Category Archives: The Working Class and the Economy

Class War in the Tax Code

I know that taxes are a really boring subject, as is talking about billions and trillions of dollars as if any of us could understand such magnitudes. But a one-sided class war is being fought every day in the U.S. tax code, and getting even a glimpse of the amounts of money involved can change our sense of why taxes matter. If the government would stop redistributing income through the tax code and instead tax investors the way it does workers, homeowners, and consumers, many things that we can’t afford today would be easily affordable.

California, for example, doesn’t have enough money to pay home care workers (who are basically state employees) both minimum wage and overtime – the state is short some $350 million. Those workers average about $17,000 a year, with lots of overtime that is paid at straight wages. In Chicago there’s not enough money to have guidance counselors and social workers in the schools where they are most needed or librarians to staff most of the libraries. The Chicago Teachers Union estimates that it would cost about $300 million to remedy these and other deficiencies, but doing so would have a big impact on educational results. In order to save the Detroit Institute of Arts’ collection from being sold to get Detroit out of bankruptcy, city workers with $19,000 annual pensions had to give up about $900 each while the state of Michigan found $200 million for a one-time contribution to the city’s pension fund.

These amounts seem very large from an individual perspective. Even the smallest, $200 million, is more than 100 times what an average professional worker earns in a lifetime. The cumulative total of $850 million could fund the payrolls of six top teams in the National Football League. But in the world’s largest economy, whose national government now spends about $4 trillion a year, these hundreds of millions of dollars are the equivalent of nickels and dimes.

I have chosen these state and local situations at random, but thousands of state and local governments are similarly “taxed out” politically, if not economically. States and municipalities compete with each other to keep taxes low in order to attract businesses that, they hope, will create more jobs; few of them are in a position to initiate new taxes on investors. The federal government, on the other hand, has lots of room to run in taxing the top income earners and wealth holders.   Local governments tax property wealth, which is widely distributed among the population, but nobody taxes financial wealth, which is greatly concentrated in the top 10% and 1%. Likewise, state and local governments are highly dependent on sales taxes for things like clothes and meals at Appleby’s, which nearly everybody buys, but there is no sales tax when you buy a stock or bond.

This is how class war is waged in the tax code. If financial wealth were taxed like property wealth, and if buying a stock or bond were taxed like buying a shirt or skirt, all underfunded public pensions could be funded; home care workers could make a living wage; we could have the kind of massive infrastructure program we need; veterans wouldn’t have to wait months to be seen by Veterans Administration doctors; and we could cut our debt and deficit at the same time as we cut other taxes. And if income made from investing rather than working were taxed at the same graduated rates as earned income, we could do even more. We could have smaller class sizes and more teachers. We could staff government agencies at levels that would enable them to actually fulfill their functions – including enforcing our labor laws. Add it all up, and millions more workers could have decent jobs.

So why do we tax income you work for at higher rates than income you don’t work for? Because investors are winning a class war that most workers don’t know is being fought. Why does it seem natural to tax real property (houses, buildings and land) but not financial property (cash, stocks and bonds)? Because investors long ago won a class war that home owners don’t realize was ever fought. And why are meals at Burger King taxed but not stocks and bonds? Because investors are winning a class war that consumers don’t know is being waged.

How much additional money would the government have if unearned income were taxed at the same rates as earned income, if financial wealth were taxed at the same rate as property wealth, and if a sales tax was levied when buying a corporate stock the way it is when buying a pair of shoes? I did a little research and found out that it’s quite a lot – at least $800 billion a year. While implementing an equitable system of federal taxation would involve many administrative, legal, and political difficulties, it could solve financial problems at the state and local as well as the federal levels. None of the difficulties is insurmountable, but first we need to simply ask why investors get discounts and free passes in the tax code. Maybe they really are more valuable and important than the rest of us. But let’s discuss that in public rather than simply assuming it in the tax code.

In the meantime it’s clear that if the government taxed investors like it taxes workers, home owners, and consumers, we’d have more than enough money to do all the things I list above. After all, providing what’s needed for home care workers in California, school children in Chicago, and pensioners and art museums in Detroit would only cost $850 million (with an “m”). We could raise nearly 1,000 times that much — at least $800 billion (with a “b”) — if the government would declare a cease fire in the class war and stop redistributing income.

Jack Metzgar
Chicago Working-Class Studies

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For those who want to check my homework, here’s how I arrived at these big numbers.

Unearned income (capital gains and dividends) is currently taxed at 20% regardless of income level. If it were taxed at the same graduated rates as earned income, United for a Fair Economy estimates it would produce $160 billion in additional federal revenue.

Local governments live off wealth taxes, but these are applied only to “real property” (houses, buildings and land) not to financial property (cash, stocks or bonds).   The average property tax rate is 1.38%. According to Dean Baker at the Center for Economic and Policy Research, the total value of outstanding U.S. corporate stocks in 2014 is about $28 trillion. Thus, a 1.38% “property” tax on stocks would produce $386 billion in new revenue. I could not find a number for the total value of bond holdings in the U.S., but a 1.38% tax on bond wealth would surely add enough for a financial property tax to produce at least $500 billion a year.

The Tax Foundation does not compute an average for “combined state & average local sales tax rates,” but among the 47 states that have a sales tax (3 states do not have any), almost all are above 6%. So using 6% as a sort-of-average sales tax and applying it to the $60 trillion in stock trades in 2013, it would produce an astounding $3.6 trillion – nearly enough to fund the entire U.S. Government. This would be wildly unrealistic, as it would wreck the stock market and kill investment, but it gives you a notion of how lucrative even a very small sales tax on stock transactions could be. HR 1000, introduced by Rep. John Conyers, would impose a sales tax of 0.25% on stock trades (that’s a tax of 25 cents on a purchase of $100 in stocks), and that would produce $150 billion in new revenue. This much more modest amount is what I used to get a total of “at least $800 billion.”

 

The Precariat: The New Dangerous Class

Across the world, more and more people realize they are in the precariat – or may be soon – and that they are not alone. That is bringing a change of mood, from being defeated and dispirited to being defiant and demanding. Old sociologists may be bewildered, but precariat groups are moving from mass occupations to political re-engagement. They know there is no unified working class and do not want to go back in search of a phoney unity. We need an alternative progressive future, forged for and by the precariat.

Most fundamentally, the 20th century income distribution system has collapsed. The share of income going to profits has rocketed and will continue to rise, the share going to rent will rise even more. Real wages will continue to stagnate.

In pursuit of competitiveness, governments have implemented policies of labor flexibility, making labor more insecure, leaving millions without health care, pensions or other benefits. Governments have turned to means-tested social assistance and to workfare. The welfare state has withered.

Meanwhile, a global class structure has been taking shape, superimposed on national structures. At the top is a tiny plutocracy, many with criminal backgrounds. Their economic and political power is awesome; they have no responsibility to any nation state.

Below them is an elite who also gain from capital, some from what Thomas Piketty calls patrimonial capitalism. Below them is a salariat, with employment security, pensions, paid holidays, and other non-wage perks. They are what American scholars in the 1960s and 1970s expected to become the norm. But although a salariat will persist, it is shrinking.

Alongside it is what I call proficians, project-oriented, self-entrepreneurs, not seeking employment security. Many work frenetically, but suffer from burn-out sooner or later. They too are uninterested in defending wages. They obtain their money elsewhere.

Then comes the old proletariat, for which welfare states as well as labor relations and regulations were constructed. The proletariat was oriented to a lifetime of stable full-time labor, in which entitlements, ‘labor rights,’ were built up. But it is dwindling, along with its capacity, and even desire, to defend welfare institutions. Its achievements should not be romanticized. The proletariat favored and benefited from a sexist, often racist hierarchical laborism. Its labor unions epitomised that. There have been few more reactionary figures in American history, for example, than the old leaders of the AFL-CIO.

It is below the proletariat where the precariat is growing. It is not an under-class. That is the lumpen-precariat, victims eking out an existence in the streets, sad souls going to an early death. The precariat, by contrast, is regarded by global capital as pivotal, and the neo-liberal state is shaping it. Recent estimates suggest that the precariat makes up about 40% of the adult population in Japan, Korea, Greece, Spain, Italy, Australia, and Sweden, still seen as the nirvana of social democracy. The biggest precariat is in China.

Defining the Precariat

The precariat should be defined in three dimensions. First, it has distinctive relations of production. Those in it have unstable labor, in ‘flexible’ contracts, working as temps, casuals, ‘freelance,’ part-time, or intermittently for employment agencies. The most rapidly growing form of unstable labor is “crowd work.” Many commentators wrongly presume insecure labor is all that defines the precariat, and then dismiss it as nothing new.

There was always unstable labor. But today it is becoming the norm. Just as historians analyzed the process of proletarianisation as disciplining workers to the norms of stable labor, internalizing that as a duty, a compact with capital, so the precariat is being habituated to unstable labor.

Crucially, the precariat has no secure occupational identity, no narrative to give to their lives. And they have to do a lot of work that does not count and is not paid. They are exploited off the workplace as well as on it, outside working hours as well as in them. This is also the first working class in history expected to have more education than their jobs require.

Second, the precariat has distinctive relations of distribution. It relies on money wages, without pensions, paid holidays, retrenchment benefits or medical coverage. It has been losing those benefits, which is why conventional statistics understate growing inequality.

The precariat also lacks rights-based state benefits. That was heralded in Bill Clinton’s 1996 declaration that he was ending “welfare as we know it.” The punitive Wisconsin workfare model has since gone global. Meanwhile, with wages volatile and falling, the precariat lives on the edge of unsustainable debt. Debt has become a systematic mechanism of exploitation, as people struggle to maintain yesterday’s standard of living.

Third, the precariat has distinctive relations to the state. Those in it are losing rights granted to citizens, becoming denizens without civil, cultural, political, social, and economic rights. Increasingly, they are supplicants, pleading for benefits or services, relying on discretionary decisions of bureaucrats making moralistic judgments on whether their behavior or attitude is deserving.

These three dimensions produce a consciousness of relative deprivation, a combination of anxiety, anomie (despair of escape), alienation (having to do what they do not wish to do while being unable to do what they are capable of doing), and anger.

Varieties of Precariat

At present, the precariat consists of three factions, which is why it is a class-in-the-making, not yet a class-for-itself. The first faction consists of those falling into the precariat from working-class communities. They lack schooling and feel deprived by reference to a lost past. Their predecessors had employment security, pensions and so on. They want that past. Many listen to populists and neo-fascists attributing their insecurity to migrants and minorities. Across Europe and elsewhere, many are voting for nationalistic, xenophobic, and racist agendas.

The second faction consists of migrants and minorities, who feel denied a home, a viable present. Mostly, they keep their heads down, concentrating on survival. But when policies threaten even that, they rebel in days of rage (as in Stockholm in 2013) or join some fundamentalist cause. They are the ultimate denizens, denied rights everywhere.

The third group consists of the educated, mostly young. They suffer relative deprivation by being denied a future, a life of dignity and fulfilment. But they do not listen to neo-fascists; they look to recover a future, aspiring to create a good society based on equality, freedom, and ecological sustainability.

The Emerging Struggles

Fortunately, partly due to the mass protests in and since 2011, more people have come to recognize that they belong to the precariat, which is an essential starting point for a counter-movement. Among the third group, a feeling is growing that they are not just victims but can fight back. This part of the precariat wants to struggle for a transformative agenda designed to abolish itself through overcoming the conditions that define it.

However, the precariat is the new dangerous class because all in it reject mainstream political establishments. Many have not been voting. This does not mean they are politically apathetic, merely that mainstream parties and politicians have not understood their needs or aspirations.

The protests since 2011 have been mostly the actions of what historians call primitive rebels, symbolizing a time when the emerging class is more united around what it is against than around what it wants instead. But the protests are helping the precariat move closer to being a class-for-itself. It is ready to move to a struggle for Representation and Redistribution.

Unlike the old socialist project, the struggle will be for a redistribution of resources needed for personal development in an ecologically sustainable society: security, control over time, quality space (including the commons), liberating education, financial knowledge, and capital. All are more unequally distributed than income. The precariat has no security, no control over time, is crowded into impoverishing space and is losing the commons (cause of the Geci Park occupation), is subject to commodifying schooling, lacks financial knowledge, and is denied access to capital.

A counter-movement is taking shape. The precariat is re-engaging in democratic politics. After the neo-liberal dystopia, the Future is back on the agenda. The precariat must be the vanguard of a new progressive era.

Guy Standing

Guy Standing is a Professor of Economics, SOAS, University of London. He will present his new book, A Precariat Charter, at CUNY (November 4), the New School (November 5), and Cornell (November 7).

Precariat of the World Unite?

The term “Precariat” has been bandied around for some time now as a convenient catchall for a growing sense of employment insecurity in the U.S. and Europe. It has really gained traction in the wake of British social scientist Guy Standing’s 2011 book The Precariat, provocatively subtitled ‘The New Dangerous Class’. Standing argued that all Western countries were seeing a growing band of workers at the margins of the labor market. The precariat includes the young and old, the unskilled and unqualified who, for whatever reason, are locked out of ‘good jobs’ with higher pay, pensions and other benefits, and prospects of advancement. The book made Standing something of a darling of those fighting for better conditions or questioning some of the worst effects of neoliberalism in economic life. His ideas have been debated and scrutinized on both left and right of the political spectrum.

The success of The Precariat has led Standing to write a sequel, A Precariat Charter: From Denizens to Citizens. If his first book diagnosed the problem, this one offers a prescription for change in twenty-nine articles aimed at reforming work and the conditions that give rise to precarity. The ideas in Standing’s charter range from a complete redefinition of what counts as work to suggestions for reforming education.

Standing’s books have some profound implications for the way we think about the class system in general and the working class in particular. His initial volume’s subtitle ‘The New Dangerous Class’ echoed Marx and Engels’s ideas of the Lumpenproletariat – a dispossessed group at the very bottom of society who at times could be brought into the labor market as part of the reserve army of labor. In Standing’s twenty-first century version, the precariat has the potential to undermine working-class conditions in employment in similar ways and as a group has little or no connection to mainstream society. In his Precariat Charter, Standing attempts to forge new bonds between the precariat and the rest of society.

What I find most interesting about this latest book is what it says about work and what work can, and more importantly, cannot provide. Like a number of social commentators such as the late French social theorist Andre Gorz or British sociologist Zygmunt Bauman, Standing seems resigned to the idea that work has little or no value for most people. Standing criticises politicians and unions for holding on to all work at any cost regardless of whether it is rewarding work or drudge labor, carried out simply for money. This attitude, he argues, compounds the problem of the precariat by creating the conditions where workers are seen as drones and are increasing conceptualised as denizens (people who reside in a place to work with few if any rights) rather than full and active citizens of a state. He calls, instead, for a radical recasting of economic life. Undoubtedly these are powerful ideas, and it’s especially important for someone with Standing’s profile to raise these issues and offer solutions to the problems identified.

However, when we dismiss unattractive drudge work as Standing and others do, we enact a kind of violence on those who are engaged in it, and, in the process, deny agency and voice –a working-class voice. For sure, in a perfect world all work would be incredibly meaningful and fulfilling all the time. But a number of writers take a working-class perspective and find value in basic manual labor. For example, in The Mind at Work, Mike Rose shows the skill and thought that goes into what many consider the most menial of jobs – waitressing. Other great writing on so-called low-end labor, such as Studs Terkel’s Working and the lesser known How to Tell When You’re Tired by U.S. author Reg Theriault, explores the cultures of work that emerge among workers in those jobs. Both of these volumes show workers as fully filled-out people who have ideas, opinions, aspirations, hopes, dreams, and fears. Rose, Terkel, and Theriault write about working-class people with whom you could share a beer. They seem like us, because they are people like us.

In contrast, because they lack voice and agency, the workers Standing’s two books seem somehow distant. Reading his books, I don’t feel like I have anything in common with the people he describes, however worthy they are of my attention. This may be the product of the book’s big picture ambition, but I find it problematic.

Precariat_Charter_coverThis stance towards the subjects of Standing’s writing extends to the covers of both books. While in A Precariat Charter, the subjects are obviously protesting actively, on both covers the workers’ faces are digitized out, so we literally cannot see them as fully human. And on the cover of the original book we gaze upon three young guys in Hi Viz jackets slumped against a wall eating a fast food meal, images that speak to resignation, passivity, and defeat reinforcing one of the themes of the first book.

tumblr_lo50e28RP31qe6laxI applaud Standing’s commitment and passion in raising the profile of workers at the margin, but it’s important that we don’t just see working-class people as passive victims of neoliberalism. Often it is precisely workers occupying the lowest rungs of the labor market who exercise both voice and agency. After all, the labor movement on both sides of the Atlantic drew its strength in part from precisely the sectors of the economy and the types of workers that Standing defines as the precariat. So I want to propose one more article for Standing’s charter: the recognition of a shared humanity working-class people hold in common.

Tim Strangleman

The Value of Admitting that Raising the Minimum Wage Could Cost Jobs

A few weeks ago I watched Bill Moyers interview conservative economist Arthur Brooks as he mouthed the Republican talking point that the problem with the minimum wage is that “it hurts the people it’s supposed to help” because it eliminates jobs. Moyers politely countered that “some studies” show that minimum wages do not kill jobs. A few days later the PBS News Hour rehearsed an almost identical dialogue between an advocate of living wages and an opponent – a battle of studies about potential job loss. You have undoubtedly heard similar talking-point contests dozens, if not hundreds, of times.

The problem with this debate is that it goes nowhere and educates no one about the relationship between declining real wages for 3/4ths of those employed and the very slow and low economic growth that leaves us with an official unemployment rate above 6%.   By itself an increase in the federal minimum wage to $10.10 an hour by 2016 and then adjusted for inflation each year thereafter, as proposed by President Obama, is insufficient to address these problems. But as the leading edge of a broader program to increase worker spending power in order to get the economy growing more fully, it could be the kind of signature issue that rallies the Democratic base of young people, women, and people of color while also attracting a significantly larger portion of the much-prized white working class (defined as whites without bachelor’s degrees).

For the minimum wage to be a leading edge of such an economic program, however, progressive Democrats have to admit that a large enough and quick enough increase in the federal minimum wage does, in fact, threaten the loss of some low-wage jobs. They have to abandon their “studies show” approach to defending a minimum wage increase, and instead develop a larger narrative about how our gross and still increasing inequality of income and wealth is the principal reason our economy is growing so slowly and, therefore, producing so few jobs.

What’s more, it does not take much political courage to exploit this opportunity because increasing the minimum wage is so damned popular. This is clear from the public reaction to the Congressional Budget Office (CBO) report that concluded, as USA Today headlined, that a “Minimum wage hike could cost 500,000 jobs.” Weeks after this news was widely proclaimed, and typically seen as declaring the Republicans the winner in the “job-killer” talking-points debate, a Pew Center survey found that nearly three-quarters of the public supported a $10.10 minimum wage as proposed by the President.

The strongest argument for a substantial increase in the minimum wage is the one President Obama articulated recently, the simple moral imperative that: “Nobody who works full time should ever have to raise a family in poverty.” The public, including even a slight majority of Republicans, apparently accepts this imperative even if it might cost a substantial number of jobs.

What the CBO report actually said was that somewhere between zero and 1 million jobs might be lost, settling on the 500,000 figure as an educated guess – and thus granting that Democrats could be right in insisting that no jobs might actually be lost. At the same time, the CBO estimated that at least 16.5 million workers would get higher wages directly (because they make less than $10.10 now) while additional millions making a bit more than $10.10 now might also get raises from a “spillover effect” –including, in the CBO’s words, “a few higher-wage workers [who] would owe their jobs and increased earnings to the heightened demand for goods and services that would result from the minimum-wage increase.” Thus, the CBO thinks there is a trade-off: of the 17 million workers directly affected, 97% would definitely benefit while 3% might lose their jobs.

Equally important, the CBO compared President Obama’s earlier $9-an-hour proposal with the current $10.10 one, and found that many fewer people would benefit from it (7.6 million) but fewer jobs would be put at risk (only 100,000). Thus, by reducing the amount of increase, the trade-off is also reduced: 98.7% would definitely benefit and only 1.3% might lose their jobs, but less than half the number of workers would be affected.

This is the single most important thing about the federal minimum wage: the higher the wage floor, the more people who benefit but the more jobs that are put at risk. For most public policies (or private ones for that matter) something that benefits 97% but harms 3% would be considered an excellent risk-reward ratio. But the loss of a job (even a low-wage one) in our society is such a punishing harm that it makes most people hesitate to “throw anybody under the bus.” Though majority public opinion supports the $10.10 minimum wage anyway, the threat of job loss undoubtedly reduces their ardor and thus the saliency of the issue in elections. The Pew survey cited above, for example, found a large gap between support for the increase and the degree to which that support would affect people’s votes.

If, as Democrats currently do, you want to insist that increases in the minimum wage won’t cost any jobs, you have to keep the increase relatively low. On the other hand, if you grant that jobs may be lost and you are not indifferent to that, then the logical response would be to search for a way to replace the 500,000 jobs that might be put at risk.

Such a way is easily found in another highly popular Democrat proposal: government investment in infrastructure — roads, bridges, water and sewer systems, public transportation, weatherization and other energy efficiency, and green technology. All these are included in President Obama’s current budget proposal before Congress, though at very small levels. The President proposes an increase of just $75 billion a year for the next four years, while the House Congressional Progressive Caucus (all Democrats) wants $130 billion a year over ten years, and the American Society of Civil Engineers estimates that we need $225 billion a year over the next 16 years. Using Council of Economic Advisers’ estimates, Obama’s minimalist plan would create 975,000 jobs, while a fully developed program that would meet our infrastructure needs would provide 2.8 million mostly decently paid construction jobs.

I may be comparing apples and oranges among these various plans, but you get my point. The President’s minimalist plan would create more than enough well-paying jobs to replace any low-wage jobs that might be lost due to increasing the minimum wage to $10.10 an hour. If we actually invested amounts like the American Society of Civil Engineers thinks we need, we should be able to offset any jobs lost to an even higher minimum wage – say $15 an hour. Over time, low-wage jobs would be replaced with higher wage ones, greatly increasing worker spending power, reducing inequality, increasing economic growth, and creating even more jobs.

Such an ambitious infrastructure program would have to be paid for, and the President has proposed to pay for his minimal program through a variety of small tax increases based on eliminating loopholes for corporations and individuals. But here our great inequality of wealth and income becomes a distinct advantage, as one of our most plentiful national resources is rich people with much more money than they need. As I have pointed out before, there are any number of ways to increase taxes on the top 1% or 2% without significantly reducing their living standards and life prospects. $220 billion is chump change for a group that each year earns $2 trillion more than they used to when labor unions forced productivity sharing on profitable companies.

You may say this is all pie in the sky, but I offer it as a winning political program for Democrats – one that simply ramps up and connects several existing Dem proposals. A minimum wage that could really make a difference in people’s lives would disproportionately benefit the Democratic base of young people, women, and people of color – giving them a reason to vote. An infrastructure program at a scale we actually need in the 21st century would disproportionately benefit white working-class men, a key part of the Republican base, while also providing opportunities for renewed affirmative action hiring requirements in the building trades. A large tax increase on our oligarchs would satisfy many people’s sense of justice while providing the money to get the economy growing again at a pace that can provide jobs and wages that make everybody’s lives better.

This is a program that could give working-class people of all colors and genders a reason to vote and a reason to vote for Democrats. Republicans are currently blocking small increases in the minimum wage, minimalist investments in infrastructure, and tax increases on the rich of any kind. Why not propose something big enough to make a difference – replacing low-wage jobs with well-paying ones – and then win elections that might allow you to actually do it?

Jack Metzgar
Chicago Working-Class Studies

The Pipeline and the Unions

The controversy over the Keystone XL (KXL) pipeline has sharply divided the labor and climate movements. The KXL would provide a new direct route for the northern leg of the existing Keystone pipeline bringing Alberta tar sands oil to refineries in the US Midwest and the Gulf Coast of Texas. The new pipe would be 36 inches in diameter, increasing Keystone’s capacity to more than one million barrels per day. It offers the promise of good jobs, virtually unlimited fuel, and – some claim – climate disaster.

Terry O’Sullivan, president of the Laborers International Union (ILUNA), has been lobbying hard for Keystone and is frustrated that “a pipeline that could put thousands of Americans to work and help ensure our nation’s energy security remains stalled” because President Obama has postponed making a decision until after the mid-term elections. O’Sullivan regards those who oppose the pipeline as job killers. He has been joined in his pro-KXL campaign by other construction trades unions, including the Ironworkers, IBEW, and Operating Engineers, some of which have project agreements with the pipeline’s builder, TransCanada. In February 2013, the AFL-CIO issued a “Statement on Energy and Jobs” that called for “expansion of our pipeline infrastructure,” though without naming Keystone.

One of the pipeline’s many opponents is James Hansen, the NASA scientist who famously wrote that building it would be “game over for the climate.” He calls the Alberta tar sands oil that would be pumped across the US via Keystone “one of the dirtiest, most carbon intensive fuels on the planet.” Canada’s deposits contain twice the amount of carbon dioxide already emitted by global oil use over time, and exploiting them would raise greenhouse gas emissions to disastrous levels. Hansen’s data and his example helped galvanize the anti-pipeline movement that took to the streets of Washington, DC in 2011, where Hansen and a 1000 other activists were arrested at White House protests. Several labor unions also oppose the pipeline, including the Amalgamated Transit Union (ATU) and National Nurses United.

Opponents point to potential problems beyond the climate effects of extracting and burning this fuel. Unprecedented quantities of toxic crude will be transported across the Ogallala aquifer, the Sandhills wetlands, an active seismic zone, and farmland whose owners can be dispossessed through “eminent domain.” TransCanada claims this would be the world’s safest pipeline (despite a devastating 2010 spill from their pipes in Kalamazoo, Michigan), to which Nebraska farmer Randy Thompson responds: “What was the safest ship that was ever built?” At the local level, a coalition of ranchers, farmers, and tribal communities in Nebraska and South Dakota – including the Cowboy Indian Alliance — is now stalling the pipeline through court challenges and creative direct action.

Supporters of the pipeline are concerned primarily about jobs, though they also claim that it will help ensure US energy independence — oddly, since the point of transporting Canadian oil to the Gulf is primarily to refine and ship it to global markets beyond the US. Access to the much closer coast of British Columbia is blocked by the resistance of First Nations communities and BC residents, despite Canadian Prime Minister Harper’s approval of the Northern Gateway pipeline. KXL opponents point out that a far greater contribution to US energy independence would be created by a wholesale and rapid transition to a low-carbon economy fueled by renewable energy.

Unions, of course, have a responsibility to protect their dues-paying members’ jobs, and to generate more jobs where they can. Around one million construction workers are out of work, and the pipeline is “shovel-ready.” Job-creation estimates for KXL vary wildly from the US Chamber of Commerce’s 250,000 to Cornell University Global Labor Institute’s 500 to 1,000. TransCanada claims 20,000. Whatever the number, most KXL jobs would be temporary, during the two-year construction phase. And again, the pipeline’s employment potential is dwarfed by the numbers that could be put to work – including laborers, pipefitters, electricians, and operating engineers — through a massive investment in renewable energy (wind, solar, and geothermal) and in upgrading the nation’s infrastructure (water systems, public transit, and the electric grid).

This is the program around which current labor-climate partnerships can unite, according to Joe Uehlein of the Labor Network for Sustainability, whose slogan is “Making a living on a living planet.” Uehlein was a member of ILUNA at a time when it featured a bumper sticker that read, “Hungry and out of work? Eat an environmentalist.” He has since worked as director of the AFL-CIO’s Industrial Unions Department and was its representative to the UN commission on global warming. He knows the history of organized labor’s tangled relationship to environmental struggles and cites several productive partnerships. “The UAW was by far the largest contributor to the first Earth Day,” and UAW president Walter Reuther was an enthusiastic endorser of the Clean Air Act. The BlueGreen Alliance of unions and environmental groups, founded in 2006 out of a partnership between the Sierra Club and United Steelworkers, works to promote jobs and investment in the green economy. Uehlein’s network promotes a “just transition,” with protections and training for workers in declining sectors of the economy.

You can demonstrate solidarity on issues of climate and jobs by joining the upcoming Peoples Climate March on September 21 in New York, in advance of a UN meeting to hash out an inter-government agreement for dramatic reductions in global warming pollution. Participants announced to date include the ATU, along with locals and regional branches of the Machinists, SEIU, IBEW, CWA, TWU, Teamsters, Nurses, UAW, AFT, AFSCME, Heat and Frost Insulators, and the Canadian Labor Congress.   More will no doubt sign on as the date approaches. The support of so many unions in what organizers predict will be the world’s largest mass demonstrations on climate issues is encouraging.

As Jeremy Brecher puts it, explaining the unanimous vote of the Connecticut State Council of Machinists to support the March, “Addressing the climate crisis is an opportunity to reduce unemployment, grow our unions, improve our community’s health and restore balance to our environment.” These union brothers and sisters, marching alongside hundreds of environmental groups, can help us to be as clear about what we are for as what we are against. A “just transition” to the low-carbon economy, with green jobs at living wages, need to be front and center in the climate rally and the campaigns that follow.

Nick Coles

Climate Change and Income Inequality

People committed to struggles for peace and justice always have our work cut out for us.  The forces arrayed against us are powerful and determined, and the range of issues and crises demanding action is daunting.  Given our limited time and energy, where and how do we apply them for the common good?  What guides us in deciding?  Life experience and the values we uphold, no doubt, but also our analysis of the present situation.  For me, the two broad concerns that have become most pressing, at least since the economic collapse of 2008, are income inequality and climate change.

These are, of course, twin products of industrial capitalism and its class system.  The rising oceans, killer heat waves, floods, species extinctions, and crop failures we are witnessing on the climate front – like the poverty wages, attacks on labor, bank fraud, malnutrition, and “austerity” in public services on the class front – are inter-related signs of a system in crisis.  Yet the two issues – climate change and income inequality – are rarely linked in a common analysis.

For instance, a recent study by the UK Government Office of Science predicts that, given increasing global population, “by 2030 the world will need to produce 50 percent more food and energy, together with 30 percent more fresh water, whilst mitigating and adapting to climate change.”  Author John Beddington adds, “This threatens to create a ‘perfect storm’ of global events,” without specifying what those events might be or how they will be exacerbated by unequal distribution of the necessary resources.

The just-published fifth assessment of the UN’s Intergovernmental Panel on Climate Change (IPCC) goes a bit further, according to The Guardian’s report:

The volume of scientific literature on the effects of climate change has doubled since the last report, and the findings make an increasingly detailed picture of how climate change – in tandem with existing fault lines such as poverty and inequality – poses a much more direct threat to life and livelihood. (my italics)

One study that does make the link explicit comes from the NSF-funded Socio-Environmental Synthesis Center in a report titled “Human and Nature Dynamics (HANDY): Modeling Inequality and Use of Resources in the Collapse or Sustainability of Societies.”  When Nafeez Ahmed wrote about this report in his Earth Insight blog for The Guardian, he touched a nerve regarding our “convergent catastrophes,” and generated a storm of commentary.  The study, Ahmed writes, “highlight[s] the prospect that global industrial civilization could collapse in coming decades due to unsustainable resource exploitation and increasingly unequal wealth distribution.”

The HANDY report begins with a review of past collapses of societies – such as the Roman Empire, Han dynasty, and Mayan civilization – to demonstrate that societal collapse is “a process recurrent in history, and global in its distribution.”  Collapse typically entails loss of political authority, breakdown of economic systems, and inability to sustain the population.   Not all societies collapse, of course, but in those cited the cycle of “boom and bust” seems to take about 300 – 500 years.

Noting “widespread concerns that current trends in population and resource use are unsustainable,” the authors apply their analysis of such collapses to the question “whether modern civilization is similarly susceptible.”  Explanations for particular cases of collapse vary by time and place and include drought, foreign invasion, earthquakes, technological change, famine, and popular uprising.  But across states and cultures that have collapsed over the past 5000 years, the authors find two common features: “the stretching of resources due to the strain placed on the ecological carrying capacity, and the division of society into Elites (rich) and Commoners (poor).”

Using the HANDY theoretical model, the authors analyze interactions between population and natural resources as these tend towards equilibrium or towards collapse, across three scenarios: 1. Egalitarian society without Elites, which can achieve a “soft landing” to equilibrium;2. Equitable society, with Workers and non-Workers (students, retirees, disabled people), which oscillates a bit but can still achieve a negotiated sustainable equilibrium; 3. Unequal society with Elites and Commoners — “most closely reflecting the reality of our world today” – in which,

Given economic stratification, collapse is very difficult to avoid and requires major policy changes, including major reductions in inequality and population growth rates.  . . .  However, collapse can be avoided and population can reach equilibrium if the per capita rate of depletion of nature is reduced to a sustainable level, and if resources are distributed in a reasonably equitable fashion.

Good luck with that, you might be thinking – but it is the goal!

The HANDY analysis is mathematical and complex, but two significant points emerge clearly.  One is that technological innovation does not reverse the trend towards collapse:  “Technological change can raise the efficiency of resource use, but it also tends to raise both per capita resource consumption and the scale of resource extraction, so that, absent policy effects, the increases in consumption often compensate for the increased efficiency of resource use.”  For example, greater fuel economies for cars can have the “rebound” effect of encouraging people to drive more and faster, in newer cars.  Current “policy effects,” despite occasional “green” tweaking, all tend towards encouraging consumption as a stimulus to economic growth.

The other point addresses the conundrum: do the leaders of the fossil fuel industries, and the politicians who do their legislative bidding, not know that their activities will make the Earth uninhabitable, for themselves as well as the rest of us?  Well, “it is important to note that the Elites – due to their wealth – do not suffer the detrimental effects of the environmental collapse until much later than the Commoners.  This buffer of wealth allows the Elites to continue ‘business as usual’ despite the impending catastrophe.”   This mechanism, the authors believe, may explain the obliviousness of the elites in the face of the impending Roman and Mayan collapses.  But they got theirs in the end.

Although I’ve been concerned here with scenarios of collapse, I am an optimist, still hopeful that the arc of human history does indeed bend towards justice.  I am also a realist, and I sense that the arc is going to need a mighty shove from those of us who still believe we can shape our history.  The fundamental problem we face, as the HANDY study makes clear, is that a sustainable equilibrium of population and resources is incompatible with business as usual under industrial capitalism.  And the difference in the current cycle of boom and bust is that the society threatened with collapse is not Roman or Mayan or even American, but global.  It’s all of us.

Perhaps I ‘ve gone a long way round to affirm the obvious: that issues of economic and social justice are interrelated with issues of environmental justice and climate change, and that we need to keep making those links visible in our activism.   But I find it helpful to have an analysis that explains the linking mechanism and points a way forward, while laying out very clearly the consequences of inaction.

Nick Coles

Better Jobs Drive Better Business

Good jobs are hard to find.  Hard jobs – entailing bone-tiring work, low wages, and limited or no advancement opportunities — are all too plentiful.  And in our country that’s been a big and growing problem dating back at least three decades.

HouseholdIncomeSince the early 1980s, job growth — and especially job quality – wilted in the face of intersecting economic, political, and demographic forces.  As usual, the short end of the stick is found in the hands of the working class and lower middle-income households.  Earnings stagnated for these groups as poverty jumped and un- and underemployment took and continues to extract heavy tolls.

These aren’t just statistics for me.  They are also my family story.  My father and two siblings worked for most of their lives in manufacturing.  I made it to college by working a few summers in a local plant.  I took away both a withdrawal card from the Machinists Union and many lessons about work and life.  But my career trajectory changed, and I went to work for a series of state and federal elected officials. This was an “up close and personal” viewpoint on how government – at the state, federal, and local levels – can expand opportunities for good jobs and stronger, more resilient communities.  But lately, I’ve grown pessimistic about the prospects for political or policy changes that might make a real difference.  Gridlock and paralysis spread – perhaps an expected result of a “conservative” governance apparatus.  Politics can be a noble calling and sometimes produces courageous heroes.  But recently, we’ve seen too much ignobility and too little spine.

That’s part of why I left the public sector.  Now I work in the nonprofit and philanthropic sector, as a program officer in a foundation. Much of my work and that of my colleagues at The Hitachi Foundation focuses on how foundations can use their tools and resources to address challenges and expand opportunities for low wealth individuals, families, and communities.

Most philanthropy targets social, educational, or support services, while others promote policy changes.  A third category aims at organizing or direct action at the worker, community, city, or even national level.  Each has its merits, and the sector makes almost $50 billion in grants annually. But only a fraction of that, about $14 billion, is targeted to the “economically disadvantaged.”  If you divided that into equal shares and only consider the 46 million people living in poverty in the U.S., it would only deliver $303 per person each year.  That’s not much of a supplement.

So philanthropy in general and our foundation in particular must focus our efforts.  The Hitachi Foundation is working on the role that good businesses can play in creating many more good jobs and improving opportunities for lower-wage workers to gain earnings and advance.  Many philanthropists, like many in working-class studies, are skeptical of the business world.  But our experience suggests that business leaders are not monolithic in their viewpoints.  If we provide evidence that “good jobs” can generate growth, profits, and happy customers, many more businesses can be spurred to take action that will benefit lower-wage and frontline workers.

Over the past five years, we’ve amassed compelling evidence that some businesses create social value even as they pursue a profitable and sustainable bottom-line.  Before we did the research, we expected that specific HR and training practices would be the generator behind significant gains in earning and career acceleration for frontline workers.  That was true in part.  But we were surprised to see that workers and employers made the largest gains when companies innovated in the products or services they offered, in the methods for producing or delivering good and services, and in HR practices and training programs.  In retrospect, of course, these strategies are interrelated. With new products or services and/or innovation in methods for producing them, there’s a premium on engaging and retaining workers with skills and experience.  And on top of that, the talent and skills grown by workers who are already in the business are often the best and most valuable fit.  All that can yield a larger overall pie that can be shared with workers.  Mutual Gain Bargaining has a history of pursuing similar ends in the context of a labor agreement.  Whether a plant is organized or not, gains aren’t always shared.  But where they are not, the workers’ incentives are poorly aligned with business goals.  Good workers with skills will be more inclined to look for other options and leave when they find them.

In the Good Companies @ Work program, we’ve collected stories of just under 100 firms that attribute their success to their frontline workers. These companies outperform their peers while providing quality jobs and pathways to the middle-class.  For example, Marlin Steel made a dramatic transition from old technology, a product in declining demand, and outmoded methods to become an innovative leader.  This Baltimore firm made baskets for bagel bakeries and stores.  But demand declined sharply according to the company because the rise of low-carb diets. Marlin quite literally “reinvented” their business and that made it possible to shift from making bagel baskets to supplying Boeing.  Today, Marlin has a more flexible approach to manufacturing a different set of products.  In part, they use some advanced technologies such as robotics and laser cutters.  The company did not make a wholesale change in their workforce.  Their core group of workers was with the company before, during, and now after the transition.  The company and the workers did invest in training, and that expanded their ability to manufacture higher quality products with less time from the initial order through design and manufacturing and on to delivery.  Another innovation at the company directly ties  wages of production floor workers to skills.  The more machines and processes they are capable of operating, the higher their hourly rate.  The firm also has a production bonus system that shares profits with workers, who can earn as much as 40% above their hourly earnings by meeting weekly team goals.

Good companies are more likely to generate good jobs.  But we’re not naïve.  Many – maybe even most – corporate or business directors are driven by short-term profit maximization.  But many are not. They bring their personal values beyond the plant gate or office door.  And those values help interest them in offering opportunities to improve wages and working conditions.  But values and motivation take business owners only so far.  We find good evidence that for many businesses, doing the right thing for and with frontline workers is not just consistent with the imperative for businesses to survive and thrive.  In many cases, it is essential to staying profitable and positioning the company for the future.

We will continue and deepen our efforts to help businesses make that connection in the years ahead.  And we’ll share what we’re learning, because we see communication as key to altering the dominant paradigm that profit margins require companies to put the maximum squeeze on labor costs.

Why focus on business to expand opportunity for low wealth, lower-wage people?  Because we believe that it works.  We’ve seen sustainable, profitable models in action. Equally important, business has more resources to create more and better jobs than either philanthropy or government.

Our goals include supporting and fomenting changes inside the plant gate, or with patient care teams, or in other settings. If we can do so that will create progress that is not dependent on the next grant or election cycle.  Neither the public sector nor the foundation world has a good track record for sustained focus and effort.  Causes rise and fall with the next crisis or new opportunity.  But strategies that yield real benefits to the bottom line and the front line, generating economic gains for companies and workers, have the potential to stick, expand, and spread.

Mark Popovich

Mark Popovich is a senior program officer at The Hitachi Foundation.  Following two decades focused on public policy as a staffer, researcher and advocate, he’s spent the last fourteen years working at the intersection of philanthropy and business.