Sunday, February 27, 2011

We Are Seeing the Destruction of the Middle Class

Today (Sunday February 27), I was doing my standard search for news and came across this headline from Bloomberg (via MSNBC)

A U.S. recovery built on low-paying jobs
I have to admit, I was a bit shocked to see something within TradMed actually recognizing the realities that millions of us have long known from personal experience to be the case. From the article:
Before she lost her job last November as a full-time health department caseworker in Aurora, Ill., Amy Valle was making $23 an hour. Now she's paid $10 an hour as a part-time assistant coordinator in an after-school program.

"From here on out, it will be a struggle," says Valle, 32, whose husband lost his $50,000 government job and still is out of work after a year. "I don't feel like there's any place we can go to get what we were getting paid."

While the unemployment rate dropped to 9 percent in January, from a two-decade peak of 10.1 percent in October 2009, many of the jobs people are now taking don't match the pay, the hours, or the benefits of the 8.75 million positions that vanished in the recession, according to Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
Of course, things are not likely to improve when we have President Obama's "Jobs and Competitiveness Council" comprised mainly of CEOs whose companies have outsourced millions of jobs and MOTU who were instrumental in the destruction of the global economy. We see the Federal Reserve, one of whose tasks is job creation, far more concerned about inflation, even though inflation is nowhere near the problem in today's economy that joblessness is. Today's NY Times has an opinion piece from Christina Romer, former Chair of President Obama's Council of Economic Advisers":
The real division is not about the acceptable level of inflation, but about its causes, and the dispute is limiting the Fed’s aid to the economic recovery. The debate is between what I would describe as empiricists and theorists.

Empiricists, as the name suggests, put most weight on the evidence. Empirical analysis shows that the main determinants of inflation are past inflation and unemployment. Inflation rises when unemployment is below normal and falls when it is above normal.

Though there is much debate about what level of unemployment is now normal, virtually no one doubts that at 9 percent, unemployment is well above it. With core inflation running at less than 1 percent, empiricists are therefore relatively unconcerned about inflation in the current environment.
In other words, the Fed is wasting time arguing about a peripheral issue while neglecting the bigger problems. An appropriate analogy might be arguing about the color of the drapes in the living room while the fire races up from the kitchen to engulf the entire second story and attic.

Today's Washington Post seems to be leaning toward the idea that destroying collective bargaining rights for public sector employees might not be such a great idea but that it's OK to cut wages and benefits since the private sector has done such a bang up job of destroying wages and benefits. When did we become a nation that exalts the destruction of the middle class rather than one that tried to raise the standards for all. From the Post article:
OREGON, WIS. - Michael Wernick, 61, a longtime body and fender man, says his financial fortunes have gone nowhere but down over the past decade. His salary is stagnant, and his 401(k) has shrunk, derailing his retirement plans.

So as he watches Gov. Scott Walker (R) take on the public-employee unions by not only demanding steep reductions in their pension and health care benefits but by also insisting they give up many of their collective-bargaining rights, Wernick is quietly cheering him on.

"Maybe there is a little bit of jealousy here, but public workers have what I don't have," Wernick, a political independent, said as he sipped coffee in this bucolic village a few miles outside of Madison. "It's nice to have these things, but if there is no money you can't afford them."
Along with the attempted destruction of public sector unions by the governors of Wisconsin, Ohio, and Indiana, we have this article from the AP (via NY Times) detailing how limited the public sector "unions" are already in most of the "right to work" states in the south.

Florida Governor Rick Scott seems to put the lie to Republican claims of wanting to create jobs. He initially rejected High speed rail funds because:
Among Scott's reasons for rejecting the funds allocated to Florida: "Capital cost overruns that could put Florida taxpayers on the hook for an additional $3 billion," "overly optimistic" ridership and revenue projections, and $2.4 billion owed to the feds if the project "becomes too costly for taxpayers and is shut down."
Other Florida elected officials from both parties worked to address Scott's 'concerns' presented a plan to the governor's office last Wednesday that Scott rejected on Thursday:
The plan, calling for local governments to take over the project, was submitted to Scott on Wednesday after meetings between the governor’s office, federal transportation officials and representatives from local governments including Tampa, Orlando, Lakeland and Miami.

This new partnership would be considered a “non-recourse entity,” which is the key piece of the proposal. It means that if the project goes bust, in no way would the state or local governments be held liable for construction or operating cost overruns. The new entity would oversee the design, building and operation of the rail system, which would effectively be privatized, with the private company bearing all risks for construction and operating cost overruns.

The state would effectively be rendered into little more than a pass-through agency for the federal grants, accepting the money and turning it over to the “non-recourse entity.” The state would still provide the land on which rail lines are placed and provide some consulting to ensure a smooth transitions
.Senator Bill Nelson had an opinion piece in today's Miami Herald on Scott's decision:
For the past week, Scott has cited so-called economic realities that led him to first turn down the money. He claimed Florida taxpayers would be on the hook for possible cost overruns. He claimed that ridership and revenue projections were overly optimistic. He claimed the state would have to repay the federal government all of the $2.4 billion, if the project faltered.

His claims were hasty and ill-informed when he first announced his decision a week ago. Today, they’re untrue.

A bi-partisan group from Florida’s congressional delegation has spent the past week working with U.S. Department of Transportation officials and representatives of the cities of Orlando, Tampa, Lakeland and Miami, to painstakingly address all of Scott’s concerns.

They came up with a detailed plan that removed any financial burdens from the state and taxpayers and placed them into the hands of private companies.

Under this plan, Florida would accept the $2.4 billion federal grant. The state would transfer the money over to a new legal entity made up of city officials from along the first leg of the route between Orlando and Tampa.
Essentially, Scott is saying that an approximate 24K jobs for Floridians, at a time when Florida unemployment is at or over 12%, is not a priority. And here I was under the impression that Republicans loved private enterprise yet Scott is rejecting allowing a private entity to be formed, at no extra cost to the tax payer, to build and operate a business. I guess Scott really does want to make Florida just like Texas. I just still do not see how cutting programs that will create jobs will actually help to create jobs. There must be some magic involved that brings this in from whatever alternative universe people like Scott dwell in. Unfortunately, I have to deal with the realities of this world. As do most of the rest of us forced to deal with people who think outlawing abortion is also a jobs creator.

And because I can:

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