Archives for category: Economy
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Why They Can’t Find Skilled Workers

By dianeravitch
November 25, 2012 //
27

Pease read Paul Krugman on the Fake Skills Shortage.

Every time you hear Arne Duncan or someone from the US Chamber of Commerce or the Business Roundtable complain that they can’t find skilled workers, think of this article and remember. The big corporations outsource jobs to where the wages are lowest. They send the jobs to countries where workers get half or less than American workers. They don’t send them to other countries because skills elsewhere are higher and more plentiful, but because wages are less. It’s all about cost-cutting and profit.

Categories Economy

Did We Lose the Middle Class? Where Did the Left Go?

By dianeravitch
October 18, 2012 //
28

A reader offers his observations of where we are today:

Others and I have posted quite a bit about this issue in other threads of the blog. In fact, I wrote at some length of the convergence of the Democrats and Republicans (or as a friend calls the two parties, the “Republocrats”; I like “Demonicans” myself). Rather than copy that post, I’ll lay out my view briefly:

1. The baby boomer Democrats became country club Republicans in all but name. (Remember when Jerry Rubin became an investment banker?) I find a lot of truth in E.J. Dionne’s discussion of this shift in his book “Why Americans Hate Politics”: He points out that the the internal dynamics of the Democratic party changed greatly when the baby boomers won major primary reforms in the early ’70s during the McGovern campaign. The rule changes greatly favored the power of the middle- and upper middle-class, college educated voters and began to dilute the more traditional blue collar powers. Thus, the Democrats started moving away for the left on economic issues and became more liberal on social issues, setting up the great defection of the blue collar voters to Reagan in 1980.

2. Union jobs became passe. Michael Moore explained in his movie “Capitalism: A Love Story” how the new middle class of the 1950s created a generation that had good schools, went to college, and abandoned the sorts of jobs that are traditionally unionized. Instead, the children of the auto workers and other blue collar parents became interested in white collar careers that traditionally were a bastion of GOP support. Families left the cities for the suburbs, owing houses, and taking up the lifestyles traditionally found among GOP supporters. We move to a “culture of contentment”, as J.K. Galbraith put it, which favors policies that protect individual wealth.

3. The intellectual left died in in the McCarthy witch hunts. As Chris Hedges points out in his book “The Death of the Liberal Class”, the 1950s took a huge toll on academics who sided with leftist views, leaving colleges and universities increasingly dominated by conservative thinkers like Milton Friedman’s Chicago Boys. By the late 1960s, as Christopher Lasch points out in “The Age of Narcissism”, the left in America had become moribund.

I think history bears these observations out quite well. By the end of the Carter administration, the country had largely abandoned support for labor and social activism, and had become extremely focused on material wealth. The culture became dominated by a libertarian idea that we would all get along just fine if left to our own devices. The great stock market bubbles of the ’80s and ’90s, and the collapse of the Soviet Union, seemed to prove that we could all get rich off of our investment portfolios and had no need for government outside of defense. During that time, the rise of Clinton and Gore and the new DLC cemented the changes that started in the ’70s. Obama carries that torch today, acting like a more like a progressive in the mold of Walter Lippmann than a New Deal reformer like FDR.

Slowly, people are realizing that we have lost our middle class and risk falling into a pit of crony capitalist corporatism. But we have not seen a real leader to show us the way back–yet. I can’t support the Demonicans; I’m voting Green this year to help support a move back from the brink.

Categories Democrats, Economy, Unions

Remember When Teachers Crashed the Economy?

By dianeravitch
October 5, 2012 //
25

Do you remember when teachers and principals brought the economy down in the fall of 2008? Remember how they caused the stock market to collapse?

You don’t? Neither do I.

No matter. States are busily figuring out how to take away teachers’ pensions to right the economy, and reformers are blaming “bad” teachers for the outsourcing of jobs to China and India. The reformers say that the jobs are being outsourced because Americans aren’t skilled enough to do the work, but it seems more plausible to believe that they are being outsourced because educated workers are cheaper in China and India than in the U.S. Know any engineers willing to work for 1/3 (or less) their current salary? Know any workers willing to sleep in a dormitory at the plant and be available 24/7 to assemble Smartphones for $17 a day?

A reader comments on the great pension robbery:

The raids on pension systems across the land are accompanied by the exact same kind of noise machine that accompanies the movement to privatize our public school system. You will never hear a peep against any of it from the President. I don’t know what these union presidents talk about when they’re on the bus with Arne Duncan, but they certainly haven’t been persuasive in getting him to acknowledge that one of the greatest robberies of all time is taking place in fast motion. Our states have run up a credit card debt with these underfunded pension systems, and now they’re walking away from that debt, and somehow we keep talking on and on and on about teacher evaluation.

Categories Economy, Pensions

A Lost Decade for the Middle Class?

By dianeravitch
September 22, 2012 //
5

The Economic Policy Institute has published its annual report on the state of working America.

There are some deeply worrisome trends. Here are some of the findings:

*America’s vast middle class has suffered a “lost decade” and faces the threat of another. The wages of typical Americans, including college graduates, are lower today than they have been in over a decade. Because hourly wages and compensation failed to grow after the 2001 recession, household incomes had declined even before the Great Recession. Furthermore, forecasts of high unemployment for many years ahead suggest that another lost decade for typical American workers and their families, as measured by wages and income, has already begun.

*Income and wage inequality have risen sharply over the last 30 years. Income inequality has grown sharply since 1979, a fact that is universally recognized by researchers. The trends that have driven this growing inequality in overall incomes are growing concentration of both capital income (the returns to financial assets) and labor income (wages and benefits), as well as a shift from labor income toward capital income.

*Rising inequality is the major cause of wage stagnation for workers and of the failure of low- and middle-income families to appropriately benefit from growth. The typical worker has not benefited from productivity growth since 1979, though there has been sufficient economic growth to provide a substantial across-the-board increase in living standards. Instead, higher earners have reaped a disproportionate share of wage income, and the top one percent of households have received a disproportionate share of all income growth. Aside from the period of strong growth in the late-1990s, wages for low-and middle-wage workers were stagnant from 1979 to 2007, and incomes for lower- and middle-class households grew slowly.

*Economic policies caused increased inequality of wages and incomes. Inequality between the very top wage earners and all others grew from 1979 to 2011 except during stock declines, driven by growing executive compensation and an expanded and increasingly highly-paid financial sector. Inequality between the top wage earners and middle-wage earners also grew from 1979 to 2011. A number of policies played a role in this growth, including those that: (1) targeted rates of unemployment too high to provide reliably tight labor markets for low- and middle-wage workers; (2) hastened global integration of the U.S. economy without protecting U.S. workers; (3) failed to manage destructive international trade imbalances; (4) allowed employer practices hostile to unions to flourish; (5) privatized and deregulated industry, including the financial sector; and (6) eroded labor standards. Inequality between middle-wage earners and the lowest wage earners grew only in the 1980s, fueled by the erosion of the purchasing power of the minimum wage and, again, the targeting of rates of unemployment that were too high. Tax and budget policies have compounded the inequalities that have been generated in market-based, pre-tax incomes.

*Claims that growing inequality has not hurt middle-income families are flawed. Some recent studies have suggested that measures of comprehensive income since 1979 show that middle-income families have seen adequate income growth. Rather, incomes for the middle class have not grown as fast as average incomes, and middle-income growth was much slower between 1979 and 2007 than it was between 1947 and 1979. Furthermore, more than half of the income growth between 1979 and 2007 was made up of government transfers, which reflects the strength of programs like Social Security, Medicare and Medicaid, not the strength of the labor market. In fact, higher household labor earnings can be traced to increasing work hours, not higher wages. Finally, the data on comprehensive incomes are technically flawed because they count rapidly rising health expenditures made on behalf of households by employers and the government as income, without taking excessive health care inflation into account.

*Growing income inequality has not been offset by increased mobility. There is no evidence that mobility—changes in economic status from one generation to the next—has increased to offset rising inequality, and some research shows a decline.
Inequalities persist by race and gender. Key economic measures, including unemployment, wealth, and poverty (particularly child poverty), continue to show staggering disparities by race and ethnicity. Gender disparities also persist, and while gaps in labor market outcomes have closed in recent decades, a number have done so because men lost ground, not because women gained it.

Categories Economy

A Dialogue About Taxing the Rich

By dianeravitch
September 22, 2012 //
36

I received a comment this morning from a reader who explained why she was voting for Romney. Here is her comment and my response.

I love reading your blog Ms. Ravitch, but I totally disagree with this post. This teacher will vote for Romney because I do not believe in the re-distribution of wealth. I do believe that if you can’t produce an ID at the voting booth, you should not be allowed to vote. I believe that taxing the rich heavily will mean less hiring. I actually believe in one flat tax for all. As a woman, I believe that if you can’t afford birth control, then don’t have sex. Additionally, if birth control for women is to be paid for by the government, then condoms should be paid for too for men. As a Catholic, I am offended that Obama would try to dictate the availability of birth control to Catholic employers for their employees–don’t take the job with the Catholic organization if you don’t like their terms. I believe it is unconstitutional for the government to require people to buy health insurance. I believe both political parties will make education worse in America with their devotion to standardized testing and love affair with charter schools, so I can’t take sides on education issues.

I grew up poor. Neither one of my parents graduated from high school because their fathers died when they were young and both had to go out to work. They struggled at every financial turn. We got one present each for Christmas and a new outfit for school for our birthdays. Yet, through hard work and perseverance, they put four kids through college–one teacher, one engineer, and two accountants. They never accepted food stamps or welfare even though they qualified for it. They were too proud and embarrassed to take it, so they dug in and took any jobs they could find. My father worked several low paying jobs seven days per week. My mother took any work she could find too. They knew education was the ticket out of poverty, so they were militant about our doing well in school. So I don’t want to hear about redistributing the wealth after you have worked hard for it. If you want to be charitable, it is your choice to make donations to the less fortunate, but I believe the government should not dictate it. Hence, this 25 year veteran teacher will be voting for Romney.

And here is my response:

I don’t question anyone’s decision to vote for the candidate of their choice.

What I do question, however, is the idea that taxing the rich means redistributing the wealth and killing jobs.

Our nation has nearly 25% of its families living in poverty. Many don’t have enough money to eat or pay rent or see a doctor.

At the other end of the spectrum are people who are obscenely rich. They have enough money to have several vacation homes with many servants. They own more luxury cars than there are adults in the family. They go to fabulous restaurants in big cities where a single meal costs nearly $1,000. They don’t think twice about buying a bottle of wine that costs $500.

Now maybe they are providing jobs for the people who build their private jets and yachts; for the servants in their homes; and for the waiters and chefs in their fancy restaurants.

But these are people who could pay higher taxes and it would have no impact whatever on their lifestyle. It would not stop them from creating jobs, if that is what they do. Some of those who work on Wall Street don’t employ anyone except the people who serve them. They don’t create jobs. They make money by speculation, by betting on which stock will go up and which will go down. It is a form of poker that creates no jobs.

I say, raise their taxes. During the Eisenhower years, when this country had a Republican president, taxes on the rich were far higher than they are today. They can afford to pay more. They should help to reduce the suffering of others, not by creating foundations but by shouldering their responsibility to pay a fair share of their income to pay the costs of essential public services, like education and healthcare.

Categories Economy, Education Reform

A College Graduate and Among the Working Poor

By dianeravitch
September 21, 2012 //
11

A reader comments:

As the first woman in my family to graduate from college, I am still the working poor, with no health insurance (and several physical ailments) and no pension. It is extremely stressful and disconcerting to have multiple college degrees and still be in poverty. I’m in my 60s and I will never be able to afford to retire, so I have no choice but to work until I die.

Categories Economy, Poverty

To Be Poor in America

By dianeravitch
September 21, 2012 //
7

Yesterday, I posted an article about growing income inequality in New York City. This morning, I posted an editorial from Bloomberg News claiming that the Census Bureau was overstating the extent of poverty by not counting transfers like food stamps.

A reader sent this story, which should remind us that it is no picnic to be poor in America.

Let me add a personal note. I am not poor. I have never been poor. But I hope I never reach a point when I stop caring about others less fortunate than I. I hope I never become so hard-hearted that I say, like some others do now, that the poor don’t know how lucky they are, or that poverty is just an excuse for bad teachers, or that fixing schools (by privatizing them or firing their teachers) will fix poverty. Or that we don’t know how to end poverty so we shouldn’t do anything about it.

I think it is shameful that so many people live in desperate poverty in the richest nation in the world. I think it is shameful that so many children come to school hungry and so many families are homeless. I think it is shameful that we have so many billionaires. I don’t know how to reorganize the tax code. It doesn’t seem fair if it produces the society we have now, where some people struggle to survive while others count their yachts and helicopters. Something’s wrong with that.

Categories Bloomberg, Michael, Economy, Education Reform, Poverty

The Good News About Poverty

By dianeravitch
September 21, 2012 //
22

Remember the story in yesterday’s New York Times that described the increase in income inequality in New York City? That’s the one that said that the gap between the richest quintile and the poorest quintile has not only grown but is one of the largest in the world, putting us in the same league as countries like Namibia.

Well, there is good news from Mayor Bloomberg’s own publishing house. Poverty is really not so bad in the U.S. because the Census Bureau didn’t count all the benefits and transfers that the poor get. So when you read that someone is subsisting on $8,844 a year, don’t forget that they get food stamps! And an earned income tax credit. And so many other freebies. Don’t you feel better already?

Just by coincidence, Forbes published its annual listing of the richest people in the world. It is here: http://www.forbes.com/billionaires/#p_1_s_a0_All%20industries_All%20countries_All%20states_

Mayor Bloomberg is not all that rich. He is #20 on the list with $22 billion.

Everything is relative.

Categories Bloomberg, Michael, Economy, Education Reform, NYC, Poverty

The Not-So-Hidden Crisis

By dianeravitch
September 20, 2012 //
8

While the billionaires and multi-millionaires wring their hands over the public schools and promise to end poverty by testing kids and their teachers, there is a back story.

The back story is that income inequality is growing worse in America. And nowhere is it more blatant and more outrageous than in New York City, the very epicenter of faux education reform.

While the mayor and his three chancellors have expanded the number of charter schools, increased testing and demanded value-added assessment of teachers and waged war against tenure and seniority, the income gap between the rich and poor has become a wide chasm.

An article in the New York Times today says that the poverty rate is at its highest point in a decade.

And get this:

“Median income for the lowest fifth was $8,844, down $463 from 2010. For the highest, it was $223,285, up $1,919.

“In Manhattan, the disparity was even starker. The lowest fifth made $9,681, while the highest took home $391,022. The wealthiest fifth of Manhattanites made more than 40 times what the lowest fifth reported, a widening gap (it was 38 times, the year before) surpassed by only a few developing countries, including Namibia and Sierra Leone.”

Do the reformers still believe that we can fix the schools first, then turn our attention to poverty? Or that if we fix the schools, then poverty will take care of itself? Yes, they do. Do they have any evidence that any of this will happen? No.

The economic policies of the past decade have been very very good for the very very rich. Not good at all for the other end of the spectrum.

Categories Bloomberg, Michael, Corporate Reformers, Economy, Education Reform, Poverty

Texas Workforce Commissioner Says NCLB Fails: UPDATE,

By dianeravitch
September 18, 2012 //
9

Sorry, once again, I forgot to add the link to the article. It’s here now. Please read it.

Tom Pauken is not only the Texas Workforce Commissioner, he is a prominent member of the Texas Republican party.

Read what he says about NCLB.

He says that labeling schools by test scores based on formulas written in Washington, D.C., and Austin is a sort of “abstract intellectualism” that doesn’t work.

He says there are lots of good jobs that go begging because young people aren’t prepared for them.

Here is his testimony to the state legislature.

His only error is in assuming that the demand for high-stakes testing prepares students for college.

It doesn’t. To prepare well for college, you need far more than the ability to answer bubble-test questions. You need to be well read, able to write well, able to think for yourself, able to figure out complex problems, know a goodly amount of history.

None of these things matter for NCLB–or for that matter, for the Race to the Top.

Both NCLB and RTTT are “abstract intellectualism” at their worst.

Categories Accountability, Economy, NCLB (No Child Left Behind), Tennessee, Testing, Texas
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