South Capitol Street

The Economic Policy Institute looks at trends in employment during and after the recent recession and documents a staggering fact, that the U.S. labor force has actually shrunk in the last few years despite the addition of millions of new workers through normal population growth.

Though the unemployment rate dropped to 9.4%, around half of the improvement was due to 260,000 people dropping out of the labor force, leaving the labor force participation rate at 64.3%, a stunning new low for the recession. Incredibly, the U.S. labor force is now smaller than it was before the recession started, though it should have grown by over 4 million workers to keep up with working-age population growth over this period…

Incredibly, the labor force is now smaller than it was before the recession started, so the pool of “missing workers,” i.e., workers who dropped out of (or didn’t enter) the labor force during the downturn, remains large. We can estimate its size in the following way. The labor force should have increased by around 4.2 million workers from December 2007 to December 2010 given working-age population growth over this period, but instead it has fallen by 246,000. This means that the pool of missing workers now numbers around 4.4 million. If just half of these workers were currently in the labor force and were unemployed, the unemployment rate would be 10.7% instead of 9.4%. None of these workers is reflected in the official unemployment count, but their entry or re-entry into the labor force will contribute to keeping the unemployment rate high.

The analysis concludes:

While the labor market is now adding jobs, it remains 7.2 million payroll jobs below where it was at the start of the recession three years ago. And even this number understates the size of the gap in the labor market by failing to take into account the fact that simply keeping up with the growth in the working-age population would require the addition of another 3.7 million jobs in those three years. This means the labor market is now nearly 11 million jobs below the level needed to restore the pre-recession unemployment rate (5.0% in December 2007). So, despite the job growth of 2010, we remain near the bottom of a very large hole. To achieve the pre-recession unemployment rate in five years, the labor market would have to add nearly 300,000 jobs every month for the entire period. December’s modest improvement offered 103,000 pieces of good news, but little collective cheer.

All of this means that the problem of long-term unemployment at record levels is not going to go away anytime soon.

Michigan Messenger

Classic:

Harper’s, one of the last bastions of old-line liberalism and a lonely defender of a certain idea of what literary culture should be, has long been supported by the largesse of its owner and patron, John “Rick” MacArthur, an author and heir to a ceramics fortune who has long supported liberal causes. And now, in a strange, ironic endgame, MacArthur finds himself fighting against his own side: His staff has unionized.

The Harper’s union has been locked in a bitter contract dispute with MacArthur since July. And now he’s trying to lay off Harper’s’ literary editor, Ben Metcalf, who’s worked at the magazine since the mid-nineties and who played a key role in the union drive — a move the union says is pure retaliation.

Ben Smith’s Blog

Classic:

Harper’s, one of the last bastions of old-line liberalism and a lonely defender of a certain idea of what literary culture should be, has long been supported by the largesse of its owner and patron, John “Rick” MacArthur, an author and heir to a ceramics fortune who has long supported liberal causes. And now, in a strange, ironic endgame, MacArthur finds himself fighting against his own side: His staff has unionized.

The Harper’s union has been locked in a bitter contract dispute with MacArthur since July. And now he’s trying to lay off Harper’s’ literary editor, Ben Metcalf, who’s worked at the magazine since the mid-nineties and who played a key role in the union drive — a move the union says is pure retaliation.

Ben Smith’s Blog

Before you get your hopes up, Goldblog, via Aluf Benn, interprets it as a sign of increasing anti-Iran hawkishness in the Israeli cabinet. Netanyahu did not like the Mossad's recent statement of the success of Stuxnet and the impact of sanctions.

The Daily Dish | By Andrew Sullivan

My latest is up on American Thinker:

Israeli Defense Minister Ehud Barak has formed a new faction and split off from the Labor Party. Apparently he and Bibi Netanyahu had this planned for a while.

Barak plans to set up his new faction with Agriculture Minister Shalom Simhon, Deputy Defense Minister Matan Vilnai, Deputy Industry, Trade and Labor Minister Orit Noked and Knesset Member Einat Wilf.

The new faction will be named Independence,(Atzmuat) according to what Barak told a press conference at the Knesset today.

“We are setting up a faction, a movement and later on a party, which will be Zionist, central and democratic, and will follow David Ben-Gurion’s legacy,” the defense minister said, promising that the new faction would put Israel first.

“Then comes the party and then come we,” he added. “The motto will be what is good for the State of Israel.”

“We are facing difficult challenges, focusing on the peace process with the Palestinians, security-related and economic and social challenges. We are ready and willing to deal with all these challenges.”

“We are leaving a party and a home we like and respect… Many of its members have experienced over the years the difficulties of daily life and the ongoing and unhealthy situation in the Labor Party, and they too were victims of the ongoing squabbles, the troubling drift to the left.”

Barak slammed Labor members who he said “have been dragged to the Left, to post-modernism and post-Zionism.”

(You can read the rest of my analysis here)

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J O S H U A P U N D I T

Newly elected GOP Sen. Mike Lee (UT) says that federal child labor laws are unconstitutional because as per the Tenth Amendment, only laws expressly laid out in the Constitution are legal. Lee is part of the new class of “states rights” Congress members intent on overturning all federal legislation not mentioned in the Constitution.

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Obama’s efforts to meddle in Israeli politics fail spectacularly.
American Thinker Blog

Children working in factories, picking crops and hauling lumber on construction sites is a vision Mike Lee, the Republican senator from Utah, apparently wants to make a reality again in the United States. In a lecture on his YouTube channel, Lee explains in great detail why he believes U.S. child labor laws are unconstitutional.

In Lee’s view, the federal government doesn’t have authority to enact federal minimum wage laws, civil rights laws or to provide Medicare and Social Security.

Lee’s diatribe shows just how determined he and his ilk are to fight the gains workers have made. And we must be as determined to stop them, AFL-CIO Executive Vice President Arlene Holt Baker said. Speaking yesterday to the federation’s annual King Day celebration, she said:

We must protect Social Security and Medicare, and we need jobs. We must put our people back to work, to build an economy built on shared, broad-based prosperity.

 And there is only one way we can prevail-and that is together.  We can only succeed if we are “greater than 1.”  We can only succeed if we harness the strength of our numbers. 

Lee is one of the  “tenthers”—conservatives who say federal laws and rules like the minimum wage, Medicare, Social Security, unemployment insurance, the Department of Education and a laundry list of other federal laws and programs are unconstitutional.

They argue that if a federal power is not specifically spelled out in the Constitution, the government doesn’t have it, according to their view of the 10^th amendment.

 As Ian Millhiser points out on Think Progress:

Lee’s call for a return to failed constitutional vision that spawned the Great Depression is obviously wrong. The Constitution gives Congress the power “[t]o regulate commerce…among the several states,” and to “make all Laws which shall be necessary and proper for carrying into Execution” this power to regulate commerce. Even ultraconservative Justice Antonin Scalia agrees that these powers give Congress broad authority to regulate “economic activity” such as hiring and firing.

 Check out Millhiser’s column and Lee’s video here.

AFL-CIO NOW BLOG

Last week, Sen. Mike Lee (R-UT) posted a lecture on his YouTube channel where he explains in great detail his views on the Constitution. As part of the lecture, which is essentially a lengthy defense of his radical tenther interpretation of the Constitution, Lee claims that federal child labor laws are unconstitutional:

Congress decided it wanted to prohibit [child labor], so it passed a law—no more child labor. The Supreme Court heard a challenge to that and the Supreme Court decided a case in 1918 called Hammer v. Dagenhardt. In that case, the Supreme Court acknowledged something very interesting — that, as reprehensible as child labor is, and as much as it ought to be abandoned — that’s something that has to be done by state legislators, not by Members of Congress. […]

This may sound harsh, but it was designed to be that way. It was designed to be a little bit harsh. Not because we like harshness for the sake of harshness, but because we like a clean division of power, so that everybody understands whose job it is to regulate what.

Now, we got rid of child labor, notwithstanding this case. So the entire world did not implode as a result of that ruling.

Watch it:

Lee’s call for a return to failed constitutional vision that spawned the Great Depression is obviously wrong. The Constitution gives Congress the power “[t]o regulate commerce…among the several states,” and to “make all Laws which shall be necessary and proper for carrying into Execution” this power to regulate commerce. Even ultraconservative Justice Antonin Scalia agrees that these powers give Congress broad authority to regulate “economic activity” such as hiring and firing. Which explains why the Supreme Court unanimously overruled Hammer v. Daggenhardt in a 1941 decision called United States v. Darby.

Moreover, Lee is simply wrong to claim that child labor magically disappeared after the Supreme Court rendered Congress powerless to prevent it. The reason why exploitative child labor has largely disappeared is because Congress placed very strict limits on child labor when it enacted the Fair Labor Standards Act of 1938, and the constitutional cloud over this law was removed three years later when the Court overruled Lee’s pet decision.

Child labor laws are also only one of many essential protections that would evaporate in Mike Lee’s America. The same legal theory Lee uses to impugn child labor laws applies equally to the federal minimum wage and the ban on whites-only lunch counters. And Lee doesn’t even stop there. In a subsequent section of the lecture, Lee attacks President Franklin Roosevelt for calling for the federal government to provide “a decent retirement plan” and “health care” because “the Constitution doesn’t give Congress any of those powers.” Watch it:

So Lee wouldn’t just remove the most basic protections against child sweatshops, he would also eliminate Social Security and Medicare.

ThinkProgress

In less than 2 minutes, the Pennsylvania AFL-CIO has provided a wonderfully entertaining history of the union movement in a fun and easy to understand animated video. It’s something for adults and kids.

Hats off to President Rick Bloomingdale, Secretary-Treasurer Frank Snyder and the Pennsylvania AFL-CIO Communications Team of Jim Deegan and Karen Gownley for the clever and informative production.

Take a look and share it with your friends and colleagues.

AFL-CIO NOW BLOG

James Surowiecki has a nice column this week looking at how and why the Great Recession has ravaged labor when the Great Depression was so instrumental in invigorating it. His basic thesis is that, as labor weakened, it was unable to deliver benefits broadly: The gains unions won for their workers were no longer shared by their non-members. A few generations back, Americans knew that organized labor had given them weekends and workplace benefits and higher wages and shorter days. Today, they see unions getting things at their expense: tenure for bad teachers, underfunded pensions for state workers, bailouts for auto companies. Solidarity has shaded into resentment.

Some of that might have been inevitable and some of it might not have been. Another difference, though, was political: Part of FDR’s response to the Great Depression — both in rhetoric and in policy — was to argue that irresponsible businesses had created the need for stronger labor unions. This White House did nothing of the kind.

At this point, I can’t tell a plausible story in which labor reverses decades of erosion and roars back to a central role in American economic or political life. Maybe someone else can — and if so, I’d like to hear it — but I can’t. The question is what replaces labor. At the workplace level, the answer is probably nothing. But as Jacob Hacker and Paul Pierson argue persuasively in “Winner-Take-All Politics,” labor has long been the largest organized, sophisticated, and funded group advocating for working-class interests in the political system. But they’re in decline — and they’re in decline even as business groups double down on their efforts to affect political outcomes.

If you even vaguely believe in the importance of interest groups in the political system, you should consider this a very big deal. But, again, it’s not at all clear what can be done about it. My depressing answer is that it’s so hard to imagine a successor to organized labor that perhaps the only plausible response is to also reduce the political power of business groups, perhaps through something like the Fair Elections Now Act (which would presumably reduce the political power of all groups, while increasing the political power of voters and small donors). But maybe other people have better thoughts on this.

Ezra Klein

Ford Motors and Detroit Lions executive Bill Ford is getting a lot of calls from other NFL owners asking about how to deal with the threat of an NFL work stoppage:

"It’s funny that the NFL owners keep asking me about labor and I keep saying, ‘Guys, it’s a totally different animal,’" Ford told Reuters.

"Most of the NFL owners have no labor background at all," he said, but added that his three decades of experience in negotiating with the UAW was no help.

"The NFL has 32 owners, as opposed to a single corporation," Ford said in an interview in his office at Ford Motor’s world headquarters in Dearborn, Michigan. "The whole thing is so different. And the issues are so different."

The NFL faces a work stoppage if the players and owners cannot agree on a new contract by March 4. The players’ union has warned its members to prepare for a possible lockout by the owners.

Ben Smith’s Blog

I cooked up this model in my head whereby asymmetric time spans of slack and overheating labor market conditions would exacerbate inequality, but then I thought I might be wrong because normally I try to avoid espousing economic theories I haven’t previously read from someone with a PhD. Fortunately, Tyler Cowen does have a PhD and says this was cut from a draft of something he was working on:

A worker who wasn’t worth much sweeping up the back room is suddenly valuable when new orders are flowing in and he is needed to ship the goods out the door. And if all those new orders require keeping the warehouse open late, the company may need to bring in a new night watchman. To paraphrase a common metaphor, a rising tide eventually lifts most boats. When the economy’s expanding, a worker who previously was worthless will at some point become valuable again. But this means that workers at the bottom of the economic ladder will have to wait until the entire economy has mended itself before they have the chance to improve their lot: That can be a painstakingly slow and uncertain process.

But Cowen is a libertarian, so his way of phrasing this is kind of in the mode of “unemployed folks are going to have to gut it out.” But Google revealed a similar point in the 2003 edition of The State of Working America from Lawrence Mishel, Jared Bernstein (now of the vice president’s office), and Heather Boushey (now my colleague at CAP) from the Economic Policy Institute:

Monetary policymakers aim at maximum employment consistent with long-term price stability. In other words, an economy that avoids either an output gap or an overheating scenario. Both kinds of failure are bad, but the failures have different consequences for different types of people. Low-skill individuals and the working class suffer disproportionately form output gaps and benefit disproportionately from full employment. Elites—meaning not just 23 rich bankers and Fred Hiatt, but a much larger minority of the country—faces a different set of incentives.

Yglesias

Maggie’s and my story today:

On defense and on its heels after the Republican takeover of Congress and key statehouses, a divided labor movement is coming together for a new campaign that will attempt to go on offense against corporate America.

In a central headquarters in Washington, the new union campaign will attempt, in particular, to prevent a split between public and private sector workers, and to defend the public workers from sharp cuts to their pay, benefits, and their right to bargain collectively. The effort also hopes to co-opt the “reform” mantle to make the case that while workers are willing to give back some benefits, “shared sacrifice” – meaning taxes on the rich and corporations as well – should be the order of the day.

“Once voters know who’s behind these fights, and that these are the same people who want to dismantle Social Security, and want to dismantle unemployment insurance, and basically want to repeal minimum wage I think they’re going to have a little better understanding of where these things are coming from,” said Naomi Walker, the director of state government relations at the AFL-CIO, which has been coordinating an effort labor sources said was expected also to include sometime rivals at the nation’s two largest unions, the Service Employees International Union, the National Education Association, and the United Food and Commercial Workers.

“There should be more focus on the tax piece,” Walker said. “In a lot of these states, at the same time as public employees are taking reduced wages, there are huge corporate tax loopholes in the states that are draining state budgets.

The Secretary-Treasurer of the giant public workers union AFSCME, Lee Saunders, stressed that the new effort will include both private and public sector unions.

“The ultra-conservatives are trying to make the public sector the enemy because the private sector is being hit so hard,” he said. A main focus, he said, would be pushing back against “misinformation” on the allegedly lavish pay of public workers.

“A lot of that information is dead-ass wrong,” he said.

Ben Smith’s Blog

Via Ta-Nehisi Coates, John McWhorter is very enthusiastic about the ability of drug legalization to improve the state of black America. I think there’s a lot to be said for laxer drug laws, but this strikes me as too optimistic:

If there were no way to sell drugs on the street at a markup, then young black men who drift into this route would instead have to get legal work. They would. Those insisting that they would not have about as much faith in human persistence and ingenuity as those who thought women past their five-year welfare cap would wind up freezing on sidewalk grates.

There would be a new black community in which all able-bodied men had legal work even in less well-off communities-i.e. what even poor black America was like before the ’70s; this is no fantasy. Those who say that this could only happen with low-skill factory jobs available a bus ride away from all black neighborhoods would be, again, wrong. That explanation for black poverty is full of holes. Too many people of all colors of modest education manage to get by without taking a time machine to the 1940s, and after the War on Drugs black men would be no exception.

I think the analogy to “welfare reform” is apt. Welfare reform seemed to be working great in the 1997-2000 period. Then it seemed to be working not as well in the 2001-2007 period. Then in the 2008-2010 period it seems to be working terribly. That’s because labor market conditions shifted. If black men currently earning black market drug incomes lost that opportunity, it’s true that some of them would find jobs in the legitimate workforce. But unemployment would still be really high, working class unemployment would still be really high, African-American unemployment would still be really high, and working class African-American unemployment would still be really really high. It’s just not within people’s power to conjure up intense demand for labor from low-skill individuals with spotty history’s in the legitimate workforce. If a guy walks through your door and says “I’m 25, I didn’t finish high school, and I’ve never held a legitimate job” you’d have to be a bit nuts to offer him a minimum wage job when there are so many other jobless people out there you could try to hire.

Very few of the years between 1980 and 2010 have featured “full employment” macroeconomic conditions. If you look at any particular set of people facing a bad labor market situation, there are going to be some good reasons why those people rather than some other people are the ones getting the short end of the stick. But it’s dangerous to take your eyes off big picture conditions.

Yglesias