Wages: A Race to the Bottom

/ The Old Crank

(updated)

From an article posted Friday by Jack Temple to the Demos Policy Shop blog, concerning last week’s jobs report:

[W]hile the manufacturing sector is steadily expanding, it appears to be joining the ranks of lower-wage jobs typically associated with the service sector. Indeed, as I’ve mentioned before, the “wage premium” for manufacturing jobs has been disappearing over the last several decades, relative to service sector jobs requiring similar skill levels.

And the numbers are clear: since 2000, manufacturing wages have increased over 70 percent among OECD nations and over 80 percent in Canada, while U.S. manufacturing wages have risen just under 40 percent.

So while manufacturing may be making some kind of a comeback in the U.S., this by no means signals a return of the high-road jobs that built the American middle class decades ago.

From the testimony of Secretary of Labor Hilda Solis before the Senate Committee on Health, Education, Labor and Pensions, on July 26, 2011:

First, I agree wholeheartedly with President Obama that rebuilding our manufacturing sector is critical to rebuilding the middle class. The manufacturing sector has shown enormous resiliency and strength in our economic recovery so far, with over 250,000 jobs added since the beginning of 2010. Manufacturing jobs are the kinds of jobs that pay well and can serve as an anchor in communities across the country. After more than a decade of losing manufacturing jobs, it is a thrill for me to be part of the policies that are helping to rebuild our manufacturing base. (my emphasis)

The secretary reserved a big chunk of her testimony to discussing the value of education credentials. “Credentials,” she said, “are a key component of improving the skills and adaptability of workers who want to compete for middle class jobs in the 21st century.”

UPDATE 1/16/12: From another recent another story on the rebounding U.S. manufacturing sector:

Ford Motor Company is bringing back 2,000 jobs from China after striking an agreement with the United Auto Workers. [Boston Consulting Group’s Harold] Sirkin says it’s good news for the economy even though wages will be lower in those jobs than they were previously.

Update on UI Extension Proposal

/ The Old Crank

A few weeks ago I wrote about a House proposal that would deny UI benefits to workers without a high school diploma or GED unless they were enrolled and making progress in a course of study designed to lead to a GED or another “state-recognized equivalent.” Congress eventually passed a two-month payroll tax cut and UI extension bill without this restriction, but I can’t think of any reason why House Republicans will not try to re-introduce this idea when they begin negotiations on a full-year UI extension later this month.

Yesterday afternoon I was encouraged to see that the Center on Budget and Policy Priorities (CBPP) has issued a paper on this issue and posted an article by Robert Greenstein strongly condemning the idea. Greenstein calls it “appalling even by current Washington standards.”

Greenstein’s piece, posted on CBPP’s Off the Charts blog, explains the basic injustice of the proposal:

The proposal would deny UI benefits to hundreds of thousands of workers — many of them middle-aged — who have worked hard, played by the rules, and effectively paid UI taxes for years and who then were laid off due to no fault of their own.

This would violate the basic compact that the UI system has embodied since its creation under President Roosevelt in 1935 — that people who have amassed a sufficient record of work, and on whose behalf UI taxes have faithfully been paid, may receive UI benefits for a temporary period if they are laid off and are searching for a new job.

Greenstein and the other authors of the CBPP report also make a good point that I did not consider in my original analysis: the new restriction would impact large numbers of older laid-off workers (according to CBPP, in 2010, half a million workers age 50 or over who received unemployment insurance lacked a high school diploma), and that for most of these workers, returning to high school or studying for a GED makes little sense.

They go on to note, as I did, that there are not nearly enough classes available in the U.S. right now to meet the current demand for adult education classes.

But as I wrote earlier, my view is that the bill that was introduced in December (H.R. 3630) would also deny UI benefits to some workers even if they are enrolled in adult education, because the bill required that those without a diploma or GED would have to be enrolled specifically in classes “leading to satisfaction” towards a diploma or a GED. This would appear to exclude those at very low literacy levels, who, even if enrolled in adult education, typically do not have the skills to enroll in GED or high-school level courses.

The bill also required more than just enrollment—it required workers to demonstrate “satisfactory progress” towards a diploma or GED without articulating how “satisfactory progress” was to be demonstrated. Again, I think the ambiguity and confusion that would result on how to do this would likely place even those fortunate enough to be enrolled in adult education at risk of being denied benefits.

CBPP also agrees with my assessment that the waiver language in H.R. 3630 was vague and inadequate. I think this point is going to be crucially important as the debate goes forward—I can easily envision lawmakers pointing to the availability of the waiver as justification for approving the restriction.

It’s encouraging to see CBPP attack this ill-conceived idea so vigorously. I am concerned, as I have written previously, that this proposal is just one example of an increasing effort to deny benefits and resources to undereducated, low-income adults.

What Is Haiti’s Adult Literacy Strategy?

/ The Old Crank

If there is one, it isn’t apparent from this fact sheet published by the U.S. State Department yesterday. According to this fact sheet, the challenge facing Haiti includes “an adult literacy rate of just over 50 percent.” However, none of Haiti’s or USAID’s strategies or accomplishments outlined in the sections that follow appear to address adult literacy. This could just be an oversight by the author(s) of the fact sheet, but if so, that’s telling in itself.

Efforts to improve children’s education are focused on raising the literacy rates of a future generation of adults, not the current one. I’m curious what is being done to raise the literacy rate of the adult population in Haiti right now.

Excerpt of the Day

/ The Old Crank

From a recent New York Times article on libraries and e-books:

Borrowing a printed book from the library imposes an inconvenience upon its patrons. “You have to walk or drive to the library, then walk or drive back to return it,” says Maja Thomas, a senior vice president of the Hachettte Book Group, in charge of its digital division. (my emphasis)