Biden’s Big Union Push

The Pitch: Economic Update for February 10th, 2022

(The Pitch is a weekly economics newsletter written by Zach Silk. Follow here on Medium or sign up for free on Substack to receive a new issue in your inbox every Thursday.)

Friends,

In a heartening moment of bipartisan unity, House Republicans and Democrats this week overwhelmingly supported the revocation of a George W. Bush-era attack on the United States Postal Service. The second Bush Administration signed into law a ridiculous requirement forcing the USPS to prepay retirement funds far into the future, which immediately threw the service into debt and disarray. (At the time, many speculated that this onerous law was passed to encourage the privatization of the USPS.)

The House of Representatives just moved to clear the USPS’s ledger of $57 billion in manufactured debt, with another $50 billion taken off the books over the next decade. In addition, Jacob Bogage of the Washington Post reports, this legislation “installs new timely delivery transparency requirements for the Postal Service…and allows the agency to contract with local, state and Indigenous governments to offer basic nonpostal services, such as hunting and fishing licenses.”

The bill could have gone further. In order to win Republican support, Democrats sacrificed an important provision that would have protected mail-in ballots, for instance. And many have made the case for the USPS to get into the banking business nationwide, taking on payday lenders and providing an essential service for low-income Americans who otherwise don’t have access to solid financial institutions. But removing the yoke of contrived debt from the USPS is an important first step toward reinventing the service for the digital age, so let’s take a moment to celebrate this win. We can plan for future victories starting tomorrow.

The Latest Economic News and Updates

Surprise: America’s job market is growing steadily

Ben Casselman and Talmon Joseph Smith at the New York Times report that the January jobs report, which included the surprise addition of nearly 500,000 jobs to the economy and retroactively added even more jobs to previous months’ employment reports, “smashed the projections of economists, who had been expecting the wave of coronavirus cases associated with the Omicron variant to lead to anemic gains, if not an outright decline in jobs. Instead, employers kept on hiring.”

Economists quoted in the article are basically gobsmacked by the new report — they can’t quite explain why the Omicron variant didn’t take a bite out of the labor force, or why the growth has been so relentless. “I don’t think I’ve ever been happier to be more wrong,” White House economic adviser Jared Bernstein told the Times.

In retrospect, the surprising thing about this jobs data is how steady it has been. This graph showing job loss and growth since the very beginning of the pandemic is almost metronomic in its regularity over the last year:

Despite growth, some workers have still been left behind

And now, the bad news about the jobs report: As the chart above shows, the economy is still about three million jobs down from the beginning of the pandemic. The Black unemployment rate is still way too high, although it did hit its lowest pandemic-era point in the January report, so the arrows are finally pointing in the right direction.

And the job market is still deeply unfavorable to women, though those numbers are improving, too. You may have seen a few concerning reports over the weekend that one million more men joined the labor force than women in January, but Ben Casselman debunked that statistic on Twitter. Casselman’s explanation — it’s wonky, but it involves a yearly cleanse of data that happens between December and January — forced Axios to run a lengthy correction on an article about the erroneous one-million imbalance.

The corrected Axios article still tells a distressing story about women’s labor force participation. While the numbers have improved over the disastrous job reports for women in late 2020 and early 2021, many fields that disproportionately hire women — including childcare and education — continue to suffer from pandemic-inspired hardships. And Axios correctly points out that with the collapse of the Build Back Better plan, which specifically targeted those industries in hopes of improving female employment, “it’s clear, women are on their own.”

Worker exploitation is rampant in the warehouse industry

The Biden Administration is ramping up wage enforcement in one of the industries that has been most affected by pandemic lockdowns: Warehouses. Josh Eidelson reports at the Seattle Times that Jessica Looman, head of the Department of Labor’s Wage and Hour Division, called for “vigorous enforcement”…

…as part of a new initiative stepping up efforts to ensure warehousing and logistics workers are paid the required hourly wage and overtime pay, can take time off as prescribed by law and aren’t retaliated against for exercising their rights. The agency has been conducting 70 investigations in the warehouse and logistics sector in recent months, and three-quarters of those it resolved found violations of the law

The Labor Department is going to specifically focus on warehouse employees who are intentionally misclassified as independent contractors, which Eidelson says is just the first step in the administration’s larger push against exploitative bosses skirting minimum-wage and overtime rules by misidentifying their employees. Looman is hiring an additional 100 investigators just to continue this crackdown on the mistreatment of warehouse workers across the country.

The pro-worker president leads the way on unions

It didn’t get a lot of attention, but earlier this week President Biden announced that his administration was adopting policies that would make it easier for federal workers and workers at federal contractors to unionize. The Biden Administration is also enacting policies that will establish “preferences in federal grant and loan programs for employers who have strong labor standards, preventing employers from spending federal contract money on anti-union campaigns and making employees aware of their organizing rights.”

The federal government employs millions of workers — numbers vary depending on who you ask, but it’s probably somewhere between seven and nine million — and these policies would give those workers the opportunity to unionize and collectively bargain for better pay and benefits. It’s hard to overstate the importance of this move, because it’s not just about those millions of workers — it’s also about the non-government workers in related fields who will be able to use the unions’ strength as bargaining tools at their own workplaces. (Studies show that unions raise wages for all workers, even non-union employees.)

This move has the potential to be a huge deal — the kind of quiet policy that, if enacted well, could change the nature of work in America. If the Biden Administration is taking suggestions for policies to further increase union membership, Europe’s labor unions have even more power than American unions because unions there can negotiate by sector, not just by employer. As Dylan Matthews wrote in 2017, “in France, for example, an employers’ federation representing restaurants will negotiate with a union representing restaurant workers. They reach a deal, and then the government ‘extends’ the deal to cover all restaurants and all restaurant workers. Everyone in the sector enjoys the pay and benefits that the union got employers to agree to.”

In a nation which has, bafflingly, not raised the federal minimum wage in well over a decade, unions represent the easiest way for a large number of workers to get a raise. This move by Biden shows that his support for unions is more than just lip-service — he really wants American workers to get bigger paychecks and better benefits, and he’s using every mechanism at his disposal to improve those outcomes.

America’s workforce is suffering from long Covid

A common argument among advocates for disabled people is that if you live long enough, you will experience disability in your life. Disability comes for everyone, eventually — in the form of old age, disease, accidents, and now, long Covid. A new report analyzing government data from the Center for American Progress shows that the pandemic has resulted in 1.2 million more disabled Americans, with nearly half a million of those disabled people in the workforce.

The Biden Administration has issued guidance affirming that long Covid is a disability and employers must treat workers with long Covid the same way they would treat any American with a disability — which is to say, the workers are protected by the Americans with Disabilities Act. This was a vital first step.

But CAP argues that more protections are needed for these newly disabled Americans, who have been struggling with Covid symptoms for months, even years, after they tested positive for the disease. CAP calls for extending paid medical leave for all Americans, ending the subminimum wage for disabled workers, and a number of other policies that will help disabled Americans rejoin the workforce as fully empowered workers.

When it comes to spending projections, the CBO has its thumb on the scale

Sometimes you learn a piece of information that puts a wealth of past experience into perspective. Economist Mark Paul tweeted something like that this week — he revealed a fact that changed the way you should think about estimates from the Congressional Budget Office. The CBO is a nonpartisan institution that releases cost-benefit analyses for legislation that Congress is considering, and a bad CBO score can often signal the death knell for a bill.

For instance, last year, the CBO warned that the Build Back Better bill would add three trillion dollars to the deficit over ten years — a figure that Senators Manchin and Sinema used as an excuse for not supporting the legislation. But Paul noticed something important — even game-changing — in a 2016 report from the CBO:

By default, the CBO automatically measures government investment in the population as half as productive as investments from the private sector — basically, every dollar that the government spends on investments in people is considered by the CBO to be only worth fifty cents of private-sector investment. Not only is this assumption far too broad, Paul points out via a wonky economics slide deck, it’s simply not true.

If you assume that government spending is inefficient and less valuable than private-sector spending, of course the Build Back Better plan would score poorly. But that assumption doesn’t take into account the things that government does better than the private sector — there’s no shareholder primacy, for one thing, and the government is excellent at demonstrating patience in the planning and execution of wide-scope, long-term projects like transportation systems. But if you were to give the BBB funds to five CEOs to use as they see fit, you’d likely see huge swaths of that money handed over to shareholders and executive bonuses. Given the unexamined fallacy at the heart of the CBO’s analysis, it’s going to be difficult to take their projections seriously going forward.

Real-Time Economic Analysis

Civic Ventures provides regular commentary on our content channels, including analysis of the trickle-down policies that have dramatically expanded inequality over the last 40 years, and explanations of policies that will build a stronger and more inclusive economy. Every week I provide a roundup of some of our work here, but you can also subscribe to our podcast, Pitchfork Economics; sign up for the email list of our political action allies at Civic Action; subscribe to our Medium publication, Civic Skunk Works; and follow us on Twitter and Facebook.

• On Civic Action Live this Friday at 10:30 am Pacific, we’ll discuss President Biden’s newest pro-worker policies, the revelation that half a million American workers are suffering from long Covid, and the surprising steadiness of America’s job growth. We’ll also be taking your questions and comments in real-time.
• On the Pitchfork Economics podcast this week, we’re re-presenting an interview from early 2020 with Stephanie Kelton about Modern Monetary Theory and the rethinking of what deficits mean for government spending. At a time when Kelton and MMT are the topic of very heated — some might say overheated — conversation among economists, you should take a moment to listen to Kelton explain her ideas in her own words.
• In his Business Insider column, Paul explains why the pandemic proved that universal healthcare is essential to protecting our national public health — and he digs into the math explaining why a universal healthcare plan would also make great business sense for American employers, who currently spend up to $20,000 annually on average for each employee.

Closing Thoughts

On the surface, this splashy new joint report from the libertarian-leaning American Enterprise Institute and the Brookings research group represents a significant shift in conservative economic policy. Titled “Rebalancing: Children First,” the report argues for “substantially increasing public investment in children” through the increase of federal programs like SNAP and the Child Tax Credit, and making sure those investments stay robust during recessions. The fact that one of the leading policy think-tanks of the Republican Party is calling for increased spending on children and education feels like a big deal, and has attracted a lot of attention to the report.

But in reality, the policies that this report proposes will cause more economic hardship, reduce investments in Americans who need it, and improve outcomes for fewer people — in other words, it’s classic trickle-down economics. The problem begins with the proposed refocusing of existing funds toward a new series of Child Tax Credit payments only for “households with no earnings.”

So the proposal fills out the social safety net with increased spending, but it also lowers that safety net almost to the ground. The beauty of the Child Tax Credit program was that it was nearly universal — it lifted millions of low-income children out of poverty, but it also offered a little breathing room for parents who were just scraping by on low-wage work, providing them them with more resources — money, yes, but also time — that they could invest in their children. Under this proposal, those parents at the bottom end of the income spectrum are completely forgotten.

What’s worse, under the classic trickle-down tactic of fretting over the deficit, the report proposes paying for the increased spending on children “with cuts to entitlement programs that benefit upper-middle-class and affluent seniors,” among other budget-tightening maneuvers. This would finally achieve the longstanding conservative goal of undercutting Medicare by removing one of its core strengths — its universality, which allows the government to bargain with drug companies and healthcare providers from a position of unparalleled strength.

This report blithely promotes one of the biggest trickle-down tenets of inserting means testing into effective government policies in order to remove their efficacy and popularity. Once they eliminate the universality of a program, they can start slashing away at the number of people covered until only the barest minimum funding is left. It erodes the public’s confidence in government, and it transfers wealth from the many to the few. They’ve followed this game plan for almost my entire lifetime, and our leaders have to stop falling for it — which can be especially difficult when the policy is co-authored by esteemed institutions like Brookings under the guise of nonpartisanship.

Even in these times of supersized corporate power, the special thing about government is that it’s the only societal force big enough to invest in every single one of us. When political actors inspire a false choice between cuts for one part of the population in service of another, I always ask: why can’t we do both?

Be kind. Be brave. Mask up. Get vaccinated — and don’t forget your booster.

Zach