Wednesday, December 31, 2008

Waukesha takes low road in opposing sick pay benefits

The Waukesha Chamber of Commerce has announced that it plans to join the Milwaukee Metropolitan Chamber of Commerce in aggressively opposing Milwaukee's sick leave ordinance arguing that it would create a "negative business climate for the region...."

On November 4th Milwaukee residents by more than two to one approved a binding referendum that requires employers to provide their employees with paid sick days. Milwaukee joined San Francisco and Washington D.C. as the third city requiring sick day benefits.

Under the new law a full-time worker would earn a minimum of one hour of paid sick leave for every 30 hours worked, or nine days a year. Businesses with 10 or fewer employees would be required to provide 5 days a year to full-time employees.

For most of the past decade Waukesha's employers have experienced labor shortages. Until the recent economic downturn, businesses reported that the biggest obstacle to expansion was a shortage of skilled workers.

Increasing compensation by providing additional benefits such as paid sick leave makes employment more attractive. It builds employee loyalty which increases productivity.

Henry Ford understood this basic truth when a century ago he established the $5 day, doubling the average manufacturing wage. Ford's 300% turn-over rate vanished as increased compensation bought increased loyalty from Ford's employees.

The Waukesha Chamber of Commerce knows that if Milwaukee-based firms provide their employees with paid sick days it will make it harder for Waukesha firms that do not provide these benefits to compete for workers.

Companies can compete based on high-volume, low-cost production or they can compete through innovation, quality production and high levels of service. The Waukesha Chamber of Commerce is committed to a low-road strategy that might help some firms prosper in the short run, but will not create a thriving regional economy with shared prosperity.

Tuesday, December 30, 2008

President Bush is AWOL

The economy continues to spiral downward.

Two million American have lost their jobs since the beginning of the year. One out of ten borrowers is facing foreclosure. The automobile industry with its 3 million direct and indirect jobs is on the verge of collapse. And the President of the United States is AWOL.

In 2006 the noted Princeton historian Sean Wilentz wrote an article about President Geoarge W. Bush entitled "The Worst President in History?"

He concludes the essay:

The president came to office calling himself "a uniter, not a divider" and promising to soften the acrimonious tone in Washington. He has had two enormous opportunities to fulfill those pledges: first, in the noisy aftermath of his controversial election in 2000, and, even more, after the attacks of September 11th, when the nation pulled behind him as it has supported no other president in living memory. Yet under both sets of historically unprecedented circumstances, Bush has chosen to act in ways that have left the country less united and more divided, less conciliatory and more acrimonious - much like James Buchanan, Andrew Johnson and Herbert Hoover before him. And, like those three predecessors, Bush has done so in the service of a rigid ideology that permits no deviation and refuses to adjust to changing realities. Buchanan failed the test of Southern secession, Johnson failed in the face of Reconstruction, and Hoover failed in the face of the Great Depression. Bush has failed to confront his own failures in both domestic and international affairs, above all in his ill-conceived responses to radical Islamic terrorism. Having confused steely resolve with what Ralph Waldo Emerson called "a foolish consistency . . . adored by little statesmen," Bush has become entangled in tragedies of his own making, compounding those visited upon the country by outside forces.

New York Times columnist Bob Herbert echoes this theme today when he writes:

This is the man who gave us the war in Iraq and Guantánamo and torture and rendition; who turned the Clinton economy and the budget surplus into fool’s gold; who dithered while New Orleans drowned; who trampled our civil liberties at home and ruined our reputation abroad; who let Dick Cheney run hog wild and thought Brownie was doing a heckuva job...

The president would give the wealthy and the powerful virtually everything they wanted. He would throw sand into the regulatory apparatus and help foster the most extreme income disparities since the years leading up to the Great Depression. Once again he was lighting a fire. This time the flames would engulf the economy and, as with Iraq, bring catastrophe...

The catalog of his transgressions against the nation’s interests — sins of commission and omission — would keep Mr. Bush in a confessional for the rest of his life. Don’t hold your breath. He’s hardly the contrite sort.

The entire article is linked.

Both writers point out that President Bush refuses to be held accountable for the damage he has done to the country.

Herbert writes:

"He told ABC’s Charlie Gibson: “I don’t spend a lot of time really worrying about short-term history. I guess I don’t worry about long-term history, either, since I’m not going to be around to read it.”

The president chuckled, thinking — as he did when he made his jokes about the missing weapons of mass destruction — that there was something funny going on.

This is from the leader of a Party that argues that personal responsibility is the key to solving the nation's myriad problems and that individuals have to be held accountable for their actions. The President's hypocrisy is matched only by his mendacity.

Monday, December 29, 2008

Journal Sentinel says disenfranchising voters will help MPS

The Milwaukee Journal Sentinel recently editorialized that the Milwaukee Public School board should be dissolved and replaced by an appointed board.

Peter Blewett, the current MPS board president, wrote in reponse that:

Like all urban school districts, MPS faces serious challenges. But none of the issues stem from the right of Milwaukee's citizens to elect their School Board representatives. ..Rather than disenfranchising the citizens of Milwaukee, all of us - the board, administration, educators, staff, parents, business, community leaders - must work together to ensure that the district's teachers have the necessary training and resources to provide Milwaukee's increasingly marginalized youth with the tools they need to succeed in the 21st century.

Blewett's op ed is linked.

Saturday, December 27, 2008

Obama's economic opportunity

The dismal state of the economy presents President-elect Barack Obama with the chance not just to produce a recovery but to restore a more egalitarian society -- and a progressive majority.

Robert Kuttner, economist and co-editor of the American Prospect, writes:

History has delivered Barack Obama the greatest economic crisis since the one that greeted Franklin Roosevelt. As in 1933, the crisis is the direct result of free-market ideology and conservative misrule, which once again stand disgraced. This creates a once-in-a-century opportunity for Obama to redeem American progressivism as the nation's majority philosophy, with government playing a far more active role in the economy -- not just to produce a recovery but to restore a more egalitarian and secure society. However, this opportunity also produces an equally huge risk of failing, which would be seen as a failure of liberal government. Conservative ideology and Republican rule would come roaring back.

Success requires bold, immediate action. First and foremost, Obama must pull back the economy from the brink of depression. Only if he masters this primary challenge and points the economy toward recovery will he gain the political capital needed for the other hurdles -- from reform of collapsing health and pension systems to the long-term conversion of the energy economy.

The entire article is linked.

Tuesday, December 23, 2008

Mayor endorses downtown location for UWM engineering campus

Has Milwaukee's Mayor Barrett decided that downtown Milwaukee is a better location for UWM's new engineering campus than the County Research Park in Wauwatosa?

It appears that might be the case.

In a December 18th article in the Milwaukee Journal Sentinel, Larry Standler reported that the Mayor's stimulus proposal included: "$15 million to help the University of Wisconsin-Milwaukee develop its new School of Freshwater Science and downtown engineering campus."

According to one City Hall insider, the Mayor has concluded that the new campus should be built in downtown Milwaukee.

Whether this is a bargaining chip aimed at getting the County to reduce its price or a recognition that a downtown location maximizes the investments economic development potential in a more student friendly location, it is welcome news.

The Milwaukee Journal Sentinel has editorialized several times in favor of the County Research Park in Wauwatosa and buried the story when the Milwaukee Common Council endorsed a downtown location.

The paper claims there is a fire wall between the editorial page and the newsroom. If so, one would think that the Mayor's change of heart on the engineering campus's location would be worthy of coverage.

Friday, December 19, 2008

Obama labor department appointee, Hilda Solis, says unions are good for the community!

A world gone Madoff

Paul Krugman writes:

"The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole.

Let’s start with those paychecks. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence.

But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion...

We’re talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse."

Sunday, December 14, 2008

The Japanese experience with economic stimulus

In a front page Milwaukee Journal Sentinel Crossroads' column, Amity Shlaes cites the failure of Japan's "huge" fiscal stimulus program in the 1990s as a cautionary tale for President-elect Obama.

Shlaes who has become the darling of free market conservatives for her repudiation of the New Deal and all things Keynesian misrepresents the Japanese experience as a case of large public expenditures in infrastructure that failed to ignite the economy, arguing that infrastructure investments are better left to the private sector.

Leaving aside the obvious problem that a fiscal stimulus is needed precisely because private investment has collapsed, it's apparent that Shlaes is misinformed about Japan's experience. Perhaps she has not read Adam Posner's definitive work, Restoring Japan's Economic Growth, which is a detailed refutation of her arguments.

Japan's 1990s fiscal stimulus, changes in government spending and taxes, was disappointingly modest, not huge, as Shlaes contends. It amounted to only about a third of the announced stimulus and according to Posner: "This limited quantity of total fiscal stimulus was disbursed in insufficiently sized and inefficiently administered doses, with the exception of the 1995 stimulus package."

In 1995 Japan implemented an aggressive fiscal stimulus that led to strong economic growth in 1996. But its impact was undermined in 1996 and 1997 by fiscal contraction. Posner concludes: "On net, the Japanese fiscal stance in the 1990s was barely expansionary...."

The problem in Japan was not a huge stimulus package, as Shlaes contends, but an overly timid one.

This is similar to the U.S. experience in the 1930s. The economy began to grow in 1934 in response to increased deficit spending. But President Franklin Roosevelt, under pressure from his era's balanced budget hawks, was forced to cut federal spending in 1937 and the economy began to contract, only to be rescued by World War II and dramatic increases in federal spending.

So what are the real lessons President-elect Obama and his advisers should learn from Japan and the New Deal? First the stimulus package must be large enough ($700 billion to $1 trillion) to ignite the economy. And second, once the stimulus begins to work and the economy begins to grow, the Obama administration should reject any pressure from the Shlaes' crowd to prematurely cutback on the stimulus.

Saturday, December 13, 2008

Obama considering $700 billion to $1 trillion stimulus

The Wall Street Journal reports that economic conditions have become so dire that President-elect Barack Obama's economic advisers now think a two-year stimulus of between $700 billion and $1 trillion is needed to jump start the economy:

"President-elect Barack Obama's economic team is considering an economic-stimulus program that will be far larger than the two-year, half-trillion-dollar plan under consideration two weeks ago, according to people familiar with the team's thinking...

With the unemployment rate now expected to hit 9% without aggressive intervention, Obama aides and advisers have set $600 billion over two years as "a very low-end estimate," one person familiar with the matter said. The final number is expected to be significantly higher, possibly between $700 billion and $1 trillion over two years."

The article is linked.

Friday, December 12, 2008

Feingold's statement on Senate's failure to support the auto industry and its workers

Statement of U.S. Senator Russ Feingold On a Minority of Senators Blocking Effort to Save Millions of American Jobs

I supported this plan to help the U.S. auto industry because without this assistance, millions of American jobs, including tens of thousands in Wisconsin, will be jeopardized. In these tough economic times, allowing our auto manufacturers to fail could be catastrophic for our economy and could send already increasing unemployment levels skyrocketing. I am greatly disappointed that some Senators didn’t hesitate to bail out Wall Street, but decided not to help millions of working class Americans."

Doyle says federal aid needed to avoid tech college and UW cuts

Wisconsin's Governor, Jim Doyle, told the House Appropriations Committee yesterday that unless they pass a stimulus package that includes support for state and local governments he will be forced to cut technical college and state university funding:

"...state budgets ...allow kids to get a good education, and a chance at a good university or technical college education that their families can afford..." Doyle said." So that's what is threatened: our schools, our universities, our technical colleges...These are the areas that determine our budgets...And these cuts could undermine years of careful progress."

Doyle's entire testimony is linked.

Thursday, December 4, 2008

Investment in higher ed crucial to affordability and prosperity

Wisconsin received an F for the affordability of higher education in a new study by the National Center for Public Policy and Higher Education.

College education was more affordable in Illinois and Minnesota, two states that have higher per capita incomes and a larger percentage of four- year graduates than Wisconsin.

For several years Wisconsin's political, education and business leadership has made increasing the number of four-year college graduates a public policy goal. But the state has not made the investments necessary to accomplish this goal.

According to a New York Times article on the report: "The rising cost of college — even before the recession — threatens to put higher education out of reach for most Americans..."

The report found that published college tuition and fees increased 439 percent from 1982 to 2007 while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families.

The increase in costs has been particularly hard for middle class and poor families. Last year, the net cost at a four-year public university amounted to 28 percent of the median family income, while a four-year private university cost 76 percent of the median family income.

Among the poorest families — those with incomes in the lowest 20 percent — the net cost of a year at a public university was 55 percent of median income, up from 39 percent in 1999-2000.

Even at two-year colleges the cost was 49 percent of the poorest families’ median income last year, up from 40 percent in 1999-2000.

The cost of attending Wisconsin's public colleges has risen rapidly because state support has declined precipitously. As recently as 1990, the state provided the Wisconsin Technical System's colleges (WTCS) with about 30% of their funding. That contribution has fallen by 50% to less than 15%. WTCS students, who pay 20% of the costs, now contribute more than the state! And the state contribution to the University of Wisconsin's total operations budget has fallen to below 20%.

As the state's investment in higher education and occupational training has declined, the University of Wisconsin System and the Wisconsin Technical College System (WTCS) have raised tuition and fees, shifting the cost of post-secondary education to students and their families.

The WTCS's adult basic education tuition has increased 54.6% over the last ten years; collegiate transfer tuition by 57.3%. Two-year UW college tuition increased by a whopping 82.6% and UW Madison by 83.8%.

These tuition increases are making higher education less accessible for middle class and low- income students. Recent studies conducted by the University of Wisconsin System concluded that students from lower income families were increasingly under-represented in the state’s public baccalaureate education institutions. Between 1992 and 2002, the percentage of freshmen reporting family incomes in the lowest quintle (less than $30,000) fell by nearly one-fourth, from 14.5% to 11.0%. At the same time, the percentage of freshmen reporting family incomes in the state’s top quintile (greater than $87,000) rose by nearly one-fifth.

The WTCS/UW Committee on Baccalaureate Expansion concluded: "...Wisconsin students from lower income families have less access to a college education than in the U.S. as a whole."

Wisconsin's continued disinvesment in higher education makes a mockery of the goals of increasing the number of four-year college graduates and training a skilled labor force.

If these trends are not reversed, higher education and occupational training, keys to competitive advantage in the global economy, will be increasingly inaccessible for Wisconsin's middle and working class students.

State leaders, faced with a $5.4 billion deficit, need to resist the temptation to reduce Wisconsin's investment in higher education. It is a strategic investment that is essential to Wisconsin's long term growth and the prosperity of its businesses and citizens. It is particularly crucial now as dislocated workers and returning veterans flock to tech colleges.

In these hard times, the state needs to increase its investment in tech colleges and public universities so that when the economy begins to grow again we have the the skilled and technical workforce and the innovative ideas that a growing economy requires.

Wednesday, December 3, 2008

Odetta-a voice for freedom

Odetta, who gave voice to the civil rights movement as it marched through the deep south in the 1950s and '60s died last night. She also helped Student Non-Violent Coordinating Committee (SNCC) leader Stokley Charmichael and singers Bob Dylan and Joan Baez bring the fight for the civil rights to the Newport Folk Festival in 1963. I was 15 years old and still remember her performance and call to action vividly.

Odetta, born in Alabama, sang at the march on Washington in August 1963. Her song that day was “O Freedom,” dating to slavery days: “O freedom, O freedom, O freedom over me, And before I’d be a slave, I’d be buried in my grave, And go home to my Lord and be free.”

Rosa Parks, who helped start the boycott of segregated buses in Montgomery, Ala., was once asked which songs meant the most to her. She replied, “All of the songs Odetta sings.”

Odetta was 78 years old.

Monday, December 1, 2008

National Bureau of Economic Research declares recession began in December 2007

The U.S. economy entered a recession a year ago this month, the panel that dates American business expansions said today.

The official declaration was made by the cycle-dating committee of the National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts. The last time the U.S. was in a recession was from March through November 2001, according to NBER.

“The committee determined that the decline in economic activity in 2008 met the standard for a recession,” the group said in a statement on its Web site. The 1.2 million drop in payroll employment so far this year was the biggest factor in determining that start of the contraction, the group said.

The 73-month economic expansion, lasting from November 2001 to December 2007, was well short of the previous cycle that lasted a record 10 years. At 12 months, the current contraction is already longer than the last slump that covered the eight months from March to November 2001.

Although a recession is conventionally defined as two quarters of successive contraction in gross domestic product, the private committee doesn’t require supporting GDP data to make a recession call. Its members focus on month-to-month changes in the economy.

The U.S. economy shrank at a 0.5 percent pace in the third quarter after expanding 2.8 percent in the previous three months. Economists at Goldman Sachs group Inc. and Morgan Stanley in New York are among those projecting the economy will contract at a 5 percent pace this quarter.
Members of the committee are Stanford University professor Robert Hall; Martin Feldstein of Harvard University; Jeffrey Frankel, also of Harvard University; Northwestern University economics professor Robert Gordon; NBER president James Poterba; David Romer of the University of California at Berkeley; and Conference Board economist Victor Zarnowitz.