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Globalization took hits in 2016; Will 2017 lead to more?

Globalization, the path that the world economy has largely followed for decades, took some hefty blows in 2016.

The election of Donald Trump as U.S. president and Britain’s decision to leave the European Union have raised questions over the future of tariff-free trade and companies’ freedom to move production to lower-cost countries.

Borders are back in vogue. Economic nationalism is paying political dividends.

“We want our country back” was the rallying cry of those backing Brexit, a sound bite that had echoes in Trump’s “Make America great again.”

The rise of Trump and the triumph of Brexit had their roots in the global financial crisis of 2008.

Eight years later, the world economy has still not yet fully gotten past that shock to its confidence — people are nervous, some are angry, and many are seeking novel solutions to their problems. Next year, there’s scope for more uncertainty with elections in France and Germany.

Here’s a look at the year’s top business stories for 2016:

BREXIT SHOCK

In what was a sign of things to come, Britain voted to leave the EU in a referendum in June. The decision came as a surprise — certainly to bookmakers and many pollsters who had consistently given the “remain” side the edge — and means Britain has to redefine itself after 43 years of EU membership. David Cameron resigned as prime minister after the vote and the new Conservative government led by Theresa May is planning to trigger the formal process by which Britain exits the EU early next year. There are many shades of potential Brexit, from an outright divorce that could put up tariffs on goods and services, to a more amicable parting that sees many of the current trading arrangements kept in place. The pound’s fall to a 31-year low below $1.20 at one point is testament to that uncertainty.

 

TRUMP CARD

Pollsters and bookmakers got it wrong again a few months later when Trump defeated Hillary Clinton in the U.S. presidential election. Whether he translates his “America First” platform into action following his inauguration in January will help shape the global economy for the next four years at least. Trump has railed against long-standing trading agreements, including the North American Free Trade Agreement, and vowed to punish China for the way it devalues its currency against the dollar and to tax U.S. firms that move jobs overseas. He has also laid out plans to bring America’s creaking infrastructure up to 21st-century standards, a new spending pitch that has the potential to boost jobs — but which could also lay the seeds of higher inflation.

MARKETS MARCH ON

Trump’s victory did not cause the bottom to fall out of the stock market rally that’s been largely in place since 2009, when the world economy started to first claw out of its deepest recession since World War II.

In fact, both the Dow and the S&P 500 rallied to hit a series of record highs. Stocks have also benefited from a raft of big corporate deals this year — executives are seeing takeovers as a fast way to generate growth in what is otherwise a low-growth global economy disrupted by non-stop technological innovations.

Notable deals in 2016 included the announcement of an $85 billion merger of Time Warner and AT&T and the $57 billion takeover of Monsanto by Germany medicine and farm-chemical maker Bayer. The $100 billion takeover of SABMiller by Budweiser maker Anheuser-Busch InBev was also completed.

FED FINALLY DELIVERS

During his campaign, Trump criticized Federal Reserve Chair Janet Yellen, saying she should be “ashamed” of the way she’s run policy since taking the helm in 2014. A year ago, the Fed appeared set to follow up its first interest rate hike in nearly a decade with three or four more in 2016. But there was no move until Dec. 14, when the U.S. central bank raised its main interest rate to a range between 0.5 percent and 0.75 percent. Many factors explained its hesitation to raise rates, including unease over the global impact of China’s economic slowdown and uncertainty surrounding the U.S. election. But with the U.S. economy continuing to do better than most developed countries — with unemployment below 5 percent and inflation on the way up — the Fed finally delivered another hike. The markets are predicting another three or four increases next year. Those expectations have helped the dollar rally, especially as other major central banks persevere with super-loose monetary policies to breathe life into their economies.

CHINA’S KEY ROLE

As the world’s second-largest economy, China is playing a bigger role in the functioning of the global economy. Nowhere was that more evident than in the early months of 2016, when jitters over the scale of the slowdown in China caused wild swings in financial markets. Stocks took a pounding while commodities tanked, with oil skidding to 13-year lows, as traders factored in lower demand from resource-hungry China. The slump in commodities weighed heavily on economies like Australia that are big exporters of raw materials. China’s economy is ending the year in relatively good health as authorities try to pivot the economy’s focus from manufacturing to more consumer spending. But Trump’s promises to take a tough stance in trade will be of concern to Beijing.

OPEC TAKES A STAND

For the first time since December 2008, at the height of the financial crisis, the Organization of Petroleum Exporting Countries cut its production levels in 2016. November’s cut, soon followed by more cuts by non-OPEC countries like Russia, helped push oil prices sharply higher. At over $50 a barrel, benchmark New York crude is markedly higher than the near 13-year lows around $30 recorded at the start of 2016, when investors focused on high supply and concerns over an economic slowdown. The oil slump helped put several crude-producing countries into severe recessions, including Brazil and Venezuela, and even saw wealthy Saudi Arabia cut back on spending. The question for 2017 is whether OPEC — and non-OPEC — countries can deliver on their production promises. If they do and higher oil prices stick, that will push up inflation in the global economy.

IT JUST GRATES

One of the major reasons why popular sentiment has turned against governments has been a growing distrust of elites. Perhaps nothing illustrated the issue more than the “Panama Papers,” a leaked trove of data on thousands of offshore accounts that helped the wealthy, the powerful and celebrities shelter their cash from the taxman, often without breaking the law. Critics say these tax schemes are the core of a system that gives an unfair advantage to big corporations and the wealthy. Outrage grew in the U.S. when it was revealed that Wells Fargo employees opened up to 2 million bank and credit card accounts fraudulently to meet sales goals. Bank employees also allegedly moved money between those accounts and created fake email addresses to sign customers up for online banking.

It just grates.

AFT: Labor unions and shared prosperity

On the occasion of Labor Day, a message from American Federation of Teachers president Randi Weingarten on the importance of the labor movement to American workers and communities:

Today is Labor Day—and there’s a good reason it’s a national holiday. By organizing together and fighting collectively, workers have been able to better their lives and the lives of their families. So rather than think about Labor Day as the last gasp of summer or bemoan the loss of union clout, let’s redouble our efforts to re-create an enduring middle class.

Income and wealth inequality rivals levels last seen in the Gilded Age. The American dream has slipped away from those who are working hard to make it. And rather than confronting these realities, many — particularly on the right — turned to union bashing and restricting labor rights that rendered people powerless to address inequities. The result: stagnating wages and stifled hopes for men and women who worked hard and played by the rules.

But we continue to fight — to fight for higher wages, fair contracts, professional development, safety measures, and resources for our members and their students, their patients and the others they serve.

America’s educators, healthcare professionals and public service workers know this firsthand. After the Great Recession, some on the right seized the political moment to vilify teachers and assault the labor movement that gives them a voice. In the aftermath, a study by a University of Utah economist showed that, in the four states that successfully weakened teachers’ right to bargain together, public school teachers’ wages fell by nearly one-tenth. That’s a statistic we as educators and public servants simply cannot afford.

Conversely, robust unions help everyone — not just the people who form them—and a growing body of research demonstrates that. There’s a multiplier effect. Through unions, we lift up our communities, strengthen the economy and deepen our democracy. If unions were as strong today as in 1979, according to a timely new study by the Economic Policy Institute, nonunion men with a high school diploma would earn an average of $3,016 more a year. And the Center for American Progress has found that kids who live in communities where unions are strong have a better chance to get ahead.

Workers in unions earn, on average, 27 percent more than their nonunion counterparts. The National Women’s Law Center has found that unions close the pay gap for women, and the Center for Economic and Policy Research has found that black workers see outsized gains from union representation. It’s a powerful reminder of the link between organized labor and economic success.

You see the union advantage in our advocacy as well. When the recession devastated the construction sector and put millions of Americans out of work, the American labor movement came together with the goal of raising $10 billion to repair the nation’s crumbling infrastructure. Five years later, our pension funds have reallocated $16 billion for infrastructure investments, including rehabilitating New York City’s LaGuardia Airport, turning it into a travel hub befitting a great modern city and creating good American jobs in the process.

In hospitals and patient care settings across the country, our members have been leading the fight against workplace violence.

And in the classroom, unions are critical partners in giving kids the chance to succeed. A 2016 study from the National Bureau of Economic Research finds that where teachers unions are strong, districts have a better track record of building the quality of our teaching force — keeping stronger teachers and dismissing those who are not making the grade. Through unions, teachers fight for the tools, time and trust that educators need to tailor instruction to the needs of our children, to help them reach for and achieve their dreams.

Here at the AFT, we take that work seriously—for example, curating Share My Lesson, a free digital collection of lesson plans and resources for educators used by nearly a million people. In fact, Share My Lesson has more than 750 lessons about Labor Day!

Despite years of right-wing attacks on unions, a 2015 survey found that a majority of Americans would join a union if they had the choice. They know what a union offers: a voice in their workplace, the opportunity to negotiate wages and benefits and the ability to retire with dignity and security.

Indeed, despite all the attacks waged against us, the AFT—which celebrated our 100th anniversary at our national convention this summer—has grown over the past several years, with well over 1.6 million K-12 and higher education educators and staff, state and local employees, and nurses and other healthcare professionals as members. And now we are seeing more vulnerable workers — such as adjunct faculty and graduate students, teachers at charter schools and early childhood educators—seeking to join our ranks. In the private sector, tens of thousands of low-income workers have joined the Fight for 15 and the union movement because they know a union will help them get long-denied wage increases.

We have taken on the fight for adjuncts and early childhood educators from Pennsylvania to California — many of whom work multiple jobs just to make ends meet. These are the people who teach our youngest children, and they’re the ones who educate our college students; they deserve to live above the poverty line while doing this critical work.

Graduate students at Cornell University are celebrating the recent National Labor Relations Board decision that reinstates the right of graduate workers at private universities to organize. They are building momentum and talking to hundreds of fellow grad students about the power of collective bargaining, and are excited about the prospect of winning union recognition and joining more than 25,000 AFT graduate employees at public institutions who already enjoy the benefits of a contract.

The aftermath of the Great Depression and World War II led our country to understand we were all in it together. We established the GI Bill and other educational access and equity programs; management and labor respected each other, with unions being the voice of labor; and the middle class thrived.

Now, as income inequality is again at its height, let’s remember on this Labor Day what a strong labor movement has done—and can do again—to help workers, our communities, the economy and our democracy grow and thrive.

WHY IT MATTERS: Income inequality in America

Income inequality has surged near levels last seen before the Great Depression. The average income for the top 1 percent of households climbed 7.7 percent last year to $1.36 million, according to tax data tracked by Emmanuel Saez, an economics professor at the University of California, Berkeley. That privileged sliver of the population saw pay climb at almost twice the rate of income growth for the other 99 percent, whose pay averaged a humble $48,768.

But why care how much the wealthy are making? What counts the most to any family is how much that family is bringing in. And that goes to the heart of the income-inequality debate: Most Americans still have yet to recover from the Great Recession, even though that downturn ended seven years ago. The average income for the 99 percent is still lower than it was back in 1998 after adjusting for inflation.

Meanwhile, incomes for the executives, bankers, hedge fund managers, entertainers and doctors who make up the top 1 percent have steadily improved. These one-percenters account for roughly 22 percent of all personal income, more than double the post-World War II era level of roughly 10 percent. One reason the income disparity is troubling for the nation is that it’s thinning out the ranks of the middle class.

 

WHERE THEY STAND

Hillary Clinton has highlighted inequality in multiple speeches, with her positions evolving somewhat over the past year. Bernie Sanders held her feet to the fire on that subject in the primaries. Clinton hopes to redirect more money to the middle class and impoverished. Clinton would raise taxes on the wealthy, increase the federal minimum wage, boost infrastructure spending, provide universal pre-K and offer the prospect of tuition-free college.

Donald Trump offers a blunter message about a hollowed-out middle class and a system “rigged” against average Americans. Still, he has yet to emphasize income inequality in the campaign. To bring back the factory jobs long associated with the rise of the middle class, Trump has promised new trade deals and infrastructure spending. But Trump has also proposed a tax plan that would allow the wealthiest Americans to keep more of their earnings.

 

WHY IT MATTERS

President Barack Obama has called rising inequality “the defining challenge of our time.” And experts warn that it may be slowing overall economic growth. Greater inequality has created a festering distrust of government and of corporate leaders whose promises of better times ahead never fully materialized.

The result has been a backlash against globalization that many Americans feel tilted the economy against them. For the top 1 percent, the ability to move money overseas and reach markets worldwide concentrated pay for “superstars,” according to economists. At the same time, factory workers now compete with 3 billion people in China, India, Eastern Europe and elsewhere who weren’t working for multinational corporations 20 years ago. Many now make products for Apple, Intel, General Motors and others at low wages. This has depressed middle-class pay. These trends have contributed to a “hollowed out” labor market in the United States, with more jobs at the higher and lower ends of the pay scale and fewer in the middle.

Social factors have amplified the trend as well. Single-parent families are more likely to be poor than other families and less likely to ascend the income ladder. Finally, men and women with college degrees and high pay are more likely to marry each other and amplify income gaps.

 

This story is part of AP’s “Why It Matters” series, which will examine three dozen issues at stake in the presidential election between now and Election Day. You can find them at: http://apnews.com/tag/WhyItMatters.

Evidence grows of poverty’s toll on young brains

Naja Tunney’s home is filled with books. Sometimes she will pull them from a bookshelf to read during meals. At bedtime, Naja, 5, reads to her 2-year-old sister, Hannah.

“We have books anywhere you sit in the living room,” said their mother, Cheryl Tunney, who curls up with her girls on an oversized green chair to read stories.

Naja and Hannah are beneficiaries of Reach Out and Read, an early intervention literacy program that collaborates with medical care providers to provide free books during check-ups.

“I learn things that my brain will always know,” Naja said during an appointment at Group Health Cooperative’s Capitol Clinic in Madison.

Naja’s and Hannah’s brains are in critical phases of development, and they are being stimulated by a home environment that prioritizes education.

But children who do not have this same experience early in life — especially those growing up in poverty — could experience delayed brain development that significantly harms their educational progress, according to recent research by psychology professor Seth Pollak and economist Barbara Wolfe at the University of Wisconsin-Madison.

Their study is part of a growing body of socioeconomic brain research documenting what Joan Luby, a child psychiatry professor at Washington University in St. Louis, calls “poverty’s most insidious damage.” Such research is prompting legislators on both sides of the aisle in Wisconsin to explore what more needs to be done to help children succeed.

Altered brain structure

Along with graduate students Nicole Hair and Jamie Hanson, Pollak and Wolfe found that poverty can cause structural changes in areas of the brain associated with school readiness skills.

These parts of the brain are susceptible to circumstances often present in poor households, including stress, unstable housing, nutritional deficiencies, low academic stimulation, and irregular access to health care.

The study examined brain development of 389 mostly white young people ages 4 to 22. To isolate the effects of poverty from other factors, Pollak included mostly children of educated mothers: 85 percent reported at least some college-level education and 22 percent had some graduate-level education. The fathers had similar educational backgrounds.

Results indicated that as much as 20 percent of the gap in test scores of low-income children is explained by developmental lags in critical areas of the brain responsible for learning.

“This is suggesting that there is something about a child’s early environment that is affecting the way their neural systems are working that undermine their ability to extract information and succeed in school,” said Pollak, who is also the director of UW-Madison’s Child Emotion Lab.

Pollak found that children from families making below 150 percent of the federal poverty level — which for a family of four is $36,450 — experienced diminished brain development and learning. The most serious effects were among children living below the federal poverty level, which is $24,300 for a family of four.

An estimated 28 percent of Wisconsin’s children live below 150 percent of the federal poverty level.

In 2013, in a related study, a team led by Wolfe and Pollak examined how family poverty can affect the rate of brain growth among young children.

They found that infants from lower-income families started life with a similar amount of gray matter to infants whose families were not poor. But by their toddler years, poor children had less total gray matter, they found. The effects of poverty on brain size were strongest among the most impoverished children, with no difference between lower-middle-class and affluent children.

Other research has shown a connection between early childhood trauma and “toxic stress” on the ability of children to learn.

Gaps big in Wisconsin

Wisconsin has the largest disparity in the country between the performance of black and white students and the rate at which they graduate. The state also has the highest suspension rates for black high school students in the nation, the Wisconsin Center for Investigative Journalism’s Children Left Behind series reported in December.

And Wisconsin has the second-largest poverty gap in the United States between blacks and whites, a disparity that has grown faster than the national average, according to a December report from the UW-Madison Applied Population Lab.

Stress adds to school woes

Pollak theorized one reason for the achievement gap could be the “pervading sense of stress” that can accompany poverty.

So-called adverse childhood experiences can rewire a child’s brain in a way that makes it harder to learn, Dr. Bruce Perry told a group of Wisconsin juvenile court and child welfare officials meeting in Wisconsin Dells last fall.

Perry, professor of psychiatry and behavioral sciences at Northwestern University, said if the stress is “moderate” and “controllable,” children can develop mechanisms for responding to future, unexpected stresses. But stress caused by factors such as violence or neglect can create a state of alarm that makes children more reactive, often described as the “fight, flight or freeze” response.

When presented with new material in school, for example, such children may have a hard time activating the thinking part of the brain, he said.

“If you are a child who is dis-regulated … you are so overwhelmed that you shut down your cortex completely and your cortex is unable to actually process information,” Perry said.

“And in order to master the same content, you are required to have 10 times the repetition, which is not going to be provided in the typical classroom environment, and you’re going to fall further behind.”

Investing early brings results

Pollak and Wolfe’s findings suggest that efforts aimed at closing Wisconsin’s long-standing racial and economic achievement gaps should start much earlier than school age and be directed at raising income levels of poor children.

“It’s not like we need to get everybody up to affluence,” Pollak said, “we just need to have kids not living in scarcity.”

University of Chicago economist James Heckman found it is cheaper to pay for high-quality preschool than later interventions such as hiring teachers to create low student-to-teacher ratios, government-funded job training, or rehabilitation programs for ex-convicts.

“Investing in disadvantaged young children is a rare public policy initiative that promotes fairness and social justice and at the same time promotes productivity in the economy and in society at large,” Heckman wrote. He found that every $1 invested returned about $7 to $12 back to society.

That philosophy appears to be gaining traction in Wisconsin. State Sen. Julie Lassa, D-Stevens Point, and Rep. Joan Ballweg, R-Markesan, kicked off the bipartisan Legislative Children’s Caucus in April. Lassa said the goal is to advocate for evidence-based public policies that will benefit the state’s children.

Lassa and Ballweg agree that Pollak’s research provides proof that poverty harms children and alleviating it could provide long-term benefits.

“These children are our future workforce, they’re our future leaders,” Lassa said. “We need to be making sure that they get the best start possible.”

Cap Times reporter Abigail Becker wrote this story while working as an intern at the Wisconsin Center for Investigative Journalism. Wisconsin Public Radio reporter Bridgit Bowden and center managing editor Dee J. Hall contributed to this report. The nonprofit center at www.WisconsinWatch.org collaborates with Wisconsin Public Radio, Wisconsin Public Television, other news media and the UW-Madison School of Journalism and Mass Communication.

Madison mayor pushes for ban on sleeping in the day downtown

Madison Mayor Paul Soglin is renewing a push to ban homeless people from sleeping or lying down on sidewalks downtown during the day.

A growing number of cities are using this strategy to cut down on encampments and messy sleeping quarters irking tourists and business owners.

But homeless advocates criticize such proposals as criminalizing homelessness and say Soglin’s proposal is undermining the community’s good efforts to get homeless individuals into housing.

“It’s all about not wanting to see homeless people downtown,” said Brenda Konkel, an advocate for the homeless and executive director of the Tenant Resource Center. “If he doesn’t want to see homeless people downtown, then he should help us solve the problem.”

Madison is one of the many communities across the country grappling with homelessness as the city grows. It’s making progress on the Housing First model, getting homeless individuals into new permanent, supportive housing, but there is still a long waiting list and homeless individuals still camp out throughout the downtown.

If the ordinance passes, Soglin said he hopes what will change is that “at 9:10 in the morning, people in Madison do not have to feel that they’re walking through someone else’s sloppy bedroom as they traverse city streets.”

Soglin’s proposed ordinance would bar individuals from lying down or sleeping on public sidewalks downtown or city office land from 7 a.m. to 10 p.m. Madison attorney Mike May said the mayor has asked him to reduce the fine from the $100 to $250 originally outlined in the proposed ordinance to about $10, with the goal of having people move on instead of fining them.

Such bans have been proliferating in recent years.

In 2011, 70 cities banned sitting or lying down in public places, according to the National Law Center on Homelessness and Poverty. By 2014, 100 cities had such bans in place.

Soglin’s ordinance is modeled after similar laws in Portland and Honolulu, each with different aims. In Portland, the rules were created to allow sleeping bags on sidewalks and tents or other temporary structures on rights of way so long as they’re gone by 7 a.m. Honolulu’s laws conversely aim to rid sidewalks and parks of the homeless.

Soglin said his aim, however, is to have homeless individuals start picking up after themselves, putting away bedrolls, picking up loose garments and “practicing basic health and sanitation.”

“This is not about sleeping on sidewalks, it’s about picking up after yourself,” Soglin said. “This really says nothing about sleeping on sidewalks.”

Konkel said if the mayor wants people to move their stuff off the street, he should give them lockers to put their belongings.

“I don’t see how that’s going to have any impact on that all,” Konkel said. “That’s the most ridiculous thing I’ve heard. What does lying down have to do with creating a mess?”

The proposal faces long odds in a City Council that rejected a similar proposal from Soglin a year ago that also would have imposed a time-limit on how long people could use public benches.

Zach Wood, an alder on City Council who represents part of the downtown area, said something clearly needs to change, because it’s affecting businesses. But Wood said he has moral issues with banning people from sleeping or lying down outside when they have nowhere else to go.

“I don’t think that’s the kind of city I want Madison to be,” he said.

Ledell Zellers, another downtown alder, said she thinks the proposal could have some merit if done in conjunction with some actual solutions, such as providing storage.

“People vary in their level of comfort with the kind of disarray that they encounter when coming downtown, and so some people, it’s not that big a deal. Other people, they come down and they say I’m not doing this again,” Zellers said. “And in some cases it does impact businesses.”

A letter from Downtown Madison Inc. President Susan Schmitz from May 2016 outlines a series of alternative actions for improving safety and quality of life in downtown Madison, including enforcing existing Madison laws, adding lighting and cameras and working on better outreach.

“I think anyone who walks up and down the streets can tell you we need to find a better way of dealing with it,” Wood said.

 

DIVIDED AMERICA: Rosy economic averages bypass many in US

Dozens of FedEx jets queue up for takeoff at the airport here in Memphis, Tennessee. Beale Street, the heart of the music district, hums with tourists. Yet the empty storefronts in Memphis’ moribund downtown and the cash-advance shops strewn near its highways tell another story.

It’s a tale of two cities, all in one place. And it’s a tale of two Americas: the one that national averages indicate has all but recovered from the Great Recession and the one lost in the statistics.

The pattern is evident in cities and towns across America, from Memphis to Colorado Springs, Colorado, from Wichita to Jacksonville: The national numbers aren’t capturing the experience of many typical people in typical communities.

         This story is part of Divided America, AP’s ongoing exploration of the economic, social and political divisions in American society.

A key reason is that pay and wealth are flowing disproportionately to the rich, skewing the data used to measure economic health — and producing an economy on paper that most Americans don’t recognize in their own lives. That disconnect has fueled much of the frustration and anxiety that have propelled the insurgent presidential campaigns of Donald Trump and Bernie Sanders.

Again and again, primary voters who were most worried about the economy told pollsters that they had cast their ballots for Trump or Sanders, according to Edison Research, which conducted the surveys on behalf of The Associated Press and television networks.

Trump’s candidacy, in particular, has been driven by support in some of the most economically distressed regions in the country, where jobs have been automated, eliminated, or moved to other states and countries. It’s in these places that the outsider message of an unconventional candidate promising a return to the way things used to be resonates most.

Mike Williams earns $22 an hour as a maintenance worker at an Owens-Corning factory, along with health care and retirement benefits. But after a recent raise, his hourly pay has only recently returned to where it was a decade ago, when he worked as a welder.

“I feel like I’m going backward rather than forward,” Williams, 51, said on a recent afternoon after finishing his shift.

In March, Williams voted for Trump in the state’s primary, which the real estate billionaire won easily. One reason he backed Trump, he said, is he feels less secure than in the past, when more manufacturing work was available.

“I remember when you could quit a job today and go to work somewhere else tomorrow,” Williams said.

After seven years of national economic expansion _ to the point where the Federal Reserve is raising interest rates again _ the depth of such insecurity across America has caught many observers off guard.

Said Carl Tannenbaum, chief economist at Northern Trust and former economist at the Federal Reserve: “The averages certainly don’t tell the whole story.”

Consider incomes for the average U.S. household. They ticked up 0.7 percent from 2008 to 2014, after taking inflation into account. But even that scant increase reflected mainly the rise in income for the richest tenth of households, which pulled up the average. For most others, incomes actually decreased _ as much as 6 percent for the bottom 20 percent, at a time when the economy was mostly recovering.

In Memphis, hiring resumed after the recession and the unemployment rate has declined to match the national figure of 5 percent. Yet those figures, too, obscure as much as they reveal: Many of the new jobs, in Memphis and elsewhere, are in lower-paying industries and are more likely to be part time or temporary.

In Millington, a Memphis suburb where Trump held a rally in February at a military airfield, residents complain that most of the available jobs are in the fast-food chains that dot Highway 51, the main thoroughfare.

The U.S. economy has added a healthy average of roughly 200,000 jobs a month since 2011. Yet most have been either high-paying or low-paying positions. By the end of 2015, the nation still had fewer middle-income jobs than it did before the recession, according to the Georgetown University Center on Education and the Workforce.

That reflects what economists call the “hollowing out” of the workforce, as traditional mid-level positions such as office administrators, bookkeepers, and factory assembly-line workers are cut in recessions and never fully recover their previous levels of employment.

In Memphis, jobs in the one-third lowest-paying industries, such as retail, restaurants and hotels, are the only category to have fully recovered from the recession, according to Moody’s Analytics. Higher- and middle-paying jobs still trail their pre-recession levels.

In the first half of the recovery, jobs grew 5.6 percent nationwide. Yet in the wealthiest one-fifth of zip codes, hiring jumped 11.2 percent, according to the Economic Innovation Group think tank. For the rest of the country, total jobs increased just 3.3 percent.

“It’s hard to find an average city,” Tannenbaum says.

The same is true for households. These data suggest that the post-World War II trend of a steadily growing middle class, lifted by broader national prosperity, is reversing.

Slightly fewer than half of adults now fall in the middle-class camp, according to the Pew Research Center, a shift that followed four decades of decline. In 1971, 61 percent of households were middle class, according to Pew, which defines middle class as income between two-thirds and double the median household income.

Chris Rice, 29, has worked steadily in the Memphis region for the past 10 years, all at temporary jobs. Rice most recently worked as a forklift driver for Electrolux and for CEVA Logistics, a warehouse firm. The CEVA job ended after the company lost a contract to distribute Microsoft’s X-Box.

Rice said he was hopeful of getting a new temp job at a plant owned by printer manufacturer Brother International.

Still, “I’d love to have a permanent job,” he said. “I’m tired of going from temp agency to temp agency when there’s no work.”

Economists unite: Tax havens serve no useful economic purpose

We urge you to use this month’s anti-corruption summit in London to make significant moves towards ending the era of tax havens.

The existence of tax havens does not add to overall global wealth or well-being; they serve no useful economic purpose. Whilst these jurisdictions undoubtedly benefit some rich individuals and multinational corporations, this benefit is at the expense of others, and they therefore serve to increase inequality.

As the Panama Papers and other recent exposés have revealed, the secrecy provided by tax havens fuels corruption and undermines countries’ ability to collect their fair share of taxes. While all countries are hit by tax dodging, poor countries are proportionately the biggest losers, missing out on at least $170 billion of taxes annually as a result.

As economists, we have very different views on the desirable levels of taxation, be they direct or indirect, personal or corporate. But we are agreed that territories allowing assets to be hidden in shell companies or which encourage profits to be booked by companies that do no business there, are distorting the working of the global economy. By hiding illicit activities and allowing rich individuals and multinational corporations to operate by different rules, they also threaten the rule of law that is a vital ingredient for economic success.

To lift the veil of secrecy surrounding tax havens we need new global agreements on issues such as public country by country reporting, including for tax havens. Governments must also put their own houses in order by ensuring that all the territories, for which they are responsible, make publicly available information about the real “beneficial” owners of company and trusts. The UK, as host for this summit and as a country that has sovereignty over around a third of the world’s tax havens, is uniquely placed to take a lead.

Taking on the tax havens will not be easy; there are powerful vested interests that benefit from the status quo. But it was Adam Smith who said that the rich “should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.” There is no economic justification for allowing the continuation of tax havens which turn that statement on its head.

CASE STUDY: MALAWI

Tax revenue that should be helping to fund public services like healthcare and education in Malawi and other poor countries is disappearing at an alarming rate. It’s estimated that Africa loses around $14 billion in tax revenues annually – enough money to pay for healthcare for mothers and children that could save four million children’s lives a year and employ enough teachers to get every African child into school.
In Malawi, it’s impossible to get a full picture of the scale of tax dodging. However, Oxfam calculated that the lost tax revenue from the money revealed to be held by Malawians in HSBC accounts in Geneva in last year’s Swissleaks scandal could pay the salaries of 800 nurses for one year.

Half of Malawi’s 16 million people live in poverty. The health system is seriously under-resourced with shortages of staff and vital medicines. On average there are just three nurses for every 10,000 people. Public spending per primary-school child is among the world’s lowest. Recent cuts to government budgets are making the situation even worse for the poorest who have no way to pay for private clinics and schools.

A link to the signatories …

Poverty hits highest level in 30 years

Poverty in Wisconsin hit its highest level in 30 years during the five-year period after the Great Recession.

The determination comes from an analysis by the Applied Population Laboratory at the University of Wisconsin-Madison.

The lab’s data tells Malia Jones, an assistant scientist in social epidemiologist, that poverty has been getting worse in the state.

“Poverty went up significantly, even during a time when the nation’s economy was improving,” she says.

Jones compared U.S. Census Bureau data from 2005-09 to data from 2010-14. The census bureau says a person is living in poverty when the total income of a household is below the poverty threshold, which takes into account the size of the family, the number of children in the family and, in some cases, the age of the head of household.

Jones found the number of Wisconsin residents living in poverty hit 13 percent during the five years ending in 2014 — the highest rate since 1984.

For 2010-14, poverty increased significantly in 31 of 72 Wisconsin counties, including 11 of the 15 most populous counties.

The UW-M estimates show about 738,000 Wisconsin residents were living in poverty in 2010-14, compared with 605,000 in 2005-09.

The research also shows:

• Over 2010-2014, nearly one in five Wisconsin children, were living in poverty. That’s 239,000 children.

For 2005-09, about 14.6 percent of kids in the state were living in poverty.

The finding means an additional 50,000 children in Wisconsin are at risk for food insecurity, housing insecurity, poor educational outcomes and lifetime disease risk due to poverty.

• Although black people are more broadly affected by poverty than any other race/ethnic group in the state, the largest relative increase in poverty occurred among Latinos.

• The lab report shows Wisconsin ranks 49th out of 50 states on the gap between black and white poverty rates. In the state, 39 percent of blacks and 28 percent of Latinos are living in poverty. For whites, the rate is 11 percent.

• Poverty went up among both unemployed and employed adults in Wisconsin.

• Poverty increased among high school graduates with no college education from 8.9 percent to 11 percent; among those with some college from 6.6 percent to 8.9 percent; and among those with a bachelor’s degree or more from 3 percent to 3.6 percent.

National look at poverty

Consistent with the UW-M research, a national report from the Economic Innovation Group shows the gap between the nation’s richest and poorest communities widened in the “recovery years” after the Great Recession. In The Distressed Communities Index, EIC evaluated economic prosperity and distress by ZIP code, legislative districts, municipalities and states.

Some findings:

• 50.4 million Americans live in distressed ZIP codes. In the bottom 20 percent of ZIP codes that are the most distressed, more than half of adults are not working and the median income is two-thirds of the state level.

• The country’s most distressed ZIP codes are stuck in a deep recession. From 2010 to 2013, the average distressed ZIP code lost 6.7 percent of its jobs and saw 8.3 percent of its businesses close. At the same time, the average prosperous ZIP code saw booming job growth of 17.4 percent and business growth of 8.8 percent.

  • DCI Data for U.S. Zip Codes by State

New USDA rules could improve choices for consumers with food stamps

The Agriculture Department unveiled new rules on on Feb. 16 that would require retailers who accept food stamps to stock a wider variety of healthy foods or face the loss of business as consumers shop elsewhere.

The proposed rules are designed to ensure that the more than 46 million Americans who use food stamps have better access to healthy foods although they don’t dictate what people buy or eat. A person using food stamp dollars could still purchase as much junk food as they wanted, but they would at least have more options in the store to buy fruits, vegetables, dairy, meats and bread.

“USDA is committed to expanding access for SNAP participants to the types of foods that are important to a healthy diet,” Kevin Concannon, USDA undersecretary for food, nutrition and consumer services, said in a statement. “This proposed rule ensures that retailers who accept SNAP benefits offer a variety of products to support healthy choices for those participating in the program.”

In 2014, Congress required the Agriculture Department to develop regulations to make sure that stores that accept food stamp dollars, now called the Supplemental Nutrition Assistance Program, or SNAP, stock a wider array of healthy food choices.

Under current rules, SNAP retailers must stock at least three varieties of foods in each of four food groups: fruits and vegetables, dairy, breads and cereals, and meats, poultry and fish. The new rules would require the retailers to stock seven varieties in each food group, and at least three of the food groups would have to include perishable items. In all, the rules would require stores to stock at least 168 items that USDA considers healthy.

The proposal would also require that retailers have enough in stock of each item so that the foods would be continuously available.

The rules could mean that fewer convenience stores qualify to be SNAP retailers. The convenience store industry has argued that it often operates the only stores that serve certain neighborhoods and at certain times, like overnight. Concannon said the department would try to ensure that the rules don’t affect SNAP recipients’ access to food retailers, and the department may consider waiving the proposed requirements in some areas.

The rules come as a key House Republican is pushing for drug tests for food stamp recipients and new cuts to the program.

Alabama Rep. Robert Aderholt, the chairman of the subcommittee that oversees USDA spending, introduced a bill earlier in February that would allow states to require drug testing. The move is designed to help states like Wisconsin, where conservative Republican Gov. Scott Walker has sued the federal government, to permit screening.

USDA has pushed back on such efforts, as it did when Republicans unsuccessfully attempted to cut 5 percent from the program during negotiations over the 2014 farm bill. The push comes as SNAP use has skyrocketed — the program served more than 46 million Americans and cost $74 billion last year. That’s twice the program’s 2008 cost.

“While I have not seen Rep. Aderholt’s proposed legislation, I have serious concerns about an approach that could deprive a family of access to food and basic necessities simply because a member of the family is struggling with addiction,” Vilsack said after Aderholt introduced the bill.

Fast-food workers protest across the state on Democratic debate day in Milwaukee

Fast-food workers across Wisconsin today — Democratic debate day in Milwaukee — are demonstrating, repeating their demand for $15 an hour and union rights.

Later today, Feb. 11, they will join a protest outside the debate forum and candidates on the 2016 political field to stand with the 46 percent of workers in Wisconsin who are paid earn less than $15 an hour.

Many of the protesters are young and will be voting in their first presidential primary this year.

“I never thought my voice could make a difference,” said Kyesha Lee, a McDonald’s worker form Milwaukee who is paid $8.25 an hour and will be voting for the first time in the April presidential preference primary. “The fight for $15 has shown me that’s not true. Across the country, politicians have responded to workers out in the street marching for $15/hour and union rights, and we’re seeing workers win pay raises everywhere from L.A. to New York.”

Demonstrators gathered at about noon at the McDonald’s restaurant at 420 E. Capitol in Milwaukee.

At about 5 p.m. they planned to join a rally at Lake Park and march to the debate forum.

“I am a first-time voter and the honor and responsibility of that isn’t lost on me,” said Cornelius Powell, a home-care worker from Milwaukee who is paid $9.50 an hour. “Home care workers help hold our communities together and care for one another, and now we’re calling on politicians to do the same. Low-wage workers and young people have the most at stake in this election. I know every politician wants a 19-year-old’s vote, but if they want it they’ll have to stand for $15 and union rights!”

The debate is taking place at the Helen Bader Concert Hall in the Helene Zelazo Center for the Performing Arts at the University of Wisconsin-Milwaukee.