What Congress Should Learn from OWS


This post written by me was orginally posted on Policymic and No Labels

 

Occupy Wall Street has taken off. The movement is quickly spreading across the world, with new Occupy movement surfacing seemingly daily. The movement is not without its critics, who point to the vast number of messages coming out of the protests as a sign the movement does not have a singular voice.

While there may be many messages out there from the participants, it is not hard to find some central themes from the movement. Not just Wall Street needs to be listening. Congress can and should learn a lot from the Occupy movement, using the protests as a motivation to end our partisan gridlock and do what is best for the country.

Neither Congress nor Wall Street is innocent when it comes to causes of the current crisis, and because of this, neither has been good at finding solutions. The OWS movement has come clear asks, listed on their website as a series of complaints against the industry.

Here are a couple that Congress should pay particular attention to: stop illegal foreclosures; no more bank bailouts; and create jobs.

All of these have direct links to actions that Congress can take. People are angry that despite the robo-signing scandal, big banks are still trying to foreclose on homes with fraudulent paperwork and/or without being able to produce the note. Congress can pass legislation making this illegal, which would force banks to clean up their paperwork. The robo-signing scandal has banks like Bank of America facing lawsuits that could cripple them.

This leads to another ask of the movement, no more bank bailouts. Congress should listen, stop fighting the provisions in the Dodd/Frank Act that stop too big to fail, and provide a path to winding a bank down instead of bailing banks out.

The biggest grievance of the movement and every other American is creating jobs. Neither side can agree on how to create jobs, but everyone in Congress should take the growing anger as a sign to put aside partisanship and get some legislation passed. Getting people back to work is the single most important demand. Jobs can help homeowners pay their mortgage and avoid foreclosure, help recent grads pay their student loans, can get people spending money to boost the economy, and can create a bigger tax base to generate more tax revenue.

To me, the message is pretty clear: People are clearly angry by the direction of this country. Even though the brunt of the anger is being directed at Wall Street, Congress is not shielded. The messages should not only be heard by the big banks on Wall Street, but also through the halls of Congress. There are specific asks that Congress can act on, and they should listen carefully to the occupiers. Both Congress and OWS are made up of varying people with different mindsets, yet OWS protesters have managed to find a way to work together.

Here is to hoping that Congress is not only listening, but learning from OWS on how to work together, so they can end the gridlock and do what is best for the country.

The Steep Structural Slope against Job Growth


I have been thinking about doing a post concerning the uphill climb towards job growth.  Instead, I have decided to cross post something from Adam Rust over at BankTalk.  He has a great blog that I would encourage everyone to read.  Below is his post:

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Part of the headwind thwarting efforts to curb unemploymentstems from systematic shortcomings in worker training.

There were two important sets of job numbers this week. On Tuesday, the Bureau of Labor Statistics reported that there the number of new job openings is increasing. Compared to the same period last year, new openings jumped 13.3 percent in July. Moreover, private businesses posts the strongest gains. Government openings actually dropped. This followed a report that almost one in two employers plant to make new hires in the next six months. In all, companies want to hire 3.2 million workers. That is about the same number as in 2003, when our economy was booming.

On Thursday, the same Bureau of Labor Statistics said that the number of working people had remained flat. In other words, some businesses do want to hire people but the jobs are not being filled.

The way that the BLS counts jobs is far from perfect. Everyone pays attention to u-3: the percentage of the workforce made up by people looking for work that remain unemployed. U-6 counts those workers as well as people that are underemployed and that have given up looking for work. Last month, that number was 16.1 percent.  But even if the set of metrics for counting jobs leaves something to be desired, the dynamic is probably accurate. Companies want to hire, but they aren’t compelled to do so.

Part of the problem is that we have structural unemployment. It is a hard truth that some workers no longer have the skills that it takes to do a job in our economy. A lot of the jobs held by North Carolina’s textile workers disappeared in the last twenty years. Now, North Carolina has a strong economy. But many of the new jobs don’t match the abilities of workers. North Carolina suddenly has more jobs in biotechnology, in data analysis, and in finance. Textile workers are not about to get that work. There is also growth in lower-skill work, but those jobs don’t come with the same protections or with the same wages. A textile worker made more ten years ago than a certified nursing assistant or a Molly Maid maid makes today.

Multitudes of Americans are left on the sidelines. They are not working at all.  Some are getting by on 20 hours of work a week. But some jobs just are not coming back. Those industrial workers in Ohio and Michigan are probably facing a labor market that is suffocating.

The time it takes workers, on average, is going up. It takes 33 weeks to get rehired these days, on average, and six million people have been out of work for more than 27 weeks.

The unfortunate thing about this problem is that there is no quick way to fix it. Ultimately, structural unemployment is a comment on our schools. Our winner-take-all school system provides lavish public schools in places like Northern Virginia or suburban Connecticut. It provides an education that some judges have determined be unconstitutionally inadequate in northeastern North Carolina.

Our core of knowledge workers differentiates our country from the places that have taken so many of our textile jobs. I do not understand why so much political rhetoric focuses on getting those jobs back in our country. The textile jobs from the late 90s belong with the jobs picking cotton by hand in the 19th century.

We have great universities and we manage to draw the top brains from all over the world. There is real competition to get a job at the lower rungs of our economy. The answer might be to put more money into schools, but another idea might be to recalibrate how we train people. Today, people with college degrees are struggling to get work making coffee. It doesn’t make much sense to get a degree in television broadcasting from a fourth-tier public university when there are only a few thousand positions in the whole country. It doesn’t make much sense to sell a $40,000 per year tuition to potential printmakers and actors. Have you ever noticed how hard it is to find a good plumber?

Will the American Jobs Act Go Anywhere?


After all the dust has settled from the speech, a huge question remains.  Will this go anywhere?  As I wrote in my last post, I think the speech did enough to put pressure on both sides.  This increases the likelihood that something gets done, but is it enough?  Maybe the answer is, not so fast.

Nothing in D.C. is ever what it seems.  For most of the off-season Washington Redskins fans thought John Beck was going to be the starting quarterback. Instead Rex Grossman will be under center week 1. Football references aside, things in the nation’s capital tend to change quickly.

During the speech, several items like corporate taxes and entitlement reforms brought republicans to their feet.  In the immediate aftermath they admitted that there was a lot to work with.  No one wants to seem like they are against creating jobs, so the popular thing to do was say let’s get to work.

The devil will be in the details though. The president promised that everything would be paid for, but failed to deliver the details.  He promised in the coming week that the details would be revealed.  Those details will determine how much support republicans give him for paying for this.

He talked about improving on the corporate tax rate by closing loopholes.  What loopholes will be closed and how will that lower the highest corporate tax rate in the world?  He mentioned entitlement reform, which will upset his base, and in theory draw support from republicans.  However, we need to know what that reform will look like.  Is it just making cuts, or eliminating waste?

When talking about rebuilding our infrastructure, the key is shovel ready projects.  The last stimulus promised similar construction projects, but found a lack of shovel ready projects.  For this to work, there needs to be a plan at improving the number of shovel ready projects.  The other issue is dealing with foreclosures. While it is great to talk about helping struggling homeowners refinance and capitalize on low rates.  We need to know how we get this done.  What is the plan to help those whose credit scores are too low?  What is the plan for those who are unemployed or underemployed?

The point of all this is that the details still are coming out, and depending on what these details say will determine if this goodwill continues.  I for one, am worried about these details.  I am not sure that both sides are going to hear what they want.  Once all the goodwill is gone and they get to work, we could be setting ourselves up for another nasty stalemate.  No one wants to be seen as stopping job growth, but they also don’t want to create jobs at any cost.

Thanks to NC’s budget, unemployment back on the rise


After the 2010 election cycle, the republicans took over the majority in the house and senate.  During their campaigns they made lots of promises about creating jobs.  In practice they did the opposite.  The big item during the session was the state budget and dealing with the shortfall.  It seemed like from the beginning, they were more focused on cutting out state into the past than they were about creating jobs and moving our state forward.

In fact, it seemed like at every opportunity during the budget debate, they did more to hurt jobs.  They attacked tax credits like the state eitc and the child care credit, that encourage low-income families to work.  They seemed to want to cut every environmental program and had their hearts set on defunding Planned Parenthood.  They wanted to increase rates on small finance loans, and roll back the financial protections the state has become known for.  With all this, it seemed they were more concerned with turning back time and less concerned with creating jobs for the future.

What they did do was ignore calls to take a balance approach to the budget, and chose to make severe cuts rather than some cuts and increased revenues.  The latest unemployment numbers begin to show that.  All the cuts in state government meant cutting lots of jobs or eliminating positions that had yet to be filled.  As a result, there were over 10 thousand fewer jobs available in June.  This may be only the beginning as more agencies make cuts going forward, more jobs will have to be cut.

I fail to see how they delivered on promises of job creation, but see plenty of evidence of eliminating jobs.  They seemed more focused on undoing the work of the past and this holds an eerie resemblance to how republicans in D.C. handled their new-found power.  Less about solving problems and more about a undoing the past.

Financial Regulation Will Not Kill Jobs


This was written by me but was originally posted on www.policymic.com.

 

Amidst all the recent talk about the debt ceiling and the national debt, two of the more discussed topics are financial regulation and job creation, with the latter even finding its way into debt conversations. No matter how we spin things, job creation can always work itself into the conversation. With unemployment numbers still high, getting the country back to work should be a priority for everyone.

For young professionals looking to enter the financial industry, the big question is whether or not the sweeping regulations of the new Dodd-Frank Act will impact jobs. Despite what opponents to financial regulation would have you believe, industry regulation does not lead to mass layoffs or the curtailing of job creation. In fact, studies have shown quite the opposite. When we look at the short term impact of regulation, we are only looking at one side. In order to determine the long term impact of job growth, we must look at all sides; in doing so, we will see that it is too early to write off regulation as a job killer.

Opponents of regulation, like the Heritage Foundation, want to paint a picture that these new measures are going to increase cost and stifle job creation or lead to job losses. This year, one of their senior research fellows testified before Congress that the current cost of regulation — which was at an all-time high — was threatening thousands of jobs. Politicians such as Rep. Jeb Hensarling (R-Texas) have echoed these sentiments, saying that the red tape punishes millions of job seekers. However, groups like the Economic Policy Institute (EPI) take a different approach. In their report, they examine a range of factors, including actual cost of regulation instead of estimated cost. Their conclusion is that these calls of doom from regulation are overblown.

The cost of regulation is often far less than the estimated cost. Moreover, the benefits often exceed the actual costs (page 10 of the report). During the housing boom, young professionals had a plethora of choices in the financial industry. Subprime lenders needed account executives and underwriters; mortgage brokers needed loan officers and processors. The more houses people wanted to buy, the more jobs needed to be created. The problem was that deregulation led to false hope, and now we are seeing the results. Starting in 2007, jobs in the subprime market began to disappear. This demonstrates that while deregulation got us short term job gains, it made for long term job loss.

With new regulations come new agencies, like the Consumer Financial Protection Bureau, and other offices created in Dodd-Frank. These new agencies and offices will be looking for the best and brightest in the country to fill positions. Banks and other financial institutions will need to hire the best and brightest as well, not just to deal with regulation, but also to think of new ways to do business. One thing regulation has done, as indicated in the EPI report, is increase innovation.

It is too early to rule out these new regulations as job killers the way some have. They will stabilize the financial markets; stable markets, in turn, foster growth and creation. That is how jobs are created. The short term gains may not be there, but we must look at the long term picture. If history indeed repeats itself, then these new regulations will lead to innovation and innovation to more jobs.

Does NC’s new leadership care about the poor?


After the 2010 mid-term elections the NC General Assembly changed hands for the first time since reconstruction.  With Republicans now having control, they pledged they would help create jobs and create no new taxes.  It seems that they have forgotten these pledges, or it may be that like most politicians, they said what they needed to get elected so they could carry out their own agenda.  Whatever the case may be, their real agenda is starting to show.  The budget they did in the house and more so in the senate has little to no job creation in it.  In fact, because they have chosen to not take a balanced approach to the budget, all the cuts they are making are adding up to thousands of job losses.  That doesn’t sound like job creation to me.

The troubling thing to me is that they seem to want to balance the budget and govern on the backs of the working poor.  It started in the house where they decided they wanted to end the refund-ability of the State EITC.  If you are unfamiliar the Earned Income Tax Credit (EITC) is a federal program meant to help families with lower-income offset some of their tax burden and provide a way to get out of poverty.  NC is one of the states that has enacted a state version of this, that simply put, is a percentage of the filers federal EITC.  Low income families in NC pay a higher portion of their income to taxes because our system is so out of wack.  The average State EITC is about $172, and while that isn’t a lot of money it goes along way to help families living paycheck to paycheck.  In fact, these funds are a direct stimulant to the economy since the majority of these funds are spent directly into local businesses.

Regardless of what these dollars mean to families and the economy, they wanted to take away the refund portion.  Due to some great work by various groups this failed in the House.  It was not a much celebrated victory, because we knew the Senate was likely to take it up as well.  Man, did they ever.  The Senate has now gone a step further.  They are talking about cutting the whole State EITC as well as the Child and Dependent Care tax Credit.  So now, not only do they want to take away a credit that stimulates the economy and helps families make ends meet, they also want to take away a much-needed aid to families to help cover the high cost of child care.  What kind of message does this send to the people of this state.  We want you to take low paying jobs, because we will not work to create more jobs, and we will cut every program designed to help you.

About 50% of those benefiting from the State EITC make between 7 and 12 thousand dollars a year.  Can you imagine trying to pay for food, clothes, transportation, housing, and child care on that salary?  Well a large number of families in this state don’t have to imagine because it is a reality.  These are the families that make this state run, and yet the new leadership wants to cut the tax programs that are designed to offset the tax burden of these families, affectively raising taxes on lower-income families.

I thought the new leadership was supposed to create jobs and create no new tax increases.  They want to cut the corporate tax, but raise taxes on the working class folks of this state.  Their true agenda is coming out and the message from leadership is don’t be poor in this state, because we won’t care!