Unemployment – Page 2

January 15, 2013

ProJo Belittles, Misinforms Unemployed Letter Writer

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The Providence Journal is entitled to its opinions. But as the state’s paper of record, it should also respect the opinions of others.

Instead, the ProJo editorial page has a habit of tacitly belittling those it disagrees with – one of the most insidious forms of mainstream media bias – evidenced today by a demeaning editor’s note on a letter from a reader.

In the LTE, Dan D’Alessio, of North Providence, explains how he lost his unemployment benefits because of the brinksmanship during the fiscal cliff negotiations. Clearly frustrated, he writes, “I’m sure our Founding Fathers would disapprove of just how ineffective big government has become. Please let me know in a timely fashion as possible what I am supposed to do now, since I am at my wit’s end.”

At the end of his letter, the Journal offers him a response: “Editor’s note: There was no unemployment compensation at the time of the Founders.”

First off, the Journal is wrong about this. According to the Social Security Administration’s history on social services in America, “The first colonial poor laws were fashioned after those of the Poor Law of 1601. They featured local taxation to support the destitute.” It may have been administered much differently, and it may have come in a different form than a direct deposit (oftentimes, out of work colonists would get put to work on “poor farms”), but to say it didn’t exist isn’t accurate.

Secondly, it entirely misses the point. The writer, in case it needs clarifying, was arguing that politics now gets in the way of government, and the founding fathers wouldn’t like that. You can disagree with the sentiment, but whether or not a certain program existed then is really irrelevant.

Thirdly, and I think most importantly, it came across as a nasty pot shot – and was likely meant that way. Yet another indication of just how dismissive the Journal is to the plight of the less fortunate.

Does anyone think a similar editor’s note would have been attached to a letter questioning what the founding fathers would think of pension reform politics?

Here is D’Alessio’s letter, and the ProJo’s response:

My DLT experience

My unemployment compensation ran out in the last week of December.

Since that time Congress has passed a one-year extension and President Obama signed the bill. The late signing is 50 percent of the reason I was not able to continue to collect my unemployment benefits. The other 50 percent is because I am unable to get through on the phone to a representative of the Rhode Island Department of Labor and Training.

I did leave an online message about my plight, and I’m sure that many other Rhode Islanders have as well. So far, I have not received any mail or phone call from any of the department’s representatives.

I’m sure our Founding Fathers would disapprove of just how ineffective big government has become. Please let me know in a timely fashion as possible what I am supposed to do now, since I am at my wit’s end.

Finally, when I first started collecting unemployment I was able to fill out all of the necessary forms online except to pick a personal identification number. I tried then to speak to representatives by telephone but my attempts were all in vain. So I decided to drive to DLT headquarters to speak with someone just to get a PIN (I think it would have been prudent to use the last four digits of a person’s Social Security number) but I was told that I could not speak to anyone.

All I wanted to do was speak to someone in authority to explain a problem the DLT created for itself but I had an antidote for. Perhaps the agency could use an out-of-work thinker and problem solver like me.

Dan D’Alessio North Providence

Editor’s note: There was no unemployment compensation at the time of the Founders.

January 10, 2013January 10, 2013

RI Not As ‘Generous’ As GoLocal Report Indicates

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GoLocalProv reported on Monday that Rhode Island owes the federal government $200 million for unemployment benefits. When the Great Recession hit, there wasn’t enough money in the state’s unemployment trust fund and we had to borrow to make up the difference.

But about a third of the way through the article a subhead asks, “Is RI too generous?” and goes on to refer to a study on the website 24/7 Wall St. which labels Rhode Island as the “most generous” state in the country when it comes to handing out certain benefits.

GoLocalProv referenced the same study on December 25.

The implication is that Rhode Island has to borrow money from the feds because the state is doling out extravagant unemployment checks. But the reporting in both the 24/7 Wall Street piece and the GoLocalProv posts that cite is severely lacking in context.

While it may be true that Rhode Island is the second highest in the country for unemployment payments as a percentage of weekly wages, this is just one way to measure the “generosity” of UI, and nowhere does the article mention how these payments compare to the cost of living in our state.

According to the Economic Progress Institute’s 2012 Standard of Need, a single adult in Rhode Island living solely on the average unemployment benefit of $381.89 weekly would come up $4945.72 short for their annual living expenses. A single parent receiving the same benefit while trying to care for two kids would be short $37681.72.

Granted, that single parent might be eligible for other forms of assistance to help close that gap. But what if we use the example of “Christina” on page 6 of the EPI’s report (see graph at right)—say she gets laid off, and let’s assume that like 24/7 Wall St. says, she receives 43.4% of her wages in unemployment payments. That comes out to $10356.54 annually—and while we hope Christina isn’t out of work the entire year, the average length of unemployment is still around 40 weeks, so that’s not too unlikely of a scenario.

You can see how it becomes impossible for Christina to make ends meet when faced with a long-term unemployment scenario, even with our state’s “generous” unemployment payments. And this hypothetical situation is a tragic reality for many unemployed workers in Rhode Island—folks I meet week in and week out as part of the Where’s the Work project.

Rhode Island having to borrow $200m from the Feds to cover unemployment payments has nothing to do with those payments being “over-generous” (which they clearly are not) and everything to do with a failure on the part of our leaders to plan appropriately for—and respond adequately to—this unemployment crisis.

December 5, 2012December 5, 2012

OSA Hires Mark Gray for ‘Where’s the Work’ Project

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Ocean State Action today announced the addition of Mark Gray to their organizing staff, naming him the new Where’s the Work? campaign organizer after the departure of Aaron Regunberg, who has moved on to serve as Director of the Providence Student Union.

As Where’s the Work? campaign organizer, Gray will spearhead Ocean State Action’s continuing efforts to increase public awareness and understanding of the unemployment crisis in Rhode Island by putting the stories of unemployed Rhode Islanders front and center to reshape the public debate about our economy and make sure that our elected leaders better understand the urgent action that their constituents need to address the unemployment crisis.

“We are thrilled to have Mark join our team,” said Kate Brock, Executive Director. “He has demonstrated the talent, creativity and diligence needed to help mobilize and empower Rhode Island’s un- and underemployed workers.”

Gray has spent the last two years with Clean Water Action Rhode Island where he worked as a grassroots organizer on numerous campaigns, including diesel emissions reduction efforts and extended producer responsibility. In addition to serving as Recruitment Director for Clean Water Action’s renowned field canvass operation, Gray also led the organization’s highly successful efforts to support endorsed General Assembly candidates in the 2012 election.

“I am sincerely honored to be joining Ocean State Action,” Gray said. “The personal stories of those struggling with unemployment as a result of the economic crisis are getting lost in the noise of data and statistics. I am grateful for the opportunity to help these voices be heard.”

Ocean State Action is a coalition of community and environmental organizations, professional associations, and labor unions who have been fighting for social and economic justice for over two decades.

October 21, 2012October 21, 2012

Why Stock Buybacks Benefit Corporate Greed

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buyback cycle — Image courtesy of Hodart Report.

One of my last posts touched on how corporations are spending their money, what they are doing and not doing with the piles of record profits they’ve been making in the past few years while median wages have stagnated or fallen.

Here’s some additional information. First, the cites:

http://online.wsj.com/article/SB10000872396390444657804578052472320753336.html

http://www.thereformedbroker.com/2012/10/12/the-buyback-epidemic/

If you piece the two of them together, you will glean that dividend payments to shareholders are near an all-time low. Something like 34% of earnings are being paid out in dividends today. OTOH, stock buybacks by the S&P 500 hit $112 billion just for the second quarter of 2012. You will also learn that, in contrast, companies paid out about 60% of their earnings in dividends in 1960. This is despite a top tax rate of 91%. No, that’s not a typo. 91%.

Why the preference for stock buybacks over dividend payments? Again, apply the principle of ‘cui bono’: to whose benefit?

Dividends generally benefit the average holder, the smaller holders. In fact, as I’ve said before, prior to about 1990, one bought stocks in order to collect the dividend paid, not with the idea of the price of the stock going up. In fact, stocks like utilities were considered ‘widows and orphans’ stocks because of the generous dividends they generally paid.

Buybacks, OTOH, generally benefit the corporate executives because the bulk of their compensation is in company stock. One component in the price per share of stocks is the number of shares outstanding. In fact, it’s the denominator in the equation. Since corporate compensation comes from huge issues of common stock, the denominator grows, which drops the average price, which means that the shares executives increase in value. Shares that are bought back are retired, decreasing the number of shares outstanding, which has the impact of pushing the price up, other things being equal.

Yes, the average holder gains from this too, but the benefit is much more limited. Let’s say I own 1,000 shares, which is a big holding for most middle-class folks. If the price goes up a dollar, I’ve made $1,000. Not bad. But if I own 100,000, or 500,000 shares, the gain is much higher. And grants of hundreds of thousands of shares are not unusual. An executive holding a million share is not unusual.

Plus, this gain is completely tax-free, until the stock is sold. This benefits the executive who can then borrow against the shares and perform feats of legerdemain with the money. The small holder, OTOH, will generally never see the benefit f the capital appreciation because s/he is less likely to sell shares.

Yes, they may, and then turn around and buy others. However, this sort of trading mentality is very dangerous for the small investor. 80% of professional investors do not ‘beat the market’ through frequent trading. If these professionals can’t, then what chance does the small investor have? A small one, and then usually only for a short time before regression to the mean sets in. The safest strategy for the small investor is to buy stocks that pay a decent dividend and hold them for the income. Now, that few companies do this any longer is certainly a problem. Once again, the market is tilted in favor of the larger investor who can make a lot of money on fairly small increases in price, or who can hedge, or who has access to resources and information that the small investor does not have.

Cui bono? The corporate executive.

In the WSJ (yes, Wall St Journal), note the following quote:

…More than seven decades ago, in his classic book “Security Analysis”, the great investor Benjamin Graham made a call so radical that it still sounds shocking today. Complaining of the “despotic powers wielded over dividend policy by corporate executives and directors, Graham argued that companies should no longer be allowed to direct surplus cash away from paying dividends–even for reinvesting in the business–without first obtaining formal “consideration and appraisal” from their investors, most likely through a vote at the annual meeting.

Capitalist to his core, Graham was dead serious with this Bolshevik-sounding suggestion. He wanted shareholders–who, after all, own the company–to force management to provide at least a general justification for using cash for any purpose other than paying a dividend.

With the percentage of profits paid out as dividends today near all-time lows, at 34%, Graham’s drastic proposal is just what we need to cattle-prod companies out of being such skinflints.

One “argument” that tax-cutters like to use is that it’s our money, not Washington’s. Fair enough. But those corporate profits belong to the shareholders, not to the CEO. So why should the CEO decide?

(Yes, he is a shareholder, but he & his board almost never control a majority of shares. Plus, Graham’s point was to make them explain why they were not issuing larger dividends. You know, make them accountable? Radical notion, I realize. Only people on the bottom are accountable for anything. Those on top can do whatever they damn well please.)

(Point 2: the fact that dividends are ‘double taxed’ is completely irrelevant to the argument. But let’s put it this way: they are double taxed. So what? What difference does that make?)

Here’s how the other article describes the buyback/dividend issue:

…One other thing — executives use buybacks to offset compensation, they issue themselves shares or options, and then get the board to approve a stock buyback to counter the effect of dilution. If you’re asking yourself “wait, so buybacks can be used as a tool to transfer shareholder money to executives?” then you’ve got it figured out, that’s exactly what they can be used for. And they often are.

As I said, cui bono? The corporate executive. He does not own the company. He–in theory, anyway–works for the shareholders, and yet he’s following policies that enrich himself (and it’s pretty much always a ‘he’) at the expense of those he works for. Somehow, I suspect that if he found an underling at the company doing something similar, the underling would be fired, if not prosecuted.

As an aside, the comments section of the WSJ article is hilarious. Note the utter horror–The horror! The horror!–with which they regard a tax rate of 39% on dividends. Somehow, the returns to capital should be privileged above actual work. And note how they throw out retirees who will be hurt by paying an hypothetical 39% in taxes on their dividend income, after the confiscatory Obama plan of letting the Bush tax cuts expire. But, 39% is the top tax rate. Only people making the highest incomes would pay at that rate. For the rest of us, we would pay at the rate we pay on the rest of our income. The only retirees who would be hit by the top tax rate are those who are earning in the top level of income.

One final word. A while back I wrote a post about how the purpose of allowing capital to accumulate was so that business could expand and benefit more people through hiring. IOW, there’s an implicit deal: we allow capital formation so you can increase the number of people you hire, which benefits everyone. However, the capital side of deal has not kept up its end of the bargain. For pointing this out, I was excoriated as a…whatever. You can fill in the blank. But this is exactly what is happening: the profits are not being reinvested in the US, those receiving the benefits of the profits are not paying taxes to support our society, even though they benefit disproportionately from the peace and security provided by the US government. They’ve breached the contract.

Finally finally, here’s something about the effects of income polarization.

“If a man is not an oligarch, something is not right with him.”

http://blogs.reuters.com/great-debate/2012/10/15/the-billionaires-next-door/

OK, feel free to excoriate mindlessly by calling me all sorts of names, and saying I’m wrong without ever quite showing how I’m wrong.

October 7, 2012October 8, 2012

Income Inequality and Entry Level Wages

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Evidence shows that real wages for college grads fell in 2011. More: real wages for college grads are down from 2000, and real wages for college grads are down from 2004, the trough of the Bush recession. These wages did go up–sharply–in 2005, and then began a long, not-so-slow slide from which they have not begun to recover.

And yes, the link is to the Progressive Policy Institute, but the data is drawn from the Census Bureau’s annual Income, Poverty, and Health Care report for 2012 that was published recently. So this is standard gov’t data. As the article makes clear, this is very significant information. It seriously cripples the argument that people can lift themselves up by getting a college degree. Or that income inequality is simply the premium paid for education.

So the graduate enters the real world to find that a) jobs are very hard to find; b) that those lucky enough to get a job are making less than they expected; and c) they have a mountain of debt to pay off. This latter was exacerbated by policy changes in the Bush era, which have been, thankfully, addressed by Obama.

But, no problem. This is all part of the Grand Plan to make sure that a) levels of income inequality continue to rise; and b) that these differences become stratified into place, resulting into a permanent caste system. Yes, this is the goal. Let the rich get richer, and let everyone else go to hell in a handbasket. That is what the corporate overlords want. Is this bordering on tinfoil-hat paranoia? Perhaps, at first glance, but let’s look at the evidence.

Income inequality shrank significantly between 1948 & 1973. Why? Because of deliberate government actions that fostered the downward redistribution of wealth. Unions were institutionalized, providing labor with a powerful voice to protect workers’ rights. The steady, significant, upward trend of real middle-class wages was the result of deliberate policy.

Another deliberate policy that fostered income redistribution was very high tax rates. Even after Reagan’s 1981 tax cuts, the top tax rate ‘fell’ to 50%. Prior, it was in the 70s, and it only ‘fell’ to 77% after being cut in 1964. I say we do what the GOP wants and emulate Reagan. Let’s put that 50% tax rate back in place. If it was good enough to St Ronnie, then it’s good enough for me, right?

And let’s make one thing clear: today’s “corporate titans” are not the steely-eyed heroes of a bad Ayn Rand novel. These are not entrepreneurs. They are bureaucrats. The guys sitting in the chairs at Citibank or GM or 3M or Exxon did not build their company from scratch. Yes, you have (or had) your occasional Steve Jobs and Bill Gates, companies like FedEx that grew into market behemoths, but they are, far and away, the exception and not the rule. The family-owned, family run corporate giants like Standard Oil or Dagny Talbert’s (Atlas Shrugged; yes, I read it) railroad barely exists today.

The point is, when a public corporation makes money, it can choose what to do with it. The corporation can return it to the owners–the shareholders–in the form of dividends. This was the traditional thing to do. Until sometime in the 1990s, buying stock in the expectation of the price going up so you could sell it was the definition of ‘speculation.’ Rather, one bought stock to hold it, so you could collect the 5% annual dividend. In some ways, IMO, the worst thing about the dot-com boom was the idea that dividends were ‘quaint’, and something only old-fogey companies did. Now, dividends of 2% are considered generous, and perhaps foolish. Apple, with all its money, has never paid a dividend.

Or, if a corporation chooses not to give the money to the real owners, another choice is to re-invest the money in the company by building another plant, or buying new, improved machinery. This is not happening. Business investment in this country is at its lowest level in decades. Yes, some companies are spending the money in other countries by outsourcing, but that doesn’t do a college grad in this country much good, does it?

So the corp is not returning the money to its real owners, the shareholders; nor is it re-investing the money in the company. How about higher wages?

Despite enormous productivity gains, wages–which is where we came in–are stagnant at best, falling at worst. In the period 1948-1973, there was a rough equivalency between productivity increases and wage increases. If an improved process makes the product cheaper, the profit margin increases. In the time to 1973, this extra profit was shared more or less equally by everyone in the company, workers and management alike. But, starting somewhere around 1980, this trend stopped. Oh, productivity has increased, dramatically at times, but wages have remained stagnant.

IOW, it’s gotten cheaper to do things, but that money is not being distributed to those who actually do the work. It’s being kept by management.

We are living in a time when corporate profits are at record high levels, and the percent of profits going to labor is at record lows for the post-Depression period. Coincidence? No.

Why is this happening? Here’s where my tinfoil-hat conspiracy theory comes in: because this is the plan. Those fortunate enough to climb into the executive level of a corporation they did not build, have decided that they’re going to keep the extra money themselves. So, the wages for college grads falls, because it can. Why has the GOP fought so relentlessly to stymie every pro-jobs proposal brought before it? To maintain the 8-10% unemployment rate. Why do they want to maintain this high rate? Because high unemployment puts downward pressure on wages. When someone asks for a raise, the corporate response is “you’re lucky to have a job.” Yes, it’s true, and that’s exactly my point.

I get a lot of flack claiming that I’m anti-business, or a pro-union shill, or an alarmist, or lots of other things. And yet, somehow, the actual evidence seems to be on my side. Oh, sure, you can nitpick a few of these points where I’ve overgeneralized and then shout “FAIL” (it’s happened), but I have yet to see a convincing, fact-based contrary argument.

Of course, one prime target is my conspiracy theory, that there is a plan to build in legal support for income inequality. Look, corporate management is a cohesive group. These guys–and it’s 90% men–sit on the boards of each others’ companies. They hang out together in the Hamptons on weekends. They ski in Aspen. The cabal is not nearly as incestuous as the power circle here in RI, but it’s on course for that. The first thing that happens when you get power is you try to make sure you keep power. It’s damn hard to get to the top of the pyramid, so, when you do, you bloody well try to stay there.

Now, if you’re Mitt Romney, and you can borrow untold amounts from your parents, and you’ve been sent to the best schools where you met the Next Generation of Leaders, getting there is a whole lot easier. He claims he got nothing, but that’s just flipping ridiculous. I saw a post showing a copy of a magazine article from like 1967 that listed him among the 25 most eligible bachelors in the nation. Yeah, he had to work really hard. He and GW Bush could call up daddy’s friends and ask for help, for investment money, etc. Real hard. And did you see how Mitt’s original contract at Bain Capital guaranteed him a place in the parent company should the venture fail? A real risk-taker.

Even Adam Smith recognized the collusion of management: “We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject.” Wealth of Nations, Part I, Ch VIII

So, yes, the people in power have a vested interest in maintaining their power. And they have the ability to shape circumstances–to some degree–to help them maintain their power. So, conspiracy? That might be a stretch. A plan, perhaps not fully articulated as such? Absolutely.

August 15, 2012August 15, 2012

Gemma’s Jobs Plan Isn’t Right for Rhode Island

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In a world where self-described “leaders” show their “leadership” largely by describing it in press releases, and politicians routinely praise their own bold choices, it is refreshing to see one who actually lives up to his own billing.

Anthony Gemma, on the other hand, has a jobs plan that is indeed as “innovative, strategic, and transparent” as he says. Unfortunately it’s also silly, misguided, and occasionally bizarre. (And hard to find. Go look on his home page and wait until you see “Enough is enough” and click on that.)

The centerpiece of his plan is to nurture the growth of the “wellness” industry in Rhode Island. This includes businesses who produce dietary supplements and organic foods, as well as “wellness jobs that include personal trainers, aerobics and pilates instructors, managers, researchers, Web site designers, wellness and fitness writers, and dietitians.”

Well all right, then. Maybe it sounds goofy, but could it work?

Sadly, probably not. Here’s a little economics lesson for you. What Rhode Island sorely needs is not goods and services to sell to other Rhode Islanders, but things to sell to the rest of the nation or the rest of the world. Do we currently suffer from a shortage of Pilates instructors? Are there aerobics classes that can’t run because no instructor can be hired? If we had more personal trainers could we sell them to people in Kentucky or India? These are services that are not in short supply, and are really no good for export, either.

Ok, how about the nutritional supplement part of the mix? This would presumably trade on our lack of strength in this sector. So far as I can tell, as far as nutrition companies go, Rhode Island is home only to Edesia Global Nutrition Solutions, an international effort aimed at distributing nutritional supplements to starving kids. Edesia is a very cool organization, and sells teddy bears to support its mission. Though I can imagine it could be the seed for a thriving food industry here, it’s not exactly what Gemma was talking about. (Read about them here.)

So in other words, Gemma is proposing to grow an industry where what we have can’t be exported and what can be exported, we don’t have. Leveraging assets we don’t have seems an interesting approach to economic development. So you have to award points for originality, in exactly the same way you’d praise the architect who envisions a fountain in the desert before anyone has dug the first well. Exactly like that.

Bettering that, Gemma proposes that we encourage the Mayo Clinic or Tufts Medical to open wellness clinics here. This, of course, would be the opposite of exporting goods. Instead of bringing money into the state, we’d be sending it away, to Minnesota or Massachusetts to provide services that we can get in-state. This, again, is why success in business means little or nothing about success in making policy to benefit a whole state.

Too late, too little

There’s a section in this plan talking about how higher education should be demand-driven and responsive to the needs of businesses and students. That’s a great idea. So great, it was pretty much incorporated into the “CCRI 21st Century Workforce Commission” report from a couple of years ago. (Gemma also suggests asking the state’s 7 biggest employers for $250,000 apiece to shore up education at CCRI. Which is a funny thought: we can’t raise taxes on businesses, but we can demand contributions from them?)

Along the same lines, there’s a four item list on page 9, that describes what the state should do to encourage the growth of the wellness industry. What’s funny about the list is that the first three items on it — tax credits, loans, assistance finding federal money — are all things the state already does. So yes, these are good ideas. So good that someone already implemented them.

And then there’s this:

“It is incumbent upon us to eliminate the over-regulation of the small businesses which are the engines that drive the Rhode Island economy. I will create a workgroup to review all federal and state regulations that hinder wellness and health-oriented businesses…” [p.8]

This, presumably, would join the Secretary of State’s workgroup, and the legislative commissions and the Governor’s initiatives of years past. Courtesy of the Secretary of State’s office, this work is under way, and it’s hard to find anyone to disagree with the claim.

Honestly, you don’t have to find disagreement to understand why these things — streamlining, increased efficiencies, and so on — often don’t get done. People who crave simple answers will blame unions and fear of change, but it’s pretty easy to find deeper reasons.

In my experience, you can walk around any town hall or state building and find people who agree that there are efficiencies available, but don’t have the resources to re-tool their department’s operations. “Doing more with less” year after year leaves little room for designing new procedures or implenting new systems. When you walk into a tax assessor’s office and find the assessor trying to finish reports that her staff used to prepare, you’ve found someone who can’t afford to research or entertain new possibilities about the conduct of her department’s business. For better and worse, that’s how we run things these days. Studies and commissions are all well and good, but change requires resources, even when the change makes things more efficient. You’ve got to put something in to get more out.

So that’s what I learned by reading the Gemma Jobs plan: he suggests concentrating on a new industry that has approximately zero potential to bring new money into the state, and offers a bunch of other suggestions that are already in place. What’s more, almost all of his plan consists of state policy suggestions, while the last time I checked, he is running for federal office.

There’s plenty more, but I’ve piled on enough. Ok, sorry, one thing more. I have to share my favorite part. It’s a tax incentive on page 9, for people who get hired in the wellness industry. Seriously. Gemma would offer a tax credit to new employees. Really? Does he imagine that unemployed people need a tax incentive to help them find jobs? That would be the sound of the fountain designer who has finally been persuaded to help dig a well and shows up to work with a butterfly net.

So sure. Gemma is a smart energetic guy who has done good things in the past, and doubtless will again in the future. I just don’t want a congressman with judgment like this. His jobs plan is certainly “innovative, strategic, and transparent” as he says. But is there no place for “practical,” “sensible,” or “realistic?”

August 7, 2012August 7, 2012

Progress Report: ‘Marketplace’ Looks at DLT Cutbacks; WPA Plaques Disappear; Bad News for Citizens Bank; Olympics

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Marketplace, the public radio program that makes economics fun and easy to follow, reached out to RI Future yesterday. They are doing a piece – for tonight’s show, I believe – on layoffs at local unemployment offices and wanted to talk with our contributor, Jonathan Jacobs, who has been filing stories for us on losing his job at DLT. Marketplace is on RIPR tonight at 6:30.

Shermantown Rd farm — A farm on Shermantown Road in North Kingstown. (Photo by Bob Plain)

Staff cuts at the state unemployment office may not matter to most of us, but to many of Rhode Island’s most unlucky residents (the ones who were laid off during the down economy) efficient unemployment insurance payments can make the difference between being foreclosed or not. Here are the stories Jonathan Jacobs has filed for RI Future on the situation.

Also, just in case you missed it, Aaron Regunberg has also been covering the unemployment crisis in Rhode Island. Every week he profiles a local person who is out of work (here’s a list of all his stories on the crisis). The idea is to show that unemployment is more than just a a quarterly percentage sent out by the state to compare our woes with Michigan and Nevada. There are real Rhode Islanders whose lives are being severely scarred by this crisis.

And speaking of unemployment, the Projo reports that WPA plaques are disappearing from sites where the government put people to work building up the commons and our shared infrastructure that we still use to get to the office and other places today … maybe trickle-down Republicans are taking them hoping we won’t remember what got the country out of the last big economic downturn?

Here’s hoping employees of Citizens Bank don’t have to join them on the unemployment line as a result of RBS’ issues. Either way, it’s high time we start talking about relocalizing banks.

All this talk about the economy has taken the focus away from climate change – something humanity can little afford to do, GoLocal’s Rob Horowitz reminds us this morning.

Awesome sentence about the Navy testing unmanned military drones in Narragansett Bay: “The bay known as a playground for the rich is the testing ground for the Naval Undersea Warfare Center in Newport, where the Navy is working toward its goal of achieving a squadron of self-driven, undersea vehicles.”

Speaking of completely unnecessary military endeavors … today in 1964, Congress passed the Gulf of Tonkin Resolution, “giving President Lyndon B. Johnson nearly unlimited powers to oppose “communist aggression” in Southeast Asia.”

I love the irony in Fox News seeming to care more that US Olympic uniforms look American than they do that they actually be American.

July 14, 2012July 14, 2012

Many Unemployed, Fewer DLT Equals Big Problems

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chafee_bryant — Governor Chafee (Photo by Bob Plain)

So Governor Chafee has justified the reduction in key staff of the Unemployment Insurance and Workforce Development sectors of the Department of Labor & Training by saying that our economy is improving sufficiently enough to justify the layoffs.

In a June 7th interview with WPRO, the Governor stated:

“Well, the DLT is the opposite of the economy. When the economy is bad they are hiring to deal with the unemployment insurance issues and as the economy stabilized, unfortunately, it goes the other way. They start to layoff those employees that they had to hire during the glut of unemployment insurance requests.”

Realistically speaking, this means a reduction in service center employees from around 90 to around 35. So Rhode Islands’s economy, by gubernatorial logic, has improved over 65%. When did that happen? Where were we? Didn’t 38 Studios just take a flaming nose dive into bankruptcy, crashing into Narragansett Bay in spectacular fashion? Didn’t Blue Cross just let over 40 employees go? Is there a secret, hidden construction boom going on? Is manufacturing on the rise? Does Mr. Chaffee realize that having the second highest levels of unemployment in the country is not worthy of a silver medal? Or is he simply not satisfied until Rhode Island wins first place at something?

Or is it something else?

Changes in Rhode Island laws are a matter of public record, but not often a matter of public knowledge. As of July 1st 2012, Rhode Island Labor Law 28-44-6 has undergone a fairly drastic change that will significantly reduce the means by which unemployment insurance weekly benefit rates are calculated. Without going into the formulaic details of the change, it is enough to say that it will reduce the weekly benefit rate in almost all cases. Come this time next year, the weekly benefit rate reduces again and as of July 1st, 2014, it reduces once more. In a state where over ten percent of claims include out of state wages (primarily due to the small geographic size of RI and it’s proximity to CT and MA), this reduces the incentive for claimants to choose Rhode Island as the state where they would receive a benefit rate most comparable to the income they were receiving prior to layoff.

Maybe. But not necessarily. Previously, Rhode Island was often the obvious choice when given the option to request the combination of out of state and Rhode Island taxed wages because of the generous means by which our weekly benefit rate was calculated. Now it will be comparable in many cases. But not significantly reduced. The more likely incentive will be for businesses who will be able to lay workers off with less of a payroll tax rating percentage increase. Good for “job creators” when they choose to be “job eliminators.”

Another change in the Labor Laws is the means by which a disqualification can be overcome. Previously, if a claimant was determined to be separated from an employer for disqualifying reasons – getting fired for wilfull misconduct or quitting without good cause – one needed only to return to work after the date of disqualifying separation for eight weeks and earn twenty times Rhode Island’s minimum wage for each of those weeks (8X$148) to overcome the prior disqualification and be allowed to collect on subsequent separation from employment. Now one must return to work for at least eight weeks and earn at least his or her weekly benefit rate for the disqualification to be overcome. This will prevent many from being able to collect after a single disqualification, even after redeeming themselves by returning to work and being separated again through no fault of their own.

Rhode Island has the right to know about changes that will affect the safety net of over eleven percent of it’s people. These same citizens also have the right to know that, while these changes – the reduction of key workforce at the DLT, the reduction of benefits, the increase in difficulty of overcoming disqualification of receipt of said benefits – may benefit the few (the job creators who create no jobs), they disenfranchise the many.

These decisions are not math, they are politics and, in spite of the deliberate confusion on the part of many politicians, there is a difference. The workload at the DLT has not reduced. The wait times for incoming calls to the call center have routineley exceeded one hundred minutes over the past few weeks. The back office functions and specialized are falling far behind and work is piling up. After the two thirds reduction in front-line employees and the eliminations of entire sub-sections of specialization, things will not get more efficient. I will reiterate, this is math. Politics can not change math no matter how hard it tries.

Eleven percent unemployment. Insufficient training for a struggling workforce. Second highest unemployment rate in the country. 65% reduction in front line workforce on the front lines at the Department of Labor & Training. That is the math problem. Solve for X using politics.

April 24, 2012April 24, 2012

Budgeting for Disaster: Taxing History

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Is it really too soon to modify our tax code?

In the discussions of taxes at the State House, one line you hear a lot this year is that our state’s new income tax code is new and we should give it time to see how it works out. That’s what House Speaker Gordon Fox has said, and I’m hearing that it’s the line of the day on Smith Hill, available from any of the House or Senate leadership.

This is, of course, a silly point to make. The tax changes made last year basically just baked in the low taxes on rich people offered by the “flat tax” alternative. It used to be that a rich person could choose whether to pay tax under the tax code everyone else uses or using the flat tax limit, and now the flat tax limit is part of the code everyone else uses. This part may be new, but the overall “strategy” at issue — lower taxes on rich people, expect economy to get better — has been the order of the day in Rhode Island for a long time. To illustrate what’s really been going on in Rhode Island tax policy, I put together the following graph.

The blue line is the effective RI income tax rate on a fairly typical taxpayer in the top 1% over the last 16 years, with the various cuts that taxpayer has received indicated. These cuts don’t count tax credits like the film production or historic structures credits, which are typically only available to high-income individuals and which make the effective rate even lower. The black line indicates the effective tax rate on the median taxpayer (the 50th percentile). You can see a slight decline in the 1997-2002 period, but the other changes didn’t do much of anything for them.

The unemployment rate, of course, has nothing to do with the tax rate, except as a rhetorical club used to beat people about the head and neck. There is no evidence that it has any causal relationship with the state tax rate (in either direction), but the relationship between taxes and “job creators” is commonly invoked to persuade lawmakers to support lower taxes. I’ve included the unemployment rate on the graph as a service, so you can see how little is has to do with the movement of taxes.

One more thing you should know about this graph. There is some evidence available that the 2012 tax changes raised taxes substantially on the middle percentiles of taxpayers. Unfortunately, it’s premature to say more than that, since the data won’t be available until later this year, at the earliest.

The House Finance Committee is holding a hearing on several bills designed to raise taxes on the top 1% Tuesday afternoon at 4:30pm in State House room 35. Rep. Maria Cimini (D-Providence) is the prime sponsor (with 36 co-sponsors) of a bill to raise the taxes on people earning more than $250,000 per year by four percentage points, with that top rate coming down as the unemployment rate also goes down. Think of it as a “pay for performance” clause for rich people. There are also bills by Rep. Larry Valencia (D-Charlestown, Exeter, Richmond) and Scott Guthrie (D-Coventry) that will have more or less the same effect, though the income limits and tax changes are slightly different (neither of those bills have the unemployment clause).

April 17, 2012April 17, 2012

RI Progress Report: Tax Day, Central Falls, Callista Gingrich

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Happy Tax Day, says Ted Nesi. Meanwhile, our own Tom Sgouros uses the occasion to report that the Tax Foundation says Rhode Islanders have the second lowest tax burden in the region.

Speaking of Tax Day, this from Ocean State Action: “Years of misguided tax policy that benefit Rhode Island’s highest income earners have starved our state of revenue, leading to budget deficits, cuts to cities and towns and critical programs like services for the developmentally disabled, higher college tuition rates, and massive hikes to property and car taxes. This six year experiment in trickle-down economics has failed, and it is time to restore fairness to our tax structure by asking everyone to pay their fair share. The Miller Cimini Tax Equity bill will generate $131 million in revenue to invest in education, repairing our roads and bridges and ensuring to services for the most vulnerable Rhode Islanders are restored.”

They are hosting a rally today to “call on the General Assembly to end the Carcieri tax breaks for our top earners and rebuild Rhode Island through investment not cuts” today at Network RI in Pawtucket, 175 Main St., at 4 p.m.

Offshore tax havens used by the uber-affluent and corporations are costing Rhode Island more than $450 million in lost revenue annually. That’s more than we saved on pension reform last year!

Callista Gingrich, Newt’s wife, will be at Caprice in East Greenwich tonight. Her husband, people keep saying, is still running for president.

The Central Falls School District must be breathing a sigh of relief given that it will be the state Dept. of Education rather than receiver Bob Flanders who will be charged with taking over the district. It doesn’t mean there won’t be haircuts, it just means they won’t be as obnoxious.

Five banks control 56 percent of the U.S. economy, reports Bloomberg via PBN. Conversely, two economists are largely responsible for the tax equity craze sweeping the nation.

It’s true! There is one part of the local economy that is doing quite well: exports.

The United States may be a great place to have a job, but it’s a terrible place to be out of work … 30 countries have better unemployment benefits than we do.

This page may be updated throughout the day. Click HERE for an archive of the RI Progress Report.

April 11, 2012April 11, 2012

VP Candidate Talks Politics, Race, Music at RIC Friday

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There is room at every election for new voices – including the ideas of former communists and those of modern-day socialists. That’s my premise and I’m sticking to it. Well actually, I’m doing more than that this Friday at a panel discussion I’m facilitating at RI College called “Race, Politics and Music: A Look at Rhode 2 Africa and Election Year 2012,” which includes Yari Osorio, the Candidate of Party for Socialism and Liberation.

The panel is part of “Diversity is a Way of L.I.F.E,” which is a statewide conference that happens annually at RIC “to bring together educators, students, artists and community-based activists.” My session will run on Friday at 4:00 PM in Alger Hall, and Osorio will speak alongside Jim Vincent, President, NAACP Providence Branch and television host of the Jim Vincent Show; Erik Andrade, a spoken word artist and community/youth activist from New Bedford, MA; Talia Whyte, a Boston-based freelance journalist with over ten years experience reporting on social justice, media and technology; and Marco McWilliams, a RI-based educator, activist, lecturer, and published writer (including here on RIFuture.org) who covers the African Diaspora.

The entire conference kicks off at 11:00 AM, and directly following the conference there will be dinner, a poetry open mic, and performances that are part of Bilingual Poetry Festival I organizing at sites across the state.

Below is more information about the panel; updates will also be posted on www.Rhode2Africa.wordpress.com and on Twitter (follow me @rezaclif). Learn more about the conference here on Facebook or register by clicking here.

***

Rhode 2 Africa: Elect the Arts 2012 (R2A 2012), is a documentary and multimedia project being produced with the primary aim of motivating diverse constituencies to vote in November and engage in political conversations at the local, national, and global level. The project does this through conversations with emerging and established Black musicians, community members and leaders, political experts and scholars, and media professionals – including those involved in or knowledgeable about alternative parties and platforms and underrepresented issues. The exploration of these topics is based on a very simple principle: there is room at every election to hear and examine new voices and ideas, and this year is no different.

Furthermore, as protesters part of Occupy Wall Street, and break-off movements like Women Occupy and Occupy The Hood have demonstrated, citizens across this country have grown tired of never hearing from the variety of voices making up the “99%.” Still, if you pay attention to major news outlets, you would think that the only people engaged and to be targeted for the November elections are the (now) all-white Republican candidates and their party followers. However, one place in which you can hear alternative voices and views on politics is within the music community. Besides being heads of households, tax-payers, insurance-holders, and voters, there are many performers who play at political events, directly and indirectly endorsing candidates; hip hop artists who “rap” about reform and rebellion; and emerging and established artists who’ve performed at The Whitehouse. R2A Elect the Arts is about sharing the voices of Black and multicultural musicians engaged in this type of work and providing election 2012 coverage and awareness through conversations on race, politics and music.R2A 2012 is currently in-production, but on Friday, April 13 at 4:00 PM, R2A Creator/Producer, Reza Clifton facilitates a panel discussion called “Race, Politics and Music: A Look at Rhode 2 Africa and Election Year 2012.” In addition to opening the conversation up to the Diversity is a Way of L.I.F.E. statewide conference at Rhode Island College, Clifton will bring in tech/staff to film the discussion and question and answers for inclusion on the documentary. Attendees who attend and stay for the session are automatically consenting to be recorded and included in the final project.Facilitator:
Reza Clifton, Award-winning writer, multimedia producer and cultural navigator, Creator/Producer of Rhode 2 AfricaConfirmed Panelists:

Yari Osorio, Vice Presidential Candidate of the Party for Socialism and Liberation
Jim Vincent, President, NAACP Providence Branch and television host
Erik Andrade, spoken word artist and community activist from New Bedford, MA
Talia Whyte, Boston-based freelance journalist with over ten years experience reporting on social justice, media and technology
Marco McWilliams, RI-based educator, activist, lecturer, and published writer who covers the African Diaspora

***

MORE BIOS:

Reza Corinne Clifton is an award-winning writer, producer, digital storyteller and cultural navigator whose work blends and examines music, identity and global consciousness. She was acknowledged in 2007 and 2009 with Diversity in the Media awards for multimedia projects that she published or launched on her flagship blog, RezaRitesRi.com – including the first Rhode 2 Africa project, which was a four-part interview series and concert series held in Providence. Clifton has also been recognized for written work and direction as health editor a regional women’s magazine and for leadership as a young professional and community organizer in Providence, RI. In 2011 alone, she was named “Most Musical,” a “Trender,” and “Most Soothing Voice” due to her work sharing music and art in the community and on radio – through WRIU and BSR. She remains an active blogger on VenusSings.com, RI Future.org, Rhode2Africa.wordpress.com and on RightHer (a blog from Women’s Fund of Rhode Island) and she sits on the board of Girls Rock! RI, an organization that uses music to empower girls and women in RI.

Yari Osorio is the 2012 vice-presidential candidate of the Party for Socialism and Liberation; he has been a member of the New York City branch of the PSL since 2006. Born in Cali, Colombia, Osorio immigrated to the United States at age three with his mother and older brother. He is now a U.S. citizen, but grew up undocumented. The harsh anti-immigrant policies in the United States propelled Osorio to become an ardent advocate for social and economic justice, and for equality. Osorio received a BA degree from John Jay CUNY in Forensic Psychology and later became a New York State certified Emergency Medical Technician. He is an active anti-war and social justice organizer in New York City, and is a volunteer organizer in the anti-war ANSWER Coalition (Act Now to Stop War and End Racism).

Jim Vincent is the President of the the NAACP-Providence, a position he was elected to in December 2010. Prior to taking on the role of president, Vincent had spent many years serving the organization as Second Vice President, and serving the community in general through his work doing housing and community development in Rhode Island and Massachusetts. In particular, he has worked since March 1998 as the Manager of Constituent Advocacy for Rhode Island Housing, where he provides outreach and technical assistance to underserved communities among other duties. Vincent has also served on many boards throughout RI that serve the state’s African American, Cape Verdean, and Hispanic communities, and is a former President of the Urban League of Rhode Island. He may be best known for his role as the Producer and Host of the award winning, Jim Vincent Show .

Erik Andrade is a spoken word artist and community activist from New Bedford, MA who is featured in Rhode 2 Africa: Elect the Arts 2012. He works with New Bedford youth through People Acting in Community Endeavor (PACE) YouthBuild New Bedford and as co-facilitator of the organization’s Sustainability, Leadership Development and Social Justice Workshops. Andrade is also a founding member of La Soul Renaissance, a local spoken word and hip hop venue which focuses on social justice issues and spirituality, and of the Overflowing Cup Project – an artist circle that works to encourage, recover and inspire creativity through a collective process. Andrade recently ran for the New Bedford School Committee, hoping to bring the voice of at-risk youth to the committee and to issue a call for systematic reform.

Talia Whyte is a freelance journalist who has reported on issues related to social justice, media and technology for over 10 years. Her work can be found in the Houston Chronicle, The Progressive, theGrio.com, The Boston Globe, MSNBC, PBS, and Al Jazeera, among many other publications and sites. She is also a leader within Global Wire Associates, a new media consulting firm that promotes innovative communication for advancing social justice. Whyte is co-author of “Digital Activism Decoded: The New Mechanics of Change.”

Marco McWilliams is a Pan-Africanist intellectual, published writer, and lecturer whose ideas can currently be read at Voxuion.com and RIfuture.org. McWilliams is also an adult literacy instructor for Amos House and English for Action, two organizations based in Providence, RI. As founder of the Providence Africana Reading Collective, McWilliams is known for his rigorous scholarship on social justice and for creating a “progressive learning community dedicated to the interruption of normative narratives of oppression through a critical examination of the emancipatory thought chronicled in the canons of Africana literature.” He will pursue a Ph.D. beginning in 2013.

March 29, 2012March 29, 2012

Dear RI: Where’s the Work?

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For those who have never had a day of unemployment that they did not choose, there are no words which can describe the state. For those who, like me, have, you know the feelings. You know the self-loathing, the worthlessness, the despondence, the anger. But most of all, the fear. There is a special terror reserved for the jobless, a dark vicious terror that constantly lurks in the back of one’s mind. It is the terror that the bills will catch up with you. The terror that this may not be temporary, that you may never work again. That it will catch you, and in the end, kill you. And you carry that with you for months.

The job hunt is nearly as disheartening. Each letter sent out is a gamble, each interview a risk. Plenty will offer you tips, plenty will suggest you talk to so-and-so, plenty will say “perhaps if you tried here.” And you force yourself to nod, because you think to yourself, “I have done all of that already,” but you do not wish to get into a fight. But no one will treat you with respect; be it the callous souls who tell you, even in the midst of the worst economic catastrophe since the Great Depression, to “get a job,” or the people whom you are applying for a job with. You will be left on the line for weeks, sometimes without ever getting a response telling you someone else has been hired. Alternatively, they will send you some of the cruelest words in the English language, “thank you for your interest…”

I have sympathy for employers; it is not easy to pull the trigger and tell the job-seeker they will not be hired. But I have no sympathy for the politician who sees the suffering of their policies and yet continues with their madness. The politician says that they have imposed their policies so cities and towns “will get their fiscal house in order.” But they have not imposed fiscal order; they have imposed pain and suffering. Tell the victims of these policies that the political leadership has brought fiscal order. Tell the family who has abandoned their home and is living in their car because property taxes went too high, or the landlord forced to raise rents on tenants they know cannot afford it. Tell the vast majority of the people of this state who pay taxes at a rate nearly twice that of those who can most-afford it that we are bringing fiscal order. Our political leadership has a perverse definition of “order”.

Where’s the work that was promised? I was fortunate enough that I could work for free as a volunteer while I searched for a job. Most are not that lucky. They languish, in trouble, waiting for work that will end their weariness and replace it with accomplishment. Through this hell that has been imposed, they march onwards, driven by the idea of hope, our state motto. The motto so sacred to Rhode Islanders that we placed it on our flag so that it might symbolize us. The Statehouse should be the house that hope built. Instead, it is hope’s marble mausoleum.

The party in power names itself “democratic”. Perhaps they need a lesson in democracy. The word means the people rule. The people. Not the Speaker of the House nor the President of the Senate. If the representatives of the people delivers a bill, “democracy” means the leadership must consider it and bring it to vote by those same representatives, not hold it for further study, their epithet for saying they have killed it. This means that if the people cry out for fairness in our taxes, you cannot dismiss this cry as not having a chance. The people get to decide that, too.

But our “leadership” tells us that we must wait, that the tax policies they enacted six years ago during good times have not yet had their full effect. And yet, our unemployment rate has risen back to 11%, while the rest of the nation sees declines. Our “leadership” tells us we must not tax job creators, while the state loses the very jobs we are asking the creators to create. Our “leadership” tells us business favors tax consistency, but only if that consistency is going down. Our “leadership” tells us they want Rhode Island to be a place where anyone can live, but their policies force cities and towns to raise property taxes so high no one can live here.

I say this as a Rhode Islander. I say this as someone who only recently found a job in this state after nearly a year of trying, and I was not confining myself to only the state. I looked beyond our borders reluctantly, because deep in my heart, I know there is truly no other state for me. I am not ashamed or abashed to say I love Rhode Island, in all its oddities. I do not believe any true Rhode Islander can contemplate fleeing this state without any regret or sadness. And yet, that contemplation has been very real to me. And it is real to the thousands of Rhode Islanders who remain without work, many who have been searching longer than I have, many of whom are more deserving then I am.

There are those who will despise me for what I’ve written here. They will attack me, perhaps call me a demagogue. They will find fault with whatever I say, and seek to undermine my reputation. I do not care about my reputation though, I care about Rhode Island. The naysayers will point to our 11% unemployment rate and deride the citizens of this state as stupid for not abandoning it. They will insult the place of my birth, and me, not knowing or comprehending that the reason the unemployed stay is because as much as circumstances prevent them, they also have hope. They believe in this state. The naysayers look at an idea and say “we cannot do this,” and they will find such and such a reason to stop it. But those with hope will look at an idea and say, “how can we make this work” and search for ways until they have exhausted all possibilities.

We want to make our state work. We want to rebuild this state with our own sweat. We are not asking the politicians in the government to break a sweat, we will do that. We will work the hours, we will do the labor. We ask merely that the politicians on Smith Hill have the decency to relieve the pressures that prevent us from doing so, that they reverse their mistaken policies and free the people of this state to work. That they keep those already working employed. That they enforce policies that actually will bring the idle gainful work. That they take no more from those who have already sacrificed too much.

There is a dividing line between people. On one side are those who do not love this state, who cannot imagine a way out of this crisis, who call for it to be abandoned or else denigrate its people and its government. On the other are those who wish to give their lives for this state, who wish to improve it, who see its possibilities even in the midsts of its failures. I ask the leaders of this state to be the leaders that we know they can be, and lead this state to greatness. Where’s the work? It is before us.

March 23, 2012March 26, 2012

Are Tides Turning Toward Tax Equity Legislation?

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URI students lobbied state legislators last night at the State House on the Miller-Cimini tax equity bill that would raise income taxes on Rhode Island’s richest residents. And the bill might just be gaining traction.

I asked Speaker Gordon Fox about its chances for passage after the session.

“I’m not going to say yes no or anything at this point,” he said.

Really? When last I asked the speaker about tax equity legislation earlier this month he gave me a pretty unequivocal no, saying, “At this point I’m closing the door on doing anything with income tax until we have a little more historical evidence about what’s going with the reforms we did a few years ago.”

Does that mean the tides are turning for the bill that would raise the top income tax bracket back up to 9.9 percent? Fox cautioned me not to draw that conclusion. “Don’t read into my remarks,” he said. “At this point, that is my standard.”

He also mentioned the $130 million deficit the state faces this budget season. The bill is estimated to raise an additional $118 million in revenue.

Meanwhile, the state’s unemployment rate is rising again for the first time in eight months. The Miller-Cimini tax equity bill offers an incentive to affluent job creators: for every one percentage point the unemployment rate goes down so would the tax rate for those making more than $250,000 annually until they both fall to 5.9 percent.

And if Fox and the rest of the General Assembly is looking for other new sources of revenue for the state, they may want to reconsider marriage equality. It turns out, according to a new report, that letting gay couples enjoy the same rights as others would mean an additional million dollars in tax revenue.

February 27, 2012February 27, 2012

Proposal to tax the richest Rhode Islanders

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cimini_maria — Rep. Maria Cimini, D-Providence. (photo courtesy of Rhode Island College)

As Rhode Island struggles to pull itself out of the recession many have been asked to sacrifice. Cities and towns have seen drastic cuts in state aid, schools have had their budgets cut, the poor have endured program cuts and public sector employees have had their benefits slashed.

Now it’s time to ask Rhode Island’s wealthiest residents to help out, too.

There are a number of bills before the General Assembly this year that would do this by creating new tax brackets for the state’s wealthiest residents with the most interesting one being a bill sponsored by Maria Cimini, D- Providence.

“We’ve really called on low and middle income Rhode Islanders to feel the pain of this recession,” Cimini said. “I don’t feel that we’ve called on upper income Rhode Islanders to feel that pain or share that sacrifice.”

Her bill, H7729, would increase the amount of income taxes people pay who make more than $250,000 a year from 5.99 percent to 9.99%.

“What this bill does is calls upon people who are better off to chip in during this time of economic crisis,” she said.

A similar bill proposed by Rep. Larry Valencia in the previous legislation was estimated to bring in about $130 million to the state coffers. That’s about a third as much as the landmark pension reform bill passed in the fall saved the state.

The bill would actual restore the tax rate to the exact level that former Governor Donald Carcieri cut it from (at the time, Carcieri said doing so would spur economic development in the state), except instead of being applied to everyone making more than $125,000 – or the richest 20 percent of Rhode Island – it would only apply to those who make more than $250,000 – or the richest 4 percent of the state.

Cimini’s bill also offers an economic incentive for the so-called job creators to actually creating jobs in the state. According to Cimini, the tax rate increase proposed in her bill would drop by one percentage point with every percentage point that the state unemployment rate drops. So if the unemployment rate drops from 10 percent to 9 percent, the tax rate increase would drop from 4 percent to 3 percent. The potential decrease would be capped at the same amount as the proposed increase.

“What this bill does if you do hire people and you do help to lower unemployment in Rhode Island,” she said, “we will recognize those efforts.”

Cimini said there are 37 co-sponsors of the bill – that’s almost half of the 75-member House of Representatives. On the Senate side, Josh Miller, D- Cranston, is expected to introduce similar legislation.

Similarly, Sen. Harold Metts, D-Prov, has introduced a bill that would increase income taxes on people making more than $500,000 by 3 percent. Even Gary Sasse, who helped orchestrate the Carcieri tax cuts, has said that he thinks taxes should be raised on Rhode Island’s wealthiest. But he suggested only raising taxes by less than 1 percent on those who earn more than $400,000 annually, which would only mean an additional $10 million in state revenue.

February 21, 2012February 24, 2012

Chase bank charges fees to use unemployment debit cards

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Trimming the costs of governance isn’t inherently a bad thing, but charging the unemployed fees to access their account information probably isn’t the best way for the state to save money.

However, that’s exactly what happened when Rhode Island outsourced the management of unemployment fund accounts to JP Morgan Chase in 2007.

“JPMorgan Chase agreed to operate the system at no cost to the state – if it could charge fees to those receiving unemployment benefits,” reports David Klepper of the Associated Press.

About 35 percent of the 41,000 Rhode Islanders on unemployment use what’s called an Electronic Payment Card to access their benefits. Ostensibly, these would be the people that are so poor they don’t even have a bank account. But Laura Hart, a spokesperson for the state Department of Labor and Training said others on unemployment “may appreciate the convenience of the EPC format.”

Or they may not, once they consider the fees JP Morgan Chase charges to use the service: a $.50 fee to check your balance; $1.50 to withdraw funds more than once per week; $3 for using a bank out of the system.

“The fees shift the cost from state governments to the consumer,” Lauren Saunders, a lawyer with the National Consumer Law Center, told Klepper.”These are people living on thin margins already.”

While Rhode Island isn’t the only state to outsource these costs – at least 40 other state do, according to the AP – the state senate last week voted to have the governor review the fees Morgan is charging.

The bill, if passed, would require that all fees for using the debit card be stated on the card itself. It was sponsored by Sen. William Walaska and Erin Lynch, both Warwick Democrats.

Currently, according to Hart, cardholders are given “literature” that explains the fees. “Additionally,” she said in an email, “DLT produced an information video about avoiding EPC fees” that is on the DLT website.

She also said that “most” fees associated with the EPC cards can be avoided.

January 22, 2012January 22, 2012

Hard Talk About an Ugly Economy

After several months of more-or-less positive jobs numbers in RI, the last two months have been anything but. And the December numbers were, frankly, horrific. While it is certainly true that a wonk could parse [spin] the recent down-turn toward neutral, the same could be done with the previous up-cycle.

As the wonk that could do either, let me tell you this: the jobs scene in RI is bad. Damn bad. Later, I’ll parse these numbers to show how bad things really are.

Unlike my usual polemics, I’m not going to rant as if there were some obvious course of action on which pols are unwilling to act [even though that’s been true for decades]. At this point, I don’t have a lot of answers, just one brutal, ugly question: where do we go from here?

So, enough with the introductory niceties; let’s have at.

RI’s Jobs Numbers Since the Economic Collapse

Before we can talk about our numbers since the collapse, we need to appreciate that the mid-00’s were the best economic times RI had seen in decades. Of the main jobs indicators, all of them – labor force, employment and unemployment – topped out in 2006/2007. Being the Biggest Little, we need to accept that we largely rise and fall on the national trend. Or at least, we rise on it.

The lead graphic shows how most industrial sectors were basically flat 2001 to 2008 with these notable exceptions: education and health care exploded while manufacturing continued its decades-long collapse. [Source: BLS]

Ed/Health has held its gains since the collapse while professional services and hospitality, which showed solid gains to 2008, have only modest declines since. Construction, not surprisingly, along with government employment, financial services and trades, transportation and utilities (TTU) have sloped off badly.

It’s important to note that I haven’t parsed the contribution of construction in RI relative to other states, but given the collapse of manufacturing, it is at best a secondary impediment.

Long story short: our problems today are the same as our problems 20 years ago – manufacturing is dying, and we have not yet found a way to replace those jobs.

The Recent Horrors

For most of this year, we followed or even amplified the national trend downward until October, when we hit some kind of top and turned counter-trend. In the fourth quarter of 2011, we diverged almost a full percentage point from the national average.

That, my friends, is some ugly shit.

Granted, I could spin these declines toward neutral, but just as easily could I spin the gains toward neutral. The gains were mostly declines in the labor force – that is, people who say they’re looking for jobs – while the declines were gains in the same.

Long story short: we’re not creating jobs, we’re treading water. People dropped out and then dropped in again.

I probably should have mentioned that we need to create 40,000 jobs to get back to “full employment”. 40,000 jobs on a basis of just over 500,000 employed means 1 new job for every 12.5 that currently exist. It’s a giant number.

But wait…it gets worse.

The Current Situation

Look at this jobs board. Plenty jobs listed, for a certain kind of worker. These are all full-time jobs, and they are recent listings. Even ones from months ago may still be unfilled. This state lacks highly educated workers. In fact, we lack moderately educated workers – we import welders. Not Ruby on Rails developers – welders!

That’s the situation. RI’s historic under-investment in education has yielded a work force ill-prepared to face the current economy, much less the emerging one. [See above under collapse of manufacturing sector.]

To be sure, if you drive an automobile on an elevated highway, it’s important that welders that construct the steel-on-steel joints that support the reinforced concrete substrates that hold the gloriously smooth asphalt on which you drive understand the operational parameters of joint strength relative to weld length and depth as that applies to steel grade and thickness.

“Welder” does not equal “ignoramus”. If it did, you’d be dead. [If welder had ever equaled ignoramus, he or she would be dead. Welding is, you know, dangerous. Go pick up a torch some time…]

So we need a range of workers, and we import some of them from India or Slovakia or Colombia. Meanwhile, we export highly educated workers to such remote locations as Massachusetts.

But none of that does Jack Squat for our unemployment numbers. Why? Sadly, that answer is all too simple.

Our Prospects

Long ago on a blog far, far away, I wrote a post called “Our Prospects for Economic Growth”. And that post was just as cheery as this one. The cold, hard fact is that the RI’s unemployed are poorly suited to those scant jobs our economy is creating.

This state’s historic disinvestment in education has created a self-reinforcing feedback loop in which jobs exist for imports, and local don’t get jobs. I call this phenomenon “government at war with its population”. If you don’t have an advanced degree, they want you to go away…to some other place where people like you live. While the cities of Pawtucket and Woonsocket (and the ex-government of Central Falls) exemplify this trend, the RI state government proves it out, as well.

To the long-term denizens of the State House, “welder” – challenging as that job might be – is not good enough for them. They want you to have an advanced degree in micro-biology, computer science or (choir of angels) business management before they’ll say you’re RI material. [Note: Financial Services is among the employment sectors that collapsed, much to Smithfield’s chagrin regarding the enormously expensive and now only partially occupied Fidelity campus.]

Except this: RI has an unemployment rate of 10.8% as of this writing, and those people lack substantial education. What’s to do?

Non-Snarky, Future-Oriented Discussion

This state needs to recognize the fact that we’ve got a serious problem, and it’s not going to fix itself. It requires action – immediate, meaningful action. Here are some things I think we can look to create some jobs at the lower end of the wage/education scale.

Get our heads around the “1099 economy” – Having been self-employed for about a decade, I know that it doesn’t really matter if you have “a job” so long as you have “work”. But the deck is stacked badly against the 1099-ers. From health insurance to FICA, you pay a serious penalty when you try to strike out on your own. The Powers that Be have only recently become aware that there is such a thing as the 1099 economy, so they’re still getting up to speed on what it means and how they can help move it forward. Recent changes to the RI EDC Board of Directors certainly help, but they need to be far more aggressive about making this happen.

Fulfill our “Arts and Entertainment” Promise with a Downcity Casino – Like it or not, Providence is known as a party town, and we should build that out for all it’s worth. Despite all it’s challenges and downsides, I think it’s possible for us to “do a casino right” so that we get maximum benefits. And we should go the whole hog, including the postage. We should take a serious look at developing looser rules around the vice trades in which government oversight and monitoring keeps the criminal element at bay. In simple terms, we take a more Cuban or Dutch approach to the sex trades where pimps are replaced by health services.

Sell “War-on-Joblessness” Bonds that Fund Infrastructure – The same way the US sold War Bonds in the 2oth century, we sell bonds to fund the infrastructure critical to a thriving economy. Because we’re not auctioning bonds on the market but selling them directly, we can set the interest rate where ever we want it. The payoff for investors is more moral than financial. Crazy-talk, I know, but it could happen.

Take Another Look at “Dirty” Industries – The new metals recycling operation on Allens Ave is the kind of “working waterfront” thing we would do well to expand on. Garbage is big business, and it’s the kind of unglamorous industry that nobody goes after. Like the casino, it’s disastrous if done wrong, but brilliant if done right. I’m actually a connoisseur of dumps, so I’ve visited or read about some very advanced operations.

What else? My ideas aren’t the only possibilities. But whatever we talk about doing, it has to focus right down on the kind of jobs we need, not the kind of jobs we want.

October 8, 2011January 3, 2012

Liberals Love Profit Too

Lynn Neary of NPR recently interviewed Bill Frezza, a venture capitalist, about the business community’s responsibility for tackling unemployment. He bluntly said they didn’t have such a responsibility.

Listen to the podcast here: http://gregmatos.com/blog/2011/10/liberals-love-profit-too

September 13, 2011January 2, 2012

Make Serious Investments to Create Good Paying Jobs for Rhode Islanders

Dear Mr. President:
Over recent weeks I have visited Main Street small businesses and toured manufacturing facilities throughout Rhode Island’s First Congressional District. I have met with jewelry makers, boat builders, and creators of cutting edge medical devices and aeronautical components, and heard from restaurant owners, small textile retailers, and information technology start-ups. Across this diverse array of interests I hear one common and constant concern – in order to survive, prosper, and grow, entrepreneurs and seasoned small business owners alike need consumers, and those consumers need jobs.

Since becoming a member of Congress, I have hosted Town Hall and Tele-town Hall Meetings in communities across my District in an effort to hear directly from constituents. With unemployment in my state and across the country at unacceptably high levels, we must heed concerns from Main Street and the families we serve. In light of recent Congressional Budget Office projections that forecast slow economic and job growth, and in advance of your announcement outlining recommendations to spur job creation, I would like to take this opportunity to share the views of constituents in Rhode Island’s First Congressional District and some of my thoughts on this critical matter.

Rhode Island was the first state in the northeast to enter the recession three years ago, and at 10.8%, our unemployment rate continues to be among the nation’s highest. As you have consistently expressed, our government must set priorities, cut what does not work or is not needed, and make the investments that will create jobs, sustain our economy today and into the future, and ensure our ability to compete in the world.

Nationally, the manufacturing sector has been a bright spot even during these trying economic times. If this vital economic engine is to be sustained, we must continue our investments in programs that help manufacturers compete in a global economy, retool to be more efficient and effective businesses, and retrain the workforce so that skill sets utilized in declining sectors can be transferred to those that are expanding. This is the driving force behind my Make It In America Block Grant legislation and a number of common sense, job- creating bills that have been introduced in the 112th Congress to strengthen and modernize our nation’s manufacturing industry. I strongly encourage your Administration to carefully consider these proposals that will help bolster research and development, expand advanced manufacturing capabilities, and level the playing field with our foreign competitors.

If we are going to strengthen our manufacturing capabilities and make new products here at home, then we must have the ability to execute the timely and effective transport of goods, people, and ideas. This work will require significant investments, both public and private, in our nation’s infrastructure. A critically important first step in this effort is the passage of a robust surface transportation reauthorization.

Building and repairing our nation’s highways, roads, and bridges now is not only a surefire job-creating strategy, this important infrastructure work also helps advance the broader economy, enhances the safety of our citizens, and is a far more cost-effective investment today than it will be in the years ahead. Without a doubt, we must work collectively to rein in our nation’s debt. However, numerous studies, such as the Infrastructure Report Card from the American Society of Civil Engineers, clearly demonstrate that we cannot be responsible stewards of our nation’s finances if we continue to allow the price-tag for infrastructure improvements to escalate with each passing year.

This vital work also extends beyond roads and bridges, and includes our nation’s water systems, ports, schools, public parks and facilities, power grids, and telecommunications. The nearly 14 million unemployed Americans, more than 61,000 of which reside in Rhode Island, demand bold action from their government. When our nation endured the economic strains of the Great Depression, it was bold action in the form of the Works Progress Administration, the Civilian Conservation Corps, and the Public Works Administration that helped put Americans back to work, building and repairing our nation’s infrastructure.

While labor and financial market conditions in the 1930s may have been vastly different than today, what remains the same is the underlying notion that a robust investment in rebuilding our nation’s roads, bridges, and schools will generate job growth and enhance our ability to compete in the global economy. Investing today in building and restoring our nation’s infrastructure is not only smart job-creating policy, it is also smart fiscal policy – as continued deferred maintenance drives the future costs of repairs higher and higher. I strongly urge that your recommendations for job creation include a range of options that encourages both public and private investment in this important work – including the creation of an infrastructure bank and enhanced, innovative, and effective funding opportunities for states, cities, and towns that will put people back to work on priority infrastructure projects.

At the same time, we must recognize that a comprehensive proposal to create and sustain jobs in America must include initiatives that support workforce training and small businesses. Job growth today and into the future, especially for our nation’s manufacturing and construction sectors, requires enhanced support for effective on-the-job training programs, and greater collaboration between our elementary and secondary schools, higher education institutions, and employers in developing multiple career pathways for young adults and improving the skills of unemployed and underemployed Americans. Furthermore, as a member of the Committee on Small Business, I strongly encourage your continued efforts to expand small business access to capital, the lifeblood of small start-ups and longstanding businesses alike. The more than 95,000 small businesses in Rhode Island make up 96% of the state’s employers. They have endured the brunt of our nation’s economic downturn, and our country’s full and sustained economic recovery requires that small businesses have access to the resources that will allow them to form, grow, and prosper.

As the debt ceiling debate underscored, there is strong disagreement about the best approaches and the appropriate role for government in creating jobs. There is no shortage of ideas on how to put people back to work and spur economic growth in the near-term. But, the time for bold action is now. On behalf of my constituents in Rhode Island’s First Congressional District, I thank you for this opportunity to give voice to the small businesses, manufacturers, builders, and unemployed as you prepare your proposals. I look forward to hearing your recommendations, and working to find common ground across the aisle and between levels of government to help put Americans back to work.

Sincerely,

David N. Cicilline

Member of Congress

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