Erika Eichelberger

Erika Eichelberger

Reporter

Erika Eichelberger is a reporter in Mother Jones' Washington bureau. She has also written for The NationThe Brooklyn Rail, and TomDispatch. Email her at eeichelberger [at] motherjones [dot] com. 

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Why the Positive August Jobs Report Is Not Actually Positive

| Fri Sep. 6, 2013 12:23 PM EDT

The US economy added 169,000 jobs last month, according to new numbers released Friday by the Labor Department, and the unemployment rate fell a tenth of a percent to 7.3 percent. But don't be fooled. As has been the case in recent months, the unemployment rate fell mostly because more Americans stopped looking for work, and so were not officially counted as unemployed by the government. The jobs situation may actually be even worse than it was earlier this year.

In August, there were 312,000 fewer people in the labor force—defined as people who are either looking for a job or have a job; the size of the labor force is at its lowest level since 1978. And as of last month, 7.9 million Americans who wanted full-time work could find only part-time gigs. When you include these workers and those who have stopped looking for work, you get an underemployment rate of 13.7 percent.

The number of new jobs added to the economy per month has been on a downward trend over the past year. We averaged 148,000 new jobs a month for the last three months, but 160,000 jobs a month for the last six months, and 184,000 a month over the last year, Neil Irwin points out at the Washington Post. In order to make up for the jobs gap created by the recession within the next four years, about 300,000 jobs would need to be created per month, according to the Brookings Institution.

The jobs we are adding to the economy are of pretty poor quality; they are largely low-wage, service sector jobs in the health care, retail and food industries.

The unemployment rate for minorities remains disproportionately high: 13 percent for blacks, and 9.3 percent for Hispanics.

And yet the administration has been pointing to the falling unemployment rate as evidence of a recovery, and the Federal Reserve is expected to soon pull back on its stimulus measures in response to the superficially sunny jobs numbers. As Irwin writes, the administration seems to be ignoring the big picture: "[This job report] has enough signs of weakness embedded in enough places that it has to make economy-watchers—including those at the Federal Reserve who meet in less than two weeks—reassess their confidence that a solid, steady jobs recovery is underway… You don’t have to squint hard to see evidence that the 'nice, steady improvement' theme that has been the conventional wisdom is missing part of the story."

It doesn't look like jobs will come rushing back any time soon. The across-the-board budget cuts known as sequestration that went into effect in March are one reason. As my colleague Kevin Drum pointed out in July, "a rough horseback guess suggests that the total effect of our austerity binge has been a GDP reduction of 2 percent and an employment reduction of nearly 3 million."

And the coming fiscal battle in Congress could make matters worse. Republicans are threatening to refuse to raise the nation's debt ceiling when we reach our borrowing limit in mid-October unless President Barack Obama agrees to more spending reductions. Last month, Treasury Secretary Jack Lew warned against this tactic. "What we need in our economy is some certainty," he said. "We don't need another self-inflicted wound."

Especially because there isn't much justification to continue shrinking spending—the deficit has shrunk by hundreds of billions of dollars in recent years. Via Drum:

 

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Why Are Fast Food Workers Walking Out Again?

| Thu Aug. 29, 2013 6:00 AM EDT

On Thursday, fast food workers around the country will walk off their jobs in what is expected to be the largest strike the $200 billion industry has ever seen.

Workers at McDonald's, Burger King, Wendy's, and KFC will strike in 50 cities—from Boston to Denver to Los Angeles—demanding a wage increase to $15 an hour. They will be joined by retail workers at stores like Macy’s, Victoria’s Secret, and Walgreens, and members of the Congressional Progressive Caucus.

The strikes follow a massive walkout by fast-food workers in July, and are the latest in an escalating series of strikes hitting the industry.

As we noted last month:

Many fast-food workers are paid at, or just above, the minimum wage. The federal minimum wage is $7.25, though it's higher in 18 states and the District of Columbia. Fast-food wages have fallen 36 cents an hour since 2010, even as the industry has raked in record profits.

This is part of an economy-wide problem; the bottom 20 percent of American workers—some 28 million employees—earn less than $9.89 an hour, or $20,570 a year for a full-time employee. Their income fell five percent between 2006 and 2012. Meanwhile, average pay for chief executives at the country's top corporations leaped 16 percent last year, averaging $15.1 million...

The mobilization of fast-food workers is a pretty new thing, because the industry has traditionally had high turnover. But the slow economic recovery, which has been characterized by growth in mostly low-wage service sector jobs, has resulted in a growing population of adult fast-food workers who can't find other work.

Many fast food workers are forced to rely on public assistance just to get by.

Use our calculator to get a better sense of what fast-food workers are up against.

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Your Facebook Friends Could Soon Prevent You From Getting a Loan

| Tue Aug. 27, 2013 3:54 PM EDT

If your Facebook friends don't pay their bills on time, you may soon be less eligible to get a loan.

Some lenders, like Lenddo, a tech startup that offers loans in developing countries, and the German company Kreditech have started using social media data to determine the creditworthiness of potential borrowers instead of traditional measures like credit scores, according to CNN. If Lenddo, for example, finds that you're Facebook friends with someone who was late paying back one of their loans, the company could determine that you're a high credit risk and deny you funds. If you interact with that person a lot, your chances for a loan are even worse.

"It turns out humans are really good at knowing who is trustworthy and reliable in their community," Lendo's CEO Jeff Stewart told CNN. "What's new is that we're now able to measure through massive computing power."

Using social media data to determine creditworthiness is just getting off its feet for now; Lenddo mainly targets middle-class people in smaller markets like the Philippines, Columbia, Poland, and Mexico. But harnessing big data to assess credit risk could go mainstream soon, CNN reports. Kreditech gives out 10 million loans each year, and will soon launch operations in Australia, the Czech Republic, Argentina, and Russia.

Not everyone is enamored with the innovation. Via CNN:

John Ulzheimer, a credit expert at CreditSesame.com, says social data aren't necessarily indicative of whether the borrower will pay back a loan on time. FICO [a credit scoring company that traditional lenders use] only considers a handful of factors, but they are all 'incredibly predictive of risk,' Ulzheimer said.

There's also the potential to game the system. Consumers can easily control how many Facebook friends they have... The same cannot be said for what goes into their credit score.

"To me, using social media is a little bit dangerous," Ulzheimer said.

25 Republicans Who Supported Obamacare Before Obama

| Tue Aug. 27, 2013 6:00 AM EDT

This guy is one of them.

Republicans have pulled out all the stops to kill Obamacare, the president's landmark health care law that requires every American to purchase health insurance by 2014. There have been lawsuits; there have been bills (40 in the House so far); there has been a Supreme Court case—all aimed at rolling back a law that that the GOP says is an assault on individual liberty. Now, with only a few more months to go until the individual mandate—the requirement that we all have coverage—kicks in, Republicans are frantic; some are even threatening to force the United States to default on its debts if Democrats don't agree to delay the law.

This is odd because the individual mandate, the cornerstone of Obamacare, was originally a conservative idea. It was first proposed by the Heritage Foundation in 1989. And scores of Republicans—not just Mitt Romney—have backed the idea in the past couple of decades. Here are some of the GOPers who supported Obamacare before Obama:

1. Rick Santorum? The Allentown Morning Call reported several times in 1994 that Santorum wanted to "require individuals to buy health insurance rather than forcing employers to pay for benefits." Santorum denies allegations that he ever supported an individual mandate.

2. President George H.W. Bush: In 1991, Mark Pauly, an adviser to the first Bush, and now a conservative health economist, came up with a Heritage-style health care proposal for the president as an alternative to the employer-based mandate that Democrats were pushing at the time.

3. Former Vice President Dan Quayle: He was down with the Heritage idea too.

4. Mitt Romney: Romneycare was Romney's signature legislative achievement as governor of Massachusetts, and it served as a model for Obamacare. During the 2012 campaign, the presidential contender had trouble deciding what his position was on Obamacare, and he deflected the blame for having conceived a similar plan; at one debate he noted that "we got the idea of an individual mandate…from [Newt Gingrich]."

5. Newt Gingrich: Though he reversed his position in May 2011, Gingrich had been a big supporter of the individual mandate since his early days in the House. In 1992 and 1993, when Republicans were looking for alternatives to Hillary Clinton's health care plan, many, including then-House minority whip Gingrich, backed the Heritage idea. (Gingrich has said that most conservatives supported an individual mandate for health insurance at the time.)

Twenty of his fellow GOPers cosponsored a 1993 health care bill which included an individual mandate and vouchers for poor people. As health scholar Avik Roy wrote at Forbes in 2012, "Given that there were 43 Republicans in the Senate of the 103rd Congress, these 20 comprised nearly half of the Republican Senate Caucus at that time." Here are those lawmakers:

6. Sen. Bob Dole (R-Kansas)

7. Sen. John Chafee (R-R.I.)

8. Sen. Robert Bennet (R-Utah)

9. Sen. Christopher Bond (R-Mo.)

10. Sen. George Brown (R-Colo.)

11. Sen. John Danforth (R-Mo.)

12. Sen. Pete Domenici (R-N.M.)

13. Sen. David Durenberger (R-Minn.)

14. Sen. Duncan Faircloth (R-N.C.)

15. Sen. William Cohen (R-Maine)

16. Sen. Slade Gorton (R-Wash.)

17. Sen. Chuck Grassley (R-Iowa)

18. Sen. Mark Hatfield (R-Ore.)

19. Sen. Nancy Kassebaum (R-Kansas)

20. Sen. Dick Lugar (R-Ind.)

21. Sen. Alan Simpson (R-Wyo.)

22. Sen. Arlen Specter (R-Pa.)

23. Sen. Ted Stevens (R-Alaska)

24. Sen. John Warner (R-Va.)

25. Sen. Orrin Hatch (R-Utah)

Many of these folks changed their minds after the individual mandate became a Dem idea. Here is Hatch in 2010: "Congress has never crossed the line between regulating what people choose to do and ordering them to do it," he said of Obama's health care law. "The difference between regulating and requiring is liberty."

Financial-Industry Group to SEC: This Letter We Ghostwrote for House Dems Proves We're Right

| Thu Aug. 15, 2013 2:43 PM EDT

On Tuesday, Mother Jones reported that a lobbyist for the Financial Services Institute, an industry trade group whose members stand to benefit from weaker investor protections, secretly wrote a letter signed by 32 progressive House Democrats aimed at scaling back new regulations the Department of Labor (DOL) wants to impose on retirement investment advisers. Now, in an only-in-Washington twist, FSI is citing the letter its lobbyist ghostwrote to bolster its case against these protections, including in a recent missive to the Securities and Exchange Commission (SEC) urging a delay in implementing them.

The June 14 letter, authored by FSI lobbyist Robert Lewis, was signed by lawmakers including Tulsi Gabbard (D-Hawaii) and David Scott (D-Ga.) and argues that the new safeguards the Labor Department is considering, which would force millions of retirement investment advisers to act in the best interest of their customers instead of their own, "could severely limit access to low-cost investment advice" for "the minority communities we represent." FSI then cited its letter opposing the new rule—as if it had no hand in writing it—in a recent letter to the SEC, and on its own blog and website. (Hat tip to Claremont McKenna College political science professor John Pitney, who first noted this on his blog on Wednesday.)

FSI's July 5 letter to the SEC requesting that the rule be delayed and weakened notes that "we share the views of other commenters," including the "thirty-two members of the Congressional Black Caucus, Congressional Hispanic Caucus, and Congressional Asian Pacific American Caucus…who wrote to the DOL encouraging interagency coordination on this issue to avoid uncertainty and disruption in the marketplace." FSI did not disclose the fact that "the views of other commenters" are in fact its views. (FSI did not respond to a request for comment.)

Here, FSI also cites the letter in support of its interests on its blog:

And here, the trade group cites the letter on its website:

The Labor Department rule would force retirement investment advisers to act in the best interest of their customers, instead of putting their own profits first as they legally can now—a move that could crimp industry revenue.

As I reported Tuesday, since the lawmakers who signed the letter represent low- and middle-income districts with large proportions of minority voters, it could help the financial industry make the case that there is broad-based concern about the new rule. FSI is doing all it can to make sure that case gets made far and wide. 

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