Mike Shedlock - Time to Wave the White Flag on the "War on Poverty"
Posted: 4/1/2013 8:45:00 AM EST
In response to Unwilling to Work; 25% in Hale County AL Collect Disability, 14 Million Nationwide; A Simple Solution I received some interesting emails from readers.

Regardless of Insurance, Taxpayers Pay

Reader Chris writes
Hey Mish,

I have been discussing disability for quite some time with others. I know a few people on disability who should not be qualified. I also have one good friend who is on disability for back problems. He had several surgeries and is genuinely disabled. The interesting part is my friend paid for his own insurance for 25+ years and the minute that he was declared unable to work, a lawyer saw to it that he would go on SS benefits. The insurance company collected premiums for 25+ years and now the government (taxpayers) pay.
Discussion on Radio Station KMJ

I was on radio station KMJ in Fresno, California for 45 minutes on Friday discussing my post on disability. Mike, a disabled worker was kind enough to share his thoughts. Mike writes ...
Hello Mish

I just heard you on KMJ and agree with what you have said. I am a disabled person working in the social services system, I will soon be retiring due to stress related problems. I would like to keep working at another position with less stress but many of my friends think I am stupid for wanting to work instead of taking social security.
Time to Wave the White Flag

Reader Claudette, writes ...
Hello Mish

Thanks for a good post on a complex issue. SSI/SSDI comes from social security funds, making that program even less sustainable over time.

I also see those who are truly disabled and unable to be competitively employed...they are being sustained in poverty by this program because of the sheer numbers in the program.

Multiple disincentives are built into the system to getting a job for fear of losing your stable disability check and Medicare coverage, so that it is very hard for the state Vocational Rehab system (where I work) to get disability recipients back to work.

There are few entry level jobs that pay enough or have benefits adequate for the recipients to take the risk of leaving the safe harbor of Disability.

Let's just raise a white flag and admit that the "war on poverty" has been lost and look critically at how our programs sustain people in poverty rather than lift them out of it.
Thanks all. Yes, it is time to raise the white flag. Many of these programs are structured to keep people on disability rather than get them off disability.

Reader mike shows the pressure on the few who really do not want to take advantage of the system.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike Shedlock - Robot Reality: "Last Resort" Service Jobs Next to Go; "Baxter" Back in the News
Posted: 4/1/2013 8:02:00 AM EST
I have written about "Baxter" before. Baxter is not a person. Rather Baxter is a robot rapidly replacing humans in various manufacturing jobs.

See Meet "Baxter" the Robot Out to Get Your Minimum-Wage, No Benefits, Part-Time Job, Because He's Still Much Cheaper; Fed Cannot Win a Fight Against Robots.

Service Jobs Next to Go

Baxter is back in the news. The Fiscal Times says The Robot Reality: Service Jobs Are Next to Go.
If you meet Baxter, the latest humanoid robot from Rethink Robotics – you should get comfortable with him, because you'll likely be seeing more of him soon.

Rethink Robotics released Baxter last fall and received an overwhelming response from the manufacturing industry, selling out of their production capacity through April. He's cheap to buy ($22,000), easy to train, and can safely work side-by-side with humans. He's just what factories need to make their assembly lines more efficient – and yes, to replace costly human workers.

But manufacturing is only the beginning.

This April, Rethink will launch a software platform that will allow Baxter to do a more complex sequencing of tasks – for example, picking up a part, holding it in front of an inspection station and receiving a signal to place it in a "good" or "not good" pile. The company is also releasing a software development kit soon that will allow third parties – like university robotics researchers – to create applications for Baxter.

These third parties "are going to do all sorts of stuff we haven't envisioned," says Scott Eckert, CEO of Rethink Robotics. He envisions something similar to Apple's app store happening for Baxter. A spiffed-up version of the robot could soon be seen flipping burgers at McDonalds, folding t-shirts at Gap, or pouring coffee at Starbucks.

What's worrisome to Martin Ford [robotics expert and author of The Lights In the Tunnel: Automation, Accelerating Technology and the Economy of the Future] is that these jobs have been offering a huge safety net to the middle class.

They're jobs he calls "the jobs of last resort." When someone can't find a salaried job, they look for lower-paying service jobs to get by – and because the jobs typically have a high turnover rate, they're more likely to be available. Think of all the college graduates who take jobs as cashiers or baristas before they find salaried work. If those jobs were to vanish, those workers would be forced to file for unemployment instead."
Jobs of Last Resort

The Fed and the Obama administration are both clueless as to why this is happening and what to do about it.

Obama wants to raise minimum wages. He also sponsored Obamacare that is going to cost businesses plenty. Those moves encourage automation.

On its part, the Fed has driven interest rates to zero. When money is that cheap, all kinds of capital expenditures that would not otherwise be affordable, quickly become affordable.

Technology is actually a good thing. Few see it that way because the Fed has destroyed the value of the dollar and Obama is hell bent on giving businesses a reason to outsource jobs to robots as fast as they can.

To be fair, much of this is natural workforce evolution. However, the Fed and the Obama administration goosed the trend at the worst possible time.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike Shedlock - Unwilling to Work; 25% in Hale County AL Collect Disability, 14 Million Nationwide; A Simple Solution
Posted: 3/27/2013 9:21:00 AM EST
A NPR report "Unfit For Work" notes the startling rise in those on disability. Here are some interesting facts from the article.

  • Every month 14 million Americans receive a disability check.
  • In 1961 the leading cause of disability was heart disease and strokes, totaling 25.7% of cases. Back pain was 8.3% of cases.
  • In 2011 the leading cause of disability was a hard to disprove back pain, totaling 33.8% of cases. The second leading cause was an equally difficult to disprove "mental illness" at 19.2%. Strokes and heart disease fell to 10.6%.
  • In West Virginia, a whopping 9% of the population collects disability checks. In Arkansas, 8.2% are on disability, and in Alabama and Kentucky, 8.1% collect disability. In Alaska, Hawaii, and Utah, the figure is 2.9%.
  • In Hale County Alabama 1 in 4 receive disability checks.
  • One thing nearly every case in Hale County Alabama has in common is Dr. Perry Timberlake who defines disability in a rather creative way.
  • Those on Supplemental Security Income, a program for children and adults who are both poor and disables is nearly seven times larger than 30 years ago.
  • Once people go onto disability, they almost never go back to work. Fewer than 1 percent of those who were on the federal program for disabled workers at the beginning of 2011 have returned to the workforce.

Percentage of Population On Disability by State



click on chart for sharper image

Children on Disability



How Easy is it to Get Disability?

Hale county's Dr. Timberlake asks a simple question to all his patients. "What grade did you finish?" If you claim "back pain" and do not have a degree, Timberlake believes you are disabled.

The Disability Deal

Getting disability seems easy enough in some states, and especially easy in Hale County Alabama. But is disability better than minimum wage? The answer is yes. NPR author Chana Joffe-Walt explains:
People who leave the workforce and go on disability qualify for Medicare, the government health care program that also covers the elderly. They also get disability payments from the government of about $13,000 a year. This isn't great. But if your alternative is a minimum wage job that will pay you at most $15,000 a year, and probably does not include health insurance, disability may be a better option.

Going on disability means you will not work, you will not get a raise, you will not get whatever meaning people get from work. Going on disability means, assuming you rely only on those disability payments, you will be poor for the rest of your life. That's the deal. And it's a deal 14 million Americans have signed up for.

Disability has become a de facto welfare program for people without a lot of education or job skills.
Parents Force Kids to Underachieve

Joffe-Walt explains the special plight of kids.
When you are an adult applying for disability you have to prove you cannot function in a "work-like setting." When you are a kid, a disability can be anything that prevents you from progressing in school.

Jahleel's mom wants him to do well in school. But her livelihood depends on Jahleel struggling in school. This tension only increases as kids get older. One mother told me her teenage son wanted to work, but she didn't want him to get a job because if he did, the family would lose its disability check.

Kids should be encouraged to go to school. Kids should want to do well in school. Parents should want their kids to do well in school. Kids should be confident their parents can provide for them regardless of how they do in school. Kids should become more and more independent as they grow older and hopefully be able to support themselves at around age 18.

The disability program stands in opposition to every one of these aims.
Clinton Ends Welfare As We Know It

In 1996 Bill Clinton signed a welfare reform act, that he proclaimed to be the "End of Welfare As We Know It". It was. People moved off welfare on to even easier to get disability programs.

Part of Clinton's welfare reform plan pushed states to get people on welfare into jobs, partly by making states pay a much larger share of welfare costs.

The incentive "worked" using the term loosely. Welfare rolls shrank but disability rolls soared.

Welfare Costs States Money Disability Doesn't
A person on welfare costs a state money. That same resident on disability doesn't cost the state a cent, because the federal government covers the entire bill for people on disability. So states can save money by shifting people from welfare to disability. And the Public Consulting Group is glad to help.

PCG is a private company that states pay to comb their welfare rolls and move as many people as possible onto disability. "What we're offering is to work to identify those folks who have the highest likelihood of meeting disability criteria," Pat Coakley, who runs PCG's Social Security Advocacy Management team, told me.

The company has an office in eastern Washington state that's basically a call center, full of headsetted women in cubicles who make calls all day long to potentially disabled Americans, trying to help them discover and document their disabilities:

"The high blood pressure, how long have you been taking medications for that?" one PCG employee asked over the phone the day I visited the company. "Can you think of anything else that's been bothering you and disabling you and preventing you from working?"

The PCG agents help the potentially disabled fill out the Social Security disability application over the phone. And by help, I mean the agents actually do the filling out.

There's a reason PCG goes to all this trouble. The company gets paid by the state every time it moves someone off of welfare and onto disability. In recent contract negotiations with Missouri, PCG asked for $2,300 per person. For Missouri, that's a deal -- every time someone goes on disability, it means Missouri no longer has to send them cash payments every month. For the nation as a whole, it means one more person added to the disability rolls.
Disability Fraud

Who is making the case for the other side? Who is defending the government's decision to deny disability?

Nobody.

And that in a nutshell explains soaring disability roles and massive fraud.

Disability fraud also make a joke out of reported unemployment numbers. If you have a disability, you are no longer in the workforce.

Not in Labor Force With a Disability



I would love to show data pre-recession. Unfortunately, the data only goes back to mid-2008. We can see however, that nearly 23 million Americans are not in the labor force because of "disabilities".

I suggest "fraud" is more like it.

Curious BLS Numbers

Here's the curious thing: 14 million collect disability, but the BLS says 22.726 million are not in the labor force (not working), because of disabilities.

What are the other 8.726 million doing? Is the BLS inflating disability numbers making the unemployment rate absurdly low, or are states doing that poor a job getting people off welfare and on to federal government disability programs? Some of both?

Regardless, we need to stop this madness.

Simple Solution

One easy way to eliminate some of the fraud would be to put someone in charge of making a case for the other side. No, we do not need new Federal programs. All we need do is "Un-end Welfare as We Know It".

If states had any incentive to stop disability fraud, we would not have so much of it. Make states responsible for a large portion of disability claims just as they are for welfare, and the number of people collecting disability will collapse.

I have written many times about disability fraud, its relation to the unemployment rate, and its relation to expiring unemployment benefits. Inquiring minds may wish to consider some Disability Fraud Examples.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Wine Country Conference

I am hosting an economic conference on April 5 in Sonoma, California. Proceeds go to the Les Turner ALS Foundation (Lou Gehrig’s Disease).

Please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs for my association with the disease.

To learn about the economic conference with world-class speakers including John Hussman, Michael Pettis, Jim Chanos, John Mauldin, Mike “Mish” Shedlock, Chris Martenson with guest moderator Lauren Lyster and other Special Guests, please visit Wine Country Conference April 5, 2013
Mike Shedlock - Federal Spending Per Non-Government Worker
Posted: 3/26/2013 8:57:00 AM EST
Here is a pair of interesting charts from reader Tim Wallace.

Ratio of Workers



click on chart for sharper image

Tim used non-seasonally adjusted numbers from the BLS, subtracting the number of government employees from total employed to produce the the above chart.

Spending Per Non-Government Worker



click on chart for sharper image

Tim used government spending records as posted on the White House website and data from the first chart to compute the amount of spending per non-government worker.

Obama claims the cutbacks will hurt the economy.

Federal government spending now amounts to $31,679 per non-government employee, annually. This is a spending problem, not a revenue problem.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike Shedlock - Le Monde Headline "No, France is Not Bankrupt"
Posted: 3/21/2013 3:52:00 PM EST
This amusing headline story by Bruno Moschetto, a professor of economics at the University of Paris in the French newspaper Le Monde has me laughing out loud this morning: "No, France is Not Bankrupt"
No, France is not bankrupt ... The claim is untrue economically and financially. France is not and will not bankrupt because it would then be in a state of insolvency.

A state cannot be bankrupt, in its own currency to foreigners and residents since the latter would be invited to meet its debt by an immediate increase in taxation.

In abstract, the state is its citizens, and the citizens are the guarantors of obligations of the State.

In the final analysis, "the state is us." To be in a state of suspension of payments, a state would have to be indebted in a foreign currency, unable to deal with foreign currency liabilities in that currency.
Economic Illiteracy

Economic illiteracy is nearly everywhere you look and that article is a prime example. Bruno Moschetto suggests France is not bankrupt because the state is not indebted in a foreign currency.

Actually, France does have its debts in a foreign currency, euros. Note that France cannot print euros at will to pay its debts (the very essence of a foreign currency).

Moschetto says citizens would be "invited" to help France meet its obligations. Invited? The same way citizens of Cyprus were "invited" to bail out Cypriot banks?

The ability to tax citizens to death to bail out the state is hardly a reasonable measure of non-bankruptcy. I suggest having to confiscate the wealth and savings of citizens to bail out the state is proof of bankruptcy. Greece is a nice example.

Hollande has tried 75% taxation.  He has tried government takeover or threats of takeover of various auto manufacturers. Hollande also seeks financial transaction taxes.

Many French citizens have had enough of Hollande and his socialist policies and have fled to Belgium, the UK, and Switzerland.

The French economy is imploding as I type.

Thought of the Day

France is Bankrupt, and it is the policies of socialist fools that put France in that state.

The thought of the day comes from reader "PTCruiser" who chimed in with "Aujourd'hui, la France. Demain, le monde entier."... Today France, tomorrow, the world!

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Note: Some ATT users (not a fault of ATT) received timeouts on my "Wine Country Conference" link (see below). If you were one of them, please try again. The problem has been fixed.

Wine Country Conference

I am hosting an economic conference on April 5 in Sonoma, California. Proceeds go to the Les Turner ALS Foundation (Lou Gehrig’s Disease).

Please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs for my association with the disease.

To learn about the economic conference with world-class speakers including John Hussman, Michael Pettis, Jim Chanos, John Mauldin, Mike “Mish” Shedlock, Chris Martenson with guest moderator Lauren Lyster and other Special Guests, please visit Wine Country Conference April 5, 2013
Mike Shedlock - "Stand With Rand, Not Jeb"
Posted: 3/14/2013 6:35:00 AM EST
Jeb Bush is Back in the Spotlight this week with a new book, wall-to-wall television interviews, and a round of public speaking engagements. In regards to the 2016 election, Jeb Bush told MSNBC’s Chuck Todd: "I’m not saying yes. I’m just not saying no."

Unfortunately, that sounds too much like "yes" to me. I suggest, it's time to move on. The last election proves just that.

Looking ahead ...


My context is different. I suggest Jeb should go back into hiding until he is ready to "Stand With Rand" for the 2016 election.

This country seriously needs a change, not another Bush.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike Shedlock - Rare Senate Indictment of the War on Terrorism; Rand Paul's Courageous Effort
Posted: 3/7/2013 9:14:00 AM EST
To what extent should US citizens loses their constitutional right in the "war on terror". Can US citizens be apprehended without charges? Killed by drones? On US soil?

John Brennan, Obama's nomination to run the CIA, refused to disavow even that last question. In response, Senator Rand Paul courageously, and single-handedly sponsored a filibuster in the Senate to block Brennan's appointment.

Wired reports 11 Years Later, Senate Wakes Up to War on Terror’s ‘Battlefield America’
Sen. Rand Paul’s filibuster will inevitably fail at its immediate objective: derailing John Brennan’s nomination to run the CIA. But as it stretches into its sixth hour, it’s already accomplished something far more significant: raising political alarm over the extraordinary breadth of the legal claims that undergird the boundless, 11-plus-year “war on terrorism.”

The Kentucky Republican’s delaying tactic started over one rather narrow slice of that war: the Obama administration’s equivocation on whether it believes it has the legal authority to order a drone strike on an American citizen, in the United States.

Paul recognized outright that he would ultimately lose his fight to block Brennan, the White House counterterrorism chief and architect of much of the administration’s targeted-killing efforts.

But as his time on the Senate floor went on, Paul went much further. He called into question aspects of the war on terrorism that a typically bellicose Congress rarely questions, and most often defends, often demagogically so. More astonishingly, Paul’s filibuster became such a spectacle that he got hawkish senators to join him.

as the filibuster picked up more and more media attention — and especially social-media attention — hawkish senators began joining in. Sen. Marco Rubio (R-Florida) praised Paul’s efforts at compelling transparency from the White House. What Paul is arguing is “no less important than our Constitutional government itself,” said Sen. John Cornyn (R-Texas), no dove.

It would be foolish to presume that Paul’s moment in the spotlight heralds a new Senate willingness to roll back the expanses of the post-9/11 security apparatus. Rubio, for instance, stopped short of endorsing any of Paul’s substantive criticisms of the war. But Paul did manage to shift what political scientists call the Overton Window — the acceptable center of gravity of discussion.

Paul’s filibuster posed a challenge to the Senate more than it does Brennan or President Obama. “Is perpetual war OK with everybody?” he asked.
Brennan will be nominated anyway, but Paul's firm stance in the face of his chicken-hawk and constitutional-hypocrite colleagues is very much appreciated.

I support Rand Paul for president in 2016. It was a pleasure meeting him in person Monday evening at a fundraiser in Palatine Illinois.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike Shedlock - "The Blame Game"
Posted: 3/1/2013 9:39:00 AM EST
Finger-pointing and fear-mongering over trivial budget non-cuts are now in full swing. Obama is blaming House speaker John Boehner and of course Boehner is blaming Obama.

Of the more ridiculous hype, Obama asserts "Navy ships could lie idle and children would lose out on vaccinations if the cuts are not halted."

Mercy!

Mainstream Media Nonsense


Cooler Heads vs. Mainstream Media

Cooler heads prevail in non-mainstream media reports such as that of friend Tim Wallace as noted in Media Hype Over Sequester Cuts

Cooler heads also prevail in a NBC/WSJ Poll that shows "A majority of Americans (53%) prefer that Congress move ahead with the current sequester cuts or a plan that contains even more cuts, suggesting the public’s general appetite for reducing spending."

Blame Game Campaign

Getting the media all hyped up over trivial "non-cuts" is all part of Obama's "Blame Game" Campaign. To be fair, Republicans have countered with their own campaign.

With those thoughts, I have a musical tribute to offer.

Musical Tribute to Shirley Ellis

Come on everybody!
I say now let's play a game
I betcha I can make a rhyme out of anybody's name

Obama!

Obama, Obama, bo Ama, Bonana fanna fo Fobama
Fee fy mo Mobama, Obama!

Everybody do Boehner
Boehner, Boehner, bo Oenner,  Bonana fanna fo Foehner
Fee fy mo Moehner,  Boehner!



Link if above video does not play: Shirley Ellis "The Name Game" (Merv Griffin Show 1965)

Let's do Chuck

I will let readers work out the "Name Game" rhyme to Chuck (or Buck) on their own accord. Suffice to say that a couple words appear that represent the true state of the economy.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

"Wine Country" Economic Conference Hosted By Mish
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Mike Shedlock - Obama's Infrastructure Mania; Why It's Not Justifiable (And What To Do About It)
Posted: 2/22/2013 3:44:00 PM EST
Inquiring minds are watching an excellent video on The Kudlow Report between Larry Kudlow and David Harkin.

Harkin is the author of a study on US infrastructure and a professor at the university of North Carolina Charlotte.



Partial Transcript

Kudlow: President Obama wants to spend another $50 billion on repairs to our infrastructure. Do we really need it? That would be on top of the over $100 billion for the nonshovel ready projects back in the 2009 stimulus. Remember that? There's a new study that says we may not need it. Our roads and bridges are not crumbling and are much better than they were 20 years ago. How about that good news? David Harkin is the lead author of that study. David, thank you for coming on. I read the reports. Throughout the country in real terms adjusted for inflation, state control, highway spending has increased by 60%. 177% in nominal terms. 60% in real terms. They had good results.

Harkin: We were quite surprised when we looked at the numbers. The highway system has gotten better on all seven measures we looked at. Accidents rates are down. Even the pavements have been improved particularly for the interstate system. Even congestion is down too. This isn't, I think, generally common knowledge. Most people think the infrastructure is crumbling or falling apart. We found just the opposite.

Kudlow: Why is Washington then, so manic and obsessive about pouring more and more infrastructure money? Why?

Harkin: Well, the fundamental problem here is that the states control how that money will be spent. Some of it comes from the federal government and some of it from the states. So the feeling in the states and in Washington is that we just need more and more and more. But in fact the numbers don't support that. The numbers suggest that we're making progress and that's very good news for the public. So, in terms of where the issue should go here we ought to look very carefully at whether these requests are really needed.

Kudlow: David, here's one of my big beefs. This is highway money and bridge money. Davis-Bacon, the prevailing union wick, once you use federal dollars and it's true for these big union states like New York, New Jersey and California, Once do you that you have to pay the Davis-Bacon prevailing union wage rate which is at least a third higher than if you did it privately. That's my biggest beef about spending all this money.

Harkin: In our study we showed the cost for doing this work are much higher in a few states compared with the rest of the country like California, New Jersey, New York are very high cost states relative to the other states. To go back to the earlier question regarding whether this is just a problem of the interstate system or whether the civil engineering report is correct, you know, let's remember the civil engineering report looks at only one year and is based on opinions from local experts. But it doesn't look back in time to see whether we made progress. David Harkin thank you ever so much. congratulations on your study which blows the lid off all this infrastructure money proposal coming out of Washington.

End Transcript

Davis-Bacon Background

I have discussed Davis-Bacon on many occasions. Inquiring minds interested in a background on the original purpose of the act should read My Thoughts on the Davis-Bacon Act.

"... while the sponsors and supporters of the Act also intended it to disadvantage immigrant workers of other races, these thinly veiled references make it clear that the Act was primarily intended to discriminate against blacks."

The Davis-Bacon Act as amended, requires that each contract over $2,000 to which the United States or the District of Columbia is a party for the construction, alteration, or repair of public buildings or public works shall contain a clause setting forth the minimum wages to be paid to various classes of laborers and mechanics employed under the contract. Under the provisions of the Act, contractors or their subcontractors are to pay workers employed directly upon the site of the work no less than the locally prevailing wages and fringe benefits paid on projects of a similar character. The Davis-Bacon Act directs the Secretary of Labor to determine such local prevailing wage rates.

There are 117 classifications of jobs for which some set of bureaucrats must determine "prevailing wages".  Here is a partial list:

ASBE = International Association of Heat and Frost Insulators and Asbestos Workers
BOIL = International Brotherhood of Boiler Makers, Iron Shipbuilders, Blacksmiths, Forgers and Helpers
BRXX = International Union of Bricklayers, and Allied Craftsmen
(bricklayers, cement masons, stone masons, tile, marble and terrazzo workers)
CARP = United Brotherhood of Carpenters and Joiners of America
ELEC = International Brotherhood of Electrical Workers
(electricians, communication systems installers, and other low voltage specialty workers)
ELEV = International Union of Elevator Constructors
ENGI = International Union of Operating Engineers
(operators of various types of power equipment)
IRON = International Association of Bridge, Structural and Ornamental Iron Workers
LABO = Laborers' International Union of North America
PAIN = International Brotherhood of Painters and Allied Trades
(painters, drywall finishers, glaziers, soft floor layers)
PLUM = Operative Plasterers' and Cement Masons' International Association of the United States and Canada
PLAS = United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada
ROOF = United Union of Roofers, Waterproofers and Allied Workers
SHEE = Sheet Metal Workers International Association
TEAM = International Brotherhood of Teamsters

Even FDR Understood the Problem

Public unions get into bed with management and politicians and work out sweet deals for themselves at taxpayer expense. No one looks out for the taxpayer. Even FDR understood the problem.

Message From FDR

Inquiring minds are reading snips from a Letter from FDR Regarding Collective Bargaining of Public Unions written August 16, 1937.
All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.

The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees.

A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.
Time to Scrap Davis-Bacon, End Public Union Collective Bargaining

Before any project can be economically viable, labor costs must be addressed, and that is exactly why we need to scrap Davis-Bacon and all prevailing wage laws. We also need to eliminate collective bargaining of public unions.

Unless and until we do that, we will dramatically overpay for infrastructure projects and taxpayers will pay through the nose for them.

Government should strive to provide the most services at the least cost. Public unions strive to provide the fewest services at the most cost. Is it any wonder cities and states are broke?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike Shedlock - Millennials, the Stressed, Screwed Generation
Posted: 2/22/2013 2:24:00 PM EST
Those looking for a reason for sluggish housing, weak retail sales, and low family formations rates, need only look at the plight of millennials (those aged 18-33).

Many millennials have no job, high student debt with no way to pay the debt off, and few job opportunities beyond part-time employment in food services or retail.

Millennials are the ones who Obama targeted to pay for Obamacare. Indeed, the forced inclusion of youth (who will overpay for health care) is supposedly what made Obamacare "affordable".

Yet, even with the screw job on youth, the "Affordable Health Care Act" is so unaffordable that Companies Opt of Obamacare, Not Even Labor Unions Want It.

Speaking of labor unions, the odds millennials get the same benefit packages going forward that public unions receive today are roughly zero percent. Nonetheless, expect tax rates on millennials to rise so that ungracious, unappreciative boomers get ridiculous benefits they do not deserve and did not earn.

The Stressed Generation

Is it any wonder a study of of Stress in America by the American Psychological Association shows millennials to be the most stressed generation.
Both Millennials and Gen Xers report an average stress level of 5.4 on a 10-point scale where 1 is “little or no stress” and 10 is “a great deal of stress,” far higher than Boomers’ average stress level of 4.7 and Matures’ average stress level of 3.7.



The four generations are defined as following: Millennials (18- to 33-year-olds), Gen Xers (34- to 47-year-olds), Boomers (48- to 66-year-olds) and Matures (67 years and older).

Thirty-nine percent of Millennials say their stress has increased in the last year, compared to 36 percent of Gen Xers, 33 percent of Boomers and 29 percent of Matures.

More than 52 percent of Millennials report having lain awake at night in the past month due to stress, compared to 48 percent of Gen Xers, 37 percent of Boomers and 25 percent of Matures.

Additionally, 44 percent of both Millennials and Gen Xers report experiencing irritability or anger due to stress, compared to 36 percent of Boomers and 15 percent of Matures.
America's Most Stressed Generation

The Huffington Post comments on the above study in Millennials Come of Age as America's Most Stressed Generation
Not surprisingly, work is one of the biggest causes of stress, with 76 percent of Millennials reporting it as a significant stressor, compared to 62 percent of Boomers and 39 percent of Matures. "Many of these young people have come out of college or graduate school with horrendous student debt into a job market where there are not very many jobs," said Katherine Nordal of the APA. "This has put their life plans, probably, on hiatus."

The job numbers are indeed grim. According to Generation Opportunity, the unemployment rate for Millennials rose to 13.1 percent in January, up nearly 2 points from December. Among young African-Americans, it's a whopping 22.1 percent. And if you count those 18-29 year-olds who have given up and dropped out of the labor force, the overall youth unemployment rate stands at 16.2 percent.

And even for the lucky ones who are working, the picture remains bleak. According to the Economic Policy Institute, between 2000 and 2011 wages adjusted for inflation fell by over 11 percent for young high school grads and by 5.4 percent for young college grads. It doesn't help that, as a study by the Center for College Affordability found, 48 percent of working college grads are in jobs that don't require a college degree and 38 percent are in jobs that don't require a high school diploma. The report concluded that from 2010 to 2020, while 19 million college grads will be hitting the job market, the economy will add fewer than 7 million jobs requiring a college degree. That's a pretty serious -- and stress-producing -- gap.

And any of those heavily indebted, heavily stressed-out Millennials listening to President Obama's State of the Union speech would not have gotten much stress relief. He did acknowledge the increasingly untenable cost of higher education -- "Today, skyrocketing costs price too many young people out of a higher education, or saddle them with unsustainable debt" -- and declared that he would "ask Congress to change the Higher Education Act so that affordability and value are included in determining which colleges receive certain types of federal aid."
Not Promising at All

In regards to Obama's plans for education, Arianna Huffington misses the mark completely.

She says "Obama's push for colleges and universities to increase enrollment and the number of degrees they grant is a great goal." She also says changes to the higher education act "sounds promising if it ever happens".

Affordable education won't happen under Obama because neither Obama nor Huffington address the fundamental problems.

Fundamental Reasons College Costs Soared

  • Guaranteed student loans
  • Student loans cannot be discharged in bankruptcy
  • Untenable wage and benefit structures of teachers and administrators
  • Too much push for everyone to go to college whether they are suited or not
  • Federal grants and other costly programs designed to make college affordable but do the opposite
  • Outright lies and fraud by for-profit schools that lure students into believing they can become a chef or a Java programmer
  • Lack of enough accredited online universities
  • No competition in general


The millennials were screwed by all of the above. They became debt slaves in the process, to the benefit of the banks, the school administrators, and the teacher's unions.

Stressed by that? You bet. Screwed is more like it.

Screwed Generation

The Daily Beast asks Are Millennials the Screwed Generation?
How has this generation been screwed? Let’s count the ways, starting with the economy. No generation has suffered more from the Great Recession than the young. Median net worth of people under 35, according to the U.S. Census, fell 37 percent between 2005 and 2010; those over 65 took only a 13 percent hit.

The wealth gap today between younger and older Americans now stands as the widest on record. The median net worth of households headed by someone 65 or older is $170,494, 42 percent higher than in 1984, while the median net worth for younger-age households is $3,662, down 68 percent from a quarter century ago, according to an analysis by the Pew Research Center.

Quick prospects for improvement are dismal for the younger generation. One key reason: their indebted parents are not leaving their jobs, forcing younger people to put careers on hold. Since 2008 the percentage of the workforce under 25 has dropped 13.2 percent, according to the Bureau of Labor Statistics, while that of people over 55 has risen by 7.6 percent.

The screwed generation also enters adulthood loaded down by a mountain of boomer- and senior-incurred debt—debt that spirals ever more out of control. The public debt constitutes a toxic legacy handed over to offspring who will have to pay it off in at least three ways: through higher taxes, less infrastructure and social spending, and, fatefully, the prospect of painfully slow growth for the foreseeable future.

In the United States, the boomers’ bill has risen to about $50,000 a person. In Japan, the red ink for the next generation comes in at more than $95,000 a person. The huge public-employee pensions now driving many states and cities—most recently Stockton, California toward the netherworld of bankruptcy represent an extreme case of intergenerational transfer from young to old. It’s a thoroughly rigged boomer game.

More maddening still, the payback for this expensive education appears to be a chimera. Over 43 percent of recent graduates now working, according to a recent report by the Heldrich Center for Workforce Development, are at jobs that don’t require a college education. Some 16 percent of bartenders and almost the same percentage of parking attendants, notes Ohio State economics professor Richard Vedder, earned a bachelor’s degree or higher.

The "Last" Generation

My friend "BC" has a few thoughts on the screwed generation. "BC" writes ...
Millennials suffer from ...

  • Lack of durable paid employment
  • Contingent low-wage, part-time employment
  • Few (if any) opportunities for occupational/career trajectories
  • Low or no income and purchasing power
  • Heavy debt burden
  • No ability to save
  • Few options to overcome individually or collectively the cumulative socioeconomic, fiscal, and distributional structural constraints bearing down on them


The generation coming of age does not have the paid employment and after-tax purchasing power necessary to support the growth of a debt-based mass-consumer economy, big mortgages, the crushing costs of parenting, discretionary spending, Obamacare, and elder transfer programs for the Boomers nor for themselves.

In this sense, the Millennials are the "Last" Generation.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

"Wine Country" Economic Conference Hosted By Mish
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