Housing Bust Caused Deficits, Not Public-Sector Contracts, Study Finds
When housing prices began to take a dive, revenues to state and local governments plummeted. Housing construction shuddered to a halt, creating ranks of unemployed workers who began drawing unemployment benefits rather than paying local taxes on their previously middle-class salaries. The businesses of suppliers and service-providers to contractors were forced into downturn. And many states continued to cut taxes, causing a perfect storm of budget woes for the states.
Yet who got the blame for this economic morass? Public-sector employees and their unions, who have been made the scapegoats for a budget crisis that had nothing to do with them—convenient targets for the right-wing forces that seek an end to unionization in all sectors.
“The Wrong Target: Public Sector Unions and State Budget Deficits,” a new study released today by the Institute for Research on Labor and Employment at the University of California,Berkeley, makes clear the real causes of the state- and local-government budget crisis. Using data compiled from the U.S. Bureau of Labor Statistics, authors Sylvia Allegretto, Ken Jacobs and Laurel Lucia show that when the impact of the housing bust is added into tables that purport to link public-sector labor contracts with state-level budget crises, public workers’ compensation becomes statistically insignificant. (Study is available here in PDF format.)
U.S. Income Gap Bad, Wealth Gap Even Worse
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The richest 5 percent in the United States now own 65 percent of the nation’s wealth—making the wealth gap even more unequal here than the already gaping income gap. A new report by the Economic Policy Institute (EPI) cites foreclosures and falling housing values as contributing to the devastation of the net worth—the wealth—of millions of U.S. households.
Wealth, or net worth, refers to an individual’s or a family’s total assets, such as bank account balances, savings and real estate, minus total liabilities, such as mortgages, debt and outstanding medical bills. As EPI points out, “along with wages and income, wealth is another key measure of economic security and well-being since it strengthens a family’s ability to withstand job loss or other economic distress.”
As Les Leopold points out, recent debates over workers’ wages have missed the big picture.
Do public-sector workers earn more than private-sector workers? Who cares? This boneheaded question has us fighting over the crumbs. (And the answer is no—all credible studies show that when you account for educational levels, the total compensation packages are about the same.)
The real question is: Why have most workers seen their standard of living stall over the last generation?
Jobless Rate Remains at 9.7 Percent, Long-Term Unemployment a Crisis
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The jobless rate remained at 9.7 percent, with 36,000 jobs lost in February, the U.S. Bureau of Labor Statistics reports today. The biggest hit came in construction, where employment fell by 64,000. Manufacturing remained steady but 18,000 jobs were lost in the information industry. Temporary help services added 48,000 jobs.
The ongoing agony for long-term (those jobless for 27 weeks and over) jobless workers continues, with 6.1 million workers in February, roughly the same level since December. Some four in 10 unemployed persons have been unemployed for 27 weeks or more.
When both unemployed and underemployed workers are counted, there still are 26.2 million people without full-time work—a 16.8 percent under-employment rate. In fact, the under-employment rate (which includes not just the officially unemployed, but also jobless workers who have given up looking for work and part-time workers who want full time jobs) worsened from 16.5 percent to 16.8 percent.
The AFL-CIO is moving an aggressive plan to push for new jobs, calling on Congress and the Obama administration to take five immediate steps to address the jobs crisis.
Trumka Demands Real Reform on Wall Street, Across the Economy
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On Wall Street today, AFL-CIO President Richard Trumka is calling for tough new regulations on the financial industry and a new approach to making the U.S. economy work for working people.
Trumka spoke today at the New York Stock Exchange as part of the new AFL-CIO leadership team’s national tour to set out a jobs-focused, progressive vision for the economy—and to fight back against the corporate agenda that left workers behind.
We’ve let wealth concentrate for too long, Trumka said. The past decade has shown us the folly of building an unfair and unequal economy that only works for a few, while working people pile up debt to get by. We need to be able to protect consumers from abuses by mortgage lenders and credit card companies and hold accountable those whose greed and irresponsibility have undermined the economy, Trumka said:
Banks and other financial institutions must be held accountable for making this mess that required trillions of dollars of our money to clean up. For the pain they’ve inflicted on families who face financial ruin—unemployment, wiped out pensions, foreclosures and bankruptcy.
In Georgia, New AFL-CIO Leaders Take on Banks, Support Flight Attendants
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The AFL-CIO’s new leadership team is kicking off its first days with a tour around the country, listening to workers and energized to turn around the economy. Today, they visited Atlanta to focus on the foreclosure crisis that has driven millions out of their homes—and the banks that enabled it.
AFL-CIO President Richard Trumka, Secretary-Treasurer Liz Shuler and Executive Vice President Arlene Holt Baker brought a message to an area hit by more than 40,000 foreclosures in just the past six months: We need an economy that protects everyone, not just finance-industry CEOs.
Speaking to a breakfast of faith leaders and community activists in Atlanta, Trumka said the finance industry undermined the economy by engaging in predatory practices in the hopes of profiting off of the most vulnerable:
It’s time banks are held accountable for the pain they’ve inflicted on families now faced with financial ruin, even foreclosures and bankruptcy. The banks and their fly-by-night business partners took advantage of people who wanted to buy a home, knowing full well they’d have to default, and lose their homes to the bank.
Trumka said that our economic crisis is due to the greed and irresponsibility of an economy that worked for only a few, while most workers struggled with stagnant wages and debt:
Our financial system is a shambles and we’re not going to restore its luster until we rein in the abuse by financial institutions like Wachovia that threw our economy into crisis.
‘Shockingly Little Oversight’ of Taxpayer $$$ in Wall Street Bailout
It should come as no surprise that the same Bush administration that gave suitcases full of taxpayer cash to Iraq with no accountability about how it was spent has done pretty much the same thing in its handling of the $700 billion Wall Street bailout.
As Harvard law professor Elizabeth Warren puts it:
There has been shockingly little oversight of the money.
