I agree with the premise of Michael Bloomberg and Arne Duncan’s op-ed in the Chicago Tribune—the U. S. economy isn’t working for too many Americans:
About half of Americans don’t own stocks, and the share of national income going to workers — rather than investors — is actually near an all-time low. Meanwhile, almost half of all American workers earn an average of $10.22 per hour, or about $18,000 per year. President Trump hasn’t pushed for an increase in the minimum wage, even though it hasn’t increased in 10 years.
Millions of Americans, especially people of color, struggle to find a job. In Chicago, more than 45% percent of black men between the ages of 20 and 24 are jobless. This is what President Trump calls “the greatest economy in the history of America.†We couldn’t disagree more.
It used to be that a high school diploma came with a ticket to the middle class. That’s no longer true because many good jobs have been lost to global trade and technology. But instead of focusing on creating good new jobs, and helping people get the skills that today’s careers require, President Trump promises to bring the old jobs back. And he has failed, miserably.
but I disagree with their prescription:
We both strongly believe that America needs more paid apprenticeships, which provide on-the-job training for good jobs. They have been proven to work in countries such as Germany, England and Switzerland — and they can work well in the U.S., with federal support. Apprenticeships give workers training and experience that will open doors for their careers, and they ensure employers can find employees with skills they need to fill jobs. Yesterday, one of us (Bloomberg) announced a strategy for creating 1 million paid apprenticeships annually.
We have both also seen how vital community colleges are. They are the pathway to employment for millions of Americans. The federal government should make a major investment in their capacity to prepare students for employment, connect them to growing industries, and align curricula and standards with the skills that lead to good jobs. That includes increasing the number of students earning work-based degrees, which integrate classroom instruction with apprenticeships, internships or meaningful work-study experiences. We can incentivize success by rewarding states, local communities and schools that boost completion rates, job placements and earnings of graduates.
We should also help workers transition to new jobs by providing federal student aid to quality short-term certificate programs that demonstrate strong outcomes. We must also extend the earned income tax credit and unemployment insurance to Americans in training programs, so they can cover child care costs, rent, and other living expenses while they are investing in their future.
These steps will help to bridge the prosperity divide in America and ensure that our economy works for all people, in all parts of our country.
There are many reasons for the present lack of opportunity and income inequality but spending more money on education or paid apprenticeships, something I support, won’t address any of them and it may exacerbate existing problems. Rather than presenting a coherent counter-argument, I’ll just cite a few examples of why their prescription won’t work.
Presently, 16 million Americans are in college. 20 million Indians are in college in India. Today there are 70,000 journalism majors in the country’s J-schools. That’s more than the total number of people working as journalists. I think that people should pursue any field of study they care to—I just don’t think we should subsidize, either via grants or loans, fields of study unlikely to result in gainful employment. That won’t just require spending more on education. We need to redesign our entire education policy.
The problem with apprenticeship programs is that, unless very carefully crafted, in our present economic and social climate they will result in reducing the number of jobs for which Americans will be hired.
Our problem is not that we don’t spend enough on education or that we don’t have apprenticeship programs. After all we spend more on education than any other country in the world. Our problem is that the number of good jobs isn’t increasing fast enough and we’re importing too many workers to fill the good jobs we are creating.
As I have said before the sources of income inequality are
- Financialization of the economy
- Ferocious subsidization of certain fields
- Immigration, legal and illegal, maintaining a slack labor market
Unless we do something about those issues nothing else will produce much in the way of results. Those are the basics.
Bloomberg really lose me when he emphasizes the failure to increase the national minimum wage and then pivots to the jobless rate for minorities in Chicago. I believe Chicago has had one of the highest minimum wages in the country (currently $13, in July $14, the following year $15). However tight one thinks the relationship btw/ the minimum wage and employment, most people think there is one.
At that point it just all seems like platitudes for progressives.
A high minimum wage poses a problem for Chicago as it does for the Quad Cities, Rockford, Kankakee, East St. Louis, and Cairo. Iowa, Wisconsin, Indian, Missouri, and Kentucky all have lower minimum wages and all of those cities are on or near the state border.
This weekend I saw for the first time inside a McDonald’s a kiosk for placing your order. That’s the problem with raising the minimum wage.
Also, we all have seen how children often follow in their fathers footsteps in career choice, probably because that’s what they know best, what their father can show them how to achieve. But when there is no father? When the son’s inspiration comes from TV or movies? Mostly failure and disappointment. And there is no agency or group able to invest that kind of time in a young person.
In many cases, it seems that College has changed from getting an education, to just a very expensive credentialing system.
I have no problem subsidizing a well-rounded liberal arts education – our country needs people who understand history, civics, philosophy and how to think, analyze and understand. Maybe I’m looking through rose-colored glasses, but it seems that employers used to value that.
But it doesn’t seem like college does much of that anymore, most of it is job “training” that leads to a credentialed degree that is supposed to be the gateway to a professional career.
So I wonder if there is a chicken-egg problem here. Is the labor market promoting credentialing causing colleges to fill that need, or is it the reverse?
Two points: while the income premium for college educations remains, the wealth premium has vanished, largely due to the higher cost of a college education. I’m skeptical of the income premium on the grounds that I don’t think the calculations take the variance in incomes into account but just deal with averages. If income distributions aren’t normal average may be meaningless.
The second point is that we subsidize everything, not making distinctions among majors, institutions, etc. I’m a bit out of touch with this now but based on the way things used to be the total cost of getting a PhD in, say, electrical engineering or physics was enormously greater than getting a PhD in English, history, or women’s studies.
“About half of Americans don’t own stocks…”
That is one of the great lies. Every single person with a pension plan owns stocks indirectly through his plan. That includes every single government worker, every single university and college employee, and every single union person. All of them have benefitted greatly from the run up in the stock market.
It is true that the displaced workers, whose jobs were sent overseas, do not own stocks or have pension plans, but it was the policies put in place by the likes of Bloomberg, Romney, Schumer et al. that did that. Trump’s policies have benefitted everyone. We need another four years of him.
There seem to be two universes regarding the economy today.
For democrats, the economy is in the doldrums, with the 1% wealthy only reaping benefits from tax cuts, workers’ wage growth unworthy to mention, trade deals referenced mainly by the suffering experienced under tariffs, and all candidates wanting to unseat the current president raving about free everything, higher taxation, and turning the economy in an entirely different direction.
The Republican economical POV is that this is the best economy in a lifetime. Wage growth has grown faster for workers than their white collar managers – as high as 7-8% for the lower quadrant of workers. Black, Hispanic, and woman now have historically low unemployment rates. While much of these good tidings is credited to tax reform policies, most is attributed to deregulation. The trade deals in the mill are also viewed with rose-colored glasses, predicting a higher GDP once they are in place.
Ironically, during the summer of 2016, predictions were already being made about the UE rate and number of jobs added by 2020 – the former was projected to be 4.9% and the latter 1.9 million jobs. With a current 3.5% unemployment rate and over 7 million jobs created to date, those Obama era estimates seem to be off by a lot. I wonder if this also applies to the analysis the democrats are giving about the state of today’s economy as well.
40 percent of Black men between age 20 and 24 are unemployed and STRUGGLING to find a job. Are they?
Political pablum.
It’s amazing to me that anyone can maintain that it is immigration, legal and illegal, maintaining a slack labor market that helps maintain wage inequality.
Surely, immigrant labor is far better than subsidizing the rearing and mis-education of domestic children that is a greater cause of a “slack labor market.” Immigrants come already potty-trained and ready to work. Pro-natalism policies are the problem. The steal wealth and income from the singles, childfree and those past the age of breeding, through outrageous property taxes and things like tax credits, food stamps and other forms of “family-friendly” welfare. Why should breeders enjoy favorable income tax rates?
jan-Which left of center economist do you read who claims we are in the doldrums? No one I am aware of claims that. I suspect that you were reading some right winger who was making up stuff or quoting someone no one on the left thinks of as important. Every left wing economist I am aware pof thinks the economy is going pretty well, but they do dispute that this is the best economy ever, and they do it with data.
You, OTOH, reach your conclusions base upon your feelings, and very, very carefully cherry picked numbers. As Dave noted in an article here, we are still losing the good jobs. Median incomes are not doing as well and inequality is still increasing.
“Real median household income in the United States increased 0.8% to $61,937 between 2017 and 2018.
Median household income for the nation has been increasing every year since 2013, but the year-to-year increase from 2017 is smaller than the prior three years. Previously, increases ranged between 1.8% and 3.3% annually.”
Unemployment rate was 10% in 2009. When Obama left office it was 4.8% ands now it is 3.7%.
As noted before, growth with Trump is minimally better, but at the cost of increased debt.
So go ahead and feel good because Trump is POTUS, and our economy is doing pretty well, but it is hard to make the case that it is the best ever and it doesn’t look like tax cuts or deregulation did very much. We are seeing business investment growing. What we saw was debt financed growth.
“That is one of the great lies. Every single person with a pension plan owns stocks indirectly through his plan. That includes every single government worker, every single university and college employee, and every single union person. All of them have benefitted greatly from the run up in the stock market.”
True pension plans are uncommon now. Less than 1% of people work for universities. only about 7% of people are in unions. When they calculate that 0% number they are well aware that people own stocks through their retirement plan, it’s just that 30% of people have no savings at all and another bunch just have a small amount of cash savings.
https://www.businessinsider.com/quarter-of-americans-have-no-retirement-savings-2019-6
Steve
Steve, I’ll try to manage my feelings more if you take your head out of the hole of denial.
Deal?
Deal.
I don’t know how many people delve through statistical archives to rebuke others on how good or bad the state of the economy really is. In fact, I would posit that the MSM is a major driver influencing the average person’s perspective and â€feelings†of economical gloom & doom versus optimism. By this metric alone, a recent survey, of the content televised by three major media outlets since September 2019, had over 800 minutes of on-air time spent on impeachment commentary compared to a mere 9 minutes devoted to economical news. Omission of relatively positive data is just another way to distort and be dismissive about any “good†economical changes, which is a demonstrable pattern of bias ingrained in most of the democrat-leaning press’s coverage. Such lopsided reporting also dovetails into and clearly explains why a 93% negative news statistic has consistently followed Trump around during most of his presidency.
However, while I do believe the fundamentals of our economy are better under the current administration than the previous one, there remain plenty of looming long term problems. Spending is too high as is our debt – something muted in an era of low interest rates, unemployment and spirited business. Pensions are in jeopardy. Many have no savings cushion. But, these are weaknesses that have been growing over several administrations. In fact the deficit primarily shrunk under Obama through the maneuvering of Sequestration – a policy conceived by him initially as a ploy aimed to force the GOP into backing increases proposed in his budget.
Finally, I disagree with you about the effects of deregulation. Every small business interview I’ve heard rejects that claim, attributing much of their growth to the reduction of government regulatory interference. Consequently, small business optimism has soared the last few years, as has job growth in these areas. Just today, Alibaba came out with their analysis of small business, citing a number over 60% of small businesses who are reflecting optimism for the coming year. Also, UE is not 3.7% but rather 3.5%, a rate not seen since 1969. Household family incomes, when graphed along side what occurred under the 8 year presidencies of both GWB and Obama, is higher the last 3 years, as is wage growth and job opportunities for low income and blue collar workers. There have even been economical assessments that policies under Obama only increased income inequality, while the policies under Trump indicate there have been reductions – along with the rich still becoming richer.
“I don’t know how many people delve through statistical archives to rebuke others on how good or bad the state of the economy really is.”
I can answer that for you. Only those who care about what is really going on, not just their feelings, go look at the numbers. You carefully avoid doing that. There are lots of good objective sites that you can find useful data. BLS, Census data, FED, CBO, etc. You are convinced things are better because some guy interviewed some business owners and they feel good. I look at whether or not they are investing their money back into their businesses, and they are not.
So when you say “Every small business interview I’ve heard rejects that claim, attributing much of their growth to the reduction of government regulatory interference. ” I say show me the evidence.
Household income is higher, but as I noted it is not growing as fast as it was when Obama was in office. Only for the subgroup at the bottom are wages growing faster. So we have the wealthy and the poor growing with all of us in the middle not doing so hot.
“In fact the deficit primarily shrunk under Obama through the maneuvering of Sequestration”
Deficits and the actual debt also shrank when Clinton was in office. Anyway, take those decreasing deficits we had with Obama, and I am not clear on why it was bad they decreased just because of sequestration (other than that it showed poor governance) , jack them up like trump did and we almost undoubtedly end up with the same growth rates. They are so close anyway.
So its ok to say there was deregulation and I like that. It is not OK to say it lead to economic growth without some sort of proof. Alas, that means looking at those statistical archive which you so strongly eschew.
“But, these are weaknesses that have been growing over several administrations. ”
Then wouldn’t you then oppose plans that worsen this? Why not have a plan for economic growth that does not entail increasing our debt? Trump’s plan, in short form, is deficit spending while pushing the Fed to keep rates low.
Steve
Just for grins, here’s a graph up to 2018 of real income growth by income quintile (and the top 5%):
That’s why income growth for the lowest quintile is very good news.