CPD IN THE NEWS

OZY - December 23, 2013, by Pooja Bhatia - For decades, talk about economic inequality was taboo. Those who tried were met with accusations of sour grapes, inciting class warfare, or — gasp! — advocating socialism.

But such rhetorical bludgeons appear to have lost force in recent years, and words like “inequality” and “economic fairness” have at last found a place at the table of mainstream American political discourse. It’s not quite the head of the table, but it’s not the servants’ quarters either. 

Words like “inequality” and “economic fairness” have at last found a place at the table of mainstream American political discourse.

“The core issue of economic justice has been getting more traction now than during most of my time in organizing,” says Andrew Friedman, who’s been a progressive organizer for more than 15 years and now co-directs the Center for Popular Democracy in New York. Derecka Mehrens, executive director of labor-oriented think tank Working Partnerships USA in San Jose, Calif., agrees: “There’s been a sea change in how and even whether we talk about inequality.”

The signs are everywhere. In his November apostolic exhortation, the pope warned of the “tyranny” of unfettered capitalism and called “an economy of exclusion and inequality” sinful. Clear majorities of Americans support hiking the minimum wage and other policies that aim to reduce the wealth gap. Earlier this month, President Obama positioned inequality and lack of social mobility as the “defining issue of our time.” Mayors-elect of major cities all made economic inequality central to their platforms. And this year’s National Book Award for nonfiction went to George Packer’s The Unwinding, which chronicles rising social and economic inequality in the United States.  

Inequality talk is no longer off-limits for a simple reason: The lot of many has stagnated or worsened over the past decade, in some cases severely. 

Some credit the 2011 Occupy movements for popularizing economic inequality. (Or blame it, depending on their perspective.) But the main reason inequality talk is no longer off-limits is probably simpler: The lot of many has stagnated or worsened over the past decade, in some cases severely. Some 10 million people lost their homes in the Great Recession. Although unemployment is at a five-year low, the decline is partly because many have stopped looking for work.

As OZY noted a few weeks ago, the lag between technical “recovery” and job growth is lengthening, and these days it’s lingering four to five years. No wonder the Great Recession’s rough ride seems endless. Moreover, while worker productivity has increased over the past decade, real wages have stagnated or declined — leaving the average worker to wonder just where the gains from productivity are going.

“They hear the news that the stock market is climbing and say, Oh really?” Mehrens says.

Lovely A. Warren won election as mayor of Rochester last month with a campaign lamenting what she called the “two Rochesters,” challenged by crime and poverty, but also boasting prosperous neighborhoods.

Economic inequality has been growing since at least the early 1980s. But it was harder to complain about during the Clinton years, when broad-based growth lifted all boats, yachts and dinghies alike. Economic inequality grew during the Bush years too, but those were the days of subprime homeownership and plasma TVs for all. Five years after the collapse of that easy-credit economy, most Americans are still hurting. The average household has recovered less than half the wealth it lost during the recession.

As a result, income inequality has become a winning issue in some cities. The mayors-elect of New York, Pittsburgh and Minneapolis made economic justice a central plank of their platforms — and did so despite naysayers and with newfound success. New York Mayor-elect Bill de Blasio’s “tale of two cities,” for instance, was not much different from Fernando Ferrer’s campaign theme in 2005 or Ruth Messinger’s in 1997 — but only in the New York of 2013 did it resonate. 

It was harder to complain about during the Clinton years, when broad-based growth lifted all boats, yachts and dinghies alike.

Not that the discursive war has been won, mind you. Plenty of people and conservative think tanks still argue that inequality has nothing to do with poverty. Winning a war of words wouldn’t be enough anyway, organizers say: “We need to figure out how to use this sea change in how we talk about inequality to how we act against inequality,” says Mehrens.

The newfound cache of certain phrases has had some perverse effects. Developers and other big employers have latched onto terms like “living wage” but not always with worker-friendly intentions, says Lee Strieb, a researcher with labor organization Unite Here. Developers have “attempted to wrap themselves in the flag of the living wage, almost as a shield to avoid unionization,” says Strieb. ”There is a heightened sensitivity to the need to address [the wage] issue — but to the extent they can address it in a superficial way, they will.” 

Mr. de Blasio’s relentless critique of economic inequality in New York seemed to resonate with voters, who elected him in a landslide.

The shift could signal a readiness to engage meaningfully with issues like the living wage or tax increases on top earners. 

It’s unclear whether 2014 will set in motion changes to our income distribution. Mayors alone may have little power to tackle the issue. They usually can’t run big deficits and, in cities like San Francisco and New York, space for affordable housing is hard to find. Most important, mayors can’t singlehandedly restore the middle-class jobs that disappeared during the recession.

Yet the shift in tone and rhetoric is significant and could signal a readiness to engage meaningfully with issues like the living wage or tax increases on top earners. Consider Cam Kruse, 72, a mostly retired civil engineer who is active in ISAIAH, a social justice organization of about 100 churches in metropolitan Minneapolis. Kruse believes in small government. When working full time, he perched in the top one to three percent of earners. And he was a Republican for most of his adult life.

But earlier this year he found himself urging the state legislature to raise tax rates on top earners, which, he said, had fallen through the decades. Growing “gaps” in education, health, housing and transportation worried him. “My success, and that of all the other top earners in Minnesota, has been based on the investments that people before us made,” he testified. “It is our turn to give back and make investments for those who will be our future.” 

The tax increase passed.  

National groups, in search of voting rights laws that could be pursued in Republican-controlled states, have taken notice of the potential for city-by-city reforms. The Center for Popular Democracy, a national progressive group connected to advocacy organizations in 38 states, issued a report Friday geared toward educating potential partners on what voting reforms cities can pursue.

Read the full article here.

If Congress won’t focus on a new policy idea, and if state legislatures are indifferent or hostile, why not skip them both and start at the city level?

That’s the approach with a proposed law in San Francisco to require businesses there to pay for employees’ parental leaves.

It might seem like a progressive pipe dream, the kind of liberal policy that could happen only in a place like San Francisco. But Scott Wiener, the city and county supervisor who proposed the policy, sees it differently.

“The more local jurisdictions that tackle these issues, the more momentum there is for statewide and eventually national action,” he said.

It’s part of a broader movement, mostly led by liberal policy makers, to take on not just the duties that make cities run — like road maintenance and recycling — but also bigger political issues. Think soda taxes, universal health care, calorie counts on menus, mandatory composting and bans on smoking indoors.

The federal government is too gridlocked to make anything happen, these policy makers say. So they are turning to cities, hoping they can act as incubators for ideas and pave the way for state and federal governments to follow.

Conservatives used the strategy in the 1960s and 1970s, often for anti-regulatory policies. On the liberal side, Baltimore helped inspire others by passing a living wage law in 1994. The method has grown more popular in recent years, said Margaret Weir, a professor at Brown University who studies urban politics.

“Historically, especially for groups that want more government action and more generous social and economic policies, they could go to the federal government and achieve those things,” Ms. Weir said. “That has become more difficult. It’s a reflection of the loss of power at the federal level.”

Opponents have frequently responded by trying to limit the legislative power of cities. Many states have passed so-called pre-emption laws, which block cities from making their own laws on certain issues, including gun control, plastic bag bans, paid leave, fracking, union membership and the minimum wage. It’s a strategy pioneered by the tobacco lobby and later much used by the National Rifle Association. In all but seven states, state laws pre-empt local gun laws.

The pro-business American Legislative Exchange Council, known as ALEC, has pushed for many of the pre-emption laws. More recently, however, it has adopted the methods of its opponents. It has helped policy makers in local government make laws to reduce the size of government, for instance, even when states decline to do so.

One division of ALEC, called the American City County Exchange, has most notably pushed for local right-to-work laws to allow workers who are members of a union to opt out of paying dues. Yet in other cases, it has drafted legislation to prevent cities from coming up with their own laws, including on issues like plastic bag bans and containers for composting.

“Sometimes cities and counties overstep the powers they’ve been given,” said Jon Russell, director of the exchange and a town councilman in Culpeper, Va. “There are certain times states and cities are going to disagree, but for the most part, we’re going to figure out ways to resolve certain regulatory issues while staying in our lanes.”

The demographics of big urban centers — often more liberal and diverse than other parts of the country, and more likely to be governed by a single party — foster more progressive policy-making than elsewhere.

And that policy-making does seem to bubble upward to the national level. Workers’ rights are one of the main focuses of today’s urban politics, and several such city policies are now getting state and national attention, including in the presidential campaign. Paid sick leave is an example. The first city to require it was San Francisco in 2006. It is now the law in 23 cities and states, and President Obama last fall required federal contractorsto provide it. (Meanwhile, more than a dozen states have pre-emption laws to stop cities from requiring paid sick leave.)

Minimum wage is another example. SeaTac, Wash., passed a $15 minimum wage in 2013. Nearby Seattle followed, and then so did San Francisco, Los Angeles, Mountain View, Calif., and Emeryville, Calif.

Fourteen states have since changed their minimum wage laws, two bills in Congress would do the same nationally, and all three Democratic presidential contenders have said they would raise the federal minimum wage.

“It’s all due to victories at the city level,” said Ady Barkan, co-director of Local Progress, a network of local progressive elected officials. “They actually did it and showed it was possible politically and as a policy matter.”

But many of these policies have not caught on widely. Take soda taxes: Berkeley, Calif., is the only city to have passed one. Similar laws have failed in San Francisco and New York state.

Other city legislation that could eventually be passed at the state or federal level includes those related to drones, ride-hailing and home-sharing.

San Francisco’s paid parental leave policy, which would be the first such law in the nation, would apply to all businesses with at least 20 employees, some of whom work at least some of the time in the city, including national chains that do not offer paid leave to workers elsewhere.

Californians already receive paid parental leave from the state. It is one of three states to offer it; the state’s temporary disability fund pays 55 percent of workers’ salaries, up to a maximum salary of $105,000. In San Francisco, companies would pay the remainder for six weeks of “bonding leave” for all new parents, including fathers, same-sex parents and adoptive parents.

The city’s board of supervisors, which will vote on the policy, has not a single Republican. It would be a much harder sell almost anywhere else.

From Mr. Wiener’s point of view, that gives the board a responsibility: “To push the envelope on these issues, because we can.”

Source: New York Times

Federal Reserve Chair Janet Yellen said Friday that the case for raising interest rates has strengthened in light of a solid job market and an improved outlook for the US economy and inflation.

At a gathering of central bankers from round the world in Jackson Hole, Wyoming, Yellen said improvements in the USA labor market and expectations for moderate economic growth have boosted the case for a rate rise, supporting what the rate futures market has been pricing in for some time. The gains were all but erased after Fed Vice Chairman Stanley Fischer said her remarks leave open the possibility of boosting rates in September.

The economy is "nearing" the Fed's goals of full employment and stable prices, share said.

With an interest rate hike unlikely in the immediate future, the dollar is struggling to gain traction.

Still Yellen declined to hint at whether the Fed might raise rates at its next policy meeting, September 20-21, or at its subsequent meetings in early November and mid-December.

The head of America's central bank said the case for an interest rate hike had strengthened but stopped short of indicating any timetable for a move.

"Yellen's speech at Jackson Hole today didn't necessarily offer much in the way of surprises", said OANDA senior market analyst Craig Erlam.

"New policy tools, which helped the Federal Reserve respond to the financial crisis and Great Recession, are likely to remain useful in dealing with future downturns", Yellen said. Although setting a hawkish tone and perhaps trying to sound balanced, Yellen did issue a few cautionary words, but for the most part, she indicated that more rate hikes were on the horizon.

Although US government data earlier on Friday showed the economy growing only sluggishly in the second quarter, Yellen said a lot of new jobs were being created and economic growth would likely continue at a moderate pace.

Yellen's words returned a measure of clarity on the intentions of U.S. monetary policymakers, who have been publicly at odds in recent months over the need to raise rates in the near-term. "On balance, it strengthened the case for a December move", said Bill Northey, chief investment officer for the private client group at U.S. Bank in Helena, Montana.

Prices for fed funds futures implied investors saw about even odds that the Fed will raise rates in December, largely unchanged from before Yellen's remarks.

The dollar eased to 100.47 yen from 100.55 yen Thursday in NY, while the euro nudged up to US$1.1291 from US$1.1281.

In a meeting, members of the groups Fed Up and the Center for Popular Democracy told Fed policymakers that the assessment that the USA was approaching full employment did not reflect life for many blacks and Latinos looking for work. The dollar's 5 percent loss this year reflects a dimming outlook for the US central bank to reduce stimulus and diverge from unprecedented easing in Europe and Asia.

In afternoon trading, the dollar index, which measures the greenback versus six major currencies, rose 0.8 percent at 95.563.

By Adam Cater

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