Thursday, September 08, 2016
Happy Labor Day — If You Have a Job
The headline unemployment rate is at 4.9% after Friday’s jobs report — about where it has been for the last nine months. But, the real unemployment rate, when taking into account Americans who are now chronically unemployed and no longer looking for work, is in excess of 10%. The fact is, a record number of Americans are out of the labor force, and in a now familiar refrain, job growth slowed in August and remains stuck in the same ditch it’s been in for the last seven years — stagnating.
Cue Barack Obama’s Labor Day radio address, where even he conceded that “too many working folks still feel left behind by an economy that’s constantly changing.” Actually, they have been “left behind” by Obama and his Democrat Party — they have betrayed American workers.
Let’s look at the Democrat record. A year after they took over Congress in 2007, the housing market bubble, previously inflated by easy-lending policies enacted by Bill Clinton a decade earlier, began a rapid deflation. Democrats' answer to government-caused cascading economic crisis of confidence was, as always, more government. In 2009 Obama and his Democrat Congress passed a near-trillion dollar “stimulus spending package” that did nothing to stimulate the economy and everything to grow the size of government, while lining the pockets of leftist constituents and cronies. Additionally, Democrats passed the so-called “Affordable Care Act,” which has proven a colossal failure and an huge obstacle to economic growth. So yeah, you could say the economy is “constantly changing,” and the net effect of Obama’s policies have crushed the middle class.
In regard to labor unions, one of the Left’s most vociferous captive constituencies, since 2008 an estimated 500,000 manufacturing jobs have been created, but none were union. In fact, since Obama took office, labor union membership has dropped 4% overall. Commercial sector unions are now at 7% down from 20% 30 years ago, because union labor is not competitive. But, government employee unions – federal, state and local – have now grown to 35%, because they are not subject to competition – which explains the chronic lack of productivity in the bowels of federal bureaucracies. However, state government unions will likely slide in the future, primarily due to right-to-work legislation such as that in Wisconsin, where teacher unions have sided with Gov. Scott Walker and are decertifying their unions.
And as far as working folks being left behind, Obama has undermined workers at every turn. He’s pushed for a record number of economically suppressing regulations, a higher minimum wage that will price low-skilled laborers out of the jobs market, and advocated a virtual open borders policy, which has flooded the market with low-skilled labor. In short, Democrats are bad for business, which means they are bad for labor.
Mark Twain famously said that there were three kinds of lies — “lies, damned lies, and statistics.” Since this is an election year, we can expect to hear plenty of all three kinds.
Even if the statistics themselves are absolutely accurate, the words that describe what they are measuring can be grossly misleading.
Household income statistics are an obvious example. When we hear about how much more income the top 20 percent of households make, compared to the bottom 20 percent of households, one key fact is usually left out. There are millions more people in the top 20 percent of households than in the bottom 20 percent of households.
The number of households is the same but the number of people in those households is very different. In 2002, there were 40 million people in the bottom 20 percent of households and 69 million people in the top 20 percent.
A little over half of the households in the bottom 20 percent have nobody working. You don’t usually get a lot of income for doing nothing. In 2010, there were more people working full-time in the top 5 percent of households than in the bottom 20 percent.
Household income statistics can be very misleading in other ways. The number of people per household is different among different racial or ethnic groups, as well as from one income level to another, and it is different from one time period to another.
The number of people per American household has declined over the years. When you compare household incomes from a year when there were 6 people per household with a later year when there were 4 people per household, you are comparing apples and oranges.
Even if income per person increased 25 percent between those two years, average household income statistics will nevertheless show a decline. When the income of 4 people rises 25 percent, this means that 4 people are now making the same income as 5 people made in an earlier time. But not as much as 6 people made before.
So household income statistics can show an economic decline, even when per capita income has risen.
Why do so many people in the media, in academia and in politics use household income statistics, when the number of people per household can vary so much, while individual income statistics always mean the average income of one person?
Although individual income statistics can give a truer picture, not everyone makes truth their highest priority. Alarming news that household incomes have failed to rise, or have actually fallen, is more exciting news for the media, or for alarmists in academia or in politics.
Such alarming news can attract a larger audience for the media, and can justify an expansion of government programs dear to the heart of academics on the left, or to politicians who just want more power to hand out goodies and collect more votes from the beneficiaries.
Even individual income statistics have pitfalls when they lump together very different kinds of income, as is usually the case. Incomes from salaries are very different from incomes from capital gains.
A salary is usually earned and paid in the same year. Capital gains received in a given year can be paid for value accrued over a number of years. If you paid $100,000 for a home or a business in the past, and then sold it 20 years later for $300,000, have you made $200,000 per year when you sold it or $10,000 a year for 20 years?
In the income statistics, your income will be recorded the same as that of someone on a salary of $200,000 a year.
What difference does that make? It makes a big difference when most low and moderate incomes are from salaries, while incomes in the highest brackets are more likely to be primarily capital gains — whether from the sale of homes or businesses, or receiving an inheritance, cashing in stock options, or some other forms of capital gains.
This means that statistics on income inequalities are often comparing high multi-year earnings with lower single-year earnings — that is, comparing apples and oranges.
Such statistical distortions are discussed more fully in my book “Wealth, Poverty and Politics.” In an election year, it might be worth taking a look.
Labor Day: A Capitalist Holiday
How Grover Cleveland used the holiday to divide the Left
Almost no one pays tribute to the American labor movement on Labor Day nowadays because America, despite its leftward drift in recent years, is not a nation that exalts brawn over brains or socialism over capitalism.
Americans don't care about President Obama's final Labor Day message, a mixture of facts and well-worn leftist propaganda.
"For generations, every time the economy changed, hardworking Americans marched and organized and joined unions to demand not simply a bigger paycheck for themselves, but better conditions and more security for the folks working next to them, too," Obama said in his weekly address. "Their efforts are why we can enjoy things like the 40-hour workweek, overtime pay, and a minimum wage. Their efforts are why we can depend on health insurance, Social Security, Medicare and retirement plans."
"All of that progress," he added, "is stamped with the union label."
Americans are smart enough to take Obama's socialist claptrap with a grain of salt. This is a man who derides hard work, saying "you didn't built that," and "when you spread the wealth around it's good for everybody."
Americans respect hard work but they do not engage in the hateful Marxist tribalism and redistributionism that consumes backwards, kleptoparasitic states like Venezuela, Cuba, and North Korea.
"I think most people consider Labor Day an end-of-summer three-day weekend," David Ray Papke, a law professor at Marquette University, told the Huffington Post. "Very few Americans stop to reflect on the working man, on labor, on the union movement or any of those things."
And that is a wonderful thing.
In America everyone is equal before and under the law, able to achieve and chase their dreams, unburdened by ancient albatrosses like class and caste. Americans don't care about the labor movement because it hasn't done anything for them. They don't care that the movement is dying, and in most cases aren't even aware it's in rough shape. And that too is a good thing.
American statesmen had the good sense to create Labor Day more than a century ago to help co-opt the always violent labor movement and derail, or at least slow, the frighteningly speedy headway that the radical leftists – communists and anarchists – had been making during the Progressive Era.
Today most of the Left boasts that Labor Day is their holiday. The U.S. Department of Labor's website predictably gushes that:
The vital force of labor added materially to the highest standard of living and the greatest production the world has ever known and has brought us closer to the realization of our traditional ideals of economic and political democracy. It is appropriate, therefore, that the nation pay tribute on Labor Day to the creator of so much of the nation's strength, freedom, and leadership – the American worker.
This fetishizing of workers is what one might expect with a Marxist in the White House. So is the lie that "economic democracy," a socialist concept, is any kind of an American ideal.
Contrary to what many labor historians say, the invention of Labor Day was not a victory for the Left.
Labor Day was created as a reaction to the organized, terroristic violence of the labor movement. It was an attempt to placate the angry bomb-throwing radicals who were trying to destabilize America when parts of the country were ripe for revolt and other parts were actually in revolt.
And it worked. Labor Day defanged the American Left.
According to the Bernie Sanders fan site, Jacobin, potential trouble was brewing in the late 19th century when Labor Day was born. An article by Jonah Walters states:
At the end of the nineteenth century, the American labor movement was among the most militant in the world. From the stockyards of Chicago to the coal mines of Pennsylvania, workplaces all over the country were in open revolt. Strikes were commonplace, often leading to violent confrontations between rebellious workers and private militias like the despised Pinkertons. Even Marx held high hopes for revolution in the US, speculating that the country's long battles over suffrage ripened conditions for revolt. "Nowhere does social inequality obtrude itself more harshly than in the Eastern States of North America," he wrote, "because it is nowhere less glossed over by political inequality."
This social equality that Karl Marx bemoans, is better understood as economic equality, which, of course, is a feature of markets and proof that economic freedom exists. The fact that everyone is not forcibly brought down to the same level by socialist schemers in government is precisely what allows Americans to generate the kind of wealth never before seen in any society.
Returning to the 1890s, there was an economic contraction that cut demand for railway cars. This forced captain of industry George Pullman to reduce his workforce and cut wages. When his employees went on strike in May 1894, other unions refused to handle Pullman cars, a move that disrupted commerce nationwide. In July, President Grover Cleveland deployed U.S. troops to Chicago to preserve property rights and put down the strike. Angry mobs responded by setting railroad cars on fire.
Soon after these ugly confrontations started, Congress rushed through stalled legislation, which Cleveland signed into law making Labor Day a national holiday. Pressed by the similarly named socialist labor activists Matthew Maguire and Peter McGuire, many states had already acted on their own before that. From 1887 to that point, 23 states had created their own Labor Day holidays.
According to the House of Representatives historian, the new national Labor Day was an immediate success.
The response to the new holiday was overwhelmingly positive. Labor unions in cities such as Boston, Nashville, and St. Louis celebrated with parades and picnics. Large turnouts in Chicago (30,000) and Baltimore (10,000) underscored the holiday's popularity.
President Cleveland was no socialist. He was also no fool. Labor Day was placed in September to divide and conquer the Left.
"To disassociate American labor from any connection with socialism, the first Monday of September was chosen to honor American workers rather than 1 May, which in 1889 the Second Socialist International in Paris had designated as International Workers Day." (The Encyclopedia of New York State, by Peter R. Eisenstadt and Laura-Eve Moss, p.853)
Unlike much of the Left, the writers at Jacobin are not in denial about the origins and significance of Labor Day. They see Labor Day as a corporate holiday, or a "boss's holiday." The real day for radical labor agitators is not the first Monday in September, but is in fact May 1, which, as noted above, has been long recognized as the day for working-class solidarity. "Cleveland's choice to establish Labor Day in September deflected attention away from another explosive labor action – the Haymarket massacre of 1886, the origin of international observance of the May 1 holiday."
Jacobin belittles the patriotic labor leader (yes, they used to exist) Samuel Gompers, who was president of the American Federation of Labor (AFL), which had opposed the Pullman strike.
Gompers immediately endorsed the president's holiday – Cleveland even presented him with the pen used to sign the holiday in law. Gompers later wrote a superlative column in the New York Times praising Labor Day as the harbinger of "a new epoch in the annals of human history." He made the absurd claim that Labor Day "differs essentially from some of the other holidays of the year in that it glorifies no armed conflicts or battles of man's prowess over man," and wrote scathingly about the "dark side of the labor movement" represented by the Pullman strikers.
Labor Day, according to the leftists at Jacobin, "marks our historic defeat, not our triumph."
Which is why every freedom-loving, patriotic American should celebrate Labor Day.
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Posted by JR at 12:19 AM