Thrift Stores and the Recession

As people start grappling with the recession, they look for means of saving money. This usually means cutting back on purchases and holding on to items a bit longer than maybe one would in more abundant times.

As a result of this behavior, thrift stores in Calgary (and elsewhere) are feeling a pinch. Paraphrasing from an article in the Calgary Herald (March 1 2009):

Calgary's social agencies are issuing calls for donations of household items as the recession begins to pinch city residents.

"We've noticed that people are not going out and buying new things; they're hanging onto what they have," said Sparrow. "We're also seeing new faces in our stores." At the same time, the agency has experienced a 20 per cent increase in demand for its Free Goods Referral program. Women in transition or coming out of a crisis are referred to the program by one of 60 community agencies and provided a voucher to obtain clothing and household items at a Women In Need thrift store. Sparrow's organization especially needs dishes, pots and pans, linens, flatware, as well as clothing and accessories, she said. Its Dover-area store also takes furniture. "We're hoping that when people start thinking about spring cleaning, they think about us and donate," said Sparrow.

It's an about-face from the boom, when thrift stores struggled to cope with a flood of donations. Some turned donors away and a few hired security guards to prevent people from dumping unwanted goods on their doorsteps.

Beth Heyd, operations manager of The Salvation Army's Thrift Stores, estimates donations of household goods have dropped by half. Normally, there'd be a dozen sofas in the furniture section of the Salvation Army's Horizon Heights stores at 36th Street and 32nd Avenue N. E., she said, but only one or two couches were available on Thursday. "My theory is that you'll give second thought to buying that new sofa if you're worried about getting laid off," said Heyd. Donations of used clothing remain strong, but she's noticed an increase in professionals, especially women, shopping for used business wear at the thrift stores.

Likewise, the Calgary Drop-In and Rehab Centre put out a call for donations of linens for the 2,000 homeless people who pass through its doors every day. "We are in desperate need of towels and blankets," said Louise Gallagher, director of public relations and volunteer services for the drop-in centre.

My wife and I did a big clean out of our closets today, taking several bags of clothing to a local thrift store. Next time you're struggling to get through your closet, think about doing the same.

The Employee Free Choice Act

The following appeared in the Washington Post on Wednesday (Feb 25):

Although its collapse has dominated recent media coverage, the financial sector is not the only segment of the U.S. economy running into serious trouble. The institutions that govern the labor market have also failed, producing the unusual and unhealthy situation in which hourly compensation for American workers has stagnated even as their productivity soared.

Indeed, from 2000 to 2007, the income of the median working-age household fell by $2,000- an unprecedented decline. In that time, virtually all of the nation’s economic growth went to a small number of wealthy Americans. An important reason for the shift from broadly-shared prosperity to growing inequality is the erosion of workers’ ability to form unions and bargain collectively.

A natural response of workers unable to improve their economic situation is to form unions to negotiate a fair share of the economy, and that desire is borne out by recent surveys. Millions of American workers – more than half of non-managers – have said they want a union at their work place. Yet only 7.5% of private sector workers are now represented by a union. And in all of 2007, fewer than 60,000 workers won union status through government-sanctioned elections. What explains this disconnect?

The problem is that the election process overseen by the National Labor Relations Board has become drawn out and acrimonious, with management campaigning fiercely to deter unionization, sometimes to the extent of violating the labor law. Union sympathizers are routinely threatened or even fired, and they have little effective recourse under the law. Even when workers overcome this pressure and vote for a union, they are unable to obtain contracts one-third of the time due to management resistance.

To remedy this situation, the Congress is considering the Employee Free Choice Act. This act would accomplish three things: It would give workers the choice of using majority sign-up-- a simple, established procedure in which workers sign cards to indicate their support for a union – or staging an NLRB election; it triples damages for employers who fire union supporters or break other labor laws; and it creates a process to ensure that newly unionized employees have a fair shot at obtaining a first contract by calling for arbitration after 120 days of unsuccessful bargaining.

The Employee Free Choice Act will better reflect worker desires than the current “war over representation.” The Act will also lower the level of acrimony and distrust that often accompanies union elections in our current system.

A rising tide lifts all boats only when labor and management bargain on relatively equal terms. In recent decades, most bargaining power has resided with management. The current recession will further weaken the ability of workers to bargain individually. More than ever, workers will need to act together.

The Employee Free Choice Act is not a panacea, but it would restore some balance to our labor markets. As economists, we believe this is a critically important step in rebuilding our economy and strengthening our democracy by enhancing the voice of working people in the workplace.

Statement Endorsers

Henry J. Aaron, Brookings Institution
Katharine Abraham, University of Maryland
Philippe Aghion, Massachusetts Institute of Technology
Eileen Appelbaum, Rutgers University
Kenneth Arrow, Stanford University
Dean Baker, Center for Economic Policy and Research
Jagdish Bhagwati, Columbia University
Rebecca Blank, Brookings Institution
Joseph Blasi, Rutgers University
Alan S. Blinder, Princeton University
William A. Darity, Duke University
Brad DeLong, University of California/Berkeley
John DiNardo, University of Michigan
Henry Farber, Princeton University
Robert H. Frank, Cornell University
Richard Freeman, Harvard University
James K. Galbraith, University of Texas
Robert J. Gordon, Northwestern University
Heidi Hartmann, Institute for Women’s Policy Research
Lawrence Katz, Harvard University
Robert Lawrence, Harvard University
David Lee, Princeton University
Frank Levy, Massachusetts Institute of Technology
Lisa Lynch, Brandeis University
Ray Marshall, University of Texas
Lawrence Mishel, Economic Policy Institute
Robert Pollin, University of Massachusetts
William Rodgers, Rutgers University
Dani Rodrik, Harvard University
Jeffrey D. Sachs, Columbia University
Robert M. Solow, Massachusetts Institute of Technology
William Spriggs, Howard University
Peter Temin, Massachusetts Institute of Technology
Mark Thoma, University of Oregon
Lester C. Thurow, Massachusetts Institute of Technology
Laura Tyson, University of California/Berkeley
Paula B. Voos, Rutgers University
David Weil, Boston University
Edward Wolff, New York University

M.C. Escher: builder of economic models

Mark McHugh at the Across the Street blog has re-developed some of M.C. Esher's drawings to help us understand the current state of the bailouts going on in the U.S. Here's my personal favorite:

Stiglitz on the financial crisis and the Obama administration's plan

Nobel laureate Joseph Stiglitz appeared on Democracy Now to discuss his views on the Obama administration's financial bailout in the U.S. and U.S. foreign policy. It is a very interesting interview in which Stiglitz expresses some of his ideas on competitive markets (and their role in the financial crisis), the importance of (stimulating) aggregate demand, and the importancei n addressing regulatory and structural flaws in the U.S. economy. Near the end of the interview he also discusses globalization.

Economics Photo of the Week (March 2)

John Maynard Keynes & Henry Morgenthau in 1944 at the monetary conference that spawned the idea of the World Bank.

Economics Photo of the Week (Feb 23)

Paul Samuelson in 1950.

Economics Photo of the Week (Feb 17)

The library of Life Magazine's photos are available via Google. Here's a photo of Albert Meyer teaching in Beruit, 1953 (photo by Lisa Larson).