Economists: Improve the Economy by Empowering Workers

economic chart

Attacks on unions isn’t anything new, even when workers are asking for safer conditions or a little job security. What is new is that economists are starting to realize that we need stronger worker groups to advocate for labour or the economy as a whole suffers. Over the last few decades we’ve witnessed the rise of massive corporations that bully governments and workers; inevitably this process will gut the productive parts of planet (with fantastic short-term gains!). So, if we want our economy to do well for decades on end we need to ensure that all people involved in it get a share of the benefits.

A complementary approach would be to increase workers’ power. Historically, this has been most effectively done by bringing more workers into unions. Across advanced economies, wage inequality tends to rise as the share of workers who are members of unions declines. A new paper examining detailed, historical data from America makes the point especially well. Henry Farber, Daniel Herbst, Ilyana Kuziemko and Mr Naidu find that the premium earned by union members in America has held remarkably constant during the post-war period. But in the 1950s and 1960s the expansion of unions brought in less-skilled workers, squeezing the wage distribution and shrinking inequality. Unions are not the only way to boost worker power. More radical ideas like a universal basic income—a welfare payment made to everyone regardless of work status—or a jobs guarantee, which extends the right to a government job paying a decent wage to everyone, would shift power to workers and force firms to work harder to retain employees.

Read more.

Need a Job? Let’s Give Jobs to Everybody!

Interview

Underemployment runs rampant in too many sectors of our economy; and this contributes to a long-term unsustainable economic system. For example, people born in the 1980s are now the brokest generation since the Depression (for reasons why see this post). With these problems in mind, some thinkers are calling for a radical solution by providing jobs to anybody who wants one. It’s like universal income but for work.

To advocates, the payoff from this kind of program would be immense: In a single stroke, the government could not only eliminate involuntary unemployment but also alter the private job market. The wages and benefits at guaranteed public jobs would effectively set a floor for private employment. With more workers fully employed at higher wages, there’d be less demand for social services like food stamps. And although the program would require a significant initial investment, it would ultimately spur economic growth, as workers go out and spend their new paychecks.

Advocates of a jobs guarantee are clear on the need for on-the-ground leadership. The CBPP plan calls for federal administrators of a jobs guarantee program to work closely with state and local governments, and it advises that project proposals be developed “in conjunction with community leaders, local government officials, labor organizations, and local residents.”

Read more.

Worker-Owned Companies can Save Capitalism

conversation

We’re all well aware of the harm caused by the box-box retailers on local communities and their international suppliers; indeed, the people hurt the most are the workers. As a result of the pressures of large multinational corporations mixed with poor working conditions an old solution is gaining new traction. Worker-owned corporative corporations help deal with the profit-focused multinationals by empowering workers to be focussed on the economic sustainability of the company. Worker-owned co-ops are brewing in popularity amongst employees and entrepreneurs who don’t want the companies they built to fail.

“We are in a wave of growth right now,”, Hoover says. Worker-owned cooperatives, she says, have undergone several major “waves” over the last 40 years, each fueled by a different goal. In the 1970s, many newly formed cooperatives were tied to people desiring a counter-cultural lifestyle outside of traditional economies, but today, Hoover observes that more co-ops are being formed in response to economic stressors. “People don’t feel secure at their jobs anymore, and having ownership of something gives them security,” Hoover says. And some aging baby boomers implement co-op models as a way to keep their businesses open after retirement — by transferring ownership to employees.

Similar cooperatives have secured comparable benefits for staff. Whereas the state of Oregon’s minimum wage is $10.25 an hour, Blue Scorcher offers a flat wage of around $15 to $16 per hour including tips. At Austin’s Black Star Co-op brewery, employees start at around $12 per hour and receive pay increases after three months to $13.10 per hour — nearly twice the state’s standard minimum wage. Employees can pursue additional raises if they work towards a role on the managerial-level governing body called the Workers Assembly, which comprises roughly half of the brewery staff. In addition to the living wage, Black Star gives all employees paid time off, and staffers, regardless of their leadership role, are also empowered in the decision-making process. “We operate democratically, so there’s no one person making decisions,” says Black Star business team leader Jodi Mozeika.

Read more.

These Millionaires Want Higher Taxes

Office room

When it comes to taxes Americans love not paying them, but now some millionaires want to change that. The Patriotic Millionaires call on the rich to pay their fair share, and they call for that attitude to permeate the globe. Developed nations tend to tax money made through labour at a higher rate than money made through investments, meaning rich people can get richer by not working. The chair of PM, Morris Pearl, recently wrote a good op-ed explaining why he thinks the rich should be taxed and has a new book out.

Most of the ultra–rich make the vast majority of their money through capital gains, not income. They don’t work in the way most Americans work, because they live off of their investments. And it’s a lucrative path, because the top capital gains rate is barely over half of that paid for ordinary income.

That means a billionaire whose investments earn him millions of dollars while he sits around at the beach and goes to fancy cocktail parties pays a lower tax rate on his earnings than almost any working American.

Investing is not inherently more valuable than labor, and it’s simply not true that investing in the stock market creates jobs.

Read more.

Productive Companies Include Workers on Their Board

Interview

Since the late 1970s (coinciding with the rise of neoliberalism) wages have stagnated while executive pay keeps rising. This has led to inequality being one of the largest issues facing companies and countries in the 21st century. Accordingly, people sick of neoliberalism have been looking into ways to address inequality and the subsequent economic stagnation. One solution is to have workers sit on the board of their employer. This results in better treatment of the workforce while providing more opportunity for growth in efficiencies within the company.

Research has found that the setup reduces worker turnover, boosts salaries and productivity, and supports income equity. Shareholder returns do suffer slightly, but researchers largely agree that tilting the flow of revenue back toward workers is a good thing.

It stands to reason that the concept holds a great deal of sway over the American public. The gulf between CEO and shareholder earnings and that of employees is often as extreme as 25 to one. Wages for regular workers have held largely stagnant over the last three decades, as executive salaries have ballooned. Bringing actual employees to the table where these decisions are made could serve to flatten the cliff between management and workers.

Read more.

Scroll To Top
%d bloggers like this: