On July 8 – 9 CPEG joined members of Congress, representatives of community groups and union members from around the country for a “Jobs Briefing” in Washington D.C. Bill Barclay was on the panel analyzing the current jobs situation, outlining policies to address continued high unemployment and assessing our experiences organizing the unemployed. His comments are below.
I’m pleased to be at this jobs briefing as both a founding member of, and representing, the Chicago Political Economy Group. CPEG developed and published a comprehensive jobs proposal in 2008, and we have worked with the staff of Rep. John Conyers to include many of the same ideas in HR 1000. I’m also here as a Democratic Socialists of America member, happy to say that DSA was one of the first national organizations to endorse the legislation proposed by Rep. Conyers.
I’m going to consider three points in my remarks. First, what is happening to the US labor market during this Long Depression, a more appropriate title for the period we are in than recovery from something called the “Great Recession”; second, what is the role and importance of a financial transaction tax in the financing of a jobs program sufficient to the problems we face; and third, why did the efforts of several of us in 2009-10 in Chicago to organize the unemployed failed but why the situation may be different today.
The Changing Political Economy of the US Labor Market
We all know the story of the huge job loss that occurred during what is officially labeled the “Great Recession.” Yes, we are now back to the level of jobs – in terms of simply the number of people with a job – that prevailed prior to the Great Recession. However, there are more people in the US today, and thus we are actually short almost 10 million jobs if we want to achieve the same labor force participation rate that prevailed in 2007. And remember that the unemployment rate in late 2007 was still 4.7 percent, or 7.2 million people.
I think it is essential that we find ways of making these statistics real to the people we talk to. Here is one way I try to do it. Imagine we could take all the officially unemployed and underemployed and line them up, shoulder to shoulder. The line would stretch from San Diego to Bangor, Maine, and back again – and there would still be about 2 million people trying to get into the line. That is a national disgrace – and a huge collection of personal tragedies.
In the celebration of 52 straight months of job creation in the private sector, there has been very little attention to the question of what kinds of jobs are being created, how the US political economy of the labor market is shifting. A simple but very important way to see this is to divide jobs into three wage-level categories: low wage jobs pay less than $13.50/ hour, middle wage jobs pay $13.50 – $20/hour, and high wage jobs pay $20/hour or more (all numbers are in current dollars). During the free fall of 2008-09, 22% of the jobs lost were in the low wage category. But in the “recovery” since June 2009, fully 44% of the jobs created are in this category. In contrast, during the spike of unemployment, 37% of the jobs loss were high wage – but only 25% of the jobs created have been in the high wage category.
The political economy of the US labor market is being reshaped. Today, retail sales and food preparation and serving are the two largest occupations of the more than 800 listed by the Bureau of Labor Statistics. Each accounts for more than 1 in 15 of the total number of jobs in the US. These two occupations each pay less than two-thirds of the median wage for the economy as a whole. You probably won’t be surprised to learn that these two jobs categories employ proportionally more women as well as minorities than these groups are represented in the economy as a whole. Do we really want to become a nation of baristas, wait staff and perfume scent purveyors? So, when we talk about the need for jobs, we must ALWAYS talk about living wage jobs, not the low wage jobs that, left to its own devices, the private sector is so good at creating. This rapid growth of low wage jobs is increasing our already very large, both absolutely and comparatively, low wage sector. In the US, more than 1 in 6 jobs are low wage. In Western Europe, in contrast, only 1 in 12 jobs are low wage – and in Denmark only 1 in 16. In Denmark, even MacDonald’s is unionized!
The Logic of a Financial Transaction Tax (FTT) for Jobs
One part of my bio that I didn’t cover in my introduction was my career in finance. I worked for 23 years at various exchanges in Chicago. I worked with traders, regulators, strategic planners – and designed a derivative product. As a result I have focused on one of the strong points of Rep. Conyers HR 1000: the use of an FTT as a major financing mechanism for the jobs that would be created.
HR 1000 proposes a levy of 0.25% on the value of stock trading ($0.25 for every $100 of stock traded), and a much smaller levy of 0.02% on trading of futures ($0.02 on every $100 of underlying or “notional” value traded). The bill also has rates for other products, including options. In the latter case, I believe the crafters of the bill have made a mistake that needs to be remedied but that is a technical discussion and not relevant to today’s sessions.
The monetary total of stock trading in 2013 was about $60 trillion (for comparative purposes, the total world GDP is about $65 trillion). That is certainly a large sum. Thus even a very small FTT, as proposed in HR 1000, would raise significant revenue. But the total notional value of derivatives traded in the US in 2013 was over $900 trillion – more than 12 times the world GDP. Obviously much of this trading is, in the words of the former senior UK financial regulator Adair Turner, “socially useless” activity.
Now, an FTT as proposed in HR 1000 would do two things: one, raise a large amount of revenue – the American Postal Workers Union VP who spoke earlier cited the figure $350 billion/year, and two, reduce some of the socially useless activity that afflicts our financial markets today. Both would be good outcomes.
The trading that would be most adversely impacted by an FTT is that depicted in Michael Lewis’ Flash Boys. This high frequency trading (HFT) has significant negative impacts on financial markets. Here I will only list those impacts. First, HFT reduces the information content of financial markets. Doing so renders these markets less useful for resource allocation decisions by businesses (investments) and individuals (savings). Second, HFT increases financial market instability. HFT is fundamentally a trend following and exacerbation mode of trading – causing markets to overshoot on both the down side and the up side. Third, HFT is also a significant waste of resources. Spending several hundred millions on building high speed connections between Chicago and New York or New York and London – both of which are in process – contributes nothing to our social or economic wellbeing. And, remarkably, the huge increase in trading over the past 30 years has made today’s financial markets LESS efficient than those of a century ago as measure by the cost to raise each $100 of investment. An FTT is, in that much overused phrase, a win-win proposition.
Trying to Organize the Unemployed in Chicago – 2009/10
In 2009 several groups – CPEG, DSA, PDA and JwJ – the convening organization – as well as some individuals set out to organize the unemployed in the Chicago area. We went to unemployment offices (note – much of the process of filing claims for UI can now be done online, effectively isolating unemployed individuals from each other). We had First Friday monthly rallies (the day the BLS issues its “Employment Situation Report”). We did street theater that focused on various banks such as Wells Fargo, and we tried to hold neighborhood meet ups. A charitable assessment of our efforts would be “limited success.”
We had, of course, all read about the organizing drives of the 1930s that significantly remade the US political economy and changed the life chances for millions of people. And, we thought: “We can do this.”
What we didn’t understand are two variables: time and mass consciousness or psychology.
It is instructive to look at what actually happened WHEN in the 1930s. In 1934, 5½ yers into the Great Depression, there were fewer members of unions in the US than in 1929. Of course, some of this was the result of unemployment, but I think more of it had to do with the question of psychological time. How long does it take for large numbers of people to realize that changing their predicament – unemployment – is not simply a question of one more job application, one more resume, one more interview, and realize that there is a structural problem with the economy? Yes, every person’s story is unique, but the stories are actually all the same: the US economy is not capable of fulfilling its most basic task, providing living wage jobs for all willing and able to work.
And then there is psychology at the level of the individual: is it my fault that I’m unemployed? After all, I see others with jobs, maybe I’m a failure in some way that I don’t fully comprehend.
To overcome these barriers to political mobilization requires both psychological and social time. I think we were too early. (Let me be clear – I don’t regret trying). But remember, our efforts to organize the unemployed in Chicago in 2009-10 were before Wisconsin, before Ohio, before Occupy, before the low wage workers fight for $15, before the Seattle election of a socialist. In sum, before the universe of political discourse about inequality had changed.
Now is our time – to organize for jobs, to fight the power of the neoliberal elite, because more and more people understand that joblessness is not an individual problem, it is a social issue.