So you have a job

The Great Recession has taken a toll on the labor market. Unemployment remains stubbornly high; job creation and job-holding rates have been tepid. As if this isn't enough terrible news, the U.S. Bureau of Labor Statistics has released a new report on poverty among workers up through 2011. The results are sobering.

In 2011, according to the U.S. Census Bureau, about 46.2 million people, or 15.0 percent of the nation’s population, lived below the official poverty level. Although the poor were primarily children and adults who had not participated in the labor force during the year, according to data from the Bureau of Labor Statistics, 10.4 million individuals were among the “working poor” in 2011; this measure was little changed from 2010.

The BLS definition of working poor includes all adults 16 and over who were working or looking for work for at least half the year. Thus, the total is affected by the number of unemployed. However, 40 percent of the working poor were adults who usually worked full-time and were in the labor force for the entire year.

As with other poverty statistics, poverty rates among the working poor are higher for blacks, Hispanics, women, and people with less education.

A primary culprit in poverty among workers is extremely low wage rates. The BLS defines "low earnings" as weekly earnings that are less than what a person working 40 hours per week at the average inflation-adjusted minimum wage from 1967-1987; in 2011, the threshold was $331 per week. The BLS found that two-thirds of full-time working poor adults had wages that were lower than this.

Sadly, these are exactly the people and families that North Carolina's Republican legislature have targeted in their spending plans. Starting in July, workers who lose their jobs will see the amounts and duration of their unemployment compensation cut. Low-income workers in NC will also see a reduced earned income tax credit this year. And the Republicans have decided to turn down federal funds to extend Medicaid benefits to these families. Republicans may also soon shift more of the tax burden toward the working poor.

Outcomes for many workers have been miserable for the last few years. Shamefully, NC's legislature and governor are compounding that misery.

"Southernomics" in NC with a vengeance

Michael Lind at Salon.com provides an insightful summary of the "southern" (read conservative) political economic strategy to disempower workers.

The purpose of the age-old economic development strategy of the Southern states has never been to allow them to compete with other states or countries on the basis of superior innovation or living standards.  Instead, for generations Southern economic policymakers have sought to secure a lucrative second-tier role for the South in the national and world economies, as a supplier of commodities like cotton and oil and gas and a source of cheap labor for footloose corporations.  This strategy of specializing in commodities and cheap labor is intended to enrich the Southern oligarchy.  It doesn’t enrich the majority of Southerners, white, black or brown, but it is not intended to.

... The essence of the Southern economic model is not low taxation, but a lack of bargaining power by Southern workers of all races. Bargaining power at the bottom of the income scale is created by tight labor markets; unions; minimum wage laws combined with unemployment insurance; and social insurance, such as Social Security and Medicare and Medicaid.

With the state's centrist to moderately conservative Democrats being replaced by radically conservative Republicans, North Carolina is seeing this strategy played out a vengeance.

Another job-killing measure from Raleigh

Along with its efforts to opt out of the Medicaid expansion, the Republican-led North Carolina General Assembly seems poised to score another own goal against the state's economy through its ill-considered plan to impose unprecedented, draconian cuts in workers' unemployment insurance benefits. The cuts are intended to speed the repayment of $2.4 billion in unemployment insurance debt that the state incurred during the Great Recession.

The legislation is punitive and removes important protections from NC's workers. But in addition, the legislation will substantially slow the already under-performing economy.

First, the state will forfeit hundreds of millions of dollars in federal extended unemployment benefit payments. Currently, state unemployment funds cover the first 26 weeks of unemployment insurance payments, and federal funds cover an additional 47 weeks in states with unemployment rates above 9 percent. Provisions in the federal program require states to maintain their programs in order to receive the extended benefits--the goal is to keep states from shifting unemployment insurance costs from themselves to the federal government. The upshot of this provision is that if NC cuts its unemployment insurance program, it will lose the federally-funded extended benefits. The loss will be devastating to the long-term unemployed, but it will also affect the broader economy by removing hundreds of millions of dollars.

Second, the state is setting itself up to pay off the unemployment insurance debt faster than it needs to. The early repayment of that debt removes hundreds of millions of additional dollars from the NC economy. The debt needs to be repaid, but by stretching out the payments, the state would push more of the "pain" into future years where hopefully the economy will be performing better and the payments would be easier to make.

The Republicans' plan will hurt vulnerable, struggling households in the state, but it will also hurt the state as a whole.

Walmart's and the Gap's deadly penny-pinching

The second part of Wal-Mart's "Save money. Live better." motto has always been a bit dodgy. But now the giant retailer might have to scrap it altogether.

Bloomberg reports that Wal-Mart Stores, Inc. and Gap, Inc. each made a calculated decision to risk the lives of workers in Bangladesh in order to save a few bucks.

At a meeting convened in 2011 to boost safety at Bangladesh garment factories, Wal-Mart Stores Inc. (WMT) made a call: paying suppliers more to help them upgrade their manufacturing facilities was too costly.

The comments from a Wal-Mart sourcing director appear in minutes of the meeting, which was attended by more than a dozen retailers including Gap Inc. (GPS), Target Corp. and JC Penney Co.

Details of the meeting have emerged after a fire at a Bangladesh factory that made clothes for Wal-Mart and Sears Holdings Corp. killed more than 100 people last month. The blaze has renewed pressure on companies to improve working conditions in Bangladesh, where more than 700 garment workers have died since 2005, according to the International Labor Rights Forum, a Washington-based advocacy group.

At the meeting in Dhaka, the Bangladesh capital, in April 2011, retailers discussed a contractually enforceable memorandum that would require them to pay Bangladesh factories prices high enough to cover costs of safety improvements. Sridevi Kalavakolanu, a Wal-Mart director of ethical sourcing, told attendees the company wouldn’t share the cost, according to Ineke Zeldenrust, international coordinator for the Clean Clothes Campaign, who attended the gathering. Kalavakolanu and her counterpart at Gap reiterated their position in a report folded into the meeting minutes, obtained by Bloomberg News.

“Specifically to the issue of any corrections on electrical and fire safety, we are talking about 4,500 factories, and in most cases very extensive and costly modifications would need to be undertaken to some factories,” they said in the document. “It is not financially feasible for the brands to make such investments.”

But Bloomberg goes on to report that other retailers, including PVH Corp., which sells Tommy Hilfiger clothing, did find these protections "financially feasible."

Those pennies do add up, however. Wal-Mart found it financially feasible to pay its CEO nearly $3 million in "cash incentives" and $18 million in total compensation in 2012. Gap paid its CEO $9.7 million in 2011.

Apparently, some lives are worth a whole lot more than others.

We can do better with parental leave

Human Rights Watch, which usually focuses on human rights issues in other countries, has weighed in on family work supports in the U.S.

Around the world, countries have responded to the massive growth of women in the workforce over the past century by crafting public policies to help reconcile work and family obligations. These supports, which workers and employers in most countries have come to accept as standard and necessary for working families, include paid leave for new parents, flexible scheduling, breastfeeding and pumping accommodations, paid sick days that can be used for family care, and prohibitions on workplace discrimination based on family responsibilities. One of the most common work-family supports, paid maternity leave, is practically universal: academic research covering 190 countries shows that as of 2011, 178 countries guarantee paid maternity leave under national law. In nine of the 190 countries, the status of paid leave for new mothers was unclear. Just three countries definitively offer no legal guarantee of paid maternity leave: Papua New Guinea, Swaziland—and the United States.

This lack of paid leave under law in America is at odds with a workforce revolution in which female participation in paid labor skyrocketed over the past century, especially among those with young children. In the US more than 19 million families with children now have a mother as the primary or co-breadwinner, and 70 percent of children live in households in which all adults are in the labor force. Married women with children under age six were almost four times more likely to be in the paid workforce in 2008 as they were in 1950.

Yet US law provides only the most meager supports to enable workers to fulfill their work and family obligations, leaving the availability of such provisions largely up to employers’ generosity. The idealized notion is that private markets will foster such supports as employers compete for good workers. In reality, however, huge swaths of the workforce have no such supports, and there are enormous disparities in access.

Parental leave policies have not evolved much in the U.S. since the passage of the 1993 Family and Medical Leave Act (FMLA). The FMLA gave workers the right to 12 weeks of unpaid leave following the birth or adoption of a child or to care for a sick family member. The FMLA was recently updated to add care for service members and to apply to domestic partners.

The FMLA is limited in several ways. Besides only providing unpaid leave, the law also only applies to companies that have at least 50 employees and workers who have worked at least 12 months and for at least 1,250 hours for the company. About 30 percent of U.S. private sector jobs are in firms with fewer than 50 employees, meaning that a substantial fraction of workers are not covered by the meager benefits of the FMLA.

Even with those limitations, the FMLA is burdensome to companies who have to come up with strategies for temporarily replacing the services of a worker. Leave policies might be even more burdensome to small businesses. Paid leave would make these policies even more costly.

Somehow 178 other countries make this work. We hear a lot from conservatives about American Exceptionalism; however, here America only seems exceptional in its inability to support working families.

In the current political climate, universal paid leave doesn't seem to be in the cards. However, policymakers could take two modest steps forward.

The first step would be to make the right to unpaid leave universal by extending the FMLA to all employers, regardless of size. The costs to such an extension seem modest, especially in the present slack labor market where so many people are available to pick up temporary assignments. At the same time, the extension would level the playing field between firms, especially those small firms that already responsibly offer leave benefits.

An even more modest second step would be to create tax-deferred savings accounts for families to save and eventually pay for their own leave, if their employers don't offer this benefit. The accounts would work much the same way that IRAs or HSAs work with payments not being taxed until they are withdrawn from the accounts. The accounts would be portable, meaning that employees wouldn't be locked into a particular employer. At retirement, proceeds from the accounts could be transferred to IRAs or HSAs, so workers wouldn't face "use or lose" incentives.

A family that regularly put aside five percent of one of its earners' salaries would accumulate enough to cover a 12-week "paid" leave within five years. With the tax break, the up-front cost to the family might be much lower.

The policy would effectively create defined-contribution family leave benefits.

While the second step would be much more modest, look for howls of protest from businesses who would face the prospect of more workers actually being able to take the leaves they're entitled to. Look also to derisive cries of the "nanny state" from the Tea-party cranks. For any intellectually consistent conservative, however, support for HSAs or more generally personal responsibility should imply support for family leave accounts.

Helping families to finance their own family and medical leaves seems like a sound middle-of-the-road policy. Is America really so exceptional that it even rejects win-win solutions?