class won't happen on its own. That takes policies that directly affect job quality, wages, and worker's rights.
A vital goal of economic policy should be to raise the living standards of the millions of American households who have seen their wages and living standards stagnate or decline over the last few decades. Fundamental to this is an economy that produces good, well-paying jobs. The biggest obstacle to this, currently, is the jobs crisis driven by a shortfall in aggregate demand. Additional factors though, written into our current policies, mean that even when the economy does recover, there is no reason to believe that the jobs it produces will actually be well-paying jobs.
The New York Times business section ran a story yesterday on low-wage workers and declining unionization rates, making the key points that:
- We are neither building an economy in which most workers earn enough to adequately support their families nor are we sufficiently using government tools to help subsidize the lower class
- The decline in unionization rates is adding to the woes of low-wage workers
…Policymakers must recognize that while more training and education are certainly important, they cannot by themselves create an economy that provides enough Americans with well-paying jobs; after all, college graduates have not seen their real wages rise in 10 years. Instead of facing a skills deficit, workers are facing a wage deficit. Economic policy can focus on supporting good jobs, but doing so would require a shift from the policy status quo to a focus on more-progressive tax and transfer policies, increases in the real value of the minimum wage, a reversal of falling unionization rates, an expansion of publicly financed social insurance programs, and, crucially, a commitment to full employment.
As I've written before, the Obama administration has just such policies in its back pocket for a long time. Today, the president made the case for those policies. Maybe, just maybe if the President spends more time advocating for his own policies (that Republicans spent his entire first-term blocking) Americans might just paying more attention to the economic discussion in Washington, and perhaps even strengthen his hand.
