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Bernie Sanders would’ve beaten Donald Trump

Hillary Clinton was expected, by all realistic analysis, to win the 2016 Presidential Election. It was in the polling, the demographics, and the electoral map. Moody’s, which has correctly predicted every Presidential Election since 1980, predicted Clinton to win.[1] FiveThirtyEight, one of the most accurate statistical analysis sites out there, gave Trump a 35% chance, at best, of winning in the week before the election.[2] This was actually more generous than some other sources.The New York Times gave Clinton an 85% chance of winning while The Huffington Post gave her a 98% chance.[3]

As we now know, everybody got it wrong. Donald Trump won the election, arguably the biggest upset since 1948 when Harry Truman defeated Thomas Dewey despite the polls, most newspapers and experts expecting the opposite. How the polling got it so wrong will have to be dissected in the future. I had a more immediate question: Would Bernie Sanders have won the election? I believe the answer is yes. I fully admit it’s impossible to ever make such a state with certainty, we can never know what may have happened. However I will make the argument using data, and hopefully some logical reasoning. Just for the record, this isn’t simple second guessing after the fact. In March 2016 I made a post explaining why I believed Bernie Sanders could win the election, if he was to won the nomination.

First, we must understand why Clinton lost the election. Many argue it’s because of the Electoral College. It’s true Clinton won the popular vote, currently by a margin of 2.2 million, yet lost the electoral vote. However, since we have the Electoral College, (and I’ll discuss this issue in the future) I feel it’s best to look within the system we have. With several weeks of data and analysis out, it’s safe to conclude that Hillary Clinton lost the election because of 4 reasons:

1: White working class voters, especially in the rust belt

2: Lower youth turnout than in 2012

3: Independents

4: General unpopularity

It’s been well documented that white working class voters were Clinton’s weakest area of support, and Trump’s strongest. These white working class (WWC) voters constitute a large bloc in the rust belt, and their strong support for Trump is why he won the reliably blue states of Pennsylvania, Wisconsin and Michigan, and thus the election. They also drove states like New Hampshire, Maine and Minnesota to surprisingly close results. Even strongly blue New York state gave the Democratic nominee their weakest support since 1992, again driven by WWC voters who dominate the upstate region, also part of the rust belt.

Macbomb County, MI a suburb of Detroit, is the epitome of the WWC. Macomb backed Obama both times with over 50%, and backed the Democrats 4 out of the last 5 elections. Macomb backed Trump by over 48,000 votes, Clinton lost Michigan by under 11,000 voters.

The Lehigh Valley is a Democratic stronghold in Pennsylvania. Luzerne County, which has backed the Democrat every time since 1992, (usually by over 50%) favored Trump by 26,211 votes. Northampton County has also favored the Democrat every time since 1992, and favored Trump, by 5,448 votes. These two, usually reliable blue, counties are responsible for nearly half of Trump’s victory in Pennsylvania. Erie County is another unionized, working class hub that has voted Democrat every election since 1988, (both times for Obama with over 57%) that broke for Trump.

By comparing results from 2008, 2012 and 2016 you can see Democratic support in Wisconsin, a stronghold of union/labor politics, was wiped out. (In the maps used below, Democrats are red, Republicans are blue).

wi

In Florida, 4 counties flipped from blue to red this year from 2012: Pinellas, Jefferson, St Lucie and Monroe. All voted for Obama twice and have generally supported Democrats since the 90s. In addition, 3 other counties: Pasco, Hernando and Volusia came out for Trump far stronger than they did for Romney, or McCain or Bush. Trump’s victory in these 7 counties was over 125,000 votes. Trump won Florida with about 113,000. These 7 counties account for Trump’s unexpected victory in Florida, and there is a common thread among these counties: They are largely white, suburban, working class areas. [4][5][6] Clinton did exceed Obama’s 2012 numbers in some Democratic areas of Florida, and scored stronger than usual results in the Republican counties of Duval and Seminole, yet all this was wiped out by Trump’s strong support from the working class suburbs of Tampa-St Petersburg and Daytona Beach.

Trump’s strong support from this bloc is largely due to his criticism of NAFTA, TPP and trade with China, part of his overall anger about the decline of US manufacturing and job loss. This is an area Clinton was weak in. Even though she campaigned against TPP, her previous calling it the “gold standard” of trade deals, then abruptly turning against it, as well as her previous support of NAFTA and insider status made it difficult for her opposition to be taken too seriously. Trump also pledged to not touch Social Security, (as well as Medicare and Medicaid) a total break with Republican orthodoxy since Reagan. This is an essential program for the working/middle class, and Trump’s promise, (we have to see what reality brings) to not touch it likely helped comfort working class voters about him.

While many point to race as a factor, and this is an issue that certainly can’t be ignored in this race, the states of WI, MI and PA voted for Obama twice. Same for Ohio and Iowa. All predominantly white. In fact they all backed Obama stronger than they did for Kerry, Gore or Bill Clinton. Obama won white, working class counties in these states, (as well as New England) that Clinton lost. Polls show Trump’s support from black, hispanic and Asian voters actually improved from Romney’s.[7] The gender issue is another crucial one, but again polls show women voted in 2016 along normal lines. Women support for Clinton actually fell 1 point from 2012, while support for Trump fell just 2 points.[7] A 538 analysis shows white women, especially those without college degrees, backed Trump and Republican women voted for Trump in largely normal numbers.[8]

While racial and gender issues are crucial and can’t be ignored, it’s also inaccurate to boil the results down to just these. Especially since a 538 analysis shows Trump did best in counties where the economy was weaker (lower job growth, avg wage) and with higher economic anxiety (where jobs are easier to automate/be sent overseas). This held true in counties that swung from blue to red.[9]

Youth voters (below age 30) turned out for Clinton with 55% support. This is down from 60% in 2012.[7] Given their support for Clinton, and Democrats in general, this drop in turnout was a big loss for Clinton especially with several states being so tight. Particularly large drops in youth turnout from 2012, 19 and 20% were seen in the states of Wisconsin and Pennsylvania.[10]

Independents, which make up the largest bloc of voters in the US, backed Trump 48% to 42% a gap that rose 1% in favor of the Republicans from 2012. This is the lowest Independent support the Democrats have received since 1996.[7]

Finally, Clinton was simply not a popular candidate. Neither was Trump, who was consistently more unpopular. However, Clinton did have trust and image issues. The emails, the DNC scandal, Wall Street ties and refusal to release her paid speeches, questions about the Clinton Foundation all hurt her trustability. James Comey’s questionable last second reopening of the email issue was damaging, most of her lead in the polls got obliterated. She has the image of an insider, and elitist, part of the problem of government that has failed to help the people. Trump, despite his disturbing personal issues, comments and actions, was an outsider, and spoke to the people of the rust belt, became a vehicle for their economic frustration and worry. An article sheds light on some Trump voters in Erie County, PA (including former Democratic voters) and it seems many were voting not out of like for Trump, but dislike of Clinton, and a yearning for change.

It mentions many of the good paying manufacturing jobs were being sent to Texas, not overseas, but this may not have mattered. Trump gave these people a voice, one many feel has been abandoned by the Democratic Party (at least through candidate Clinton).[11] This, with the hope maybe Trump can achieve some positive change, was enough for people across the rust belt to hold their noses. Clinton’s opposition to TPP was simply not believed by many people. Her dedication to Social Security, jobs, wages, the middle and working class which were all likely sincere, simply were difficult to believe for some voters.

 

So, to Bernie Sanders. Would he have fared better? Remember the 4 factors that lead to Clinton’s loss: WWC voters, lower youth turnout, loss of independents and image/trust issues. Sanders had very strong support from the white working class. This was one of his strongest blocs of support in the primary. He has a superb record on the issues: voted against every trade bill, came out early and strong against TPP, pro union, higher wages, and ran an undisputed pro “main street” anti elitist message. His other strong bloc of support came from the youth. In the Democratic Primaries, Sanders consistently won the under 30 vote, even in many southern states he lost badly, often winning with over 70 or 80%[12] Sanders won more youth voters in the primaries than Clinton and Trump combined, and his support didn’t waver even as it became clear Sanders would not win the nomination.[13] His youth support was massive.

Independents also favored Sanders fairly strongly and consistently through the primaries.[12][14] Unlike Clinton and Trump, Sanders had a positive favorability rating, the only candidate of both parties to achieve this.[15] As Sanders’ name recognition grew, so did his popularity. As he became more known his image did not become more mixed, the opposite in fact, the more people got to know Sanders, the more popular he became finishing with a +16.6 favorable rating. Contrast with Clinton who’s numbers got worse over the campaign finishing with a -15.2 favorable rating. [16][17] Note Clinton’s downward trend begins Feb 2013, and takes another downward trend at the start of 2015, both before Bernie Sanders hit the scene.

pop

So, what would’ve happened if Sanders won the nomination and squared off against Trump? We can’t ever know definitively, who knows how the campaigns would’ve been run, the tactics used. I will say though, the areas that cost Clinton, were Sanders strong suits. We can’t know how white working class voters in the rust belt would’ve broken, but given the fact they are usually blue states, and Clinton lost all 3 by a total of just 107,000 votes, it’s not unrealistic to imagine Sanders winning enough votes, in these normally Democratic states, to win all 3 and thus the election. Especially when you take his popularity vs Trump’s into account.

While it’s also impossible know how youth turnout would’ve been, given Sanders’ extreme popularity with the youth bloc, I imagine there would’ve been some amount of improvement over Clinton’s result. With MI, PA and WI being so close it would not have taken much to tip the results Democratic. Same with Independents. We can’t know how they would’ve broke, but given his popularity with Independents one would imagine he would’ve fared better than Clinton.

To conclude, I believe Bernie Sanders’ strength with white working class voters, the youth, independents and his general popularity would’ve been enough to win the usually Democratic states of Michigan, Pennsylvania and Wisconsin and thus the election. Especially against the immensely unpopular Donald Trump, who didn’t manage to win even 49% in any of the 3 states. There would’ve been no email story to constantly hammer home, nor could Comey have dropped a last second bomb, no DNC leaked email scandal, no Wall Street or Clinton Foundation $ ties to raise suspicion. The 4 major factors behind Clinton’s loss would’ve been strengths in a Sanders campaign, and the issues that dogged Clinton would no longer have been issues.

 

 

Sources/References:

1: http://money.cnn.com/2016/11/01/news/economy/hillary-clinton-win-forecast-moodys-analytics/

2: http://projects.fivethirtyeight.com/2016-election-forecast/

3: http://www.huffingtonpost.com/entry/nate-silver-election-forecast_us_581e1c33e4b0d9ce6fbc6f7f

4: http://www.tampabay.com/news/politics/stateroundup/donald-trumps-strength-in-florida-shows-in-working-class-pasco-county/2293878

5: http://www.orlandoweekly.com/Blogs/archives/2016/11/10/blue-collar-counties-key-for-trump-in-florida#

6: http://www.miamiherald.com/news/politics-government/election/article113786328.html

7: http://www.nytimes.com/interactive/2016/11/08/us/politics/election-exit-polls.html

8: http://fivethirtyeight.com/features/clinton-couldnt-win-over-white-women/

9: http://fivethirtyeight.com/features/trump-was-stronger-where-the-economy-is-weaker/

10: http://www.npr.org/2016/11/14/501727488/millennials-just-didnt-love-hillary-clinton-the-way-they-loved-barack-obama

11: http://www.nytimes.com/2016/11/13/us/politics/pennsylvania-trump-votes.html?_r=0

12: http://www.cnn.com/election/primaries/polls

13: https://www.washingtonpost.com/news/the-fix/wp/2016/06/20/more-young-people-voted-for-bernie-sanders-than-trump-and-clinton-combined-by-a-lot/?utm_term=.4af10160baa5

14: http://fivethirtyeight.com/features/the-hidden-importance-of-the-bernie-sanders-voter/

15: http://fivethirtyeight.com/features/donald-trump-is-really-unpopular-with-general-election-voters/

16: https://elections.huffingtonpost.com/pollster/bernie-sanders-favorable-rating/edit#!minpct=0&maxpct=70&mindate=2008-01-01&maxdate=2016-11-09&smoothing=moderate&showpoints=yes&showsplines=yes&hiddenpollsters=&hiddensubpops=&partisanship=S,P,N&parties=D,R,I,N&selected=favorable,unfavorable&fudge=1

17: http://elections.huffingtonpost.com/pollster/hillary-clinton-favorable-rating

 

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JFK’s economics: A bold, liberal agenda.

One week ago today marked the 53rd anniversary of JFK’s assassination.

His legacy is dominated by this, specifically the deluge of theories about his death. When one thinks about the actual JFK Presidency, a few things jump to mind: The Bay of Pigs invasion, the Cuban Missile Crisis, the Berlin Wall, the space program, calling for the Civil Rights Act, and his escalation of the Vietnam War.

Much of this has been long discussed already, so I want to a focus on a neglected aspect of the JFK legacy, his economic policy. I have almost always heard JFK’s economic policy explained in two words: Tax cuts. Kennedy called for the top income tax rate to be cut from 91% to 65% and the corporate tax rate to be cut from 52 to 47%.[1] He made it clear these would not be temporary, but permanent. In 1964 Kennedy’s vision became reality when President Lyndon Johnson signed a bill cutting the top income rate from 91 to 70% and corporate from 52 to 48%.

This has often been praised by conservatives, supply siders and libertarians, and cited as proof their ideas work.  Last year Presidential candidate Ted Cruz went so far as to say JFK would be a Republican today, again citing his tax cuts as a reason.

The recent anniversary of Kennedy’s death reminded me of this comment, as well as previous ones of a similar note, and it motivated me look deeper into the economics of JFK. I was surprised to learn there is far more to it than the tax cuts. It’s a great disservice to paint his economic ideas with such a simple brush stroke, and it’s inaccurate to believe he was some proto-Reagan, supply side conservative. In fact, I would say Kennedy had a bold, liberal economic agenda.

First, the dominant belief at the time was that of balanced budgets, and avoidance of deficits, even if it meant keeping the top tax rate at 91%. In fact conservatives and many business leaders were opposed to the idea[2] and Barry Goldwater, an original champion of the modern limited government movement, voted against the JFK inspired tax cuts.[3] While some deficit fluctuation was understandable perhaps during a recession, as Kennedy made clear these were to be permanent tax cuts, with little care if it produced a longer run deficit. He called the concept of balanced budgets “outdated” and “misleading mythology”.[4]

As seen below, from 1948 to 1960 the government budget heads towards deficit during recessions and the Korean War, but otherwise trends towards surplus. It was under Kennedy the budget went to a continuous deficit despite the lack of recession or war.

deficits

 

In his 1962 speech to the Economic Club of New York[5], Kennedy made it known he believed a budget deficit isn’t an inherently bad thing, as long as it comes from investment in the future, and that strong growth would naturally take care of the deficit. All this was quite a break from the orthodoxy of the time.

While this does indeed sound like a precursor to supply side economics, two points must be made. First, despite the focus paid to the top rate, the JFK tax cut was across the board. Every rate saw a cut, and Kennedy “sought a tax cut that showered most of its direct benefits upon working class and middle class Americans”[6] Second, the intent was not to boost supply, but demand. By putting more money into the hands of people, especially those who were more likely to spend it, the tax cut was expected to boost demand through consumption by the masses. In fact, it seems Kennedy and company believed whatever supply side impacts may occur would be a result of demand fueled growth itself. This is no conservative economics. It’s also possible the pro wealthy/business tax cuts were more for political reasons than economic: A way to sell the cuts to skeptical conservatives, and assuage hostility between the business community and Kennedy.[6]

However there was more than just the tax cuts. Kennedy increased the minimum wage and expanded its coverage. He increased Social Security benefits and extended jobless benefits. Kennedy started the food stamps program, (originally a pilot program but was later made permanent), passed a bill to invest in economically depressed areas, a public works program and a housing bill. Kennedy also directed Federal agencies to accelerate their allocated spending, [Sorenson. 396-404] basically behaving as a stimulus package.

This spending was not insignificant. $800 million was spent on extended jobless benefits, $200 million on welfare to children of needy parents, over $1 billion released for highway funds. [Sorenson] Nearly $400 million spent on economically depressed areas, $100 million for a jobless youth training program, $900 million for the public works program.[7] $4.9 billion was allocated for the housing bill.[8] Kennedy’s aim was large scale and long term. He didn’t want to just quickly end the recession, but achieve “full recovery and sustained growth” and  lamented that employment and production never reached their pre 1957-58 recession levels before the next hit.[Sorenson] He was concerned about economically distressed areas, both rural and urban, as well as people being left behind during economic growth. Kennedy said to Congress, “Large scale unemployment during a recession is bad enough…large scale unemployment during a period of prosperity would be intolerable”.[Sorenson]

Kennedy also took on the steel industry, where some powerful executives were planning on raising prices. He felt this was not only collusion, but a violation of the deal between labor and industry he facilitated. Unions in major steel companies agreed to accept no wage increase and minimal benefit increase while executives would not raise steel prices. Kennedy was enraged, and refused to simply accept it. He took on the very powerful industry by publicly chastising them, and using a host of public and private means to try an break the price hike. [Sorenson 443-59] Kennedy was successful, the price hike was called off. This was barely over a year into his Presidency.

Kennedy signed an executive order granting Federal employees the right to collective bargaining, greatly increasing the number of unionized federal workers and emboldening state and local employees to bargain as well.[9] He also signed a bill dictating Federal employees be paid a salary comparable to that of private sector counterparts[10] as well as the Equal Pay Act, requiring equal pay for equal work regardless of gender.[11] While the impact of this act on gender pay equality can be debated, it can’t be denied JFK sought to close the gap with this legislation.

To conclude, the economic legacy of John F Kennedy is one that has been understated and inaccurate. Most discussion of the topic focuses on his proposed tax cuts for the wealthy, while small government conservatives have tried to portray him as a champion of their ideology. The former misses the point, the latter is flat out wrong. Kennedy pushed for tax cuts across the board, and spent greatly during a recession, increased welfare and invested in areas he felt were being left behind even as the economy recovered. From comments and policies, it’s clear JFK didn’t just believe the government should provide a shot in the arm while sick, but try to improve deficiencies while healthy. He threw away the orthodoxy of the time, that government budgets must be balanced as much as possible. John F Kennedy’s economic legacy was neither hands off or conservative, it was in fact bold and liberal.

 

 

 

Sources/references:

1: http://www.presidency.ucsb.edu/ws/?pid=9138

2: http://economix.blogs.nytimes.com/2014/02/04/how-l-b-j-pushed-through-kennedys-tax-cut/?_r=0

3: http://www.cnbc.com/2014/03/05/recalling-the-days-when-democrats-cut-taxes.html

4: http://www.ontheissues.org/celeb/John_F__Kennedy_Budget_+_Economy.htm

5: http://www.presidency.ucsb.edu/ws/?pid=9057

6: http://s3.documentcloud.org/documents/715643/jfk-tax-cutfinal-2.pdf

7: https://www.jfklibrary.org/Research/Research-Aids/Ready-Reference/Legislative-Summary-Main-Page/Economy-and-Finance.aspx

8: https://www.jfklibrary.org/Research/Research-Aids/Ready-Reference/Legislative-Summary-Main-Page/Housing.aspx

9: http://www.cfr.org/labor/government-unions-became-so-powerful/p22887

10: https://www.jfklibrary.org/Research/Research-Aids/Ready-Reference/Legislative-Summary-Main-Page/Federal-Employees.aspx

11: https://www.jfklibrary.org/Research/Research-Aids/Ready-Reference/Legislative-Summary-Main-Page/Civil-Rights.aspx

“Kennedy: The Classic Biography” by Ted Sorenson

 

 

Why we need a $15 minimum wage, and why it won’t hurt us

In recent years there has been debate over the minimum wage, from both the right and left.

In 2013 President Obama called for the minimum wage to be raised to $9/hr prompting criticism from many Republicans and conservatives that it would be detrimental to the economy, not a surprising response, but more recently Democratic Presidential candidate Bernie Sanders called for a $15/hr minimum wage, prompting criticism from some Democrats/those on the left who feel this number is too high. His opponent Hillary Clinton for example has supported a $12 min wage, but not 15.

The debate has gotten quite interesting. Some Republicans, such as Ted Cruz, oppose the minimum wage entirely. Some accept raising it moderately, perhaps to $9 or $10 an hour. Democrats/liberals are split on going to $12 or $15.

While the debate rages on, people have taken the matter into their own hands. In recent years there has been a nationwide push for a $15/hr min wage, drawing mockery or being waved off as a bargaining ploy to achieve something more reasonable. However, some cities such as Seattle, San Francisco and Washington DC have passed bills to raise their minimum wages to $15/hr. While this is understandable for such high cost cities, in more bold moves the states of California and New York have passed bills to raise their statewide minimum wages to $15. The fight for 15 must now be taken seriously, (and at the very least the need for some minimum wage increase) but the questions still remain:

Do we need a minimum wage? If so, what is a good number? Is $15 too high? What about worries that it’ll cost job loss, cause price increases, or the argument that it’s unfair burger flippers should suddenly make as much as many other Americans? Let’s look at each of these questions.

Yes, we do need a minimum wage.

First, there is the moral argument that if you are willing to work, you should be able to earn a decent living. It’s actually a very American idea, and indeed polls show over 70% of Americans, including a majority of Republicans, support the minimum wage being raised.[1][2] A recent poll showed only 8% favoring repeal of the minimum wage, while a plurality (30%) supported a $15/hr min wage.[3] A survey of 1000 business executives, done by Republican pollster and consultant Frank Luntz, found 80% support increasing the minimum wage.[4] Other polls have also indicated small business support for a higher minimum wage, with around 60% agreeing it should be raised to 10 or 12 dollars. [5][6]

Sound hard to believe? Well, besides moral reasons, there are realistic reasons to support a min wage. First, even if eliminating the min wage would create more jobs, it wouldn’t do much good if all these jobs paid $4/hr. How would people be able to afford the goods and services created by firms? Afford cars? Rent? Basic necessities? How would people be able to save for the future?

Some argue abolishing the min wage would lower prices, but I find this dubious. If you look at the min wage adjusted for inflation, (seen below) you see it’s been largely stagnant since 1989, yet the cost of living continued to increase over this time. It seems the cost of living and min wage are unrelated, and this makes sense if you think about some of our major expenses. Gas and food prices are dictated by global supply & demand, utilities are an extremely monopolistic market, healthcare costs have grown far beyond the rate of inflation for decades. Clearly theses costs are unrelated to the min wage, as are others like auto insurance. While the min wage will have some impact on prices, it’s obvious the cost of living will increase regardless, thus the min wage should rise over time to ensure working people have some degree of a solid living.

real min wageSecond, our economy has changed from a manufacturing to service economy. This is permanent and simply a result of a developing economy. For example, in Jan 2016 nearly 70% of jobs created that month, (105k of 151k) were in retail and food services/drinking places.[7] Service sector jobs are generally low paying, thus we’ve undergone a fundamental shift to a low wage economy. More proof of this is seen in a study, revealing the plurality of jobs created since 2009 (44%) were in low wage industries.[8] If this is simply how things are now, it’s unfair to leave these industries so low paying.

Third, a min wage hike is a stimulus. When people have more money, they will spend more money, stimulating the economy. This is especially true with lower earners, who tend to spend more of their money than higher earners.  A min wage hike would be a stimulus package that comes at no cost to the government. In fact:

A higher minimum wage will help the government budget. If people make more money, it will lead to higher tax revenue, without raising taxes, and it will also reduce spending on public assistance. One study conservatively estimates a $10.10 min wage would save the government $7.6 billion a year through less public assistance spending.[9]

OK, but doesn’t a minimum wage cost jobs or raise prices?

In reality there is little evidence to suggest min wage hikes hurt employment or has drastic impact on prices.  Numerous studies have been done on  min wage hikes and employment, the most famous being Card and Krueger’s 1992 study. They looked at fast food restaurant employment in New Jersey and Eastern Pennsylvania, before and after NJ implemented a min wage hike while PA did not. This helped isolate the min wage hike impact on employment. They found no negative impact on fast food employment in NJ after the state’s wage hike.[10]

A better study was done in 2010 by Dube, Lester and Reich. One aspect of the study was looking at hundreds of bordering counties, where there was a min wage difference, all over the country from 1990 to 2006. (Seen below) They found no negative impact on employment from min wage hikes.[11]minwagestudy

Other studies have found the min wage to have no negative impact on teen employment, nor on employment even during a recession. One “meta study” took 64 studies conducted from 1972 to 2007, pooled all the data together, and found no negative impact on employment.[9]

During the 50s and 60s when the min wage was higher in real terms, we had a very strong economy with low unemployment. Germany recently implemented their first ever min wage and it had no negative impact on employment. Australia has a high minimum wage, currently $17.70 (AUD)/hr, and they haven’t had a recession in 25 years. How can all this be?

Several reasons. First, is the stimulus impact. People spending more boosts the overall economy, thus helping corporate profits and negating some of the cost.  Second, higher wages may reduce turnover, increase productivity (people working better), and draw more people into the labor force, creating competition for jobs and thus keeping pressure on employees to work harder.

This is nothing new, in 1914 Henry Ford shocked the world by doubling wages, and the result was less turnover, higher productivity, and Ford hailed it as a great cost cutting measure. 100 years later some are re-learning this lesson. McDonald’s recently gave some employees a $1 raise, as well as 5 days paid vacation, and the results have been reduced turnover and improved customer satisfaction.[12] In fact a number of studies have shown min wage increases lead to decreased turnover and higher customer satisfaction.[13]

OK,  but won’t a higher minimum wage just raise prices?

While there will be some price increase associated with a min wage hike, real life evidence suggests they will be very mild. One study estimates a 45% min wage hike would lead to a 2.7% increase in fast food prices.[14] Another estimates a $15 min wage would lead to a 4.3% increase in fast food prices.[15] A review of 30 papers on the topic found a 10% min wage increase would cause no more than a 4% increase in food prices, and .4% increase overall[10] while another study estimates a $1.75(24%) min wage hike would cause a .27% increase in prices.[16] While there is variation in results one thing is clear, a min wage hike will not cause drastic inflation. There will be small price increases, yes, however anyone who says a hamburger will just cost $20, or the min wage hike wont help low wage workers because price increases will wipe it out are simply mistaken.

OK, but what should the min wage be? Isn’t $15 high?

One study found a majority of people earning $12.16/hr and under require public assistance.[17] If you believe that someone who works shouldn’t need public assistance, (which would also reduce public assistance to the role of safety net, rather than necessity) than clearly $12/hr isn’t going to cut it. Especially if you believe working people should earn more than simply survival wages, but enough to enjoy a solid life. That every worker, everyone who chooses to get a job and be productive, should be able to enjoy a decent piece of the pie they help create, and not just surviving. So what is a good rate? $15 certainly would put many workers above the need for public assistance, but will it earn a decent living?

Using data from government/respected sources EPI has calculated the cost of living needed to attain a “modest yet adequate” standard of living for 618 areas of the US. Taken into account is rent, food, child care, transportation, healthcare (both private and public costs), taxes and other necessities such as clothing, personal care items, school supplies and telephone costs for some examples.[18] This has been put into a calculator format to determine the cost living needed for a range of families from single adult to 2 adults, 4 children.

Needless to say there is great variation around the US to attain a modest yet adequate living. In rural Tennessee $49,767 is needed for a 2 parent 2 child family, equating to $11.96/hr. ($49,767 /2 workers = $24,883 per year/2080 hours (40 hrs/week X 52 weeks)). A single adult would need $11.75/hr ($24,444/2080). In Washington DC a single adult would need $20.24/hr ($42,119/2080) while a 2 parent, 2 child family would need $25/hr ($106,493/2 =53,246/2080). EPI states the median is Des Moines, IA which requires $15.32/hr for a 2 parent 2 child family, and $12.89/hr for a single adult. Perhaps in another post I will take a more in depth look at costs of living around the US, but for now I’ll say $15/hr seems to be a good middle point. It will strongly benefit many areas of the country and single adults, (enhancing the stimulus impact) while being of lesser benefit in other areas and for families, (though still a great improvement and more on families in just a bit).

Another, more uniform, thing to look at is productivity. Productivity is basically how much each worker produces. How good a worker you are and how efficiently our economy runs. EPI notes if the minimum rose with productivity, as it did from 1948-1968, it’d currently be $18.67/hr.[19]

mw1

Even if the minimum wage kept up with productivity at 1980 levels (when it went more or less permanently downward) the minimum wage today would be around $15.50

mw2

Personally I like this concept. First, we’re told that if we work harder, get more education, we’ll be rewarded, as productivity goes up so does pay. Second, there won’t be significant inflation as long as wages rise with productivity. Our productivity has continued to rise, we’re increasingly educated, so wages should rise. One could argue those at the minimum wage may not work in productive areas, but teachers, police officers, garbage collectors, child and elder care can’t really be much more “productive” yet we don’t continue to pay them wages from 100 years ago. Everyone has a role to play in our economy, and everyone should get a piece of its growth. By indexing to productivity, we’d ensure wages rise, without causing accelerating inflation, and would maintain a stable ratio of capital-labor share of income. By starting at 1980/leaving a gap I acknowledge the minimum wage while growing in lockstep with productivity, should be at a level to ensure owners, more experience/educated workers and those in more productive fields should get a larger share of growth. Following this, it seems $15 is a very good place to put it. This is high, but if we get there incrementally there should be little risk/negative impact, per previous studies.

OK, but it’s not fair that a burger flipper should make $15 that’s as much as I make!

There is validity to this argument, it would be unfair that someone working at McDonald’s could make the same as a college graduate starting their career. However, a rising minimum wage will raise other wages. Firms want to remain competitive, and maintain their internal wage structures. In other words, if firm X pays you $13/hr and you can now work at firm Y for $15/hr, firm X will need to raise your wage to $15 to keep you there. If you work at firm X for $16/hr and have been there for a few years, having worked your way there, you may be upset to be just above the new bottom wage, thus firm X may give you a raise too, to ensure fairness and incentive. For a visual demonstration of this here is a simple picture of what would happen to wage levels if the bottom is raised.

wage ratcheting

Basically, min wage hikes will “trickle up” the ladder. Is there any proof of this? Yes. One study of a large retail company found that in response to a min wage hike, it raised wages 30-40% across its entire workforce, despite only 5-10% of employees earning the minimum wage. Another found a 10% min wage hike caused a bump up in wages up to the 25th percentile (bottom 25% of workers). One from the UK found a min wage hike, despite impacting only the bottom 5% of workers, had a bump up effect up to the 25th percentile.[20]

EPI estimates a $12/hr min wage by the year 2020 would boost wages for 35 million Americans [21]. EPI has also estimated that a $15 min wage will boost wages for 3.2 million in New York, (about 37% of all workers in the state) for 98,000 workers, (about 27%) in Baltimore, and 114,000 workers in DC.[22][23][24] A UC Berkeley analysis estimates the $15 min wage in California would boost wages for 5.6 million workers, (37% of workers)[25] All of these studies have noted these results would especially benefit minorities, women, and the vast majority of beneficiaries are over 20, even 25, years old. A majority work full time and many have children. Those impacted often contribute around half of their families income, and in some cases over 20% of beneficiaries are the sole earner. Yet another analysis estimates a $15 min wage in Los Angeles will produce $9.2 billion in stimulus, creating over 64,000 jobs and generating $1.3 billion in additional government revenue.[26]

This is the strongest reason to support a rising minimum wage: It will benefit far more than those at the minimum wage. While there are numerous reasons for wage stagnation since 1973, it isn’t coincidence this coincides with minimum wage stagnation since 1973. As EPI said, if the idea of an $18.67/hr minimum wage seems staggering it’s only because the median wage is now so low ($16.30/hr). If the median wage grew with productivity, as it used to, it would currently be over $28/hr.[19] I expect the “ratcheting” up of wages would be significant with a $15 minimum wage, since 42% of Americans make under $15/hr[27] and you would expect those who make a bit above $15 would see raises as well. So to those who ask how is it fair a fast food/retail worker should suddenly make as much as you, I’d say you will see a raise too.

In conclusion, we need a higher minimum wage, and $15 an hour would be a level that makes up for much of the decades of wage loss we’ve seen, and would boost wages for possibly half of American workers, providing a large “bottom up” stimulus to the economy. It should then be indexed to something, inflation, cost of living, productivity, to ensure wages rise continuously. Providing a more living wage would not only benefit tens of millions of Americans, it would reduce the need for welfare and raise revenue. If done in steps, there will be little to no negative impact on jobs, and very minor impact on prices as evidenced by numerous studies.

 

References/Sources

1: http://money.cnn.com/2014/06/09/news/economy/minimum-wage-poll/

2: http://www.raisetheminimumwage.com/pages/polling

3: http://www.huffingtonpost.com/entry/minimum-wage-poll_us_570ead92e4b08a2d32b8e671

4: https://www.washingtonpost.com/news/wonk/wp/2016/04/04/leaked-documents-show-strong-business-support-for-raising-the-minimum-wage/

5: http://www.businessforafairminimumwage.org/news/00573/national-poll-small-business-owners-favor-raising-federal-minimum-wage

6: http://thehill.com/blogs/congress-blog/labor/249857-small-businesses-support-boosting-minimum-wage

7: http://www.bls.gov/news.release/archives/empsit_02052016.pdf

8: http://www.nelp.org/content/uploads/2015/03/Low-Wage-Recovery-Industry-Employment-Wages-2014-Report.pdf

9: http://s4.epi.org/files/2014/safety-net-savings-from-raising-minimum-wage-final.pdf

10: http://cepr.net/documents/publications/min-wage-2013-02.pdf

11: http://www.irle.berkeley.edu/workingpapers/157-07.pdf

12: http://fortune.com/2016/03/09/mcdonalds-wages/

13: http://www.raisetheminimumwage.com/pages/business-case

14: http://www.peri.umass.edu/fileadmin/pdf/research_brief/PERI_fast_food_wages.pdf

15: https://www.purdue.edu/newsroom/releases/2015/Q3/study-raising-wages-to-15-an-hour-for-limited-service-restaurant-employees-would-raise-prices-4.3-percent.html

16: file:///C:/Documents%20and%20Settings/user/My%20Documents/Downloads/cflaugust2013-313-pdf.pdf

17: http://www.epi.org/publication/a-majority-of-low-wage-workers-earn-so-little-they-must-rely-on-public-assistance-to-make-ends-meet/

18: http://www.epi.org/publication/family-budget-calculator-technical-documentation/

19: http://www.epi.org/publication/lagging-minimum-wage-reason-americans-wages/

20: http://equitablegrowth.org/research-analysis/raising-minimum-wage-ripples-workforce/

21: http://www.epi.org/publication/raising-the-minimum-wage-to-12-by-2020-would-lift-wages-for-35-million-american-workers/#epi-toc-1

22: http://www.epi.org/publication/raising-new-york-state-minimum-wage-to-15/

23: http://www.epi.org/publication/raising-baltimores-minimum-wage-to-15/

24: http://www.epi.org/publication/raising-the-d-c-minimum-wage/

25: http://laborcenter.berkeley.edu/15-minimum-wage-in-california/

26: http://economicrt.org/publication/effects-of-a-fifteen-dollar-an-hour-minimum-wage-in-the-city-of-los-angeles/

27: http://nelp.org/publication/growing-movement-15/

True economic recovery has begun, but there’s a long way to go.

The BLS has put out their March 2016 jobs report, and there is some good news. 215,000 jobs were added that month, a solid number. There is some much better news however: The labor force grew by 396,000. The labor force participation rate is now up to 63%[1] This is on the heels of a strong February report where 555,000 people joined the labor force[2], and March was the 6th straight month of labor force growth.

This is significant because for years while millions of jobs were being created, millions of people were also leaving the labor force. Often more people were leaving than were finding jobs. Part of this has been due to people retiring, but much has been because of people simply giving up looking for work. This trend started to level off in 2014, and it seems that people may finally be returning to the labor force, finding jobs or looking for jobs. This is seen in the chart below:

lfpr

 

There are always ups and downs, but this has been the strongest labor force return in 6 years, and it seem very possible this is a longer term trend, not just a temporary blip. While this is great news, it means people are gaining confidence in the economy, it also means that strong recovery has only just started. We have a long way to go to just fill the hole left by 7 years of people leaving the labor force. The official unemployment rate is 5%, still a bit behind the level reached under Bush (4.5%) and a good bit behind Clinton’s (3.9%). Baby Boomers retiring will help those entering the labor force, but still there is a long ways to go to fill the hole left by the great recession, especially when considering population growth.

In Jan 2015 EPI calculated at a job growth rate of 246,000 a month, which we have largely followed, it would be August 2017 when we return to pre recession employment, with population growth taken into consideration.[3] This would be 8 years after unemployment peaked, and means we still have a year and a half to go, just to reach pre recession employment levels!

EPI

This brings up another long term issue: Wages

With so many people out of the labor force, even as employment grows there has been almost no upward pressure on wages, and even now as people return to the labor force, because so many left, I forsee little upward pressure on wages anytime soon. In fact, as people return, it’s possible there will be even less wage pressure as there could be more competition for jobs.

Making this situation worse is the fact lots of job growth has been low wage. In January 2016 151,000 jobs were added, 105,000 of which came in retail and food/drink services.[4] That is 70% of jobs created coming in low wage sectors. This is not a one time or recent phenomenon either. A study shows the bulk of jobs created, (44%) since 2008 have been low wage.[5]

It’s not just a problem at the lower end either. Across the board wage growth has remained sluggish despite the steadily falling unemployment and years of solid job growth. In fact wage growth remains well below the 3.5 to 4% range that is consistent with Fed targets of inflation and productivity. These are both seen in the chart below by the Economic Policy Institute[6]

epi

When broken down by percentile, we see that for half of American workers wages remain flat from or less than where they were in 2007, as seen in the chart below.

epi

This report also notes that from 2014-2015 most of the rise in real wages were due to lower prices rather than significantly higher wages. Also interesting to note is the rise of wages in the bottom 10% of workers for several years, which has been due largely to minimum wage hikes happening in many states around the country.[7] It can be seen that wage growth in the bottom 10% has now exceeded those at the 30 and 50th percentiles, showing the power of minimum wage hikes for those at the bottom.

So, while there has been good economic news in recent months, the recovery still has a long way to go. We are not at risk of the economy getting “too hot” and in fact we are only starting to see signs of true economic recovery. This is especially true of wages which have only started to see an uptick for 70% of US workers in the last couple of years, and remain well below where they need to be.

Sources/References:

1: http://www.bls.gov/news.release/archives/empsit_04012016.pdf

2: http://www.bls.gov/news.release/archives/empsit_03042016.pdf

3: http://www.epi.org/blog/at-an-average-of-246000-jobs-a-month-in-2014-it-will-be-the-summer-of-2017-before-we-return-to-pre-recession-labor-market-health/

4: http://www.bls.gov/news.release/archives/empsit_02052016.pdf

5: http://www.nelp.org/content/uploads/2015/03/Low-Wage-Recovery-Industry-Employment-Wages-2014-Report.pdf

6: http://www.epi.org/nominal-wage-tracker/

7: http://www.epi.org/publication/wage-inequality-continued-its-35-year-rise-in-2015/#epi-toc-2

 

The Depression of 1920. Government spending enabled swift recovery.

The depression of 1920-21 was a very sharp downturn with a rapid, robust recovery that started the roaring twenties. You see and hear very little about this recession. However, it has some received some attention on the internet, usually from subscribers of the Austrian school of economics, as well as some general libertarians and conservatives, who have cited this recession as proof their theories work.

I was walking through Barnes & Noble recently when I saw a book on the topic: “The Forgotten Depression: 1921: The Crash That Cured Itself” by James Grant. The first mention I’ve personally seen of this recession outside the internet, and it rekindled my interest in the topic.

The story goes like this: During this recession the government cut taxes, cut spending, then did nothing else. Without government interference, the recession bottomed out and rapidly recovered. Due to it’s short nature and/or the fact it was resolved without government action, it’s been called the “forgotten depression”, and “the depression you’ve never heard of.” [1][2]

The Austrian take is best summed up in “America’s Great Depression” by Murray Rothbard. “There is one thing the government can do positively, however: It can drastically lower its relative role in the economy, slashing its own expenditures and taxes, particularly taxes that interfere with savings and investment.” “Any reduction in taxes, or of any regulations interfering with the free market, will stimulate healthy economic activity.” “In sum, the proper governmental policy in a depression is strict laissez-faire including stringent budget slashing, and couple perhaps with positive encouragement for credit contraction.” (Rothbard) He quotes a Benjamin M. Anderson as having said this was “our last natural recovery to full employment.” (Rothabrd. p 186)

So, according to the Austrians during the recession the government cut taxes, spending, kept their hands off after that and we had rapid, robust recovery. There’s a few issues with this story however:

1: The tax cut was passed on Nov 23, 1921 [3] while the  recession ended in July 1921[4]. So the tax cut could not have helped end the recession, since it was already over by then.

2: Most of the spending cuts occurred before the recession ever started, (January 1920) as seen in the graph below. [5] So, this could not have ended the recession.

wwi gov scale down

3: While there was no fiscal stimulus the government did intervene in a couple of ways: A tariff was passed, (The Emergency Tariff of 1921) and the Fed cut interest rates.

All this and other issues have been largely discussed already however. Here is a link to a wonderful collection of posts about the topic, and also a paper by Daniel Kuehn who first discussed how it was Woodrow Wilson who is responsible for most of the cuts to government expenditure, before the recession ever started, as well as some other points of critique. I encourage everyone to read these works, but for now  I instead want to look at a new aspect:

Private spending 

From 1920 – 1922 there was a surge in private spending. Using data compiled by Steve Keen, I estimate the private debt level rose from 53 to 69% of GDP in that span. This is an estimation, but as seen in the graph below clearly there was a big spike in private spending from 1920-22.

US private debt 1920-22

After the horror of WWI there was a want to return to “normalcy” and given the fact wages soared during the war, thanks to full employment and strong union positions, there would’ve been plenty of money to spend spend spend. This is strengthened when we look at the period right before.

From about 1915 – 1919 private debt falls from 75 to 51% of GDP  a 24% drop. This put the private debt level the lowest it’s been in nearly 20 years. As seen in the graph below.

US private debt 1915-19

It appears there really was “pent up demand” after WWI. Years of less spending lead to a boom in spending, aided by a high savings rate and high wages. This is what fueled rapid, robust recovery. This is not shocking in any way. Consumption is the major driver of our economy. People spending on air flights to take vacations, appliances, cars, houses all boost the economy. In economic terms: Y= C + I + G+ NX. With most else stable, the massive increase in C will lead to a large increase in Y.

However, it’s not enough to simply say the private sector spent its way out of the recession. There’s another piece to the story.

That fall in private debt, 24%, is a massive number, you can see how large it is on the graph above. Usually, falls in private debt correlate with recessions/stagnation. This makes sense, it’s the reverse of the process described above. Just to verify this, I checked the list of US recessions and compared it to the graph, which yielded this result:

uspdr

Most of the very large drops in private debt correlate with recessions, some of them are our longest and worst ones: The depression of 1839-43, 1873-79, the Great Depression, the Great Recession. Even the  early 90s recession, while not terrible, was followed by low growth and lingering unemployment lasting until around 1995, which correlates with a drop in private debt.

So, why did the 24% fall in private debt from 1915-19 not have similar results and in fact saw an economic boom? Government debt rose from 2.7% to 30%[6], a 27.3% increase. This spike in government spending boosted the economy, allowing people to save without feeling an economic crunch. So when the scale back came the population had plenty of savings ready to be spent, buoying the economy.

Some say the slashing of government quickly ended the 1920 recession and fueled robust growth, but it was actually the previous build up of government spending, that laid the foundation for recovery!

 

 

 

 

 

References/Sources:

Rothbard, Murray. America’s Great Depression. 1963. The Ludwig von Mises Institute. Auburn, AL.

http://link.springer.com/article/10.1007%2Fs11138-010-0131-3   Daniel Kuehn paper

http://www.itulip.com/forums/showthread.php/26157-Steve-Keen-revises-his-private-debt-estimate-for-USA-and-other-countries    Private debt data and chart

http://socialdemocracy21stcentury.blogspot.com/p/the-us-recession-of-19201921-is.html Info on 1920-21 recession

https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States

1: https://mises.org/library/forgotten-depression-1920

2: http://fee.org/freeman/the-depression-youve-never-heard-of-1920-1921/

3: http://legisworks.org/sal/42/stats/STATUTE-42-Pg227.pdf

4: http://www.nber.org/cycles/cyclesmain.html

5: http://krugman.blogs.nytimes.com/2012/01/23/more-than-you-want-to-know-about-warren-harding/?_r=0

6: http://www.theatlantic.com/business/archive/2012/11/the-long-story-of-us-debt-from-1790-to-2011-in-1-little-chart/265185/

Trade bills have cost the US 6 million jobs, and TPP will make it worse

In mid 2015 TPP, (the Trans-Pacific Partnership) became a major issue. There was widespread concern about the potential trade bill, specifically it’s impact on American jobs, the back door nature in which it was drafted, environmental concerns, and people from both parties and various sources calling the bill “Crony Capitalism” and “managed trade”. Then TPP seemed to disappear from the news, and the deal was signed, though it still needs to pass the US Congress. What can we expect from TPP?

This report by EPI shows that trade with the TPP countries cost the US 2 million jobs in 2015 alone, with every state seeing losses. The hardest hit state was Michigan, with over 5% job loss, others badly hit being Indiana, Kentucky, Ohio, Tennessee, Alabama as well as Oklahoma and Wyoming. The report notes 52% of jobs lost were in manufacturing, the biggest chunk of that, (36.4%) being in motor vehicles.[1] While all states and many sectors were impacted, clearly the worst pain was dealt to US manufacturing, which continues to leave not just it’s traditional upper mid west base, but now the south.

TPP

The above graph shows jobs loss per state by % of jobs lost. It struck me that a state could lose far more jobs than another, but have a larger population thus lose a lesser percentage. With this in mind I used the EPI data to make the map below, showing the 10 hardest hit states by TPP country trade by the number of jobs lost, while also taking population into account.

tpp jobs

All this was before TPP was even implemented! This has just been the impact due to current trade with the 11 TPP countries, imagine how much worse it will be if the bill is actually implemented. The US will continue to see a net loss of jobs, particularly hurting manufacturing, and overall putting more downward pressure on wages, (due to both job replacement being lower wage and having to compete with low wage labor in other countries). The erosion of the American middle class, and thus increasing inequality and worsening social mobility, will continue if TPP is implemented.

This is nothing new however. TPP is just the latest in a series of trade bills, which have had a negative impact on the US economy.

NAFTA:

Passed by Congress and signed by Bill Clinton in 1993, NAFTA was a trade agreement between the US, Canada and Mexico. NAFTA has cost the US 682,900 jobs. All 50 states and DC saw a net loss of jobs. Nearly 61% of jobs lost were in manufacturing, and nearly 38% of these jobs lost were in computer, electronics and automobiles.[2] The 10 worst hit states in terms of number of jobs lost, and as a percentage of their workforce were Michigan, Illinois, Indiana, Kentucky, Ohio, Pennsylvania, New York, Texas, Florida and California as seen in the map below, made using EPI data.

nafta jobs

China:

In 2000 permanent normal trade relations with China was passed by Congress and signed by Bill Clinton. Since 2001 trade with China has cost the US 3.2 million jobs, with all 50 states and DC seeing a net loss. 75% of jobs lost were in manufacturing. Jobs displaced due to trade with China, for those who were able to find one, paid 17% less, and trade with China cost the US $37 billion in wages per year.[3]

china trade

Korea:

In 2011 a US-South Korean trade bill was passed by Congress, signed by Barack Obama, (and supported by Secretary Hillary Clinton) which cost the US 75,000 jobs between 2011 and 2014. Over 79% of the growth in trade deficit with South Korea came in manufacturing, with 75% of that coming in auto vehicles and parts. The EPI report notes the deal isn’t fully implemented, with some protection of the US auto industry still in place. However, these expire in 2021, meaning the loss of auto vehicle/part manufacturing will only accelerate after that. [4] It is also noted the agreement with Korea opened up access to American auto markets but without guaranteeing equal access to Korea’s.[5] This virtually ensures a loss of American auto manufacturing jobs.

There have been numerous other trade agreements signed. Ones with the US and Jordan, Bahrain, Morocco, Oman, Panama, Colombia, as well as CAFTA a multi lateral deal with the US and Central America and the Dominican Republic. While I can’t find any analysis on most of these bills, EPI notes that each of these trade agreements is with low wage labor countries. Also, these agreements put US labor in competition while protecting US skilled professions.[5] This is not only managed trade, deciding who gets protected from competition and who doesn’t, but worsens inequality. To make matters worse, EPI also finds that trade with low wage countries puts downward pressure on wages even in jobs not lost. On average yearly wages were $1,800 lower for Americans without college degrees, due to competition with low wage labor, and with roughly 100 million non college educated workers in the US, this is a roughly $180 billion yearly loss in wages.[6]

This is what we do know:

Trade agreement – Loss of jobs – % lost in manufacturing

NAFTA – 682,900 – 61%

CHINA – 3.2 million – 75%

KOREA – 75,000 – 79%

TPP counties- 2 million – 52%

TOTAL: 5.96 million  – 66.75%

These 4 trade agreements, our largest, have cost the US 6 million jobs. While all sectors and states have been impacted, two thirds of these jobs lost have come from manufacturing, hitting particularly hard the rust belt from New York to Illinois, the upper south, (Kentucky and Tennessee), Texas and California. These trade bills have directly or indirectly lowered the wages for tens of millions of working Americans, and thus has been a major factor in the erosion/weakening of the US middle and working classes.

We need to renegotiate our trade bills, not put up tariffs, to ensure trade works for American workers, not against us, including stopping TPP before it can be implemented.

Sources/References:

1: http://www.epi.org/publication/trans-pacific-partnership-currency-manipulation-trade-and-jobs/

2: http://www.epi.org/files/page/-/BriefingPaper308.pdf

3: http://www.epi.org/publication/china-trade-outsourcing-and-jobs/

4: http://www.epi.org/blog/u-s-korea-trade-deal-resulted-in-growing-trade-deficits-and-more-than-75000-lost-u-s-jobs/

5: http://www.epipolicycenter.org/blm-trade_and_jobs.pdf

6: http://www.epi.org/publication/unfair-trade-deals-lower-the-wages-of-u-s-workers/

 

 

Yes, Bernie Sanders can win the nomination, and the election.

Bernie Sanders was a surprise in 2015 to say the least. The obscure, New Deal style Senator from Vermont announced he was running for President and had very little name recognition, no money and no party support…going against a candidate who had all those in abundance. He shocked everyone with the strength of his polling, crowd sizes and fundraising ability. More importantly, he shocked everyone (Republican and Democrat) with the popularity of ideas written off by most as extinct since Reagan, and too out there for the US.

Despite dedicating a huge amount of resources in Iowa, Clinton won by just .2% taking 23 delegates to Sanders’ 21. Sanders then won New Hampshire by 22% the largest, non incumbent, NH victory in the Democratic Primaries since JFK in 1960. Nevada, which was supposed to be Clinton’s firewall, turned out to be a 6 point victory, with the delegate split being 20-15. Polls have shown Sanders closing the gap nationally, and that he has the support of voters under 45, and especially under 30 (which he wins consistently by over 80%). While acknowledging all this, most dismissed Sanders simply because he had no chance anyway.

Indeed, after Clinton’s big win in South Carolina it was declared over. People, pundits, and articles all spoke about how Clinton had it in the bag, noting constantly her large lead with African American voters, and the dominance of African American heavy states on Super Tuesday would seal the deal.

Sure enough, Clinton won Super Tuesday 7 states, (and American Samoa) to Sanders’ 4 with massive leads in the southern states. It has been declared over, or at least unofficially over and we just need to wait for the inevitable. She also has a massive lead in Super Delegates, which basically gives her a 400 delegate cushion.

While Sanders faces an uphill battle, it is far from over. I think he has a realistic chance to take his fight all the way to the convention, and have a very strong showing while doing so. A path to the nomination may be slim, but it does exist. Here’s how.

First, let’s note Super Delegates are “soft” meaning they are not locked in. They can change their vote whenever they want, and vote for whoever they want want the convention. As has been widely reported, Clinton and Howard Dean held super delegate leads in 2008 and 2004, just to have them all move to Barack Obama and John Kerry.

In terms of “hard” delegates, those won in the state primaries and are locked in to their candidate, Clinton leads 608-413. Large, but far from the 1000-400 picture that is often painted by including super delegates, and there are still 35 states to go. In fact, now that Super Tuesday has passed, the map gets a lot more favorable for Sanders. The map becomes a lot more white, liberal and rural/blue collar.

Super Tuesday proved Sanders can win big in both these types of states. While he did poorly in the south, as expected, it wasn’t reported that he did better than expected in the other states. Vermont was no surprise, but he won quite handily in Minnesota, Colorado and Oklahoma, by 23, 18 and 10 points respectively. Oklahoma’s result, at least the size of victory, was particularly surprising, and shows Sanders can do well even in very conservative states.

Also of note from Super Tuesday. It seems Sanders did very well with Hispanic voters in Colorado. Courtesy of the New York Times:

CO

This syncs up with a poll that had Sanders lead among Hispanics[1], and also Nevada where it seems he also performed well with that demographic. Also evident from this picture: Sanders did well in places that favored Obama over Clinton in 2008, which also syncs up with results from Iowa, NH and Nevada.

Keeping all this in mind, let’s look ahead. March 5 & 6 has 4 states: Nebraska, Kansas, Louisiana and Maine. It’s very possible Sanders can win 3 of these states, Nebraska, Kansas and Maine, and by solid margins. This would chip into Clinton’s delegate lead a bit, and give Sanders some momentum going ahead, which could be helpful for March 8. Mississippi is likely to be a large Clinton win, but Michigan has 130 delegates, and is more favorable to Sanders. His message about creating jobs, boosting wages and railing against trade bills that send our jobs overseas, could play very well in the state. While a win would be spectacular, a strong result would at least be very beneficial both for delegates and chipping away at Clinton’s “inevitability” image.

March 15 is another critical day with 5 states voting, all delegate heavy. The day doesn’t look favorable to Sanders at the moment, so the key will be picking up as many delegates as possible. He can have a good day delegate wise, Florida has a solid amount of white liberals, Illinois, Missouri and Ohio all have solid to large numbers of white working class voters. A win, Ohio and possibly Missouri are likely candidates, will be spectacular for Sanders’ media image, but more importantly he will need to win as many delegates as he can on this day to keep Clinton within realistic striking distance, and to pad his numbers because the map becomes very favorable after this.

Arizona, Idaho, Utah, Alaska, Hawaii and Wyoming are all states either Obama won in 2008 or look favorable to Sanders’ demographics, especially if he continues to do well with Hispanics in the west and working class whites. During this time are two states with a lot of delegates, Wisconsin and Washington, that look very good for Sanders. Winning these states by large margins, which is very possible, would give Sanders some good delegates, capping a span where he can win most of the states.

Then comes New York. A state that is favorable for Clinton, (not only her home state but the New York City area is a base of strong support) but it does also have a high number of white liberals, as well as working class voters. Sanders will need to win as many delegates as possible, possibly by doing very well in upstate NY taking working class voters.

April 26 has 5 northeast states, 3 of which Obama won in 08: Delaware, Connecticut, Maryland while Clinton took Rhode Island and Pennsylvania. Sanders can compete in all of these states, with a strong chance to win some. Pennsylvania will be particularly important, given it’s large amount of delegates and it’s very large white, working class population. Outside of Philly and it’s suburban area, much of the state is rural and blue collar, Pittsburgh still has a strong labor tradition, and lots of the state has been hard hit by loss of jobs where Sanders’ message can resonate. This is a state Sanders should focus on, a strong result or even win would be huge.

After this are several states that could be favorable for Sanders: Oregon, North & South Dakota, and West Virginia. Oregon is clearly a strong fit, a white liberal state that went for Obama in 08, and even in July 2015 a poll showed Sanders within striking distance…while polling out of West Virginia shows Sanders very much alive if not leading. A very white, working class state that has been badly hammered by job loss, could be a big win for Sanders. Montana is a white rural state, with a populist streak that Obama won in 08 and the last poll from there indicated a strong support for Elizabeth Warren. Kentucky and Indiana are very conservative states, but white and rural, not far off from Oklahoma. New Mexico is a fairly liberal state, and if Sanders can continue to do well with Hispanics in the west this could be another big win.

Much of these states are small however. There is one state that could be essential, if Sanders was to build momentum in this way described above:

California.

The state has 475 delegates up for grabs, and has large numbers of liberals, college students and Hispanics. In 2008 Clinton won the state 51.5% to 43 and results show Obama did well in the coastal areas, as well as some inland counties, while Clinton took the rest of the state, and won the Hispanic vote with 65%. The liberal vote, (51% of the state in 2008) was split 48-48% between them.[2]

It’s very possible Sanders can win Obama’s support in 2008, and by bigger margins. It’s also possible liberals comprise a bigger number, as has been the case in much of the US. The liberal coastal area alone makes the state tighter for Sanders, and if he can maintain and ideally expand this support among Hispanics, get strong youth turnout, and continues to win Independent voters, California could be a big win for Sanders. If Sanders can make it all the way to California, perhaps even in a good position by successes in earlier states, this could be the state that decides the nomination.

So, after surviving Super Tuesday the map becomes a lot more favorable for Sanders going forward, with some large states that could be in play for him. He can win the majority of states starting tonight going forward, which would help his momentum and image. The biggest hurdle Sanders faces, is how widely it’s reported the nomination is over. As well as other discouraging tactics such as reports including super delegates to lessen the strength of his victories in places such as New Hampshire and Colorado. If Sanders can win states and keep doing so, it can help erode these media portraits, and bring more name recognition to his campaign, helping in bigger states where it will be critical he can win delegates. Voters in a state may like Sanders, but if they feel the campaign is already over, it of course doesn’t matter. This could be come a self sustaining cycle either way. If he finds continuing success, it will continue to strengthen his polling numbers, making him seem more likely, etc etc

Momentum, name recognition, turnout especially from youth and less general appearance of impossibility will be critical for Sanders taking advantage of the demographically favorable states coming up.

One quick note about super delegates. As mentioned earlier, they can change their vote at any time for whoever. Super delegates have never decided a primary, they always back the leading candidate. This is why Sanders must do well as possible going forward. If he has the delegate lead entering the convention, super delegates will back him. If Clinton has the lead, they will back her. Some worry the party may refuse to back Sanders, but I find this unlikely. It would be dangerous to go against the candidate with the lead, and if it was done could be even more dangerous given the unfair treatment and roadblocks many Sanders supporters feel the Democratic Party has given him, and their already voiced concerns about the super delegate itself. There are also over 230 super delegates left unpledged at the moment. If Sanders was to win the majority of states going forward, including some big wins, and continue to strengthen his polling both against Clinton and Republicans (which already look favorable) it’s possible more Super Delegates will pledge for Sanders, a few may even jump from Clinton to him.

Which leads me to a final point: Electability.

Many worry about Sanders’ electability, but this should not be a concern. Sanders can absolutely win the Presidential Election.

There are several factors to keep in mind.

1: Anyone can vote in the general election. This means Independents, who seem to strongly back Sanders.

2: Youth. Sanders has very strong support with the under 30 crowd, and while youth turnout is famously low, they did come out in record numbers for Obama in 2008, and given the fervent support Sanders enjoys, its possible that at lest a small bump in youth turnout will happen, which could be enough to ensure some states on the fence are tipped his way.

3: The blue states will vote blue. The red states will vote red. As always the election will be decided by the swing states. Can Sanders win these states? I think the answer is yes, and this leads to my next two points.

4: The republican candidates. The one with the most broad appeal, John Kasich, has a near 0 chance of winning the nomination. Even if he did, his platform of increasing defense spending, cutting entitlements, and general support of Reaganomics may not play very well, especially against Sanders. His elimination of estate taxes while raising the cigarette tax in Ohio, pushing for increased military spending while cutting entitlements, writes the Sanders “working people paying for the rich” campaign line for him.

Trump and Cruz are intensely disliked outside the Republican Party. Even if every Republican came out to stop Sanders, moderates are no guarantee to support either, some Republicans may just not vote at all if they have Cruz or especially Trump as their nominee. An Independent Trump run would only help Sanders, as would be Republicans get siphoned off to him. Rubio pushes standard Republican economics which again may not fare well against Sanders’ campaign about the working and middle class, creating jobs and boosting wages. “Socialism” as a political attack is nothing to be worried about. It may strengthen Republican support, but it may do very little outside of the party. Recent polls have shown increasing numbers of Americans embracing the word socialism. [3][4] I feel perhaps the tactic is actually backfiring on conservatives. When a word is over used it loses its impact, and now that a candidate is no longer running away from the word, even embracing it, as people look at Sanders they may think “Hmmm this is Socialism? I kinda like this guy”. It’s looking very likely that socialism as an insult is losing its impact.

5: Sanders’ ideas. Bernie Sanders has run a campaign dedicated to the middle class. Specifically the erosion of it thanks to jobs sent overseas and stagnant wages. He’s attacked Wall Street excesses, and money in politics. He wants to create 13 million jobs rebuilding the US, boost wages, tax Wall Street speculation to fund tuition free public college and fund Social Security by asking the wealthy to pay into the system. He’s railed against the too big to fail banks which are now even bigger, and Citizen’s United which polls show 80% of Americans disapprove of. Many areas of the US, even conservative ones, do have a deeply populist and anti elitist streak in them.

Will this let Sanders win states like Oklahoma, Utah, Kansas and Alabama? No. However, it will play very well in more moderate, working class states, that will vote Democrat, especially ones that have seen jobs sent away. States like Ohio, Iowa even West Virginia which was a Democratic stronghold into the 90s though has gone increasingly Republican due to increased liberalism, and abandonment of labor, by the Democratic Party. States that some feel could be in play like Pennsylvania or Michigan will almost surely back Sanders and his strongly pro labor, union and working/middle class campaign. Can Sanders platform win in states like Ohio, Iowa, Colorado, Nevada, New Mexico, Virginia and Florida? Absolutely, and he wouldn’t need all. Certain combinations would do the trick, Ohio and Iowa could do it, Florida alone would be enough.

So, does Bernie Sanders have an uphill battle in the Democratic Primary? Yes. He needs to start winning states tonight, win the majority going forward and pick up some large ones. Is it impossible? No. The map favors him and name recognition/momentum could take him a long way. Some of the large states do have demographics in his favor. Bernie Sanders has an uphill road in front of him, but the nomination is not already over, and in fact he can take a legitimate fight all the way to the convention. If Sanders could force a 2008 type primary, perhaps even in a loss he (pushed by supporter campaigning) could be given a cabinet position, as happened in 2008. Sect of Labor Sanders could push his jobs program and wage hikes, perhaps bring in some more progressive economists such as Robert Reich and Joseph Stiglitz. At the very least, be a voice for the progressive movement in the cabinet to keep the Democrats honest. It would surely influence the Democratic Party, with a growing progressive movement and Elizabeth Warren in the waiting.

Sanders campaign was like that of Ron Paul in 2012: Hoping to influence the party, but probably understanding there was a slim chance of winning. Sanders has surpassed everyone’s expectations, perhaps even his own. He will go to the convention and try to leave a lasting imprint on the party, this I am sure of. However, he has the potential to go farther, and it starts this weekend with Maine, Nebraska and Kansas.

 

Sources/References:

http://www.huffingtonpost.com/entry/bernie-sanders-2016_us_56b91726e4b01d80b2478746

1: http://freebeacon.com/politics/free-beacon-poll-sanders-overtakes-clinton-in-colorado/

2: http://politics.nytimes.com/election-guide/2008/results/states/CA.html

3: http://www.politico.com/story/2016/02/democrats-poll-socialism-219600

4: http://www.marketwatch.com/story/42-of-democrats-are-in-favor-of-socialism-2016-01-31