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economics

Martin Cantor, director of the Long Island Center for Socio-Economic Policy, says declining labor participation on Long Island gives him cause for concern. Photo of labor demonstration from Pixabay

On Monday, Sept. 5, Americans took off from work in honor of the contributions made by laborers throughout their national history. This Labor Day was an opportunity to catch up with Martin Cantor, director of the Long Island Center for Socio-Economic Policy. During an exclusive interview, he discussed some of the labor trends on Long Island, the success of remote work and the role of unions today.

How would you describe the current state of the labor force on Long Island?

First, we still haven’t recovered all of the jobs lost during the [COVID-19] pandemic. We’re about 30,000 jobs shy. However, we have a strong labor force — I think we have about 1.5 million people in it. Still, our labor participation rate is not as it once was prior to the pandemic. There are still people on the sidelines.

What labor trends on Long Island do you find most troubling? Also, which trends are most encouraging?

The most troubling is that a lot of our workforce has not come back. The economy cannot expand unless our workforce participation rate increases, and that gives me concern. The other thing that gives me concern is that the Federal Reserve is going to aggressively go after inflation by increasing interest rates. With employee productivity at record lows, that could mean layoffs in the future.

Speaking of layoffs, do you believe there is already a labor shortage on Long Island?

No, I don’t think there’s a labor shortage. I think that if there’s any kind of a shortage, it’s people not wanting to come back to work. 

How does the cost of labor factor into these growing economic concerns?

Well, the cost of labor is very important, and that’s part of what caused the inflation. Not only did we have all of that extra money that the federal government put in, but we arbitrarily increased the minimum wage. That led to higher prices in the marketplace. 

I’m not denigrating the minimum wage [$15 an hour on the Island] — it’s only $31,000 a year. It’s very difficult for one person to pay for rent, food and electricity living on the minimum wage, but it did have an economic impact.

Do you think that the gradual development of remote work will have a positive long-term effect on the labor force?

Well, it depends where you are. The quick answer is yes. Two things have happened during the pandemic. Number one: Employers learned to have a different business model that didn’t require everybody to come into the office. They were able to reduce the amount of space that they needed to rent. 

The other thing was that employees found they could have a better quality of life by working remotely. They didn’t have to commute two hours a day to get into the City. On the other side of the coin, Goldman Sachs just announced that there’s no more remote work and everybody has to come into the office in New York City.

Do you think a schism is emerging between those who work from home and those who go to the office?

I wouldn’t call it a schism, but I will tell you that how people work and how businesses operate have changed. I think that congestion pricing in the City is a big influencer on all of that. 

If people don’t want to ride the trains, they usually drive in and have to pay more money. They might insist on working remotely. They also might insist on getting higher wages from employers. Some businesses might relocate out of the City because it is too expensive and too onerous for their employees.

So I think you have several things that will impact where people work and how people work.

How has the relationship between workers and public transit evolved here on Long Island?

I will tell you this: The Long Island Rail Road is [operating] at about 50% less than its prepandemic ridership. I took the train about three weeks ago, and the train was empty. Even when I jumped on the train at Penn Station at about 4:30 — which is normally packed — the train was empty. 

What accounts for the popularity of labor unions today?

People have felt this was a very difficult time during the pandemic. Some people have taken a look at life’s choices and are saying, “Hey, I’m not getting paid enough to do this stuff.” They want better benefits, a proper workplace environment and a salary commensurate with their skills. That’s why unionization is at one of its highest points in years.

What is your long-term forecast for the regional economy on Long Island?

Our regional economy is doing well. Historically and even currently, Long Island has always been able to fend off bad economic times. I think we are doing fine and we will be doing fine. 

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Do we need tax cuts?

Lots of people agree that our current tax rules are outdated, cumbersome and unfair. On the other hand, there will never be total unanimity on how the tax code should read because one person’s tax cut is another’s tax increase, and for sure no one wants to lose whatever benefits they already have. So the prospect of changes is only palatable as a campaign promise if there would be an overall greater good that everyone recognizes. Such a benefit was proposed during the 2016 campaign as a way to recharge the slow economy. And the conversation has continued from there.

But hold on. The circumstances have changed. Our economy is no longer sluggish. In fact, it seems to have taken off. And, unusually, the economies around the globe appear to have also done so, almost in unison. This rare good news bodes well for the United States and others around the world.

So, back to my original question: Why do we need a tax cut?

If the answer is, for political reasons, that stinks. Just because politicians promised to cut taxes, a regular pledge to get votes, is not good enough to shake the ground on which we live. If the answer is to reallocate wealth, that has never been the role of our capitalist democracy. If the answer is to make more equal the lives of the haves and the have-nots going forward, then simply raise the taxes on the haves in proportion to how much they have benefited from our same capitalist society. And finally, if the answer is to raise revenue in order to reduce our unprecedented national debt, then raise taxes across the board proportionately on everyone who enjoys the services provided by life in these United States.

Sometimes one can get too close to a problem and not see the bigger picture. There is a saying that goes: Are we doing things right—or are we doing the right things? To check on whether we are doing things right, we have to engage in the details, the nitty-gritty of the process. In the case of tax reform, we have to hammer out every line to the greater satisfaction of all concerned. But to decide if we are on the right track, that is, if we are doing the right things, we have to stand back and examine the whole picture. Has the situation changed, perhaps rectified itself, or do we still have to help matters along?

I suggest the latter and I’ll explain why.

Businesses, which will reap three-quarters of the tax proposals over the next 10 years as currently presented, are already, for the most part, doing just fine. That is why the stock market keeps hitting new highs. The prices of the stocks are earnings driven, and the companies we can publicly track via the markets are showing record profits. Why do they need more stimulus? To expand and create more jobs, which is a political mantra? More likely companies will reinvest the additional profits in job-saving equipment, which is the way trends are already leaning. If the government wants to create more jobs, it should help create more businesses, which it could do by offering tax breaks to start-up companies. But that doesn’t require broad tax overhaul. That would just take one change. Mr. President, pick up the pen. Furthermore, to encourage companies to add more workers, offer incentives specifically pegged toward those additional salaries, not tax breaks that can simply result in higher profits in the misguided hope of higher tax revenues.

The initial tax proposals include eliminating deductions for large medical expenses; student loan interest; alimony; tax preparation costs; moving to a new job expenses; casualty, disaster and theft losses; and qualified adoption fees, according to CNBC. Are those the changes we want for our society?

What ultimate goal can we all get behind, and do we get there with tax cuts?