by Tim Paulson, Secretary-Treasurer
San Francisco Building & Construction Trades Council
What?! Paulson wants to talk about interest rates? Give me a break…..
Well I do. Because it affects us as leaders, union members, apprentices and families in our profession and craft.
I sit on the Citizen Advisory Board of the Federal Reserve Bank of San Francisco. The national AFL-CIO worked very hard to get me, as a labor representative, on this important board. And they are trying to get more of us on the actual board dominated by bankers - the institution that Alexander Hamilton created in the early days of forming our breakaway American colonies into a functional country.
The AFL-CIO invited and paid for thirty of us from around the country who sit on these boards and councils to meet in DC for two days to get briefed and plan labor strategies.
For example, Harry Melander, journeyman carpenter, head of the Minnesota Building and Construction Trades Council, sits on the Minneapolis branch of the Fed.
Interest rates can be our friends and enemies. When we buy a car or house today – if we are lucky – interest rates are pretty low. When we miss a credit card payment or take out a payday loan, interest rates gouge us. Our savings accounts don’t generate any real interest income right now, but the banks still like to keep and use our money. I can go on and on.
When I was 17 years old and a freshman in college I was lectured to by Professor Milton Friedman, an influential conservative economist, who informed our macroeconomics class that the only reason that government should exist is to keep an army and navy and that everything else should be left to the beautiful magic of the “free market.” As a young idiot I though he was a genius … for about three days. I now know that the “free market” is code for “greed.”
How This Affects Construction Workers
When developers decide to build something, they need to know how much banks and investors demand for their rate of return before they loan money to them. So our developers need to figure out if they can make any money on their investment. This is also an interest rate.
During the painful great recession where we experienced 70% of skilled union construction workers out of work, American banks and financial institutions refused to invest in us. We sat at home and some of us lost our homes and cars and other assets. I almost traveled to China to get money for the Hunters Point development. American bankers kept all their money on the sidelines during this depression and refused to invest in jobs. Thank you, bankers, for screwing workers.
And then our government bailed the banks out! Not homeowners or workers. From 2007 on they ignored the American worker. But, hey, we still are supposed to believe in the stability of our American institutions. Whatever.
Cut to the chase, Paulson.
The Federal Reserve Bank, our national bank, was initiated by one of our founding fathers, Alexander Hamilton, who was also a major bank president in New York. (And then he got murdered in a political pistol duel and 200 years later they made a hit musical on Broadway. Ha.)
Congress charges the Federal Reserve Bank with only two things: to ensure full employment; and keep inflation low. That’s it. They call it the “blunt instrument.” Their tool: They raise or lower interest rates by “printing money” via 1) issuing more or, 2) buying up U.S. bonds to “control” that market.
In my half ass opinion, the Fed has been weak on full employment but is over-obsessed with interest rates to keep inflation in check.
Higher interest rates stifle development and incentives to create jobs and we need to be diligent.
The Wall Street Journal and other business-friendly newspaper mouthpieces focus on stocks and bonds, and they are happy to report that unemployment is low at just 4%. Whoopie do. People are working three jobs and still can’t pay rent. If an Ironworker works only two days in a month she is counted as being employed. The data is skewed.
The real metrics for workers are still not taken seriously by the Federal Reserve Bank and our national leaders need to know that full employment means that one job should be enough - along with the right to belong to or form a union, not be abused as an “independent contractor” and have a voice at work. This should be included in all economic and legislative decisions.
Despite now being your Secretary Treasurer I am going to keep this Federal Reserve appointment as one of my side jobs.
When we work together we win.