SHORT TAKES ON IMPORTANT STORIES #4: WORKERS AND ECONOMIC WELL-BEING
Here are short takes on five important stories that have gotten little attention in the mainstream media. Each provides a quick summary of the story, a hint as to why it’s important, and a link to more information.
STORY #1: The Consumer Financial Protection Bureau just finalized a regulation that caps at $8 the fee that the big credit card corporations can charge for a late payment. Currently, they typically charge around $30. When the regulation goes into effect in 60 days, it’s projected to save consumers $10 billion a year. The credit card corporations can charge a higher fee if they can show that their actual collection costs are higher. Nonetheless, the credit card corporations have announced they will go to court to block the fee cap. [1]
In a separate report issued in February, a Consumer Financial Protection Bureau analysis found that large credit card issuers charge customers higher interest rates than smaller ones. They estimated that a customer of one of the 25 largest credit card issuers with an average balance of $5,000 could save $400 to $500 a year by shifting to a small credit card issuer. [2]
STORY #2: An update on a short take in my 2/1/24 post: The Republican Governor in one of the 15 states that was refusing to provide federally-funded food to 8 million very low-income children this summer has changed his mind. Nebraska Governor Pillen has agreed to accept $18 million from the U.S. Department of Agriculture to pay for food for about 150,000 children this summer when they won’t be in school and receiving the free or reduced-price meals they get there. Despite Governor Pillen’s previous statement that he didn’t “believe in welfare,” after hearing from students, a bipartisan group of state legislators, pediatricians, and anti-poverty groups, he changed his mind. He said the change was due to “an evolution of information” about how children would be affected by his decision to forego the food assistance of about $40 per month. Nebraska legislators noted that this showed that grassroots “voices make a positive difference” and called it a “HUGE win for Nebraska’s kids, families, … and small businesses.” [3]
STORY #3: State to state comparisons show that unions improve workers’ pay and benefits and do NOT reduce job growth or hurt a state’s economy. Nonetheless, 26 states have so-called “right-to-work” laws that undermine unions. The advocates for these laws claim that they promote job growth, but there is no evidence for this. “Right-to-work” laws prohibit unions from requiring workers to join the union or to pay the union a fee similar to union dues at a unionized job site. Therefore, workers can receive all the benefits the union provides – from increased pay and benefits to improved working conditions and grievance procedures – without having to pay for them. Not surprisingly, this undermines the union’s membership numbers and finances. Nationally, about 10% of workers are in unions, while in states with long-standing “right-to-work” laws (since before 2010) only 5% of workers are in unions. In states without “right-to-work” laws, over 14% of workers are in unions. [4]
Workers in states without “right-to-work” laws are paid 3.2% more (about $1,700 more a year for full-time work) than workers in states with such laws. They are also more likely to have employer-supported health insurance and retirement benefits. Furthermore, unions reduce job-related racial and gender inequities, as well as income inequality in general.
STORY #4: At 18.6%, the immigrant portion of the U.S. workforce was at a record high in 2023. However, immigrants are NOT hurting the job prospects and incomes of U.S.-born workers. Here are three key facts (among others) that support this statement:
· The 3.6% unemployment rate for U.S.-born workers in 2023 was a record low.
· The 81.4% employment rate for prime-age workers (i.e., those between 25 and 54) is at its highest level since 2001.
· The 83.9% labor force participation rate of those prime-age workers (i.e., those working or actively looking for a job) is at its highest level since 2002.
Furthermore, immigrants contribute to economic growth and increase government tax revenue. Without immigration, the U.S. population would decline, which would hurt economic growth due to a lack of needed workers. [5]
STORY #5: The tariffs President Trump imposed on China and other countries were a political success but a policy and economic failure – like many things he did. A nonpartisan study of U.S. employment data by industry found that Trump’s tariffs on China and other countries in 2018 did NOT increase the number of jobs in the industries protected by the tariffs as promised. However, they did lead to other countries imposing tariffs on U.S. exports in retaliation, which had a negative impact on U.S. jobs and our economy, particularly agriculture. The Trump administration was forced to respond by providing $23 billion in subsidies to farmers in 2018 and 2019, which only partially offset the harm caused by Trump’s tariffs. [6]
[1] Cowley, S., 3/6/24, “Federal rule caps most credit card late fees,” The Boston Globe from the New York Times
[2] Wilkins, B., 2/16/24, “New CFPB research spotlights ‘predatory’ credit card practices of big banks,” Common Dreams (https://www.commondreams.org/news/cfpb-credit-card-report)
[3] Conley, J., 2/13/24, “Under pressure from angry students, GOP Gov reverses on federal summer meals funding,” Common Dreams (https://www.commondreams.org/news/nebraska-summer-meals)
[4] Sherer, J., & Gould, E., 2/13/24, “Data show anti-union ‘right-to-work’ laws damage state economies,” Economic Policy Institute (https://www.epi.org/blog/data-show-anti-union-right-to-work-laws-damage-state-economies-as-michigans-repeal-takes-effect-new-hampshire-should-continue-to-reject-right-to-work-legislation)
[5] Costa, D., & Shierholz, H., 2/20/24, “Immigrants are not hurting U.S.-born workers,” Economic Policy Institute (https://www.epi.org/blog/immigrants-are-not-hurting-u-s-born-workers-six-facts-to-set-the-record-straight/)
[6] Swanson, A., 2/3/24, “Trump’s tariffs hurt US jobs but swayed voters, study finds,” The Boston Globe from the New York Times