TIME Business

The $15 Minimum Wage Is a Bellwether of the New Living Wage

Fast-Food Strikes in 50 U.S. Cities Seeking $15 Per Hour
Robert Wideman, a maintenance mechanic at McDonalds Corp., shines the shoes of a Ronald McDonald statue outside of a restaurant while protesting with fast-food workers and supporters organized by the Service Employees International Union (SEIU) in Los Angeles, California, U.S., on Thursday, Aug. 29, 2013. Bloomberg—Bloomberg via Getty Images

When $13 an hour isn't enough

A little less than two years ago, a group of courageous New York fast food workers went on strike, outlandishly insisting on a $15-an-hour wage and launching an unlikely David-versus-Goliath battle to raise pay for tens of millions of Americans in dead-end jobs.

Goliath is falling.

On Tuesday, word leaked that the mayor of Los Angeles will soon propose raising the city’s minimum wage to more than $13 in the next three years – an increase that would lift pay for hundreds of thousands of struggling Angelenos.

The plan neither meets the now iconic $15 demand of low-wage workers everywhere (though with cost-of-living adjustments built in, it would get there by 2023), nor guarantees the right of workers to freely form a union – a critical step in solidifying wage increases and improving other working conditions.

But pointing out these shortcomings only highlights just how far the nation has come. For who, on that cold November day two years ago, could have envisioned that a proposal to raise the minimum wage in America’s second largest city to more than $13, a nearly 50% increase over three years, would not only be taken seriously but would strike some as being too modest?

Who could have envisioned that under pressure from their left, moderate New York governor Andrew Cuomo would endorse a minimum wage of more than $13 for the nation’s largest city (New York), and Chicago’s dyed-in-the-wool pragmatist mayor Rahm Emanuel would throw his weight behind a $13 wage floor in the nation’s third largest city?

Who could have imagined that in 2014, business leaders in Seattle would actively support and help enact an unprecedented $15 minimum wage law, only to be one-upped by the San Francisco business community, which has agreed to let one of the country’s most liberal electorates vote on an even faster increase to $15 this November?

Who could have foreseen techs and janitors at Baltimore’s Johns Hopkins and teachers’ aides and cafeteria workers at schools in Los Angeles successfully bargaining contracts guaranteeing $15 an hour, or businesses like Michigan’s Moo Cluck Moo deciding to raise employees’ pay to $15 just on principle?

By themselves, any of these victories – along with the passage of more modest but still significant wage increases in cities like San Diego, Berkeley, Santa Fe and Washington and in states including Maryland, Michigan, Minnesota, Hawaii, Vermont, Connecticut and Massachusetts – could be dismissed as an aberration. Together, they represent the start of an inexorable march toward a new social compact, one in which America’s workers are no longer cast aside as dispensable factors of production whose output is to be maximized at the lowest possible cost.

Looking ahead, we can ask: Which state will be the first to set a $15 minimum wage? Which big fast-food company will be the first to guarantee a minimum hourly wage that is double the industry standard? When can we expect to see a living wage become a core labor standard guaranteed to all workers across the country?

For four decades, wages have flat-lined, even as worker productivity has continued to grow. Low-wage jobs now form the core of America’s economy, comprising seven of the ten occupations with the largest projected growth over the next decade. Now middle and working class people in this country are rightfully insisting on a larger share of the nation’s prosperity.

In years past, right-wing politicians and their corporate backers may have been able to subdue this agitation with references to “job creators” and patronizing warnings against “hurting those you want to help.” But Americans – low-wage workers, middle class families and even many business owners – have had enough.

A powerful movement is afoot to create a decent life and a truly sustainable economy for us all. Giants beware.

Arun Ivatury is a campaign strategist with the National Employment Law Project.

TIME Economics

What Everyone Gets Wrong About Argentina

Argentina Seeks to Skirt U.S. Ruling by Paying Bonds Locally
Axel Kicillof, economy minister for Argentina, speaks during a news conference in Buenos Aires, Argentina, on Wednesday, Aug. 20, 2014. Bloomberg—Bloomberg via Getty Images

Grossly oversimplified versions of history are regularly used as econ class morality tales

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I woke up a couple of weeks ago to an Argentina that had, against its will, defaulted on its sovereign debt. For those unversed in international finance terminology, that basically means a country is failing to make payments due to bondholders. These situations are often accompanied by economic chaos, but, fortunately, the day was anti-climactically lacking in catastrophe. The New York Times wondered if we were in denial.

Not a chance. National headlines proclaimed imminent disaster, while the minister of economy’s announcement of failed negotiations received reality-TV-worthy audiences. Every conversation since has hinged on the “default,” and whose fault it is. Government officials have taken flak for parsing definitions of default, but they have a point: more than broke, Argentina is caught in a judicial Catch-22. This isn’t denial, but it is uncharted territory. In Buenos Aires, where I have lived most of my life, some people have taken to calling the unique situation a “Griefault,” in honor of the New York judge, Thomas Griesa, who got us into this mess.

To make a long story short, after Argentina’s history-making default in 2002, the country successfully renegotiated terms with 93 percent of its bondholders, and has been meeting those obligations. But “hold-out” hedge funds in possession of some of the bonds demand full payment and convinced Judge Griesa to force Argentina to pay them in full if anyone was going to be paid at all. That is an untenable solution for Argentina’s government, which points out that the vast majority of bondholders agreed to renegotiate terms on condition that no one else get a better deal – which is what the New York court asked Argentina to provide the hedge fund plaintiffs. In the end, a deal that maximized the interest of almost all parties is how being held hostage by a small number of bondholders. (More detailed explanations of the convoluted story can be found here and here.)

Maybe when you’ve already lived through every sort of default, devaluation, inflation, hyperinflation scenario imaginable (all that and I am still only 31!), you start developing a thicker skin. You follow and opine on arcane financial developments with passion generally only reserved for our national soccer team during World Cup season. Competing inflation indices and their differing methodologies are legitimate dinner conversation fodder here. I can hardly understand my credit card statement, but I have spent the past month in heated debate with friends about obscure debt-restructuring contract clauses governed by New York law.

Our history also leaves us with a healthy fear of economic instability, because it eventually affects every aspect of our life and everybody around us, even if the immediate effects of “default” haven’t yet had an effect on people’s day-to-day lives. Though the jury is still out on exactly how it will affect individuals, the decline in international credibility caused by a default would reduce access to foreign credit for provincial and private enterprise, as well as lessen foreign investment in the country. These could cause a downturn in the general economy. Argentina has mostly been locked out of international capital markets for more than a decade, so what’s really a shame is that all the painstaking economic reconstruction over that period in this country of 40 million people is now in jeopardy.

Beyond its financial travails, Argentina remains stuck in the tiresome role of case study and cautionary tale to the rest of the world. Argentina is the smart teen who went off the track, the high school pothead parents warn you about.

Grossly oversimplified versions of Argentina’s history are regularly used as econ class morality tales: one of the early 20th century’s wealthiest countries that failed to develop, the International Monetary Fund poster child that blew up, the country that in 2002 committed the most spectacular sovereign-debt default in history and, now, the country that somehow was forced into another default by a judicial order.

But these vignettes are more interested in making the point that Argentina detonated its unbelievably bright future through some intrinsic character flaw than including all the relevant details about Argentina’s history. A Roger Cohen op-ed in the New York Times last February is fairly illustrative of the genre: they always start with a lamentation of what we could have been. The author compares our wealth 100 years ago to Sweden, France, and Italy. Then, tragedy strikes. He argues it came in the form of Juan Perón, who shaped “an ethos of singular delusional power.” That’s pretty dismissive of a thrice-elected president whose party continues to win democratic elections and define national politics to this day. Imagine talking about FDR that way.

The clichés about Argentina – surely you’ve seen the musical – make for a good finger-wagging, “Don’t-be-like-Argentina” admonition that might keep impressionable countries in line, even if they say very little about Argentina’s reality. The caricature is predicated on flashes of fact: export riches, a wealthy elite, and massive immigration. Left out are the thornier questions of political culture, adverse international trading patterns, Cold War realpolitik and the like. Researching why Argentina couldn’t be more like Canada is like trying to figure out why a tadpole failed to develop into fish.

Yet, the misguided and dismissive commentary from abroad is mirrored by Argentina’s own domestic obsession with identifying the “wrong turn” in our history – a more nuanced sport than the one played at our expense by outsiders, but equally corrosive.

The never-ending quest for the source of our decline is nothing but a red herring. There’s no moment when our golden future came tumbling down, because the whole story is a fairytale. Alejandro Grimson, an Argentine anthropologist who explores this misguided belief, places the roots of Argentina’s delusion of grandeur and European-ness in the beliefs of Argentina’s 19th century elites who were, indeed, fantastically wealthy, although nobody else was. “As time passed, this idea took root, that Argentines had a magnificent destiny that we had not been able to reach, for some mysterious reason or through the fault of one group or another. Each decade we were further from that illusion,” he writes in his book on Argentine myths. A sense that we were powerless to stop this loss took hold even though Argentinians helped contribute to the decline by supporting a weak democracy, a trigger-happy military, and a polarized, highly politicized society.

And this is our own form of exceptionalism. American exceptionalism is predicated on the idea that Americans are number one; Argentine exceptionalism is predicated on the idea that we should have been number one, but were robbed (or blew it, depending on how you want to play the game).

Buenos Aires boasts impressive French-style façades and a tremendous cosmopolitan culture, making it easy for outsiders to continue being fooled, assuming we’re a nation comparable to Sweden. Argentina’s history and trajectory start to seem less exceptional and aberrational when you compare it to its neighbors: Brazil, Chile and Uruguay, though of course each country’s history has its own unique circumstances.

But no one, certainly not a people known for its quirky attachment to hyperbole, wants to be just another “normal” country. As Grimson argues, if we can’t be the best country in the world, we’re determined to make the case that we’re somehow the worst. And, of course, we’re quick to be offended when outsiders start making the same case and playing our “how-could-this-all-have-gone-so-wrong” game.

I myself refuse to keep playing. No matter what some New York judge says, and no matter what we could have, should have, might have been in the imagination of certain pundits, the Argentina I know is making its own future, with all the contradictions and difficulties endemic to democracy and our history. We’re not the French or the Swedes by a long shot – but that’s a good thing. I think we’re way better.

Jordana Timerman, a Buenos Aires native, is a member of La Fábrica Porteña, a Buenos Aires policy platform. Her work has also appeared in The Atlantic’s City Lab, Foreign Policy, and The Nation. Ms. Timerman’s father, Héctor Timerman, is the foreign minister of Argentina.The views expressed in this piece are purely her own. This piece originally appeared at Zocalo Public Square.

TIME Economics

The Wealthy and Powerful Discover Inequality

President Obama Hosts Summit On Working Families
Goldman Sachs Chairman and CEO Lloyd Blankfein participates in a panel discussion on 'Talent Attraction and Retention' during the White House Summit On Working Families at the Omni Shoreham hotel June 23, 2014 in Washington, DC. Chip Somodevilla—Getty Images

Even the rich are admitting that inequality is bad for business

As the Gilded Age has been peaking, a number of the rich and their foundations have been helping the hungry, the sick, the homeless, the battered, the less educated and veterans in need of opportunity. However, aside from the palliative approach, “the system,” as President Franklin D. Roosevelt liked to call it, until now, has had no serious proactive strategy to address the inequality in incomes and wealth.

The dominant social message has been that for most of the population – the huge middle class – one can work hard and raise oneself up through education, solid contributions, good performance and, ultimately, economic rewards that will be the fruit of these virtues and labor. But there are signs everywhere that this is no longer the case. Wages are flat, returns to education are down, and solid-paying jobs with benefits are the old, not the new, norm. As recent data from the U.S. Department of Commerce shows, employee compensation – wages and benefits – comprise an ever-smaller piece of the economic pie, while wealthy Americans collect significantly more in capital income – interest and dividend payments. As Brookings Institution labor economist Gary Burtless put it, “everything’s coming up roses for people who own a chunk of American capital.” The structure of the economy rewards those who own capital and derive income from that capital. Work hours alone simply do not cut it. Automation and robotization will only accelerate the process.

Who has stepped forward to analyze the problem and start a national conversation about the solution? Many have, but one recent surprising group of trenchant commentators this summer is the wealthy and powerful themselves. In defining the problem of inequality in early June, Goldman Sachs Chairman and CEO Lloyd Blankfein told CBS This Morning that inequality is “destabilizing” and “responsible for the divisions in the country. The divisions could get wider. If you can’t legislate, you can’t deal with problems. If you can’t deal with problems, you can’t drive growth and you can’t drive the success of the country. It’s a very big issue and something that has to be dealt with.” In mid-July, Bill Gross, a billionaire in Southern California and the founder of PIMCO Asset Management, headlined a USA Today op-ed with the claim that “Economic inequality threatens capitalism.” In the piece, Gross goes on to argue that “income equality is good for business” – underscoring this group of observers’ concern that inequality threatens economic growth – and says that solutions to inequality should guide a Republican platform. In the July issue of Politico, billionaire Nick Hanauer wrote a “memo” to his “fellow zillionaires.” As the first nonfamily investor in Amazon.com and founder of an Internet company that sold to Microsoft to for $6.4 billion, Hanauer represents the high technology side of “the system.” His message would be downright scary if it were not written by a billionaire himself. In his piece, “The Pitchforks Are Coming…For Us Plutocrats,” he wrote, “Our country is rapidly becoming less a capitalist society and a more feudal society…. No society can sustain this kind of rising inequality.” In mid-July, Walmart President and CEO Bill Simon commented to Reuters and CNBC that its lowered sales were because the “middle and down are still pretty challenged.” Even philanthropy magazines are filled with worry about the inequality conundrum. Alms for the poor and vulnerable just won’t cut it anymore.

This group has not been shy about discussing possible solutions. Bill Gross called attention to Henry Ford’s “broad-based” solution to expand incomes early in the last century – which echo the generous cash profit-sharing checks on top of wages, which every Ford worker still enjoys today – and suggested large increases in the minimum wage. While not offering specifics, Hanauer suggests our policies must “change dramatically,” and he admits the performance/reward gap of the new economy by saying that “I’m not the smartest guy you’ve ever met, or the hardest-working.” Blankfein’s solution is to “grow the pie” and “distribute it in a proper way.” He lays out this criterion for a solution: “If you grow the pie and too few people enjoy the benefits of it and the fruit, then you have an unstable society.”

The insights from the top do not let up, and their analyses are wide-ranging and sharp. However, “the system” has not been systematic about exploring solutions. If one trolls the websites of the foundations of the rich and powerful, there is a decided lack of willingness to look at systematic economic solutions. Occasional ideas should not be mistaken for careful and deliberate problem-solving on this complex problem.

We will never solve the problem of inequality unless we develop mechanisms for the middle class to share in the ownership and profits – the capital – of the economy. The reason is that the private ownership of capital assets, such as businesses, stocks and bonds, are highly concentrated. Moreover, in 2011 almost 90% of all capital gains and all capital income, such as dividends and interest, went to the top 20% of the population.

One possible avenue is to apply to the middle class at large the approaches that the rich and powerful apply to themselves. Most of their income is from having a share of ownership and profits in businesses. In order to give middle class workers access to these types of capital income, we must dramatically expand the tax incentives for businesses of every size to offer shares of ownership to all of their employees. This ownership can come in the form of grants of restricted stock, stock options, ESOPS (Employee Stock Ownership Plans) and profit sharing, a la Henry Ford. There is a long history of citizen shares in American workplaces since the late 1700s, with many worthy examples among the Fortune 500, high tech firms and the thousands of privately held corporations offering generous ESOPs.

Shares of profits and equity at the workplace will help, but will not be sufficient because much of the population works in the public sector – in the military, government or non-profits. Big ideas are necessary. For soldiers and teachers and others, we need to explore how to apply the lessons of the Alaska Permanent Fund Corporation to the rest of America. The Corporation receives oil and mineral rental, royalty and revenue-sharing payments from corporations allowed to use Alaska’s resources. This capital is invested in a diversified portfolio so that every Alaskan citizen can receive an annual dividend check.

To replicate this arrangement here, assets and leases of the Federal government and states should be made available to private corporations – similar to the Alaskan initiative – in order to pay citizen dividends nationwide. The wind and solar energy fields popping up around the nation should be largely owned by these corporations, as should the wireless spectrum controlled by the Federal Communications Commission and other future technologies receiving tax subsidies funded by citizens at large. States and cities should stop the corporate welfare of huge tax abatements and receive ownership shares to be deposited in citizen share corporations. For example, the DeBlasio Administration should do a top to bottom review of New York City’s tax abatements and monetize them as equity shares for the middle class. These corporations can be licensed by the Treasury and borrow funds to invest in the new technologies and robots of the future. As a sign of hope for the younger generation, we should revisit the idea of Baby Bonds, where an account is set up for each newborn using the same low interest loans that the Treasury and the Federal Reserve recently used to bail out Wall Street and revive its capital ownership. These Baby Bond funds would also be privately managed to be invested in assets that pay regular capital income. Relatives and the rich could make deposits to the accounts, the children could learn how to track them in elementary school, and the dividend income could supplement wages in adult life.

If citizens do not privately own more of the economy, the flat wages of the middle class will never dig us out of inequality. It is time for the rich and powerful to encourage both political parties to set up a national bipartisan commission to explore these and other useful ideas. Charity and philanthropy will never be enough.

Joseph Blasi’s latest book, The Citizen’s Share: Reducing Inequality in the Twenty First Century (written with Richard B. Freeman and Douglas L. Kruse) tells the story of the American history of the shares in business and the economy. Blasi is the J. Robert Beyster Distinguished Professor at Rutgers University.

TIME Culture

No Thanks: 8 Products Women Have Stopped Buying

Less Diet Coke, more scarves

With the financial collapse of 2008 behind us, and an economic recovery underway, buying trends for women have had their own kind of renaissance. Over the past five years, key fads have gone by the wayside (so long, diet foods) while other purchasing trends have taken center stage (hello, student loans!) “All put together, it looks like there’s a bit more empowerment and independence for women,” says Anita Gandhi, Vice President of Strategic Services at Experian Marketing Services, which provided the data.

Turns out, women are now spending more money on experiential events like going out to concerts or watching live performances, which Gandhi attributes to the increase in financial security. “In 2009, people didn’t have a lot of discretionary spending,” she says, “and if they did they were more concerned about [whether] they were spending their money on frivolous things.”

So what day-to-day products are women ditching? Here’s the breakdown:

1) Pantyhose of any kind

Sorry, Kate Middleton, not everyone is on board with your nude pantyhose trend. In the last five years, control-top pantyhose purchases have plummeted by 47%, regular pantyhose purchases have dropped 40%, and knee-high buying is down 59%. Women seem to be ditching hose in favor of tights– those are up 18% since 2009. Because newsflash: black tights look great with anything.

2) Diet foods

We’ve seen some serious pushback against chemical-laden “diet foods” in the last five years: sales of sugar-free foods are down 15%, fat-free foods have dipped 17% (low-fat is down 13%,) and low-cholesterol foods are down 22%. But that doesn’t mean women are any less health-conscious than before. Instead, the definition of “healthy” has evolved, says Gandhi. Now women are gravitating toward natural and organic foods, which have seen a 10% uptick in sales.

3) Diet cola

Remember when women downed diet sodas like water? Not anymore. Diet cola sales have plummeted 21% since 2009, and non-cola diet soda sales have dropped even more, by 26%. We hate to break it to you, Taylor Swift, but those numbers include Diet Coke. “People saw diet soda as a healthy alternative,” says Gandhi. “You could drink soda [thinking] it doesn’t have the calories and sugar.” Yet in the past five years, we’ve seen an influx of information touting the “negative impacts of even diet soda, the chemicals in it,” says Gandhi. And then there’s the bad press brought about by anti-soda campaigns like the one Mayor Michael Bloomberg backed in New York City, which certainly didn’t help soda sales.

4) Cigarettes and anti-smoking products

Both cigarettes and products that help people quit smoking (like patches or gum) have seen sales dip in the last five years: Cigarettes are down 13%, and anti-smoking products have sunk by 18%. Since fewer women smoke than men (only about 16% of American women smoke, compared to more than 20% of men) and since smoking overall has been on the decline since 2005, this shouldn’t come as a huge surprise.

5) Hair products

Apparently the natural look is in, because women are buying less styling cream and fewer home perms and relaxers than they did in 2009. Both styling purchases have gone down by 14% in the last five years. Perhaps this is the resurgence of the boho-chic? Cue the flowing braids.

6) Business casual: blazers, skirts, slacks

Are offices getting more casual in the age of the hoodie-tech-genius? Maybe so, since purchases of business casual attire have dropped in the last five years. Women are buying fewer blazers and suit jackets (sales have plummeted by 32%,) skirts (down 18%) and business slacks (down 24%, but that doesn’t include jeans, which, we hate to inform you, aren’t business casual.)

On the other hand, dresses, scarves, and boots are on the upswing. Dress purchases are up 15%, boots are up 44%, and scarves are up 68% compared to five years ago. Moral of the story: scarves are back!

7) Non-scarf accessories: gloves, purses, watches, sunglasses

Women also seem to be spending less on accessories that aren’t scarves. Glove purchases are down by 25%, watches are down 15%, and fashionable sunglasses (not Rx) are down 26%. Even purses saw a 14% drop. Did we mention that scarves are back?

8) Books:

Despite the runaway success of The Fault in Our Stars, book purchases are still down among women. Paperback, hardcover, and audiobook sales dropped 13% in the last five years.

 

So what are women doing with all the money they’re saving on Diet Coke, pantyhose, cigarettes and suit jackets? Having a blast, apparently. Here are the products that female purchasers have gravitated to in the last five years:

1) Healthy moderation

Along with the 10% rise in natural and organic food purchases, women spent more money on gym memberships (up 26%) but also bought more chocolate (up 8%.)

2) Fun stuff

Concerts and music festival ticket purchases saw an 11% rise since 2009, while live dance performances had a 9% spike and comedy club tickets went up 8%. In other words, women just want to have some fun.

3) Big financial decisions

The majority of home equity loans, new car loans, and U.S. savings bonds are now owned by women (51%, 52% and 54%, respectively) and 59% of personal loans for education are made to women. Meanwhile, only 48% of women say they’re the sole decision-maker when it comes to buying food products, and only 49% say they decide which household goods to buy, down from 51% and 52% in 2009. The result: women are making more of the big financial decisions, but fewer small, household ones.

So if you’re planning on putting on your dress, tights, boots and scarf, munching some chocolate, checking on your home equity loan and heading to a music festival, you’re right on trend.

 

TIME Money

Bank of America Reported Close To Record DOJ Settlement

Paying up for their role in the housing crisis

+ READ ARTICLE

Bank of America may pay $16 billion to $17 billion to the Department of Justice as a settlement for their role in the housing crisis, according to media reports.

That would be the highest payment to the DOJ for mortgage securities fraud to date, exceeding the $13 billion settlement that J.P. Morgan Chase negotiated in November.

Bank of America issued the most mortgage securities of any large bank on Wall Street in the years leading up to the financial crisis. According to the Wall Street Journal, of the $965 billion in mortgage securities that the bank issued between 2004 and 2008, $245 billion in securities have defaulted or become delinquent.

 

MONEY Sports

How the Economics of Playing Football and Basketball Compare

That loud roar you heard this week was NFL training camp getting under way. With less than six weeks until the Green Bay Packers head to Seattle for a game against the Super Bowl Champion Seahawks, fans across the country are following every move of their favorite players and planning for their fantasy football draft.

We decided to take a look at some of the important markers in the life-cycle of a professional athlete. From sporting gear to concussion rates, the gallery below provides a snapshot of what parents have to pay to get their kids on the field—and how long players stay in the big leagues once they actually get there.

To put the numbers in a little bit of context we compared football’s costs to basketball’s.

TIME Education

Obama to Sign Bill Improving Worker Training

Barack Obama, Joe Biden
Vice President Joe Biden greets President Barack Obama as he arrives to speak at Community College of Allegheny County West Hills Center, Wednesday, April 16, 2014, in Oakdale, Pa., about the importance of jobs-driven skills training. Carolyn Kaster—AP

On Tuesday, President Obama and Vice President Biden will announce new executive actions on job training at the signing of the Workforce Innovation and Opportunity Act

Congress and the President have finally found some common ground: Obama will sign the first significant legislative job training reform effort in nearly a decade on Tuesday.

The Workforce Innovation and Opportunity Act passed by Congress on July 9 will streamline the federal workforce training system, trimming 15 programs that don’t work, giving schools the opportunity to cater their services to the needs of their region, and empowering businesses to identify what skills workers need for success and help workers acquire them.

The bipartisan, bicameral bill is a response to a projection that by 2022, 11 million workers will lack the education necessary to succeed in a 21st century workplace including bachelor’s degrees, associate’s degrees, and vocational certificates.

“Workforce training is critically important to help grow the American economy still recovering from recession and bridge the widening skills gap separating thousands of unemployed workers from promising careers in 21st century workplaces,” said Senator Johnny Isakson (R-Ga.) when the bill passed.

The Obama Administration apparently agrees. On Tuesday, when Obama signs the bill into law, he and Vice President Joe Biden will also announce new federal and private sector actions to address the need for an improved job training system, which currently serves about 21 million Americans including veterans, Americans with disabilities, the unemployed, and those who lack skills to climb the career ladder. The Obama administration’s new actions also complement the new Workforce Innovation and Opportunity Act by improving federal training programs not included in the bill.

Earlier in 2014, President Obama tasked Biden with reviewing the federal training system to find ways to improve it. As a result of that review, Biden will issue a report Tuesday that outlines “job-driven” strategies that the Administration says will make the federal training system “more effective, more responsive to employers, and more accountable for results” in Tuesday’s report.

Chief among these strategies is a new “job-driven checklist,” a tool that measures how effective programs are in preparing students for careers that will be incorporated into applications for all 25 federal training grants, at a total of about $1.4 billion, starting Oct. 1. The checklist requires programs to engage with local employers in designing programs that cater to their needs, ramp up opportunities for internships and apprenticeships, and keep better data on employment and earning outcomes.

“From now on, federal agencies will use specific, job-driven criteria to ensure that the $17 billion in federal training funds are used more effectively,” a senior White House official said on a Monday evening press call.

The Obama administration will also expand opportunities for apprenticeships, considered a “proven path to employment and the middle class,” according to a White House statement. After completing these programs, 87% of apprentices gain employment at an average starting salary of $50,000.

In addition to using competitions and grants to bolster job training in the U.S., the administration will also use technology. On Tuesday, Obama and Biden will announce $25 million award from the Department of Labor to develop a web-based “skills academy” for adult learners. And the Department of Education will experiment with education models that award skills based on a person’s tangible skills rather than their performance in a classroom setting.

“Too often job training programs are focused on providing the skills needed for yesterday’s jobs, not the jobs of today and tomorrow,” an administration official said Monday. “And teaching methods are often rooted in outdated, class-based models that haven’t kept pace with technology and new training techniques.”

TIME China

The U.S. Has Good Reason to Be Fed Up With China’s Economic Policy

U.S. Treasury Secretary Jacob Lew listens during a panel discussion at the North American Energy Summit in the Manhattan borough of New York
U.S. Treasury Secretary Jacob Lew listens during a panel discussion at the North American Energy Summit in the Manhattan borough of New York, June 10, 2014. Adam Hunger—Reuters

Talks in Beijing between American and Chinese officials made little progress on key economic issues

No one expected big breakthroughs from the latest round of the annual U.S.-China Strategic and Economic Dialogue, held this week in Beijing. But the results didn’t even meet those lowly expectations. After two days of talks with Chinese officials, U.S. Treasury Secretary Jacob Lew left empty-handed. A much-coveted but long-discussed treaty to boost investment between the two countries only inched forward. Nor did China offer firm commitments to further liberalize its currency — an issue of great importance to Washington. That apparently left Lew searching for something positive to say to his Chinese hosts. “The commitments China has made here in Beijing over the past two days reflect the economic reform goals set forth” previously, Lew said on Thursday, “and we look forward to future progress.”

Washington has been waiting for progress for quite a while. U.S. officials have been repeatedly pressing Beijing to open markets wider to American companies, improve the protection of intellectual property, and make the economy more transparent and market-oriented. But in return, Washington just gets vague pledges and expressions of caution. Meanwhile, the two continue to bicker over trade practices — most notably these days, Washington’s punitive tariffs on Chinese solar panels. The stalemate in economic ties between the U.S. and China is symbolic of the greater strain between the two nations. China has responded angrily to U.S. charges that its military cyberspies on American companies, while officials from both sides have exchanged hostile barbs over China’s territorial disputes with Japan and other neighbors. Relations between the U.S. and China are arguably at their lowest point in years.

That’s bad news. What happens between the world’s two largest economies has ripple effects around the world. Each country, furthermore, needs the other for its own economic growth. U.S. companies require access to Chinese consumers to keep their profits growing, while China badly needs advanced U.S. technology to upgrade its industry. Still, the two sides often look upon each other warily. As China’s clout increases, the U.S. is frustrated that Beijing is not making the Chinese economy more open or playing by the perceived rules of international commerce. Beijing’s policymakers get upset when Washington badgers them on reforms they consider none of America’s business.

But the U.S. has good reason to be annoyed. Many of the issues that matter to Washington have been dragging on interminably with no resolution in sight. Take, for instance, the sticky issue of China’s currency, the yuan. Washington has complained for many years that Beijing manipulates the value of the yuan to promote its own exports, and during this week’s meetings, Lew again pressed his Chinese counterparts to make the process by which it is valued more market-driven. Though I have written on many occasions that the U.S. has exaggerated the impact the yuan’s value has had on the country’s trade deficit with China, Lew has a right to be fed up with the slow pace of change. The Chinese have been blabbering about allowing market forces to determine the yuan’s exchange rate for ages, and the reform is considered an integral part of China’s greater goal of liberalizing capital flows in and out of the country. But the government still wields tremendous influence over the direction of the yuan — a degree of control is has been reluctant to relinquish, promises aside. In this week’s meetings, China offered only more excuses. “If we move too fast, we will be tripped by the demons of details,” Chinese Vice Premier Wang Yang cryptically responded to Lew. Instead, Wang said Beijing was looking for “balance.”

“Balance,” however, has become Beijing-speak for “do nothing.” Currency reform is only one of many changes Chinese policymakers have promised, but never seem to implement. President Xi Jinping and his team have pledged to liberalize markets, fix the financial sector and allow private businessmen a bigger role in the economy. Economists swooned over a bold policy document released in November that committed the leadership to a sweeping reformation of China’s economic system. No one should expect such major changes to happen overnight, of course. But the fact is we’re still waiting for the process to really get started. Meanwhile, the Chinese economy is facing a host of unresolved problems that threaten its future. Growth has slowed, debt has mounted to dizzying levels, the financial sector is fundamentally flawed, and a property bubble appears to be bursting.

What Lew wants to see from China is a true effort to overhaul an economic model that is badly broken. That would be good for China, the U.S., and everybody else.

TIME India

India’s Modi (Barely) Passes His First Big Test on Economic Reform

Indian PM Modi walks in front of a picture of former Indian PM Vajpayee after a news conference in New Delhi
Indian Prime Minister Narendra Modi walks in front of a picture of former Indian Prime Minister Atal Bihari Vajpayee after a news conference in New Delhi on July 9, 2014. Anindito Mukherjee—Reuters

The new Prime Minister indicated change will come in steps, not all at once

Narendra Modi and his Bharatiya Janata Party (BJP) rode into office in May on a tidal wave of support created by hopes he would revive India’s stumbling economy. India, once one of the world’s best-performing emerging economies, has witnessed growth shrink under 5% — too low to rescue the hundreds of millions of countrymen still trapped in desperate poverty. Business leaders have had high expectations that Modi would push ahead with the long-stalled but painful reforms necessary to restart the country’s economic miracle.

In his first major policy pronouncement, however, Modi indicated change would come — but slowly. On Thursday, Modi’s Finance Minister, Arun Jaitley, presented the new government’s budget in Parliament in New Delhi. Indian budgets are considered a bellwether for the direction of economic policy. What emerged was a very gradualist approach, with some encouraging tidbits, but no signs Modi is in a big rush to remake the Indian economy. In his speech, Jaitley said the budget was “only the beginning of a journey” to bring growth back up to 7% to 8% over the next three to four years. “It would not be wise to expect everything that can be done or must be done to be in the first budget,” he said.

Investors got some items on their wish list. The government pledged to open the defense and insurance industries wider to foreign investors, bring down the budget deficit more rapidly, press ahead with much needed tax reform, improve the country’s inadequate infrastructure and support manufacturing to create more jobs. Jaitley also promised an overhaul of costly food and fuel subsidies, which are a huge burden on the strained budget, to make them “more targeted” on the most needy.

Yet for a government that has pledged to control spending and unleash the country’s growth potential, the budget was still puffed up with plenty of populist pork. The budget reiterated Modi’s campaign pledge to provide toilets for all. Jaitley also decided to maintain the previous administration’s expensive and controversial program to guarantee jobs for rural workers, though he suggested its oversight would be strengthened to ensure funds got utilized more wisely. On other issues, Jaitley seemed to fudge a bit. Widely criticized efforts by the previous government to impose retrospective taxes scared foreign investors, and though Jaitley said the Modi administration would limit any such taxes and “provide a stable and predictable taxation regime that would be investor-friendly,” he didn’t emphatically close the door on them, either.

The most disappointing aspect of the Modi budget is that it was no bold statement that a new era of economic policy was coming. Details on many of Jaitley’s proposals were sparse. For example, he did offer many specifics on such key issues as reducing subsidies. Other important reforms weren’t addressed, such as loosening up the country’s restrictive labor laws, which hurt job creation. “Nothing that was announced today marks this government out as being significantly different from the last,” complained Mark Williams, chief Asia economist at research firm Capital Economics. “If market enthusiasm for Mr. Modi’s government is to be sustained, that will have to change.”

Ultimately, though, Modi’s incremental methods may be simply good politics. Even though Modi scored a landslide victory in the last election, many of the reforms most critical to the economy are certain to face stiff opposition. If he charges ahead too quickly, his entire reform effort could get derailed. Modi has already been forced to reverse course on one of his initial reforms. In late June, Modi partially rolled back a hike in train fares aimed at putting the strapped railway system on a stronger financial footing after protests erupted and the BJP’s political allies objected.

At the same time, Modi has to play a delicate political game. If he moves too slowly on reform, growth won’t improve, and his support could suffer. Fixing India’s economy will take a huge amount of political will. We’re still waiting to see if Modi has it.

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