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‘This Is What the Middle Class Looks Like’

9:09 am in Uncategorized by ThirdandState

By Stephen Herzenberg, Third and State

"This Is What Democracy Looks Like"

But what does a real middle class look like?

“This is what democracy looks like.” Even though this chant originated with the Seattle protests against the World Trade Organization (WTO), which haven’t yet led to major reforms, the phrase nonetheless captures the idea of a social movement that has crystallized its demands and has a better chance to succeed because of it. Other examples include the right to vote in the civil rights movement, or the fight to legalize gay marriage, a simple modern demand that culminates a fight for equality in all its dimensions.

One challenge in the U.S. fight for economic justice since inequality began to yawn wider in the 1970s has been the lack of a simple demand that either working people or elites thought could bring back the middle class. Having such a demand fuels social movements because it gives members of the movement confidence — conviction — that there is a way for the world to give them what they want. It also fuels social movements because it gives the broader society a way to let the protesters get a win.

The fast food workers engaging in one-day strikes across the country may be on the verge of crystallizing a simple demand to which their low-wage employers could accede — and, in the process, cracking the code to the next U.S. middle class.

Today’s story on these strikes in The New York Times says that the organizers aren’t actually clear yet on the path to victory. The demand is a $15-per-hour wage — a ticket to the middle class. But will progress result from a higher minimum wage, local living wage requirements for big chains, or companies themselves raising wages to get off the front page? (This is where you say in your best pompous pundit voice, “Well, ah, um, cough, good question.”)

Because these protesters have a practical, confident vision of the end point they want — an economy that pays lower-wage workers a middle-class wage (so what if Big Macs cost 50 cents more) — they have a good chance of finding the mechanism that can get them there and keep them there (or forcing the rest of us to figure out the mechanism).

Read the rest of this entry →

Fact Checking PA Governor Corbett’s Jobs Record…and Some Unsolicited Advice

2:07 pm in Uncategorized by ThirdandState

By Stephen Herzenberg, Third and State

Governor Tom Corbett’s administration has a new summary of Pennsylvania’s recent job performance. Today’s news that Pennsylvania’s unemployment rate is as high as the national unemployment rate underscores, however, that the state’s recent jobs record is not  good. Let’s take a closer look.

PA vs. U.S.: The Corbett jobs summary notes that Pennsylvania’s unemployment rate is below the national rate — and it was when the summary was first released. This was not a new trend: the Pennsylvania rate was a point or a point-and-a-half below the national rate for most of the four years before Governor Corbett took office. A year ago, the gap between the Pennsylvania and U.S. unemployment rate was still statistically significant. (See Table A.) But the gap between the two rates — the “Pennsylvania advantage” — has been shrinking steadily since 2010 until the Pennsylvania rate finally climbed to the U.S. level in August 2012, both equaling 8.1%.

Private-sector Job Growth: While the administration touts private-sector job growth in 2011, the numbers reflect a national trend, rather than a unique Pennsylvania story.

The U.S. economy has had 30 consecutive months of private-sector job growth. In fact, Pennsylvania’s rank for the percent growth in private-sector job growth has fallen from 8th in 2010 to 36th in the 12 months ending in July 2012. One of the reasons that Pennsylvania’s private-sector job-growth ranking is down is the deeper cuts in public employment in Pennsylvania compared to other states. Deep cuts to Pennsylvania public schools and colleges led to a loss of 14,000 education jobs alone in 2011.

These layoffs impact the classroom and Main Street too. Unemployed teachers, like unemployed factory workers, don’t have money to spend, which affects the broader economy.

Manufacturing Job Growth: Manufacturing jobs growth improved in 2011, but again reflects national trends. In fact, Pennsylvania’s manufacturing job growth since early 2010 is slightly below half the national increase. (See The State of Working Pennsylvania 2012.)

New Hires in Marcellus Shale: Not this one again. The administration is touting natural gas industry growth by citing the number of new hires. As we’ve explained repeatedly, new hires are not new jobs (most new hires replace people who quit or are fired). In fact, the number of new hires is basically a meaningless number. Statewide there were 580,400 new hires during the 2nd quarter in Pennsylvania, while total non-farm employment rose between the 1st and 2nd quarter by less than 300 jobs. In other words, the only reason to cite new hires is to make the job gain seem substantially larger than it really is.

The gas industry has led to some job growth in Pennsylvania, just not on the scale claimed by the industry. Between the 4th quarter of 2008 and the 4th quarter of 2011, employment in the core Marcellus Shale industries grew by 18,000. That gain was largely wiped out by the loss of 14,000 education jobs in just one year. Even using the most generous estimates, employment in the Marcellus Shale in direct and ancillary industries in the 4th quarter of 2011 (as published by the Pennsylvania Department of Labor and industry) was 238,400 – about 4.2% of total state employment.

Here’s the unsolicited advice: Twenty months into Governor Corbett’s first term, there is still time for the Governor to pursue policies that will improve Pennsylvania’s job performance. There are multiple options that have strong bipartisan and business support. For example, investing in transportation infrastructure as recommended by the Governor’s own transportation commission.

In manufacturing and workforce development, the administration is also saying some of the right things. But talk is cheap: we need actual investment in skills and innovation if our job performance is going to improve relative to other states and the nation.

PA’s July Jobs Report Is Out, and It’s Not Good News

9:18 am in Uncategorized by ThirdandState

By Mark Price, Third and State

Pennsylvania’s unemployment rate shot up three-tenths of a point in July to 7.9%. Just two months before in May, the rate was 7.4%. Total nonfarm jobs in the state were down 3,100 in July.

That’s not all. There was a big revision downward with the state’s nonfarm payroll count for June: it was originally reported as 5,729,700, but was revised down by 17,400. To put it in some perspective: Pennsylvania reported a June jobs gain in its report last month of 14,600 jobs. After the latest revisions, Pennsylvania actually lost 2,800 jobs in June.

Industry-wise, the July report is a mixed bag. Mining; trade, transportation & utilities; information; professional & business services; and other services saw gains. Constructions; manufacturing; financial activities; education & health services; leisure & hospitality; and government saw losses.

Overall, July was not a good month for the labor market in Pennsylvania, with employment falling in both the household (-10,000) and establishment (-3,100) surveys, and, of course, with the unemployment rate rising to just shy of 8% and shamefully close to the national unemployment rate of 8.3%.

I say shamefully because Pennsylvania weathered this recession better than most states and early in the recovery posted strong job gains. The Pennsylvania advantage coming out of the recession is being slowly whittled away by the persistent loss of public-sector jobs, mostly in local school districts, that has followed deep cuts in state funding.

I wouldn’t panic over these numbers; there is no reason to believe the Pennsylvania or national economy are headed into a recession. Growth just remains disappointingly weak and will likely remain so through the end of the year.

PA Job Numbers Out, The War On Unemployment Insurance, and Inequality

8:36 am in Uncategorized by ThirdandState

By Mark Price, Third and State

A pile of rusty pennies.

Photo by Davidd

Happy Sunny Friday, people! Now for the not so good news. The job numbers for Pennsylvania came out Thursday, and the overall picture was somewhat disappointing. The unemployment rate edged down slightly to 7.4% and nonfarm payrolls declined by 600 jobs. Focusing on the jobs data, the biggest loser in April was construction, which shed an eye-popping 5,400 jobs. That is a big swing at a time of year when construction projects should be ramping up. Odds are that loss is driven by sampling error rather than real trends in construction activity. Another troubling stat was the loss of 1,700 jobs in the public sector.

Because monthly data are somewhat erratic, you shouldn’t make too much out of any one-month change in employment overall or within a sector. Looking at nonfarm payrolls since October, the jobs picture is somewhat brighter with Pennsylvania adding, on average, 3,900 jobs a month. So Pennsylvania’s labor market, like the national labor market, is continuing to recover.

Now for the bad news: if you were hoping the Pennsylvania economy would finally return to full employment by 2015 (remember, the recession started in December 2007), nonfarm payrolls need to grow by about 10,000 jobs a month. So by that metric, we are a long way from fully recovering from the worst recession since the Great Depression.

Read the rest of this entry →

PA Must Reads: Predicting School Districts In Distress, Privatization and Hello Düsseldorf!

7:17 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

The Harrisburg Patriot-News reports this morning on a new study that predicts fiscal distress in Pennsylvania school districts thanks to state budget cuts.

In a report titled “Sounding the Alarm,” the Pennsylvania State Education Association describes the impact that state funding cuts and policies are having on school districts’ ability to meet the educational needs of students.

In it, the union calls on the Legislature and Gov. Tom Corbett to put more money into public schools and remove the limitations on property tax increases required by the state law known as Act 1.

But the Corbett administration suggests there’s no reason for alarm.

In a cringe-inducing moment from that Patriot-News story, a spokesman for the Corbett administration chose not to read the study before reaching into his trusty public relations rapid-response handbook:

Tim Eller, Department of Education press secretary, said having only one or two districts out of 747 public school entities encountering severe fiscal distress is no reason to sound the alarm.

From the study:

The authors of a study published recently in the refereed Journal of Education Finance conclude that districts that are relatively small, rely heavily on a single source of revenue, have little buffer within their budgets, and have relatively high amounts of debt are more likely than other districts to cut classroom expenditures by at least five percent in a given year (Trussel and Patrick, 2012). The strongest of these indicators of underlying fiscal weakness is heavy reliance on a single source of revenue.

Districts entered 2011-12 in varied financial shapes. Applying the model from the Trussel and Patrick study to Pennsylvania school districts, and combining those results with trend data from districts’ General Fund balances over the last few years, strongly suggests that many districts across the state faced elevated risks for making severe cuts to classroom services, even before the other cost and revenue pressures reviewed below are taken into account. Read the rest of this entry →

PA Must Reads: Transit Cuts and Job Training In Its Many Forms

7:55 am in Uncategorized by ThirdandState

Port Authority Bus Line #40 (photo: pquan/flickr)

Port Authority Bus Line (photo: pquan/flickr)

A blog post by Mark Price, originally published at Third and State.

The Pittsburgh Post-Gazette reports there will be a hearing today on the fare increases and service cuts facing the Port Authority of Allegheny County.

Financial problems are nothing new for the Port Authority; nor are public hearings on proposed fare increases and service reductions, like the one scheduled today at the David L. Lawrence Convention Center…

The agency has pinned its hopes on recommendations by the state’s Transportation Funding Advisory Commission in August. The panel, appointed by Gov. Tom Corbett, issued a proposal to raise as much as $2.7 billion in new revenue for highways, bridges and public transit. But Mr. Corbett has yet to embrace the plan and his spokesman has suggested that Port Authority funding is a local rather than state problem.

The July 1 fare increase is likely to occur regardless of whether the state comes up with additional funding. In addition to the 25-cent base fare increase, it would add 50 cents to a two-zone trip, making it $3.25. It would be the third fare increase in five years.

The service cut would eliminate 46 of the remaining 102 routes and reduce the frequency of trips on the others. It would be the third reduction in six years and leave the region with less than half of the service that existed before the cuts.

A 15 percent reduction last March caused severe overcrowding on some routes, and riders still get passed by buses that are filled to capacity.

The Patriot-News reports that offsetting proposed cuts in state support for higher education would require a 9% increase in tuition at state-owned universities. Read the rest of this entry →

PA Must Reads: High Unemployment Strains the Safety Net and Underwater Mortgages

7:50 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

The Pittsburgh Post-Gazette reports this morning on the continued strain that high unemployment is putting on the safety net in Pennsylvania.

There are 1.8 million people in Pennsylvania so short of cash that they qualify for food stamps. That translates to 14.4 percent of the state’s population receiving at least part of their food budget from the Supplemental Nutrition Assistance Program.

The slow economic recovery from the Great Recession is not yet translating into personal recoveries…

Pennsylvania does not keep unemployment trend records on a month-by-month basis but in the fourth quarter of 2011, 33 percent of the state’s unemployed had been out of work for more than six months and the state’s labor force participation rate was 62.8 percent, lower than in the fourth quarter of any of the previous three years…

When Just Harvest advertised a part-time job paying $12 an hour to help people apply for food stamps, the agency was inundated with applications — including people with doctorates seeking a job that just required some education past high school.

Laura Tobin Goddard, executive director of the Pennsylvania Hunger Action Center in Enola, Cumberland County, said food pantries around Harrisburg are still reporting seeing a lot of new faces even 2 1/2 years after the recovery began.

Her agency, which is also a nonprofit that helps people access government programs and directs them to food pantries, received 500 calls in 2007 from people seeking assistance. Now it receives 100 calls a month.

Those of you betting that 2012 will mark the year the housing market in Pennsylvania came roaring back need to pay up. The Pocono Record reports on the percentage of borrowers that owe more on their homes than those homes are worth if they were put up for sale.

Almost half the homes in Monroe County are worth less than what homeowners owe on their mortgages, according to a recent study.

That’s the highest “underwater” rate in the state, according to data from RealtyTrac.

The data show nearly one-third of all Monroe County homes are seriously underwater. That’s where borrowers owe at least 25 percent more on their mortgages than their property is worth…

By comparison, about 27 percent of homeowners across the state are, on average, underwater.

PA Must Reads: Unemployment Benefits Extended, Prevailing Wage Change Stalls and Running Government Like a Business

7:48 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

What a difference an election year makes. Last year was full of pointless brinksmanship over federal policy issues that will take several decades to solve. Those battles at times looked like they threatened the near term health of the economy.

The New Year is shaping up to be very different. The New York Times reports this morning that a deal has been struck to extend the payroll tax reduction and extended unemployment benefits through the end of the year. Tentatively, it looks as if efforts to weaken the unemployment insurance system have been blocked. Both the payroll tax reduction and extended unemployment benefits were set to expire at the end of February, and the failure to extend them was on most economists’ lists of things that could weaken the economy in 2012.

The Allentown Morning Call reports that an effort to weaken Pennsylvania’s prevailing wage law appears to have stalled. There is little evidence that the presence or absence of prevailing wage laws raise public construction costs. There is, however, abundant evidence that repeal of these laws lowers the wages of construction workers. Read more here.

So why the effort to weaken the law? It is about catering to owners and executives of contractors who pad their pockets by paying workers’ poorly.

Governor Tom Corbett, meanwhile, is touring the state to promote his 2012-13 budget.

Corbett insisted to reporters during his tour of the high-tech Siemens Medical Solutions plant that his 2012-13 plan for a steep new cuts in state aid to higher education — including 30 percent less money to state-backed schools such as Pennsylvania State and Temple Universities — could be dealt with by reducing campus operating costs, not by raising tuition…

“A lot of people are upset at spending at that level, but that’s all the money that we have,” he said, reiterating his vow not to raise taxes…

He argued that the state had to be run more like a private business — like Siemens, in fact — to create more jobs and cut costs.

“We can’t continue to raise our prices,” he said, referring to college costs. “If Siemens kept increasing prices, they would make themselves uncompetitive.”

Speaking of “all the money that we have” and running the government like a “private business” that gives away its services for free even when it has no idea whether the benefits of that policy exceed the costs … Governor Corbett has signed into law an extension of Keystone Opportunity Zones.

Gov. Tom Corbett on Monday signed a bill extending for 13 years the Keystone Opportunity Zones program that exempts businesses from paying many state and local taxes.

Exemptions run for up to 10 years, but the bill lets companies enroll through the end of 2015 so the program now will run through 2025…

While KOZs started in 1999 to promote the use of distressed lands and run-down properties, lawmakers and observers noted instances in the early years of the program where companies enjoyed the tax benefits without investing in properties or creating jobs.

Finally this morning, we have lots of news on the impact of economic austerity around the state. For starters, school districts in Cumberland County are moving to balance their budgets by raising fees, and the Lancaster School District faces a budget shortfall.

The Philadelphia City Controller has issued a grim warning about the Philadelphia School District’s financial future.

As expected, City Controller Alan Butkovitz included a warning Tuesday about the Philadelphia School District’s finances in a report that could result in higher borrowing costs for the district.

The comprehensive annual report, sent to bond-rating agencies and bondholders, includes a paragraph expressing reservations about the district’s financial viability.

The school district, the controller’s office said, “has experienced continued operating funds losses, is projecting significant budget shortfalls for fiscal years 2012 and 2013, and is uncertain about its ability to achieve cost savings and obtain additional funding to overcome these budget shortfalls. These conditions raise substantial doubt about its ability to continue as a going concern.”

And social service agencies in Northeastern Pennsylvania are bracing for cuts.

The week that area social services agencies have had to chew on the cuts in Gov. Tom Corbett’s proposed 2012-13 budget has not made them any easier to swallow.

Amid still-unanswered questions over how a 20 percent smaller pool of funding within a revamped Human Services Development Fund will be distributed at the local level, critics say the one certainty is children and people with disabilities will be among those bearing the brunt of the cuts.

“It’s going to take through the year to find out who really are going to be the victims here,” Michael Hanley, executive director of United Neighborhood Centers of Northeastern Pennsylvania, said Tuesday. “Certainly, what we do know is it is going to be the most vulnerable. That is a given.”

PA Must Reads: Haute Couture, Extended Unemployment Benefits and Nursing Home Cuts

8:51 am in Uncategorized by ThirdandState

Zoolander

A blog post by Mark Price, originally published at Third and State.

Project Runway fans (don’t judge) know that this week is Fashion Week in New York. So in a nod to our fashion forward readers comes a story about an effort to provide more workplace protections for fashion models.

Models are more than just pretty faces. They’re often overworked, underfed and underage independent contractors with little say when things go bad behind the scenes. Many are just teenagers far from home, in some cases earning as much in a day as their poor families back in Russia and Eastern Europe do in a month. As a result, many fear speaking out about sexual harassment, unscrupulous booking agencies, demands to alter their bodies, lack of backstage privacy and punishing stretches with little sleep.

“Modeling is precarious freelance labor,” said model Sara Ziff, who was discovered at 14 walking home from her New York City school. “We have very little job security. It’s also a winner-takes-all market. There’s only one Gisele. Basically, it’s a labor force of children who are working in a very grown-up business.”

Dorian Warren at NewDeal 2.0 has more on the effort to provide workplace protections for models.

You really must read all of Simon Johnson’s post this morning on efforts in Washington to weaken extended unemployment benefits.

The principle behind unemployment insurance is simple. Since the 1930s, employers have paid insurance premiums (in the form of payroll taxes, levied on wages) to the government. If people are laid off through no fault of their own, they can claim this insurance — much the way you file a claim on your homeowner’s or renter’s policy if your home burns down…

The original legislative intent, reaffirmed over the years, is clear: Help people to help themselves in the face of shocks beyond their control.

But the severity and depth of our current recession raise an issue that we have literally not had to confront since the 1930s. What should we do when people run out of standard unemployment benefits — much of which are provided at the state level — but still cannot find a job?

In negotiations currently under way, House Republicans propose to cut back drastically on these benefits, asserting that this will push people back to work and speed the recovery. Does this make sense, or is it bad economics, as well as being mean-spirited?…

The jobs crisis was caused by recklessness in the financial sector, made possible by irresponsible deregulation (including a period when Republicans controlled Congress and the White House) and resulting in enormous unconditional bailout protection for the bankers at the heart of the disaster (under both President George W. Bush and President Obama).

Let’s be generous for a moment and simply state that mistakes were made — on an enormous, macroeconomic scale with gut-wrenching consequences for families around the country. Why would anyone now seek to punish these people when they seek work but cannot get it?

Since Simon brought up punishing the 99% for the sins of the 1%, let’s turn our attention to the state budget. My colleagues at the Pennsylvania Budget and Policy Center have released their full analysis of Gov. Corbett’s proposed budget. The Philadelphia Inquirer this morning focuses in on the budget cuts targeting nursing homes.

Pennsylvania nursing-home operators, already hit hard by last year’s cuts in federal and state funding, face another revenue loss in Gov. Corbett’s proposed budget for the fiscal year starting July 1. The budget proposal, released Tuesday, calls for a 4 percent cut in the Medicaid reimbursement rate for nursing homes. The total revenue loss for nursing homes is projected by the Pennsylvania Health Care Association to be $46.5 million…

“The issue isn’t: Can you cut costs? Everybody can cut costs. The issue is: Can you cut costs and provide quality care?” Kleinberg said. Cutting aid to elderly poor who rely on Medicaid is a relatively “easy thing to do,” she said. “Their need is so great, but their voice is so small.”

PA Must Reads: Hard Times, Unemployment Insurance and Marcellus Arm Twisting

10:18 am in Uncategorized by ThirdandState

(photo: wisaflcio/flickr)

(photo: wisaflcio/flickr)

A blog post by Mark Price, originally published at Third and State.

Although the economy is recovering, it is important to remember that unemployment remains high and that means many households are struggling to make ends meet. WITF this morning reports on non-food aid from a Central Pennsylvania charity.

NPR’s Morning Edition had a very good story on the national controversy surrounding food assistance.

Meanwhile, the Allentown Morning Call reports that a bill required to enable 17,000 Pennsylvania workers to qualify for federally-funded unemployment insurance has cleared an important hurdle.

The state House has advanced Legislation that would restart the flow of extended unemployment benefits for 17,000 jobless Pennsylvanians. A final vote, which would send it to Gov. Tom Corbett’s desk, is expected Wednesday …

… the bill was quickly moved to third, and final consideration, with Speaker Sam Smith’s announcement that all amendments to the bill had been pulled. …

Some House Republicans, with the backing of business leaders, had sought to tie approval of the bill to shoring up the long-term solvency of a system that owes $3 billion to Washington — courtesy of historic levels of unemployment.

The Philadelphia Inquirer reports on hard ball politics aimed at boosting support for a weak Marcellus Shale drilling fee. Read the rest of this entry →