Archives for August 2017

But some analysts fear that the government is going too far, giving employers too much of an upper hand and greatly eroding the power of unions, prompting at least one of them to promise a nationwide strike.

Mr. Macron’s changes make it easier to hire and fire workers and allow some workplace issues to be negotiated at the company level, rather than with national unions, in hopes of stimulating both growth and job creation. The government focused especially on smaller businesses with fewer than 50 employees — the majority of French businesses — which have complained bitterly about excessive red tape and regulations.

“This reform brings a radical change, a big bang in the functioning of the French labor market,” said Gilbert Cette, an economist at the University of Aix-Marseille. “This is a new approach that turns the market upside down completely,” he said, referring to the decentralization of labor negotiations especially for smaller companies.

The step by France was also important to Europe, where far-right and populist forces have fed on economic stagnation as well as on the disruption caused by globalization. The new step by Mr. Macron tries to answer both those challenges, belatedly, on France’s own terms.

France had put off fundamental changes to revitalize its economy far longer than its European Union partners. Germany crossed that Rubicon in the 1990s under Chancellor Gerhard Schröder. More recently, painful changes were forced upon a host of other nations by the euro and debt crisis.

“There’s no long term sustainability for the eurozone if France is not managing to reform structurally like for example what Spain did, what Portugal did a bit, what Ireland did,” said Karel Lannoo, the chief executive officer of the Center for European Policy Studies, a research organization in Brussels.

“If one of the core partners doesn’t reform or just piggybacks off Germany, then one day or another, the currency collapses,” Mr. Lannoo warned.

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Others agreed.

Roughly 15 years ago, “France and Germany had economies that were more or less comparable, and that ceased to be the case because the Germans wisely did micro-reforms and the French did not,” said Sebastian Mallaby, senior fellow for international economics at the Council on Foreign Relations.

So the French ended up with “high unemployment, which fed populism, and getting out of that trap is vital to a country where the ratio of public debt to G.D.P. on current trends would eventually turn France into Italy,” Mr. Mallaby said.

A more economically sound France will have more influence with Berlin, and could help soften Germany’s “rather inflexible economic policy for the rest of the E.U.,” he added. In the last few years, “we could have done with more France and less Germany.”

But there is little doubt that for France the changes will bring both opportunity and risk.

“We are entering into an economy built on innovation, skills, digitalization,” said Mr. Macron in an interview Thursday with the weekly newsmagazine Le Point.

“To succeed in this world we need an economy that is much more flexible, much faster moving.”

Employees will no longer have jobs that last for a lifetime, but periods of unemployment are more likely to be temporary and go in hand-in-hand with more frequent job changes and retraining, he said.

Among the changes in the decrees published Thursday is license for employers to negotiate with workers over certain workplace issues rather than having to follow industrywide agreements. That will allow a car parts factory in one region to have a different agreement with its workers than a similar company elsewhere.

Small companies especially are being given more leeway to bargain directly with workers or their representatives, without the mediation of unions.

Not everyone saw the changes as positive ones.

“Macron has amplified something that has been in the air for a bit: to move labor negotiations closer to the ground,” said Michel Pigenet, a historian of work and social movements at the Sorbonne, one of France’s most prestigious universities.

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“But closer to the ground, it’s a fact that unions are weaker,” he said. “Thus the negotiation is certainly going to become less balanced.”

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Unlike several French leaders before him, Mr. Macron was able to push through the changes so quickly because he had — controversially — circumvented parliamentary debate by persuading lawmakers to allow him to make the changes by decrees.

Since his party had a majority in the National Assembly, the lower house of Parliament, and the opposition on both the left and right are divided among themselves, winning assent for the decrees was scarcely in doubt.

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The labor changes were then discussed with businesses and unions behind closed doors. They were unveiled Thursday and will go into effect after they are officially adopted at a cabinet meeting on Sept. 22, then signed by Mr. Macron and officially published.

Parliament has to ratify the provisions in the decrees in the coming months for them to become law, but at this stage that is not expected to be difficult.

Leaders of one major union, the General Confederation of Labor, or CGT, said that the changes were as bad as they expected, and that they would go ahead with a national strike on Sept. 12. Though the demonstration could be volatile, it is not expected to block the changes.

More moderate unions were more cautious, accepting some of the government’s compromises, but worrying about other provisions. Business groups struck a more optimistic note.

The relative equanimity came in large part because the Macron government went to great lengths to consult with everyone whose interests would be affected by the changes, holding more than 100 meetings since May to discuss the different provisions.

“We multiplied the meeting with the social partners and did not exclude anyone,” said Édouard Philippe, the prime minister, referring to both unions and employers, who were briefed on the final version just before the measure was detailed in a televised news conference.

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Two larger unions, the CFDT and Force Ouvrière, have already announced although they were not completely satisfied with the changes, they would not take part in the Sept. 12 protest.

The decision by Force Ouvrière was significant because last year when François Hollande, then the president, tried to win approval for changes in France’s labor laws, its members took to the streets along with the most hard-line union, the CGT.

This year it is different, there was “real consultation” said Jean-Claude Mailly, Force Ouvrière’s leader.

“There were things we got, there were things we avoided and there are things we don’t agree with,” he said, adding that his union had to thoroughly study the changes.

The economist Gilbert Cette and others, including Agnès Bénassy-Quéré, president of the semi-independent Council on Economic Analysis, which reports to the prime minister, warned that the impact would probably not be immediate.

Ms. Bénassy-Quéré said that while there might be more job creation, it could be offset by more workers being fired in the near term. “The short-term impact is not completely clear,” she said, adding, “It will encourage hiring but also could free employers to fire. It’s double-edged: The goal is to make the market more fluid.”

“Macron wants to break with the old system,” Ms. Bénassy-Quéré said, adding that the fluidity would mean that while at first more people might experience periods of unemployment, the hope is that it will be short term.

France lags behind the rest of Europe in its ability to lessen its long-term unemployment, which hovers at about 4.2 percent, according to the Organization for Cooperation and Economic Development.

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Overall unemployment is about 10 percent, but more than twice that for young people. In some areas of the country, especially the poorer suburbs of major cities, as many as 40 percent of youths are unemployed.

While some optimism surrounded the changes, the country still had more work to do, most economists agreed.

“We cannot wait for this reform to be the solution to France’s problems,” said Mr. Cette, noting that labor reforms cannot take three or four years to have the desired impact.

“It is one element along with tax reform, education and professional training that will have an effect,” he added, “but on its own, it’s not enough to bring us back to full employment.”

Correction: August 31, 2017

An earlier version of this article misspelled the surname of the president of the Council on Economic Analysis. She is Agnès Bénassy-Quéré, not Bénnassy-Qéueré.

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Article source: https://www.nytimes.com/2017/08/31/world/europe/macron-france-labor-law.html?partner=rss&emc=rss

Still, the effects are likely to ripple across the globe. Mexico and other Latin American markets that have come to depend on American gasoline and crude oil will have to turn to Europe and elsewhere, putting them in competition with American markets for the same supplies and probably compounding the impact of higher prices.

The amount of refined petroleum products affected by the storm has risen daily, to 3.3 million barrels on Thursday from two million on Tuesday, according to a report by IHS Markit, an analytics and consultancy firm.

Five of Houston’s nine refineries are shut down, though no serious permanent damage has been reported. Floodwaters continue to rise in areas, potentially jeopardizing the city’s other refineries, already operating below normal levels.

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Serious flooding may also be a problem in Beaumont and Port Arthur, where Exxon Mobil, Saudi Aramco-Motiva, Total and Valero have large refineries.

The operator of the Colonial Pipeline has said operations from Texas will resume as soon as refining safely does, but probably no earlier than Sunday. The pipeline, which normally carries more than 15 percent of the fuel consumed nationwide, continues to operate east of Lake Charles, taking petroleum products north.

Even when the refineries start again, problems will remain at the port of Houston. The Coast Guard, already overburdened, needs to remove debris to protect docking vessels, and flooded railways and roads may keep dockworkers from unloading vessels and putting cargo on trains and ships.

The storm’s impact has been felt in oil and gas production as well as refining. Output from offshore platforms is down nearly 20 percent. Oil companies are beginning to return to the platforms to inspect possible damage from the storm, a process that could take weeks, before near full production can resume.

Meanwhile, flooding in the Eagle Ford shale field in southern Texas has cut production by an estimated 300,000 barrels a day. That is only about 3 percent of national production, but more important may be permanent damage to the shale wells. That is an engineering and geological uncertainty since the long horizontal wells, blasted through hard rock, are relatively new and have never been seriously tested by flooding.

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The most important shale field in the country, the Permian Basin in West Texas, was not directly hit by the storm. But with refineries closed along the coast, pipelines out of the Permian have been shut off, and production is already declining. Fuel supplies necessary to keep the drilling rigs going may also fall short because of the refinery shutdowns.

“We’re going to see a curtailment of production levels because the refineries can’t take the product,” said Steve J. McCoy, a senior executive at Latshaw Drilling, an Oklahoma company active in the Permian. “We’re kind of worried about the availability of diesel out here, and that, too, could have an impact.”

That may spur new production in other shale fields, like the Bakken field of North Dakota, where costs of production are usually higher than in West Texas.

Ed Hirs, an energy finance professor at the University of Houston, predicted that “this interruption may help Bakken producers as they ship more crude to the Pennsylvania and New Jersey refiners, and it will throw a temporary lifeline to the refiners in Pennsylvania and New Jersey.”

The flooding has also knocked out trucking routes to gasoline stations, and many stations in Texas and Louisiana are out of fuel or flooded.

Some relief is coming from nuclear power. Two reactors outside Houston are running at full capacity and suffered no serious damage. That is helping to keep the lights on for thousands of residential and business customers.

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Article source: https://www.nytimes.com/2017/08/31/business/energy-environment/storm-oil-industry.html?partner=rss&emc=rss

Even more remarkable, the plan drew praise from across the ideological spectrum, including that of conservative supply-side advocates like Grover Norquist, the president of Americans for Tax Reform, which opposes all tax increases.

Among the organizations lauding the effort were the Urban-Brookings Tax Policy Center, the Tax Foundation, the Institute on Taxation and Economic Policy, and the National Taxpayers Union.

“What makes D.C. so unusual was the bipartisan support,” said Joseph Henchman, executive vice president of the Tax Foundation and an expert on state taxes.

The council chairman, Phil Mendelson, who led the effort, said the capital had to reform its tax code and ease the burden on business and middle- and low-income taxpayers to stay competitive.

“We now have the lowest general sales tax and lowest property taxes in the region, and the business tax is the same as Maryland,” he said. While he conceded that there is no way of knowing to what extent the tax cuts stimulated growth, he added: “We’re no longer seen as the high-tax jurisdiction. People feel good about that, which is a psychological factor that I feel is very important.”

Contrast that success with what happened in Kansas, which also carried out a notable tax experiment recently. Under the leadership of Gov. Sam Brownback, the Republican-dominated Legislature passed deep tax cuts that went into effect in 2013, with only modest efforts to raise revenue by broadening the base. The governor called the move “a shot of adrenaline into the heart of the Kansas economy.”

If so, it was a shot that nearly killed the patient. There was no surge in economic growth — Kansas lost jobs in 2015, the Bureau of Labor Statistics reported, trailing its neighbors Nebraska and Oklahoma and posting one of the worst performances of any state. In June, faced with a $900 million budget gap, Kansas lawmakers threw in the towel. They passed a $1.2 billion tax increase and overrode Mr. Brownback’s veto.

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Tax reform is never easy, and it wasn’t in the District of Columbia, either. There are no Republicans on the council, but as the Republicans have discovered, there can be sharp divisions within the same party. Among elected officials, the main opposition came from Vincent C. Gray, then the mayor, and the most liberal council members, who favored spending increases over tax cuts.

“The counterweight is always to spend the money,” Mr. Mendelson told me this week. “The mayor wanted to spend it, so I had to step up. Other members were willing to stand behind me as long as I was willing to take the political heat.”

The council passed the measure by a vote of 11 to 2. Opponents have fought a rear-guard action to delay putting the measure’s remaining cuts into effect, without success.

To raise revenue, the plan extended the sales tax to service businesses, which swept tanning salons and fitness centers into the tax base. They mounted a spirited opposition, calling the plan a “yoga tax” and a misguided effort to tax exercise, fitness and health.

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“They almost succeeded in derailing it,” Mr. Henchman said. “It was really just a loophole, but every loophole has a constituency, and they can be very vocal.”

What can lawmakers now trying to reform the federal tax code glean from the District of Columbia’s experience?

The federal tax code is obviously far more complicated. Taxpayers in the capital, as in most states, generally report just their federal adjusted gross income. So thorny issues like mortgage interest, charitable contributions, and state and local tax deductions weren’t part of the debate.

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The capital also had a balanced budget that was generating a surplus, which gave it more leeway for tax cuts.

But the philosophy behind the local effort could well apply to the federal government. Steven M. Rosenthal, who served as staff director of the District of Columbia’s tax revision commission and is a senior fellow at the Tax Policy Center, said the Trump administration and lawmakers should seek to “lower rates for competitiveness but tackle loopholes at the same time.”

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“Lower rates mean fewer economic distortions — and the broader the base, the more we remove taxes as a driver of economic decisions,” he added. “That’s the tried-and-true theory of tax reform.”

Mr. Mendelson said Republicans might need to sacrifice ideological purity in pursuit of a common goal. “The goal should be to get to 51 percent of the votes in Congress, not 100 percent support within the Republican Party,” he said. “If you don’t have unanimity in the party, you need strong majority leadership that’s willing to form a bipartisan coalition with some dissent within the party.”

Mr. Henchman also stressed compromise. “Nobody got everything they wanted,” he said. “But they got enough that they felt it advanced their goals.”

He also cited the “high-level leadership” provided by Mr. Mendelson — someone who can stand up to special interests and make a persuasive case, as he did, that the code could be fairer and more competitive.

That’s a challenge that now falls to Mr. Trump, especially since he largely abdicated any leadership role in the failed effort to repeal and replace the Affordable Care Act.

Speaking this week in Missouri, he kicked off the campaign with broad themes and few details, pledging to “dramatically simplify” the federal tax code, “eliminate special-interest loopholes” and create a “competitive tax code that creates more jobs and better wages.”

Those may be platitudes, but the most important lesson from the District of Columbia may be a simple one: It can happen.

Correction: August 31, 2017

An earlier version of this column misstated the budget deficit looming in Kansas before legislators passed a tax increase. It was $900 million, not $900 billion.

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Article source: https://www.nytimes.com/2017/08/31/business/tax-reform-congress.html?partner=rss&emc=rss

“Part of the motivation behind it would be to shame certain employers that found large gaps into doing something and taking proactive steps,” said Jake Rosenfeld, a sociologist at Washington University in St. Louis who has studied the issue.

White women’s median hourly earnings are 82 percent of those of white men, according to a Pew Research Center analysis of Bureau of Labor statistics data. Asian women earn 87 percent of what white men earn, while black women earn 65 percent and Hispanic women earn 58 percent. Black and Hispanic men also earn less than white men, while Asian men out-earn them.

The pay gap shrinks after controlling for factors like industry, education and hours worked, but a gap persists. Economists say the unexplained portion of the gap is probably because of discrimination.

The Obama regulation required that employers with at least 100 workers include aggregate, anonymous information about pay for categories of employees, on a form they already submit with information on sex, race and ethnicity. Similar policies are in effect in Europe, including a new law in Britain.

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Proponents said the regulation would make it easier for employers to police themselves and harder for them to hide discrimination. It would also make it easier for the federal government to investigate them.

Business groups opposed the rule, saying it was a burden and wouldn’t prove that any disparities were because of bias. The Trump administration agreed, and said it required too much paperwork.

While pay transparency doesn’t prove discrimination, it’s a starting point for employees and regulators to find out if there is any. Lilly Ledbetter, who inspired the Fair Pay Act of 2009, did not find out she was being paid less than men until she received an anonymous note 19 years after she started her job.

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The little research that exists has shown that pay transparency leads to smaller pay gaps, sometimes just by making people aware there’s an issue. Mr. Rosenfeld found in a study that it raised wages by helping workers negotiate. Many public-sector employers are required to publish pay, and pay gaps tend to be smaller.

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Employers might not intentionally pay people differently, said Cynthia Estlund, a law professor at New York University who has written on the topic. But publishing the information highlights pay gaps that arise for other reasons, like the fact that women negotiate pay less often.

“These individual negotiation strategies with a lot of secrecy around salaries basically allow employers to keep salaries lower for some groups,” she said.

Pay transparency can have unintended consequences. Though some research has found that it motivates people to work harder, other research has found that it lowers morale and motivates people to look for new jobs.

When California cities began publishing municipal salaries, one study found, it prompted pay cuts among men. The quit rate also increased by 75 percent.

A study by economists at Princeton and the University of California, Berkeley, found that people who were paid below the median reported lower job satisfaction and were more likely to look for new jobs, and that people who earned above the median reported no higher job satisfaction.

To get around the problem, some companies, like Salesforce, have done internal audits and given people raises to close the pay gap without publicizing pay. That might seem like the easiest solution — but companies are less likely to feel the need to do it without outside pressure.

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Article source: https://www.nytimes.com/2017/08/31/upshot/one-effort-to-close-the-gender-pay-gap-wont-get-a-try.html?partner=rss&emc=rss

“Part of the motivation behind it would be to shame certain employers that found large gaps into doing something and taking proactive steps,” said Jake Rosenfeld, a sociologist at Washington University in St. Louis who has studied the issue.

White women’s median hourly earnings are 82 percent of those of white men, according to a Pew Research Center analysis of Bureau of Labor statistics data. Asian women earn 87 percent of what white men earn, while black women earn 65 percent and Hispanic women earn 58 percent. Black and Hispanic men also earn less than white men, while Asian men out-earn them.

The pay gap shrinks after controlling for factors like industry, education and hours worked, but a gap persists. Economists say the unexplained portion of the gap is probably because of discrimination.

The Obama regulation required that employers with at least 100 workers include aggregate, anonymous information about pay for categories of employees, on a form they already submit with information on sex, race and ethnicity. Similar policies are in effect in Europe, including a new law in Britain.

Photo

Proponents said the regulation would make it easier for employers to police themselves and harder for them to hide discrimination. It would also make it easier for the federal government to investigate them.

Business groups opposed the rule, saying it was a burden and wouldn’t prove that any disparities were because of bias. The Trump administration agreed, and said it required too much paperwork.

While pay transparency doesn’t prove discrimination, it’s a starting point for employees and regulators to find out if there is any. Lilly Ledbetter, who inspired the Fair Pay Act of 2009, did not find out she was being paid less than men until she received an anonymous note 19 years after she started her job.

Newsletter Sign Up

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An error has occurred. Please try again later.

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The little research that exists has shown that pay transparency leads to smaller pay gaps, sometimes just by making people aware there’s an issue. Mr. Rosenfeld found in a study that it raised wages by helping workers negotiate. Many public-sector employers are required to publish pay, and pay gaps tend to be smaller.

Advertisement

Continue reading the main story

Employers might not intentionally pay people differently, said Cynthia Estlund, a law professor at New York University who has written on the topic. But publishing the information highlights pay gaps that arise for other reasons, like the fact that women negotiate pay less often.

“These individual negotiation strategies with a lot of secrecy around salaries basically allow employers to keep salaries lower for some groups,” she said.

Pay transparency can have unintended consequences. Though some research has found that it motivates people to work harder, other research has found that it lowers morale and motivates people to look for new jobs.

When California cities began publishing municipal salaries, one study found, it prompted pay cuts among men. The quit rate also increased by 75 percent.

A study by economists at Princeton and the University of California, Berkeley, found that people who were paid below the median reported lower job satisfaction and were more likely to look for new jobs, and that people who earned above the median reported no higher job satisfaction.

To get around the problem, some companies, like Salesforce, have done internal audits and given people raises to close the pay gap without publicizing pay. That might seem like the easiest solution — but companies are less likely to feel the need to do it without outside pressure.

Continue reading the main story

Article source: https://www.nytimes.com/2017/08/31/upshot/one-effort-to-close-the-gender-pay-gap-wont-get-a-try.html?partner=rss&emc=rss