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While the
media beats the drums of drama into a frenzy over N. Korea’s alleged underground
nuclear test (awaiting cannot confirm of any radiation), here are some items of
interest. This grabbed my attention when it came across my desk early this
morning, prompting me to weave the following two together: Bernanke: Start Saving Now. “While politicians and economists have warned of a coming
squeeze on Social Security and Medicare (while debating possible solutions) for
several years now, Bernanke's speech attached some fresh Fed numbers to the
issue. The Fed's latest projection, he said, shows that Medicare and Social
Security will require funding equal to 20%
of U.S. economic output by 2030,
up from about 8% today. Bernanke said a 4%
cut in consumption by the current generation is necessary to avoid a 14% cut in the future, if the two big
entitlement programs are to stay solvent.” http://www.forbes.com/business/2006/10/04/fed-bernanke-speaks-biz-cx_tvr_1004bernanke.html Not only have
middle class incomes become stagnant, they are increasing unstable. The Great Risk Shift: The Assault on American Jobs, Families, Health
Care, and Retirement - And How You Can Fight Back by Jacob Hacker,
Oxford University Press, 256 pages. From the
Introduction: “We all know something about rising inequality in the United States....Yet we
have heard much less about rising insecurity,
the growing risk of slipping from the economic ladder itself....Consider some
alarming facts. Personal bankruptcies has gone from a rare occurrence to a
routine one....Since the early 1970s, the mortgage foreclosure rate has
increased fivefold....Meanwhile, the number of Americans who lack health
insurance has increased with little interruption over the last twenty-five
years. ....Perhaps most
alarming of all, American family incomes are now on a frightening roller
coaster, rising and falling much more sharply from year to year than they did
thirty years ago....And this rising insecurity does not come with any obvious silver lings. The chance
that families will see their income plummet has risen. The chance that they
experience long-term movement up the income ladder has not. Publisher’s
Comments: “The book documents how two great pillars of economic
security--the family and the workplace--guarantee far less financial stability
than they once did. The final leg of economic support--the public and private
benefits that workers and families get when economic disaster strikes--has
dangerously eroded as political leaders and corporations increasingly cut back
protections of our health care, our income security, and our retirement
pensions. Hacker concludes by advocating an insurance and opportunity society that would safe guard economic security
and expand economic opportunity, ensuring that all Americans have the basic
financial security they need to reach for and achieve the American Dream.” http://www.powells.com/biblio/7-1135655723-0 The War Against Wages Major employers
like Wal-Mart have decided that their interests are best served by treating
workers as a disposable commodity. By Paul Krugman,
NYT, Oct 06, 2006 Should we be
cheering over the fact that the Dow Jones Industrial Average has finally set a
new record? No. The Dow is doing well largely because American employers are
waging a successful war against wages. ...[C]onsider the latest news from
Wal-Mart. Wal-Mart already has a well-deserved reputation for paying low wages
and offering few benefits...; last year, an internal Wal-Mart memo conceded
that 46% of its workers’ children were either on Medicaid or lacked
health insurance. Nonetheless, the memo expressed concern that wages and
benefits were rising, in part “because we
pay an associate more in salary and benefits as his or her tenure increases.” The problem from
the company’s point of view, then, is that its workers are too loyal; ...
not enough workers quit before acquiring the right to higher wages and benefits. Among the policy changes the memo
suggested to deal with this problem was a shift to hiring more part-time
workers...And the strategy is being put into effect. ... Wal-Mart ... wants to transform its
work force to 40% part-time from 20%.” Another leaked Wal-Mart memo describes a plan to impose
wage caps, so that long-term employees won’t get raises. And the company is
taking other steps to keep workers from staying too long: in some stores,
according to workers, “managers have suddenly barred older employees with back
or leg problems from sitting on stools.” It’s a brutal
strategy. Once upon a time a company that treated its workers this badly would
have made itself a prime target for union organizers. But Wal-Mart doesn’t have
to worry about that, because it knows that these days the people who are
supposed to enforce labor laws are on the side of the employers, not the
workers. Since 1935, U.S.
workers considering whether to join a union have been protected by the National
Labor Relations Act... For a long time the law was effective: workers were
reasonably well protected against employer intimidation, and the union movement
flourished. In the 1970’s,
however, employers began a successful campaign to roll back unions. ... thanks
to America’s political shift to the right. And now that the shift to the right
has gone even further, political appointees are seeking to remove whatever
protection for workers’ rights that the labor relations law still provides. The Republican majority
on the National Labor Relations Board ... has just declared that millions of
workers who thought they had the right to join unions don’t. You see, the act
grants that right only to workers who aren’t supervisors. And the board, ruling on a case involving
nurses, has declared that millions of workers who occasionally give other
workers instructions can now be considered supervisors. As the dissent from
the Democrats on the board makes clear, the majority bent over backward,
violating the spirit of the law, to reduce workers’ bargaining power. So what’s keeping
paychecks down? Major employers like Wal-Mart have decided that their interests
are best served by treating workers as a disposable commodity, paid as little
as possible and encouraged to leave after a year or two. And these employers don’t worry that
angry workers will respond to their war on wages by forming unions, because they know that
government officials, who are supposed to protect workers’ rights, will do
everything they can to come down on the side of the wage-cutters. http://economistsview.typepad.com/economistsview/2006/10/paul_krugman_th_1.html |
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