Excerpts Fall/Winter 2000

Fighting Poverty, Supporting Jobs
How Many Cheers for Lower Unemployment?–From the Chair
Living Wage Laws Gain Support
Social Democratic and Green “Modernization”
Canada’s Welfare State is on the Ropes
Minimum Wage Critical for Low-Wage Workers
Network News

Fighting Poverty, Supporting Jobs: A Five-Year Plan

By Gregory N. Heires

Imagine a society without poverty in which all people have jobs that support a decent standard of living and healthy lives. That vision of society underlies a proposal to combat poverty and inequality that the National Jobs for All Coalition presented to the National Council of Churches.

The proposal, done at the NCC’s request, calls for a five-year initiative to promote living-wage jobs for all workers and a dramatic increase in public income support and government social welfare programs.

“For all the hoopla about prosperity and a booming economy, poverty and inequality continue to plague our country,” said Gertrude Goldberg, chair of the National Jobs for All Coalition, commenting on the proposal. “This age of budget surpluses provides a unique opportunity for government to address the failure of our economy to provide a decent standard of living for all of us.”

NJFAC presented its proposal to the NCC in September. The initiative is timely because the NCC is considering reaching out to other church groups to undertake a decade-long campaign to battle poverty.

The first section of the proposal outlines a series of initiatives to support living wages and jobs with decent pay.

The goals of these initiatives are to cut the official unemployment rate in half within five years and to reduce the gap between the unemployment rates of disadvantaged groups and the rest of the population, as well as to increase the minimum wage to its peak level in 1968 (about $7.50 in 2000) and link it to an economic indicator, such as average wages or consumer prices. Also, one of the goals is also to reduce wage gaps between men and women and low- and high-wage workers.

Strategies for implementing these goals include:

  • Changing the priorities of the Federal Reserve Board from fighting inflation to reducing unemployment, which is the mandate of the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978,
  • Implementing public job-creation programs that offer jobs that pay at least the minimum wage for unemployed individuals who are ineligible for unemployment insurance or who have exhausted their benefits,
  • Improving anti-discrimination laws,
  • Creating jobs in areas where disadvantaged groups live and in areas of higher than average unemployment,
  • Tightening the labor market through full-employment measures,
  • Enforcing labor legislation, including protections for the right to organize,
  • Encouraging unionization campaigns, particularly among low-wage workers.
  • Supporting living-wage campaigns and pushing for corporate accountability.

Income Support, Social Welfare
The second section of the proposal calls for the government to bolster its income support and social welfare programs.

The proposal recommends a series of ways in which the government can raise incomes above the poverty level and alleviate the financial burden of high-cost goods and services, such as child care, housing, health care, transportation, banking and credit, and utilities.

Recommended actions include paid family leave, housing subsidies, universal health care, an expansion of child-care subsidies, income support for the elderly and people with disabilities, increased funding for public transportation, greater assistance for home utility expenses and improving access of low-income people to banking services and credit at reasonable rates.

“Other rich countries, though all with less wealth than the US, have achieved much lower poverty rates and largely through the anti-poverty effects of their social welfare system,” the proposal says. “Such programs, though a vital component of a strategy to end poverty, should remain complementary to the primary thrust of public policy – living-wage jobs for all.”

Requests for copies of the proposal can be made by calling NJFAC at (212) 870-3449. The proposal will also be posted on the Coalition’s Web site (www.njfac.org).

Gregory N. Heires is a member of the National Jobs for All Coalition’s executive committee and an associate editor of the District Council 37’s newspaper Public Employee

From the Chair
How Many Cheers for Lower Unemployment?

By Gertrude Schaffner Goldberg

“Unnatural” rates of unemployment continue.

Whether or not the monetary authorities in charge of the U.S. money supply have rejected the pernicious theory (known as NAIRU) that accelerating inflation is an inevitable “natural” consequence of lower unemployment — they have certainly not aligned themselves with full employment.

Indeed, even before inflation threatened, they applied the brakes numerous times in the past year. If policymakers would commit themselves to “no more recessions” or to controlling inflation by means other than increasing unemployment, then Jobs for All advocates might have more to cheer about.

One cheer for Lower Unemployment
The National Jobs for all Coalition gives one cheer for an official unemployment rate below 4 percent. As would be expected in a tighter labor market, real average hourly and weekly earnings are both up since 1995. However, the lengthy discussion of wages in the forthcoming edition of the Economic Policy Institute’s The State of Working America 2000-01* is not a cheerful one. Real wages have not recovered the ground lost since 1973 and remain below 1979 levels as well. Nor in the past five years have they kept pace with productivity gains.

Over one-fourth of all workers earn poverty-level wages (less than the four-person poverty level of $13,290 for year-round, full-time work in 1999), higher than the proportion of poverty-level workers in 1973. Over one-third of blacks (35.6 percent) and 45 percent of Hispanics earn poverty wages. Of special relevance for the consequences of welfare “reform” is the fact that two-fifths of black women and one half of Hispanic women fall into this group of disadvantaged workers. In other words many who have jobs are underemployed. The distinguished English economist, Sir John Eatwell, calls this “disguised unemployment.”

A bigger pie isn’t shared with workers
The pie is bigger, but the shares at the bottom are smaller. The GDP per capita is more than 40 percent higher than in 1973. But these gains in total national resources have not been shared with workers. Whereas the top one-fifth of households had about 10 times the share of aggregate income of the bottom fifth in 1973, this inequality ratio had risen to over 13-to-1 in 1999. And the second lowest quintile — with incomes in the $17,000 to $32,000 range in 1999 — lost even more ground than the lowest one-fifth.

CEOs, on the other hand, must be giving four cheers for themselves. Their pay has increased nearly 90 percent since 1988. And they are the richest CEOs in the world. On average CEOs in 12 other advanced countries make only about two-fifths as much as their U.S. counterparts.

Coalition Efforts

What is the National Jobs for All Coalition doing about the low unemployment rate? Here are some of our initiatives.

    • Hispanic Outreach
      With two-fifths of their members earning poverty-level wages, Hispanics are a natural constituency for full employment or

Good Jobs for All

      With a grant from the Shelley and Donald Rubin Foundation and encouragement from the Latino-American Studies Program at Syracuse University and its director, Professor Silvio Torres, the Coalition has translated its brochure and parts of its

Uncommon Sense

      series into Spanish. Professor Julian Rivera, director of the Undergraduate Program in Social Welfare at Adelphi University, is serving as editor of the Spanish editions, and Milagros Butler, of the Spanish Action League in Syracuse, has done some of the translations. Under the leadership of NJFAC founding member Frank Bonilla, former director of the Inter-University Program for Latino Research, the Coalition is forming a Latino Advisory Group that will aid it in distributing these materials in the Latino community.

    • An Anti-Poverty Plan for the National Council of Churches
      The National Council of Churches (NCC) called upon the Coalition to propose a plan to cut poverty in half in the next five years. NCC hopes to unite a wide range of Christian groups through collaboration on a single issue of public concern such as poverty.

    • Social Security Project
      Social Security continues to be hotly contested. In preparation for the post-election deliberations on the nation’s largest social-welfare program, the Coalition will be issuing a Social Security Packet. Jean Bandler’s “Social Security Is not Just for Seniors” is the latest addition to this packet, which includes the earlier publications, “Social Security Is not in Crisis” by Richard DuBoff and “Women and Social Security” by the Women’s Institute for Policy Research.

    • Income Inequality and Low Wages
      On the assumption that the large numbers of underemployed or underpaid workers have a stake in full employment, the Coalition is stepping up its publication of pieces identifying and analyzing the problems of low wages and income inequality. Reprinted in July, “The Great Divide,” by former labor secretary and Coalition Advisory Board member Robert Reich discusses the extraordinary widening of income inequality since the 1970s and some policies that would reduce it. A new, soon-to-be released

Uncommon Sense

    by Beth Shulman, former special assistant to the president of the United Food and Commercial Workers, will document the lack of a social contract for 35 million low-wage workers, describe their working conditions and suggest policies to improve their status.

*Lawrence Mishel, Jared Bernstein, and John Schmitt, The State of Working America, 2000-01 (Ithaca, NY: Cornell University Press, forthcoming). Most of the data in this article was taken from Economic Policy Institute’s invaluable biannual report on the US economy.
Gertrude Schaffner Goldberg is professor of social policy at Adelphi University and National Jobs for All Coalition chair.

Social Democratic and Green “Modernization”
Germany’s Tax Reform Cuts Services, Retirement Benefits

By Jörg Huffschmid

The German coalition government has backed off its initial support for a new economic policy to promote jobs and social justice, abandoning the agenda for which it was elected in September 1998.

The recently adopted tax reform brings lower taxes for everyone. Insofar as this includes considerable tax relief for lower income groups, it is certainly

The largest tax gifts, however, go to the corporate world and big corporations in particular. And the whole tax package was mostly financed through huge spending cuts — as usual, predominantly in social programs.

Altogether, the reform amounts not to a reversal but rather a continuation of the politics of redistribution of income in favor of profits. The reform is being carried out at the expense of workers and weakest sectors of society.

Threat to Social Security

The really big “reform” the government is about to set in force is the destruction of the traditional pension and retirement system. Under the government plan, the two basic principles of the current system — pay-as-you-go funding and financing of the system by employers and employees — would be replaced by a mixture of pay-as-you go pensions and supplementary private old age insurance.

The supplementary insurance would be financed exclusively by the employees. This means that all those who cannot afford to pay for a supplementary private insurance will have considerably lower pensions, and many will be thrown into poverty.

For those who do participate in supplementary private insurance, the total burden of contributions — public and private — will rise, while the contributions of employers, who will not be financing the private insurance, will remain low.

The conservative Kohl government attempted reforms of this kind several times during the last ten years. Each time it was stopped by strong resistance from Social Democrats, who were then an opposition party. Now more than an opposition party is needed to stop the Social Democrats in government from dismantling the social security system.
Jörg Huffschmid, professor of political economy and economic policy at the University of Bremen, is a member of the NJFAC Advisory Board and co-founder of European Economists for an Alternative Economic Policy.

Canada’s Welfare State is on the Ropes

By Harold Chorney

Canada was once known and respected for its commitment to a moderate, almost social democratic vision of low unemployment, tolerance, high economic performance and a well developed welfare state.

Its health care system was widely respected as a humane and better alternative to the American system. As John Kenneth Galbraith, our greatest intellectual export to the United States, has often noted, Canada was a liberal democratic society that was strongly influenced by Keynesian ideas.

Alas, this was the Canada of old.

During the past two decades, neo-conservative policies have dominated Canadian public policy and significantly damaged the Canadian welfare state and public health system. Unemployment in Canada during both the 1980s and the 1990s averaged close to 10 percent. The rate finally dropped below 9 percent in 1997 after the longest and deepest recession since the Great Depression of the 1930s. The current rate, 6.9 percent, is the lowest since the mid-1970s.

A Dogmatic Central Bank

The Bank of Canada , once known as the Bundesbank of the North, has been one of the most dogmatic practitioners of monetarist doctrine since its conversion in 1975. The damage that this has done to the Canadian economy has been enormous.

After more than a decade of budget slashing and deficit obsession that began under the previous Conservative government of Brian Mulroney, the Liberals, who returned to power in 1993, are using a 22 billion Canadian dollar surplus and a projected surplus of over 50 billion dollars over the next five years to promise a reinvestment in the health care system. The national health-care system was badly damaged by severe IMF approved budget cuts over the past seven years. The Liberals’ policy amounted to a reversal of some of the draconian changes to the employment insurance system, also IMF inspired, that resulted in fewer than 50 percent of the unemployed being eligible for benefits. It also includes a reinvestment in education and social policy areas. On top of this they have committed $12 billion to debt reduction.

The debt to GDP ratio in Canada now stands at about 58 percent and will continue to fall so long as the economy grows and the budgetary balance remains.

Amazingly, because of the dreadful employment performance over the past two decades, the current 6.9 percent unemployment rate is celebrated as the return of boom times to the Canadian economy. But our central bank seems determined to stamp out any widespread joy. Already the Bank of Canada has been making threatening noises about the need to nip “inflationary expectations” in the bud despite the complete absence of any inflationary threat. Over the past year it has raised interest rates several times.

Further, if Alan Greenspan were to raise rates higher in the US in the coming months, the pressure on Canada to follow suit would be enormous.

Harold Chorney, professor of public policy at Concordia University, Montreal, and vice president of the International Research Group on Employment, is a member of the National Jobs For All Coalition Advisory Board.