Who are the real makers and takers in America?
Get on the Bus for Freedom Rides to Save Democracy + Event on immigration vision + Race and Class Debates Revisited
In today’s issue:
Analysis debunking right-wing claims that too-generous unemployment benefits are causing a massive shortage of workers by enabling an outbreak of laziness. Hot takes from Jamila Michener, Heidi Shierholz, and Andrew Stettner and perspectives from Mariana Mazzucato and Frances Fox Piven, and Richard Cloward.
Recordings of two compelling events: a discussion about new visions for immigration, featuring Amaha Kassa, Peter Markowitz, and Ruth Milkman; and a debate about the role of race and class featuring Deepak and Touré Reed.
An important opportunity to take action to save Democracy. Rather than just read the tea leaves about Joe Manchin, you can join an exciting Freedom Ride for Democracy planned by UNITE HERE and Black Voters Matter. Learn how you can get on the bus.
Recommendations about delightful music and films.
Also, The Platypus urges its NYC readers to rank Maya Wiley #1 for Mayor and Brad Lander #1 for Comptroller. You can read Deepak’s endorsement of Maya in The Nation here.
Makers and takers
Who are the real makers and takers in America today? This week two damning exposés turned a spotlight on tax evasion by the super-rich. On Tuesday, ProPublica’s Jesse Eisinger, Jeff Ernsthausen, and Paul Kiel released a bombshell investigation, “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax.”
In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes.
. . . According to Forbes, [the 25 richest Americans] saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%
Then, on Saturday, Jesse Drucker and Danny Hakim at the New York Times published “Private Inequity: How a Powerful Industry Conquered the Tax System.” Among their many findings,
People earning less than $25,000 are at least three times more likely to be audited than partnerships, whose income flows overwhelmingly to the richest 1 percent of Americans.
These scandalous revelations about billionaire deadbeats come on the heels of metastasizing right-wing claims that allegedly lazy working-class people are refusing to take jobs because unemployment benefits are too generous. The fact that the pernicious story about workers having it too easy has become a cultural trope while the story about wealthy tax evasion hasn’t caused the same cultural firestorm says a lot about the state of the debate about work, wealth, and deservingness in the country. So too does the astounding fact that 25 Republican Governors have refused to take enhanced unemployment benefits from the federal government, citing a problem that doesn’t exist. The false story about unemployment benefits has had dramatic policy consequences, hurting millions of workers. But the true story about rigged tax policy enabling plutocrat tax avoidance may have no impact on public policy. (The bipartisan “agreement” on infrastructure, flawed in so many ways, also would ditch Biden’s proposed tax increases on the rich in favor of regressive tax increases on gas.)
Mitt Romney famously told millionaire donors in 2012 in a closed-door meeting
There are 47 percent of the people who will vote for [President Obama] no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax. [M]y job is is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.
This storyline of heroic entrepreneurs who create wealth and, um, supposedly pay all the taxes is paired with a racist and sexist story of workers who prefer idleness to work. That, in a nutshell, is the neoliberal story of wealth creation, embraced by Republicans and some Democrats, too. It’s just all wrong.
In The Value of Everything: Makers and Takers in the Global Economy, Mariana Mazzucato points out that a lot of wealth is not created but extracted– for example through monopoly pricing of drugs or financial speculation that doesn’t result in any new jobs (and may destroy them). “By ‘value creation’ I mean the ways in which different types of resources (human, physical and intangible) are established and interact to produce new goods and services. By ‘value extraction’ I mean activities focused on moving around existing resources and outputs and gaining disproportionately from the ensuing trade.” This distinction is essential for us to recover in our political and economic discourse. Real wealth is of course created by workers and all of us through public investments that drive innovation.
Cornell professor Jamila Michener offers a brilliant takedown of bogus arguments about dependency and poverty in a recent episode of Ezra Klein’s podcast: “Employers Are Begging for Workers. Maybe That’s a Good Thing.” Must listen!
In many ways, I think of it as akin to, like, a moral panic. And it’s not to say that we shouldn’t be thinking a lot about the economy, about the workforce, about labor dynamics. But the things that we should be thinking the most about, it’s always striking to me that the things I think we should be thinking the most about and worried the most about are not the things that we actually tend to talk the most about.
And this employer-centric emphasis is exactly an example of that. We should really be worried about what’s going on the side of people, ordinary people who are navigating the labor market for their survival. If they are turning down jobs that are available, why? And if there are barriers to being able to work the kinds of jobs that people would otherwise want to work, what are those barriers? . . .
[P]eople should be able to choose work that allows them to live with dignity and to care for and meet their needs and even a little bit above that, so that people don’t have to be living on the verge of subsistence all the time. And at the very least they should be able to choose work that doesn’t put themselves or their families in danger, right? And that seems to be not asking too much, but to many people’s ears, or to at least some people’s ears, it would sound radical.
I teach this in my course, on poverty. I teach students about this idea of the principle of less eligibility. And it’s like, we don’t want to make welfare so good that people are going choose that as an option over work. And that’s been baked into our policies, especially social policy, providing people with assistance in the form of cash, in the form of food, in the form of any kind of help to keep them off kind falling off of the economic brink.
Let’s make sure that work is always a better alternative and really use poverty as a way of coercing people into accepting labor market conditions that they otherwise wouldn’t accept. You shouldn’t have to choose between what’s actually good for you and what you need to do because you have no other means of survival.
Along these lines, you should also check out Frances Fox Piven and Richard Cloward’s Regulating the Poor: The Functions of Public Welfare, which Deepak teaches his grad students every semester. It explains the relationship between employers’ desires for abundant and desperate low-wage workers and the expansion and contraction of welfare systems. Turns out there’s a relationship between Jeff Bezos’s billions and the poverty of millions of people – that relationship is called exploitation. Hence the manufactured outrage about any income support that might reduce the flow of desperate workers into the labor market.
Might raising wages be the solution to the so-called “shortage of workers”? The Washington Post’s Eli Rosenberg reports “These businesses found a way around the worker shortage: Raising wages to $15 an hour or more”
The owners of Klavon’s Ice Cream Parlor had hit a wall.
For months, the 98-year-old confectionary in Pittsburgh couldn’t find applicants for the open positions it needed to fill ahead of warmer weather and, hopefully, sunnier times for the business after a rough year.
The job posting for scoopers —$7.25 an hour plus tips — did not produce a single application between January and March.
So owner Jacob Hanchar decided to more than doublethe starting wage to $15 an hour, plus tips, “just to see what would happen.”
The shop was suddenly flooded with applications. More than 1,000 piled in over the course of a week.
“It was like a dam broke,” Hanchar said. Media coverage that followed his decision soon pushed other candidates his way.
The impact of the narrative of overly-generous benefits has been dramatic. Andrew Stettner in this Twitter thread shows which 25 states have rejected fully federally-financed enhanced benefits and just how low unemployment benefits are in those states.
In an exceptional New York Times op-ed, Heidi Shierholz of the Economic Policy Institute implores, “Republicans, Don’t Ignore the Evidence on ‘Labor Shortages.”.
In the same way the price of a good increases when it is in short supply, a sign of a labor shortage is accelerating wage growth, accompanied by sluggish job growth. If employers badly in need of workers can’t attract them, they will raise wages to hire them away from other employers, who will consequently raise wages to retain their workers, and so on. When those measures don’t result in a substantial increase in workers, that’s a labor shortage. Absent that dynamic, you can rest easy.
As we sift through the latest jobs report, which showed the economy gained 559,000 jobs in May, three key findings rise to the surface. Bona fide labor shortages are not pervasive. The main problem in the U.S. labor market remains one of labor demand, not labor supply. And unemployment insurance — which many commentators say is keeping workers from returning to work — is bolstering the economy. . . .
Wage growth decelerated in May in most sectors. And in a large majority of sectors, wages are growing solidly but not fast enough to raise concern about damaging labor shortages, given that job growth is also strong. Further, we still have 7.6 million fewer jobs than we did before Covid, and there are large employment gaps in virtually all industries and demographic groups. The good news is that unlike in the wake of the Great Recession, today’s labor demand problems are likely to be resolved relatively quickly, thanks to the American Rescue Plan. . . .
But employers of low-wage workers typically have a great deal of power to suppress wages. Out of desperation, these workers often have no choice but to take any job no matter how bad the wages, unsafe the labor or chaotic the schedule as they try to cobble together child care or elder care. Unemployment insurance isn’t keeping people out of the labor market en masse right now. But when expanded benefits means some individuals don’t feel the same pressure to accept a terrible job, that is what economists would call efficiency enhancing.
Finally, the 25 states cutting pandemic programs are weakening their own recoveries. The recipients of benefits in these states are expected to lose $22 billion in aid, and as a consequence these states will be forgoing an enormous amount of economic activity.
For lawmakers creating policy that will shape the future of a recovery, affecting both the larger economy and the lives of those hardest hit by the recession: Look at the facts.
In 1848, John Stuart Mill asked why “the really exhausting and really repulsive labors, instead of being better paid than others are, almost invariably, paid the worse of all.” He concluded it was because they have “no choice.” Humane systems of social insurance give people a choice. And that’s a good thing. The latest revelations about tax-cheating billionaires point to an obvious way for the U.S. to fund such a system: tax the rich.
Delights and Provocations
Deepak is listening to Jacob Banks, whose range in every dimension is astonishing.
Harry has been bingeing on Kamasi Washington.
Deepak and Harry were transfixed watching Unorthodox.
Documented hosted a great discussion entitled “How Do We Build a More Humane Immigration System?” You can read about it here or listen to the full discussion here. It features Amaha Kassa, Peter Markowitz, and Ruth Milkman, each of whom has a brilliant chapter in Immigration Matters: Visions, Movements, and Strategies for a Progressive Future.
You can also listen to a debate of sorts between Deepak and Touré Reed on a familiar topic: “Reckoning with Race and Class on the Road to Social Democracy” on SLU’s podcast Reinventing Solidarity here.
Savvy Corner
From our friends at UNITE HERE:
In 2020, we took back our future. Now, as attacks on our freedom to vote are sweeping the country, we need to fight to keep it. That’s why UNITE HERE members and allies are joining Black Voters Matter to build on the legacy of the original Freedom Ride, fight the systems of racism and voter suppression that impact us today, and demand that the Senate pass crucial legislation to protect our rights. JOIN US – GET ON THE BUS!
Buses are leaving from Chicago, Baltimore, Phoenix, Detroit, Connecticut, New York City, Las Vegas, Philadelphia, Miami, Orlando, and Atlantic City and will converge on Washington D.C. on June 26. If you would like to join us on this historic action, please fill out the online form and we will get back to you to make arrangements.
Questions? Fill out the online form and we will get back to you within 24 hours. Please forward to anyone that may be interested – staff, students, supporters, allies, friends and family.
We are committed to providing a COVID safe environment for this trip. All riders must provide proof of vaccination. Please respond by Wednesday, June 16 to confirm your participation