Employment – The Wrongologist

Democrats Are Better For The Economy

The Daily Escape:

Sunset at Fonts Point, Anza-Borrego Desert SP, CA – March 2024 photo by Paulette Donnellon

“If you want to live like a Republican, vote for a Democrat.” – Harry S. Truman

Republicans always claim that they are the Party of prosperity. They pretend that their policies lift everyday workers and their families, what with tax cuts and all, and the public seems to buy it. In polls, the Republicans usually get better marks on the economy than Democrats, often by hefty margins.

But as John E. Schwarz notes in the Washington Monthly:

“What is truly startling is the astonishing degree to which American workers have fared better under Democratic than Republican presidents….Today, the economic data are unambiguous: Whether it’s real wage gains or job creation, average Americans have fared far better under Democratic than Republican presidents.”

From the economist Jeffery Frankel, Professor of Capital Formation and Growth at Harvard University, and formerly a member of the White House Council of Economic Advisers:

“Since World War II, Democrats have seen job creation average 1.7 % per year when in office, versus 1.0 % under the GOP. US GDP has averaged a rate of growth of 4.23% during Democratic administrations, versus 2.36% under Republicans, a remarkable difference of 1.87 percentage points. This is postwar data, covering 19 presidential terms—from Truman through Biden. If one goes back further, to the Great Depression, to include Herbert Hoover and Franklin Roosevelt, the difference in growth rates is even larger.”

Frankel says that the results are similar whether one assigns responsibility for the first quarter of a president’s term to him or to his predecessor. He also makes the point that the average Democratic presidential term has been in recession for 1 of its 16 quarters, whereas the average for the Republican terms has been 5 quarters, a startlingly big difference.

Frankel asks whether these stark differences in outcomes are simply the result of random chance? But he concludes they aren’t:

“The last five recessions all started while a Republican was in the White House (Reagan, G.H.W. Bush, G.W. Bush twice, and Trump)….The odds of getting that outcome by chance, if the true probability of a recession starting during a Democrat’s presidency were equal to that during a Republican’s presidency, would be (1/2)(1/2)(1/2)(1/2)(1/2), i.e., one out of 32 = 3.1%. Very unlikely.”

I know, nobody said there’d be math in the column. Frankel says that the result is the same as the odds of getting “heads” on five out of five consecutive coin-flips. And it gets worse if we look back further in time:

“A remarkable 9 of the last 10 recessions have started when a Republican was president. The odds that this outcome would have occurred just by chance are even more remote: one out of 100. [That is, 10/2¹⁰ = 0.0098.]”

More math, but you get the idea. If you look at job growth, the results are similar. More from John Schwarz:

“The significant contrast between each party’s record on wage and job growth has held true from the election of Ronald Reagan in 1980 through to the onset of the pandemic, just after 2019 ended, and after that, starting once again under Joe Biden.”

Here’s a chart from The Economist:

The Republican and Democratic Parties were in the White House for roughly equal amounts of time, 24 years each. During the Republican presidencies they created about 17 million jobs, whereas Democrats presided over the creation of about 60 million. That’s such a big gap that Americans can safely reject claims of stronger economic performance under Republicans.

Schwarz closes with this:

“Democrats have an amazing story to tell in 2024. They should tell it loud and clear.”

Absolutely!

Enough of the hard math. It’s time for our Saturday Soother, when we try to disconnect from Trump’s Bible sales and from the plan by Senate Republicans to introduce articles of impeachment of the Secretary of Homeland Security when there’s so much truly pressing business for them to consider.

Here on the Fields of Wrong, we’re attending to some spring yardwork in the precious time between passing rain and snow showers. We will also find the time this weekend to watch college basketball’s March Madness.

To help you focus on anything but politics on this Easter weekend, grab a seat by a south-facing window and listen to Gregorio Allegri’s “Miserere mei, Deus” (Have mercy on me, O God), performed here in 2018 by the Tenebrae Choir conducted by Nigel Short at St. Bartholomew the Great Church, in London.

Allegri composed this in the 1630s, during the papacy of Pope Urban VIII. The piece was written for use in the Tenebrae service on Holy Wednesday and Good Friday of Holy Week. Pope Urban loved the piece so much, that he forbid it to be performed elsewhere outside of the Sistine Chapel.

We all could use a little mercy now, and this is beautiful:

The Auto Strike

The Daily Escape:

Trail Ridge Road, Rocky Mountain NP, CO – September 2023 photo by Rick Priebe

On Friday, The UAW union expanded its strike against GM and Stellantis, two of the Big Three automakers, ramping up pressure on the companies to reach deals on new contracts. The union walked off the job at parts distribution centers of both manufacturers but spared Ford, saying the company had done more to meet its demands. From the NYT:

“Our pressure on Ford is starting to pay off,”

But there was no indication a deal with Ford was imminent. More:

“Stellantis workers walked out at 20 of the company’s parts distribution centers Friday, while G.M. workers went on strike at 18 centers.”

Ford Canada reached a deal last week with the union that represents its Canadian workers. It may offer a clue to the US outcome: The deal provides for pay increases worth up to 25% over three years, as well as bonuses, improved retirement benefits and measures to protect employees as Ford retools factories for electric vehicles. The union, Unifor, is negotiating separately with GM and Stellantis in Canada.

The UAW is asking for a 37% wage increase over four years, improved retiree benefits and shorter work hours. They also want an end to a tiered wage system that starts new hires at much lower wages than the top UAW pay of $32 an hour. Importantly, more than 18,000 UAW members are now on strike.

Some context: UAW workers made significant sacrifices to help keep the big three afloat, amidst the financial crisis in 2009. They made those sacrifices based in part on the promise that the Big Three would eventually renew their compensation and benefits, which the Big Three never did. There were no cost of living adjustments, despite the Big Three going from losing money to record profitability (and tens of $ billions in stock buybacks).

And this week, Biden will join the strike in an extraordinary move of support. From CNN:

“Biden will travel to Michigan on Tuesday and walk the picket line with members of the United Auto Workers union, he announced Friday…”

Biden said in a post on Xitter:

“Tuesday, I’ll go to Michigan to join the picket line and stand in solidarity with the men and women of UAW as they fight for a fair share of the value they helped create. It’s time for a win-win agreement that keeps American auto manufacturing thriving with well-paid UAW jobs,”,

This presidential appearance on a picket line is a historic first. It is also an opportunity to score political points, since it comes one day before Trump is scheduled to deliver a speech to an audience of current and former union members in Detroit. In July, Trump asked the UAW to endorse him, so both politicians are working hard to gain traction with the union.

The UAW was angered by Biden’s pumping tax money into nonunion electric vehicle suppliers, and has withheld its endorsement, even as most other labor unions have rushed to back Mr. Biden’s re-election.

Back to some context for the UAW strike: The WSJ reports that:

“The Detroit companies’ labor costs, including wages and benefits, are estimated at an average of $66 an hour…”

That compares with $45 at Tesla, which isn’t unionized.

Hopefully, the UAW strike will yield fair results for the workers, given the enormous profits the companies are making, the generous salaries the industry’s execs are reaping, and the sacrifices labor made to keep the lights on when the industry was on life support in 2008.

This may well be the union’s last big strike when you consider that nearly half of all the cars built in the US are manufactured in 31 foreign-owned plants. None of these facilities are unionized, and their workers are generally paid less than those at union plants.

The move to EVs will be also be a sea-change reality for auto labor. There is likely to be a 40% reduction in the labor required to build the new engineless cars. Electric motors are much simpler than internal combustion engines. It is estimated that in less than 10 years, two-thirds of all new cars will be electric.

While the impact on labor throughout the supply chain will be dramatic, plenty of internal combustion engines will remain in use, even if not in production. That will provide stability for auto maintenance and repair workers for decades to come.

Nonetheless, the writing is on the wall. Workers with computer skills and AI capability will replace many traditional lunch-pail workers at plants assembling automobiles.

Time to wake up America! Not so long ago, the thought of a UAW strike was traumatizing because of the enormous workforce the union represented. A half-century ago, the UAW represented 1.5 million auto workers (1.5%) out of a total American workforce of just under 100 million workers. Today, UAW membership at GM, Ford, and Stellantis is about 150,000 employees (less than one percent) out of a total American workforce of 160 million workers.

Imagine if today’s number is reduced by 40%, or 60,000 workers! This means that the UAW loses its ability to represent its workers effectively by 2033!

To help you wake up, watch and listen to Green Day perform their hit “Wake Me Up When September Ends” from their 2004 album “American Idiot” at England’s Reading Festival in 2013. Frontman Billie Joe Armstrong wrote the song about the death of his father when he was 10 years old. But it has come to express loss of all kinds. Gotta love those English crowds:

You realize that the country is growing older, that Biden is growing older, the song is growing older, Green Day is growing older, and the union movement in the US is growing older too.

Regardless of how much time has passed, this song hits just as hard as it did when it was introduced 19 years ago.

Sample lyric:

Summer has come and passed
The innocent can never last
Wake me up when September ends

Reshoring The Semiconductor Industry: The Chips Act

The Daily Escape:

Sunset in Yarmouth Port, Cape Cod, MA – July 2023 photo by Cynthia Maciaga

The semiconductor industry is big, complex, and important. Semiconductors are also an important test case for America’s ability to revive its domestic manufacturing base. There’s a lot riding on Biden’s Chips Act that became law one year ago. It is a $50 billion package of subsidies, tax credits and other sweeteners designed to bring advanced chipmaking back to America.

As a result, Taiwan Semiconductor Manufacturing Company (TSMC) is investing $40 billion in Arizona. Samsung is investing $17 billion in Texas. Intel, America’s biggest chipmaker, will spend $40 billion on four semiconductor fabrication plants, or “fabs” in semiconductor parlance, in Arizona and Ohio. Both Democrats and Republicans regard it as a bipartisan legislative triumph.

But, finding highly skilled labor is key to the Act’s success. While America still has world-class semiconductor researchers and designers, we no longer have the kind of skilled labor that turns silicon wafers into electronic circuits. Chief Investment Officer magazine quotes Joseph Quinlan of Bank of America (BOA):

“America’s manufacturing renaissance could either be delayed or derailed by mounting structural headwinds….The US will have graduated only 108,000 technicians (who operate, maintain and fix electronic gear) by 2030, but demand is for 130,000 by then….Similarly, the nation will have produced 42,000 engineers and 21,000 computer scientists at that point, yet will need 69,000 and 34,000, respectively.”

BOA says that the other shortfall is construction workers. Construction of US factories has climbed 80% from a year ago, yet the nation has 374,000 unfilled construction jobs. We’re already seeing the problem. From the Economist:

“…The first of TSMC‘s factories was due to start production next year. But in July it announced that the launch would be put back to 2025 because it could not find enough workers with the expertise to install equipment at such a high-tech facility.”

The problem is during the delicate final phase of installing the most high-end equipment. Mark Liu, TSMC’s chair, said in a July earnings call:

“…there is an insufficient amount of skilled workers with those specialized expertise required for equipment installation in a semiconductor-grade facility.”

As a result, TSMC is sending skilled workers from Taiwan to teach Americans how to do the job. The Commerce Department forecasts that about 100,000 workers may be needed for the construction of these new fabs in the US.

The chip market breaks down into “leading edge” chips, followed by “advanced” chips and “trailing edge” chips, sorted from the smallest chips to the largest. The Economist says that by 2025, American chip factories expect to be churning out 18% of the world’s leading-edge chips (see chart below):

This seems highly optimistic if we can’t get these new plants built or staff them. Leading-edge fabs that are built in America will take longer to build and will be smaller than those in Asia. In China and Taiwan, companies can build out a new fab in 650 days. In America, the average construction time is expected to be 900 days, or 40% longer. Construction costs, therefore, can be 40% more in America than in Asia.

Regarding size, in Arizona, TSMC plans to make 50,000 wafers a month—equivalent to two “mega-fabs”, as the company calls them. In Taiwan, TSMC operates four “giga-fabs”, each producing at least 100,000 wafers a month. Size matters: The more chips a fab makes, the lower the unit cost.

More from the Economist: (emphasis by Wrongo)

“America will produce enough cutting-edge chips to meet only about a third of domestic demand. Apple will keep sourcing high-end processors for its iPhones from Taiwan.”

Overcapacity is a possible threat. The Economist says that in 2019, China made one fifth of “trailing-edge” chips, which go into everything from washing machines to cars and aircraft. But by 2025 it will produce more than a third of them. It’s possible that excess supply from China will put downward pressure on prices. In the long run, this could hurt higher-cost American fabs.

So, while there has been substantial progress in just a year, the US isn’t going to undo 20+ years of offshoring chip manufacturing in the next 24 months. The Commerce Department says it wants companies to collaborate on building up a construction workforce, so that workers trained for one project can move on to other fabs that are being built. In this respect, TSMC’s plan to import Taiwanese trainers is less of a bug than a feature, part of the process of helping to build knowledge.

Once the fabs are built, they’ll need technicians to operate them. Such workers have historically required two years of training at a community college or a vocational school. But companies and educators are experimenting with much shorter courses. Columbus State Community College in Ohio, where Intel is building two fabs, is offering a one-year program. The aim is for students to be job ready for Intel as their fabs come online.

But, will these companies be willing to put candidates with one year’s training anywhere near the multi-million-dollar machinery inside their fabs?

The fabs also need engineers to run them. Universities near some of the fabs under construction, including Arizona State and Ohio State, have expanded their offerings of semiconductor courses as part of degrees in engineering and physical sciences. Leading the charge is Purdue University in Indiana: last year it launched a semiconductor degree program for both undergraduates and graduates.

And the flow of students seems encouraging. Intel expected 100 registrants for its quick-start courses, but 900 showed up. At Purdue enrollment has also been very strong. Handshake, a job platform for recent graduates, reported that applications for full-time jobs at semiconductor companies were up by 79% compared with last year, versus 19% in other sectors.

Returning to having a strong, vibrant high tech manufacturing industry in the US is good, both strategically and economically. But for the immediate future, it remains a gamble: We’re saying that the economic reasoning for moving manufacturing offshore in the past still exists. But it’s important enough strategically that we (and these profit-seeking corporations) will somehow underwrite the cost disadvantages.

Relearning basic skills such as cutting wafers into chips and packaging them in hard plastic casings will take time. The welcome news for these new fabs is that colleges and universities see an opportunity in helping train the new labor force.

But we will still be dependent on other countries. We do not have a secure domestic supply of lithium, nickel, graphite and other minerals needed to expand production of solar panels, wind turbines, semiconductors and electric vehicles. BOA points out that American imports of lithium-ion batteries from China more than doubled in 2022, to $9 billion.

So, while there’s lots going on that may someday be positive, China represents a potentially dangerous choke point given that US-Sino bilateral relations are at a decade’s low. We’re depending on them to continue providing much of the materials crucial to our new manufacturing capacity, while we’re in the middle of a serious rift with them.

Reshoring manufacturing, especially high value manufacturing is America’s dream. But it will take unprecedented cooperation between the government, multinational firms and our higher education system to make it happen.

Monday Wake Up Call – July 17, 2023

The Daily Escape:

Comb Ridge, UT & AZ – July 2023 photo by RC Bullough Photography

Wrongo and Ms. Right were urban pioneers in NYC in the early 1980s. We rented a loft on Maiden Lane in the financial district. Back then, we had to go uptown or to Hoboken, NJ for groceries because there were so few people living amongst the downtown forest of office towers.

But by the 2020 census, lower Manhattan was the fourth fastest-growing residential neighborhood in NYC. Since the pandemic, downtowns have looked more like the ghost towns of the 1980s with so many workers adapting to remote work. And they seem to be staying away.

Things are going to get interesting. We may be at the beginning of a massive structural change, not just a temporary blip impacting office towers: It seems that companies have figured out they won’t ever need this vast amount of vacant office space. Brookings says that office utilization averages less than 50% across major US downtowns. While The Gothamist reports that national office vacancies are at a high of 19.2% (compared to 12.6% in early 2020). They also report that McKinsey predicts that remote work will erase $800 billion from urban office real estate values.

This has many cities thinking about conversion of office space into residential space. In NYC, 25 Water Street, which was once home to the Daily News and JPMorgan Chase, has a plan to gut the offices, carve out courtyards and add 10 floors to the 22-story structure. GFP Real Estate and Metro Loft bought the building, formerly known as 4 New York Plaza, in December for about $250 million.

One loophole is that the Financial District doesn’t require that the conversions include any affordable housing. So this project will not have any apartments with capped rents for low-income units. That isn’t true in other parts of the City, like Midtown, Queens or the Bronx.

Boston is testing an incentive program for developers to convert empty downtown offices into housing. Mayor Michelle Wu announced that the owners of repurposed buildings could get up to 75% off on their property taxes. Boston’s office market vacancy rate climbed to 14.2% in the second quarter, the highest level in 20 years, according to data from CBRE Group Inc. And median monthly rent for a one-bedroom apartment has jumped 8% in the past year to $2,800.

Boston’s downtown has about half of the city’s office space. An October 2022 report commissioned by the city found that economic activity downtown remained 20% to 40% below pre-pandemic levels for industries like retail.

Back in NYC, Mayor Eric Adams is also proposing incentives to designate 136 million square feet of office space for conversion to residential development. It’s worked before: A 1995 tax break for conversions helped create 13,000 new apartment units in Lower Manhattan.

Brookings raises the question of what the taxpayers’ interest should be in these conversions:

“To what extent are current high office vacancies a market problem whose burden falls on the private sector (property owners and investors) and to what extent do they represent a market failure and policy problem to which government must respond with financial support from the public?”

The advocates of tax breaks and other financial incentives say it will:

Help drive foot traffic to downtown businesses struggling from a lack of commuters.
Bolster municipal coffers, as cities often rely on property taxes from office buildings.
Supply much-needed housing amid a shortage that has many paying exorbitant rents.

It seems that office-to-home conversions are no more a comprehensive remedy for housing than e-bikes are for transit issues. Few office buildings are truly suited for conversion. It’s often more straightforward for developers to knock down the existing structure and build condos from scratch.

Moreover, the best thing that cities can do to encourage more housing is to loosen zoning restrictions, allowing multi-use and apartment buildings to be developed rather than just supply tax breaks.

The battle lines are drawn. The 25 Water St. developer said state and city lawmakers will have to pay up if they actually want to turn vacant offices into homes:

“The politicians, if they want to create housing in New York City out of these buildings, they will need to provide significant incentives….And if they want to provide affordable housing, those incentives would have to be even higher.”

Time to wake up America! We can’t let our mayors give away more tax revenues to developers! We’re unsure if the current rate of office utilization will improve or not, so cities need to be smart about what they do next. To help you wake up, we dust off an oldie. Here are the Rolling Stones with “Salt of the Earth” from their album “Beggars Banquet”. Performed live at the Rolling Stones Rock and Roll Circus in 1968. This was the first tune where Keith Richards had the lead vocal:

Sample Lyric:

Raise your glass to the hard-working people
Let’s drink to the uncounted heads
Let’s think of the wavering millions
who need leaders but get gamblers instead

Two Data Points That Say Much About Our Economy

The Daily Escape:

Another Alaska pic: Wrongo was in a kayak about 20 yards from this big guy asking himself whether he could out-paddle a charging grizzly. June 21, 2023 photo by Kristina Rau for the cruise line.

Today let’s talk about two interrelated economic issues. First, with more than 200,000 jobs created in the US economy in June, nearly 4 million more people are now employed than just before the pandemic.

Heather Long at the WaPo looked at who’s getting them. Along the way, she busts a few Right Wing myths:

“The mistaken notion that Americans don’t want to work can now be put to rest. Nearly 81% of Americans ages 25 to 54 are working, the highest share since 2001.”

Long reminds us that in March 2022, Fed Chair Powell argued the labor market was “unhealthy”:

“There was a misguided belief that it would take a recession to get supply and demand for goods — and workers — back to more normal levels. But what many experts missed was how many workers of color and immigrants wanted to work and were still looking for opportunities.”

Long provides the demographic breakdown for our recent job gains:

“Fewer White people are employed now than pre-pandemic. In contrast, over 2 million more Hispanics are employed now, over 800,000 more Asian Americans and over 750,000 more African Americans.”

Before the pandemic, companies were complaining that they couldn’t find workers, while the experts were saying the nation was at “full employment.” However, every month, Black and Hispanic people (largely women) kept entering the labor force and getting jobs.

Also, more than 2 million more foreign-born people are employed now than before the pandemic. This means that more than half of the new workers have been immigrants.

This is partly a result of low unemployment. Blacks and Hispanics often do not get hired until late in an economic recovery. In the past year, there’s also been a strong uptick in jobs in government and health care, two sectors in which women of color have historically found employment opportunities.

Employers have also loosened their hiring criteria, offering improved pay and benefits, and removing requirements for college degrees for many positions. Long says:

“This past spring, for the first time, Black Americans were as likely to be employed as White Americans.”

What a change! Hard to see much “socialism” in this new jobs analysis. This is good news that disputes the old Right wing bromides about how “these folks don’t want work; they want to sit back and get free stuff”.

Second, the WaPo’s Department of Data, a new statistical analysis feature, answered the question:

“Which states contribute the most to the federal budget in taxes, and which get the most back in terms of benefits?”

They start by reminding us where tax revenue comes from:

“The vast bulk of the $4 trillion in revenue the federal government received in 2021 came in the form of income taxes and payroll taxes for Medicare and Social Security. Most of the rest comes from corporate income taxes and excise taxes on goods such as gasoline and alcohol.”

And just 4.5% of that income (customs duties and earnings on Federal Reserve deposits) cannot be traced to individual states.

But let’s get to the good stuff. Just eight blue states, (CA, NY, NJ, MA, CT, WA, NH, and CO) pay more in taxes to the federal government than they receive in federal benefits. They therefore subsidize all other states. Every other state receives more federal money than they pay in taxes.

And unsurprisingly 9 of the 11 top recipients of federal benefits are red states (KY, WVA, MS, AL, AK, LA, OK, AK, SC).

Nine of the 10 states that sent the most to the federal government, per person, voted for Biden in 2020. Nine of the 10 states that sent the least voted for Trump. So who’s got the bigger stake in socialism?

Its important to remember that when Republicans complain about “out of control” federal spending, most of them live in a state that receives more from the federal government than they contribute.

If we ever called their bluff, Republicans would scramble to decide what federal benefits their home states would be willing to give up in order to cut federal spending.

But of course, they would simply bluster on about socialism in the cities.

Maybe we should divide America into the MAKER states and the TAKER states. It’s nice to see that the data again shows Blue states are far more productive. Maybe another question for the Department of Data is:

“Why is higher income so closely aligned with support for Democrats?”

Monday Wake Up Call – June 5, 2023

The Daily Escape:

Blue Ridge mountains, NC – June 2023 photo by Michele Schwartz

It’s getting to be long enough into our economic recovery that we’ve started to ignore the monthly jobs report by the Bureau of Labor Statistics (BLS). Luckily, Simon Rosenberg doesn’t let us forget: (brackets by Wrongo)

“The…BLS jobs report is out and it’s another good one – 339,000 net new jobs, [plus] 432,000…upward revisions from previous months. With this new data my monthly jobs tracker clocks in at:

-33.8m jobs – 16 years of Clinton, Obama

-13.1m jobs – 28 months of Biden

-1.9m jobs – 16 years of Bush, Bush and Trump

Biden’s 13.1m jobs is almost 7 times as many jobs as were created in the 16 years of the last 3 Republican Presidencies, combined.”

Since the end of the Cold War, the US has seen 49 million new jobs created. Remarkably, 47 million of those 49 million jobs were created under Democratic Presidents.

On the Democratic Party’s watch we’ve seen strong economic growth. OTOH, during the same time, Republican presidents have overseen three consecutive recessions. It’s not a stretch to say that the GOP’s economic track record over the past 30 years has been among the worst in US history.

Consider Biden’s record of economic growth:

GDP growth under Biden is 3+%, or 3 times what it was under Trump.
Almost 7 times as many Biden jobs as last 3 GOP Presidents combined.
Best post Covid economic recovery among the G7 countries.
Lowest unemployment rate in a peacetime economy since WWII.
Lowest poverty/uninsured rates ever.
Real corporate earnings up in 2022.

Despite what the GOP is saying to the press about their being deficit hawks, the federal deficit went up every year under Trump, and has come down every year under Biden. Rosenberg adds this helpful chart of GDP growth by president:

So why is it that Americans aren’t convinced that the economy has improved since the pandemic? In a new poll from the AP-NORC, asking if the nation’s economic conditions are in good shape, the percentage who agree is down from 30% last month to 24%. Only a third of Americans in the new survey approve of how Biden’s handling the economy, while two-thirds disapprove.

In the survey, Democrats were more likely than Republicans to view economic conditions favorably, but just 41% of them say the economy’s good and only 7% of Republicans agree. And both numbers are down from the previous month for both Parties.

Now this may be at least partially due to the Republicans scare tactics about the Debt Ceiling. The Hill reports that this AP-NORC poll is in line with other recent surveys that suggest most Americans think the country’s economy is in poor shape, Other polls also indicate low confidence in the economic leadership team.

Axios suggests a different way to view the economic issue. They looked at Federal Reserve survey data from 2017-2022, which shows that people think they’re personal economy is doing just fine, while they think the national economy is in terrible shape:

This is most likely because of the media’s awfulizing about our economy. Obviously, consumer prices are high, but inflation is coming down. But even if inflation went to zero, today’s prices will still be much higher than Americans were accustomed to pre-pandemic, so people will be complaining.

And we can’t discount the negative impact of Congressional dysfunction about the Debt Ceiling, or all the news bunnies crying about our unsustainable national debt.

Still, our economy continues to do better than even the economists think. The May employment report marked the 14th straight month that more jobs were created than economists expected. Our GDP continues to grow (it’s up more than 5% from its pre-pandemic peak), even after accounting for inflation.

The average US employee now makes $33.44 per hour, 17.5% more than before the pandemic. The stock market is up 10% so far this year, but still, Americans aren’t buying it. Axios’ Felix Salmon reports that while Americans say that they’re broadly happy with their personal finances (above chart), in other polls, a majority consistently think (erroneously) that we’re currently in a recession.

Time to wake up America! Things are rolling along reasonably well, even if they’re not fantastic. We have the best job market in 50 years, and there’s no recession on the horizon. As the Rolling Stones said: “You can’t always get what you want…”. Maybe it’s time to look at the glass as half full.

To help you wake up, watch and listen to Alan Jackson cover Eddie Cochran’s 1958 “Summertime Blues” in 1994. The Blue Cheer had the radio hit with it in 1968. Wrongo loves three versions of this song: Blue Cheer, the Who, and this Allen Jackson cover:

Sunday Cartoon Blogging – May 7, 2023

(The Monday Wake Up Call will be published on Tuesday this week.)

America has been waiting for more than a year for the Federal Reserve to get control over inflation. In that time, they’ve jacked up interest rates to over 5%. A year ago, raising rates that high seemed unthinkable, but here we are. Wages have also risen.

There was some damage: A few horribly managed banks collapsed. A couple of auto dealer-lender chains that specialized in selling overpriced used cars to subprime customers collapsed. And there were some fiascos in commercial real estate.

All of that has led the Fed to indicate that there could be a “soft landing” for our economy. But with the latest jobs growth numbers, maybe the Fed will have to keep circling the airport. In April, 253,000 jobs were created. There are now a record 155.7 million payroll jobs. Over the past 3 months on average, 222,000 jobs were created per month. So is a soft landing ahead?

Please raise your seat tables to the upright position and pass your trash to the attendant. On to cartoons.

Coronations aren’t just for the Brits:

(Wrongo watched the coronation of King Charles III yesterday. Seventy years ago, he also watched the coronation of Queen Elizabeth II on a 9″ black & white Philco television. Yesterday’s was on a 55” Samsung.)

The reality about the GOP:

What to expect after the GOP talks with Biden about the Debt Ceiling:

Proud Boys found guilty, but who pulled the strings?

Kremlin complains:

Justice Thomas needs to be taller to take the ride:

Time to buy more cards:

Workin’ On The Railroad

The Daily Escape:

Pikes Peak with Garden of the Gods in foreground, Colorado Springs, CO. View is from the reflection pool at Garden of the Gods Club and Resort – November 2022 photo by John Susan Hoffman

On Monday, Biden called on Congress to prevent a rail workers’ strike. Railroad workers are threatening a nationwide strike on December 9, which could deliver a crippling blow to the American economy. According to the Association of American Railroads, a nationwide rail shutdown could cost more than $2 billion per day. Passenger rail transportation would also stop, disrupting hundreds of thousands of commuters.

The unions have rejected a tentative agreement that had secured a pay increase of 24% over 5 years for rail workers, but wages don’t appear to be the primary sticking point. The outstanding issue is paid sick leave. The railroad companies have adamantly refused to include any more short-term paid leave. That means rail workers must report to work, even when they are sick, or forfeit their pay.

The essence of the unions’ position is that rail workers must use accrued paid time off (PTO) for their sick time. Actually, they use PTO for ANY days off. They get about 21 days of PTO annually. The rest of their time, including their weekends, is tightly controlled.

The context is that rail workers do not get weekends or holidays off unless they use their PTO. They’re on call 24/7, and if they refuse a shift after a designated (12 hour) rest period, they are docked points. Since the rail carriers have laid off more than a third of their workforce in the past decade, every shift is understaffed, and on most shifts, everyone who is eligible is likely to be called in.

Rail workers have jobs that often require them to be on the road for weeks at a time. From Heather Cox Richardson: (brackets by Wrongo)

“…[the unions]…oppose a new staffing system implemented after 2018, which created record profits for the country’s main rail carriers but cost the industry 40,000 jobs, mainly among the people who actually operate the trains, leading to brutal schedules and dangerous working conditions.”

The Precision Schedule Railroading (PSR) system made trains more efficient by keeping workers on very tight schedules. Any disruption in those schedules, like a family emergency, brought disciplinary action and possible job loss for the worker.

In the US, the 40-hour work week provides on average, 104 weekend days off per year, plus federal holidays. How many American workers would accept the total of 21 days off that most rail workers will accrue in PTO under the now-rejected Tentative Agreement?

The Railway Labor Acts of 1926, 1934 and 1966 control not only railroad labor disputes but also airline labor disputes. There is a series of steps that must be taken by both sides, and the final steps are where a union may strike, and Congress can step in and enact a law codifying an agreement between the companies and the unions.

The US Chamber of Congress and some 400 business groups, representing a wide range of industries, have sent a letter calling on Congress to intervene before the strike deadline if a deal is not reached to “ensure continued rail service.”

You would think that puts Democrats in a bind. They’re pro-union, but in this case, they’re jumping to the tune of big business. And why did Biden make his announcement a week in advance of the possible strike? A good negotiator would create some uncertainty in the minds of both the companies and the unions. There should be at least the appearance of a strike being possible.

Shouldn’t the “most pro-labor president” in a generation (in 1992, he was one of only six Senators to vote against legislation that ended another strike by rail workers), demonstrate that he’s proud to be on the workers’ side, at least until he isn’t?

Congress also has the option to dictate a cooling-off period, allowing parties to continue negotiating until they reach an agreement, or force both sides to enter arbitration, where a third-party mediator gets involved.

The unions knew that Congress would likely intervene. So workers would rather have a bad deal forced on them than to vote for it.

Four paid sick days is nothing. The fact that the rail companies are unwilling even to give four sick days says everything you need to know about American corporations in 2022.

Dems Have To Talk About Inflation

The Daily Escape:

Blueberry barrens, Sedgewick, ME – Via. The blueberry plants turn red like trees because they’re also preparing for winter dormancy.

We’ve been writing about how the threat of losing both the House and Senate weighs on Democrats. Inflation and the economy are said to be voters’ top concerns in recent polls. This week’s NYT/Siena College survey showed that 26% of respondents cited the economy, while another 18% chose inflation as their No. 1 issue.

The Dem’s lack of messaging about inflation needs to be adjusted because inflation is hitting hardest in a few swing states like Georgia, Arizona, and Florida. From the Right-leaning Washington Times:

“The Phoenix metropolitan area has the highest inflation rate in the nation at 13%, the worst of any US city in more than 20 years and twice as high as the rate in San Francisco. It’s a high hurdle for Democratic Sen. Mark Kelly of Arizona as he tries to fend off a challenge from Republican Blake Masters.”

Kelly currently holds a one-point lead in the latest survey.

Wallet Hub says that the US metropolitan area with the second-highest inflation rate is Atlanta, where consumer prices are 11.7% higher than a year ago. Senate Democratic incumbent Raphael Warnock holds a four point lead. One message that’s lost in the inflation debate is, as Georgia’s Sen. Warnock says:

“While we are seeing record prices, a lot of our corporate actors are seeing record profits in the gas industry and the pharmaceutical industry.”

Two metros in Florida: Miami, Ft. Lauderdale, and West Palm beach (10.7%), along with Tampa-St. Petersburg (10.5%), are in the top four highest inflation cities, and Marco Rubio (R) holds a 4.7-point lead, with Democrat Val Demings having an uphill fight.

Philadelphia ranks 14^th in metropolitan area inflation, at 8.1%. Democratic Senate candidate John Fetterman leads by 2%.

Nationally, the inflation rate is 8.2%.

Nearly two-thirds of consumer spending goes to services rather than products. Services are now the key driver of US inflation. The CPI for services increased in September for the 13th month in a row, and by the most since 1982. Housing costs spiked, but so did other services, such as health insurance (up 28% year-over-year). Airline fares rose by 42.9%, while motor vehicle maintenance and repair rose by 11.1%.

One of the worst categories is the CPI for “food at home”, or food bought in stores and at markets. It spiked by 0.7% in September from August. Year-over-year, the CPI for food at home jumped by 13.0%, led by eggs which are up by 30.5%. Food inflation is particularly insidious because it hits lower-income consumers the most, since they spend a larger share of their budget on food.

The key question for Democratic candidates in swing states during the last weeks before the midterms is how to talk about the economy when inflation remains above 8% and maybe is even higher in their state.

Democratic strategist Mike Lux has warned that Democrats can’t duck talking about inflation at a time when it’s the Republicans’ primary campaign issue. Lux says how Democrats should explicitly address inflation:

Wealthy corporations with monopoly power are jacking up their prices, and their profits are going through the roof.
Drug prices and health insurance premiums are going to go down because of the Inflation Reduction Act…while Republicans have no plan of their own.
Seniors will be getting the biggest increase in their Social Security payments (8.7%, more than current inflation) in 40 years…while Republicans are talking about ending Social Security.

But Dems should also ask why voters think that if Republicans return to power that they will actually fight against inflation and improve the economy? If they get back in power all they’ll offer is tax cuts and financial austerity. They’re saying they will jeopardize the future of Social Security and Medicare.

Their House Speaker-in-waiting, Kevin McCarthy (R-CA) has said in an interview with Punchbowl that he will hold the national debt ceiling hostage next year, a move that the WaPo’s Catherine Rampell warns “could easily precipitate a global financial catastrophe.”

The economy is a difficult issue for Dems this year, and many are afraid to talk about inflation. But they have an excellent legislative record to run on and the best job market in 40 years. Democrats have plenty to say about inflation if they connect it to broader economic themes where they have a strong message.

For sure, Dems can talk about Republicans’ appalling destruction of reproductive rights, but we can’t expect to win the election on that alone.

More Midterm Madness

The Daily Escape:

Sunset, Thumpertown Beach, Cape Cod, MA – October 2022 iPhone photo by Wrongo

We’re back from a truly delightful time with family and friends on Cape Cod. The next few days will be hectic because we’re leaving again on Sunday, this time for a week in London.

About the November midterms. It seems clear that the polls are tightening in many races. Some of that is natural and to be expected as the political horse races head down the stretch. Some pundits like Amy Walter, think that this demonstrates that the Dems have reached the ceiling for their support in 2022:

“So, basically, what…I’m hearing from…sources in the campaigns is that Democrats may have maxed out that enthusiasm gap they got over the issue of abortion and that growing beyond that is going to be the challenge.”

Robert Hubbell agrees that recent polls have swung towards the GOP, but questions whether these polls reflect the facts on the ground:

“Never before in American history have we faced the elimination of an existing Constitutional right for 51% of the population. Never before have we faced a party whose platform seeks to end the very democracy they seek to rule…”

The Wrongologist

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Category: Employment

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Monday Wake Up Call – June 5, 2023

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Workin’ On The Railroad

Dems Have To Talk About Inflation

More Midterm Madness