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A century ago, workers were a lot more “flexible” than they are now. Veritable Gumbies in the mills and mines and factories they were, distorting their lives to slog 10 or 12 hours a day, six – even seven – days a week.

Then came the 40-hour week. And weekends. And eventually sick days. And paid vacation days. Now, bosses at mills and mines and factories regard these rules as coddling and consider the workers accustomed to them as unyielding to corporate demands.

The GOP has an app for that. It’s called the Working Families Flexibility Act. This legislation that the Republican majority in the U.S. House is expected to pass this week would force some old-time flexibility into 21^st century workers. The forced flexibility act would award bosses the power to “offer” compensatory time off instead of overtime pay. Bosses, not workers, would determine when the comp time could be taken. The proposal puts control in corporate hands, obliging wage earners to bend over backward for bosses exactly like their Gumby ancestors were compelled to.

Trade unionists and labor rights activists died to achieve the goal of eight-hour days and 40-hour weeks. They were shot and beaten in the streets during demonstrations organized by the eight-hour movement. Their slogan was: “Eight hours for work; eight hours for rest; eight hours for what we will.”

Finally, in 1938, President Franklin Delano Roosevelt signed the Fair Labor Standards Act (FLSA) as part of the New Deal, which gave workers and families rights and security that previously had been exclusive to the wealthy.

FLSA enforces the 40-hour week with a simple measure. It requires employers to pay time and a half to wage earners for each hour worked beyond 40 in a week. That creates a financial disincentive for bosses to order work beyond 40 hours. That also creates a financial incentive for companies to avoid overtime pay by hiring more workers. That was a significant bonus during the Great Depression. (more…)

Last week, 11 European nations forged ahead to create a new tax while American Republicans walked backward into a no-new-tax trap.

On Jan. 22, the European Union gave 11 member countries – including economic giants Germany and France – permission to institute a financial transaction tax, a tiny fee charged on trades of stocks, bonds and other financial instruments.

On the same day, U.S. House Speaker John Boehner announced that he’d given failed Republican vice presidential candidate Paul Ryan the task of preparing a budget that would end the federal deficit within a decade – without new taxes.

That stuck Ryan with grim choices. He can break America’s decades-old pledge of decency to the aged and infirm through Medicaid, Medicare and Social Security. Or he can break the Republican pledge of no new taxes. Republicans put themselves in this position because they don’t understand Americans – hard-working people the GOP standard bearers called “takers.” Republicans do this to themselves because they don’t understand how much Americans rely on and plan their lives around the promise of Medicare and Social Security. They do this because they don’t have a clue that Americans would gladly impose a financial transaction tax on the Wall Street speculators who caused the Great Recession, which bloated the deficit.

Two Democrats have for years proposed a financial transaction tax for the United States. Iowa Sen. Tom Harkin and Oregon Rep. Peter DeFazio would charge 3 cents on every $100 worth of stocks, bonds, derivatives and other Wall Street transactions. That would raise $35 billion a year. The 11 European countries plan a higher tax – 10 cents on every $100. If the United States instituted a financial transactions tax matching the European rate, it would raise more than $100 billion a year, which would go a long way toward ending the deficit.

The Wall Street crisis caused the large federal deficits over the past four years, Nobel Prize winning economist Paul Krugman has repeatedly pointed out. During the Great Recession, high unemployment reduced the tax dollars the government received while at the same time the government paid out more for relief programs like unemployment benefits.

American taxpayers, who suffered job loss and foreclosure as a result of Wall Street recklessness, would love to charge financial speculators 3 cents on $100 in trades. They’d be happy to impose the tax that would chill market-endangering financial speculation and high-speed trading. They’re all for restoring a tax that the United States charged for 50 years during its greatest economic expansion and that 30 nations still charge in one form or another today. (more…)

Bob King, the President of the United Auto Workers, and Jim Tetreault, the Vice-President of Ford for North American Manufacturing, joined me at a Friday Forum at the Cleveland City Club to tell how a collaborative process involving Ford, the UAW, communities, and the government helped rescue the American auto industry. (Click to hear the podcast)

It’s a success story. If the auto industry had gone down, the number of jobs lost in the Great Recession would at least have doubled – making it worse than the Depression. And at one point the public opposed the federal intervention that was essential to save GM and Chrysler by a margin of 3-1- which unlike Ford had lacked the foresight to establish adequate lines of credit for the storm that was coming. So did many of our leaders – most notably Mitt Romney, with his famous New York Times op-ed, “Let Detroit Go Bankrupt.” So even though the forum is non-political, the issues it raises unavoidably resonate in the broader context of this election year – and I think shed some light.

Romney’s op-ed looks even more revealing in the light of last week’s Boca Raton tapes revealing a harsh hostility to “the 47%” and suggesting that it is Mitt the Massachusetts moderate who may have been an act, and Mitt the bleak Social Darwinist the real thing. Because what Romney said about the bail-out, unequivocally and in precise detail, was that a collaborative solution to the auto industry crisis was impossible.

“Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.”

These words are eerily reminiscent of the infamous advice that Treasury Secretary Mellon gave President Hoover: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.”

Hoover – sort of – followed Mellon’s advice. Roosevelt’s New Deal followed. Obama didn’t – in the face of public opposition he kept GM and Chrysler going, maintaining the auto supply chain that Ford required as well. So Romney’s wisdom as a CEO seeking to be Job Creator in Chief has been tested – and found wanting.

With the bailout, the Big Three did precisely what Romney said they could not. They changed course – as Tetreault and King make clear here in Cleveland. They changed; they negotiated their way out of their retiree burdens, jumped into the technological lead, started regaining market share, embraced fuel efficiency and are rebuilding jobs, shifts and factories.

But they changed because there was trust and transparency – something Romney’s version of predatory capitalism values not at all – or we would have seen his tax returns. Romney’s version of private equity posits that only a hostile “turn-around” can rescue an industry in crisis – it values only fear, not trust. But that’s not what turned Detroit around. The auto industry changed because it faced a crisis, yes, but also because it discovered that it had a reliable, predictable partner in the American people, as expressed in the investment the Obama Administration made. And it changed because its leaders – people like Tetreault and Bob King – liked each other, trusted each other, and took risks with each other. (The three of us on stage are an unlikely trio. Tetreault , who started out as an environmental clean-up specialist keeping auto plant wastes out of rivers, graciously deflects efforts to draw him into politics - “I’m working with everyone.” -but he notes that Bob is not as apolitical. King, as I discovered on a trip to Tokyo trying to rescue the NUMI plant in California, is the rare industrial union president who is a vegetarian. And I’m here because we can’t outsource the creation of a sustainable America. Without the restoration of “America the Maker” our ecological future is grim.)

Roosevelt would have understood. Romney, it appears, does not. (more…)

The latest edition of the Economic Policy Institute’s “State of Working America” report, out this week, documents in sharp detail what has been for the middle-class economy a “lost decade” in which working people have fallen behind. But what’s more disheartening is its prediction that without radical change “nearly two decades likely will pass before American incomes regain lost ground and return to their 2000 levels.”

The report makes clear what has been robbed from low- and middle-income people as a result of conservative policies that have their roots in the early 1980s, as the country turned from balanced growth policies in which labor and capital profited more or less in tandem to government policies that advantaged corporations and the wealthy at the expense of workers.

As a result of these policies, the report notes, “the business cycle preceding the recession [of 2008-2009] was already shaping up as a lost decade for American

incomes,” with median household incomes falling 6 percent during that period. But when the Great Recession hit, median income of working-age families fell another 7.1 percent between 2007 and 2010.

“This is an underappreciated economic calamity,” the report says.

These key slides from the report help tell the story:

The report notes that this calamity is not caused by a lack of overall economic growth. National income, the report notes, has grown enough to substantially improve the fortunes for all. As the data reveal, however, it is the top 5 percent, the top 1 percent, and fractions of the top 1 percent that have received almost all the benefits of the economy’s growth. (more…)

Of the various things that keep me up at night, two big ones are, in order, a) the economy has never fully escaped the grip of the Great Recession, and b) we’re collecting unsustainably low amounts of revenue.

Well, in a simple burst of insight, economist Bill Gale solves both with this sentence from a recent op-ed. As opposed to squabbling about which part of the tax cuts should sunset, Gale suggests that:

… [a] better way to stimulate the economy and move the broader debate forward would be to let all of the Bush tax cuts expire as scheduled and be considered as part of a broader tax reform and medium-term deficit reduction effort, and institute instead an explicitly temporary cut, again a payroll tax cut comes to mind.

If this doesn’t exactly light up that little light bulb atop your head then allow me to elaborate.

The fiscal cliff, as wonks like Ezra Klein have been pointing out for about a year, is unique in that if we do nothing, the tax increases and spending cuts steer us onto a sustainable budget path, one that absent that revenue (that’s the main part of this) would be explosive.

That allows me to go to sleep re: worry ‘b’ except for I’m still tossing and turning re worry ‘a.’ But here, the solution, as Gale points out couldn’t be simpler. Take a small chunk of that new revenue that’s in the new baseline and spend it on temporary stimulus. He likes a payroll tax cut, and I’m cool with that (general revenue would replenish the Social Security trust fund, just as under the payroll tax holiday). I’d add state fiscal relief and FAST!

But wait, you say! What about the damage of going over the cliff? What about the big tax hikes on the middle class, the mindless cuts of the sequester?

All good points, but none are dispositive. First, as CBPP has consistently stressed, a quick trip down the fiscal slope quickly reversed by a smart plan, would be far better for the economy and markets than another reckless can kick. The economy can finally get the boost it needs next year by a strong dose of stimulus, and the markets will finally see some fiscal rectitude locked into place. (more…)

The Romney v. Obama economic smack down in Ohio last Thursday failed to deliver half the punch of remarks the men made earlier in the week.

President Obama said the nation must focus on the public sector, which continues to lay off thousands of teachers, cops and firefighters, even while the private sector has recovered sufficiently to consistently add jobs. Romney said he would fire more teachers, cops and firemen.

This gets to the dispute between Democrats and Republicans. The GOP has contended for 30 years that the primary function of government is to serve corporations and the 1 percent, and that when they thrive, the 99 percent may receive hand-me-down benefits. Democrats believe the principal function of government is to serve the majority of people and that when they benefit, the economy thrives for everyone.

For all the fancy talk in Ohio on Thursday, it comes down to this: Do Americans want a government of the people by the people for the people, one conceived in liberty and dedicated to the proposition that all men are created equal? Or do Americans want a government of the corporations by the corporations for the corporations, one dedicated to the proposition that the rich are better than everyone else?

For the rich, like Mitt Romney, the proposition that they are better than everyone else is a given. Romney believes that he, the son of a wealthy car company executive and governor, the youth who attended exclusive private schools and wallowed in every privilege, is a self-made man.

That is basic Republican philosophy: Every wealthy person and every successful corporation achieved that all by themselves. They didn’t inherit; they didn’t benefit from taxpayer-funded infrastructure like roads, schools and patent enforcement; there was no luck involved. They achieved it alone by virtue of their own grit, hard work and dedication.

Anyone can do it, the GOP believes, if they would just buckle down, work hard and follow all the rules. As a result, in Republican world, anyone who isn’t rich has only himself to blame.

Therefore, in GOP-logic, the poor and middle class are inferior beings. Government should not serve them. The government, Republicans think, should bow to the successful, who earned service. The government must not, according to the GOP, reward shiftlessness by providing benefits to middle class scallywags who have failed to do what it takes to get rich. (more…)

U.S. Secretary of Commerce John Bryson had a bad weekend. After what appears to have been two hit and run accidents he was eventually found asleep or unconscious over the steering wheel of his car. He has now taken a “medical leave of absence.”

That was obviously bad for Bryson, bad for the people he hit, and embarrassing, at least politically, for the Obama administration. But the incident didn’t seem to have any real far reaching significance. There was, however, a further detail. The car the secretary was driving was a Lexus.

“So what,” you say. A lot of people drive Lexuses. What’s the big deal about that? Well, the thing is that Lexuses in the United States are totally imported from Japan. The Secretary of Commerce — the official most responsible for carrying out President Obama’s export doubling campaign — is driving an import. Top Japanese officials don’t drive imports. Top German officials don’t drive imports. Top South Korean officials don’t drive imports. All of their countries have trade surpluses.

How is the United States supposed to double exports, reduce its trade deficit and thereby create jobs domestically when its top official in charge of the export-doubling doesn’t even drive a U.S.-made car? Couldn’t he at least drive a Honda or a Toyota Camry or a Mercedes or BMW? All of these are foreign brands, but at least they are also made in America. He doesn’t have to be xenophobic, just conscious of creating American jobs.

The coincidence of Bryson’s troubles with the release by the Federal Reserve of a report showing that the median net worth of Americans fell by 39 percent between 2007-10 couldn’t have been more apt. (more…)

New data showing U.S. median net worth plunged by nearly 40 percent following the not-so-Great Recession is getting big media play today. Pundits are shocked—which gated communities do they live in again?—but the Federal Reserve figures showing individuals’ net worth dropped from $126,400 in 2008 to $77,300 in 2010 doesn’t come as a surprise to most Americans. They’ve been struggling to find jobs in an economy where there still are more than three job seekers for ever one available.

Meanwhile, Republicans in Congress are holding hostage the America Dream, one that involves making a decent living and being able to afford to send your kids to college and maybe buy a home. The partisan gamesmanship, especially among members of the so-called tea party who want to make a point at the expense of the rest of us, has paralyzed passage of basic legislation that normally would be voted for as a matter of routine, such as the surface transportation bill, which would create up to 3 million jobs and begin to address the nation’s dangerously crumbling infrastructure.

As Transportation Trades Department (TTD) President Edward Wytkind put it, the bill:

is being held hostage by too many lawmakers who want to score political points with their political base rather than inject billions into our failing highways, bridges and transit systems. (more…)

The articles on the Fed’s Survey of Consumer Finance release from yesterday give you an excellent flavor of the magnitude of what’s been lost in the Great Recession. But I haven’t seen this figure posted yet (though I may have missed it somewhere, of course).

It’s simply the trend in real median net worth from the SCFs going back to 1989 (this survey is taken every three years; see data caveats below). There’s a little dip in the 1990s downturn, a flattening in the 2001 recession, and then…a massive cliff dive in the Great Recession.

We’re talking two decades of gains, gone. Now, it is important to recognize that some those gains, particularly those from that steep climb you see in the latter 2000s, were the housing bubble at work inflating home prices. And since homes are the primary asset of many in the middle class, that in turn inflated median net worth.

Source: SCF, my adjustments to pre-2001 data using CPI-RS (see data note below) (more…)

Here are the facts of the economic case as I see them today:

- Much of Europe is in recession and the downturn is in no small part a function of austerity measures that, like bloodletting, are making things worse, not better. While the new French president is certainly making the right sounds, it’s awfully hard to point to the actual implementation of helpful policy anywhere.

- The U.S. is doing better but we too are failing to enact measures that would finally release the economy from the residual gravitational pull of the Great Recession.

- The latter point is showing up in lots of worrisome places: the economy is slogging along at too slow a growth rate (around 2%); the job market may be decelerating from an okay pace to a sub-par pace; real paychecks are falling behind inflation.

All of which begs the question, why are advanced economies so seemingly immune to correct diagnosis and prescription? Why are we applying leeches instead of the contemporary medicine of combined monetary and fiscal stimulus in order to once and for all hit the escape velocity that’s eluded us thus far?

Here are some answers off the top of my head:

- U.S. Politics: There are those who so badly want to hammer the incumbent president that they’re willing to throw the economy under the bus to do so. A potentially interesting wrinkle from Europe is, what if the electorate turns on the austerians?

- Stimulus Doesn’t Work: There are also those who know two things: we implemented aggressive measures by the government and the Federal Reserve starting in 2009 and here we are, still hurting, in 2012. Ergo, stimulus doesn’t work. (more…)