Marketplace - What happens if Trump brings back Schedule F?

Episode Date: October 31, 2024

An estimated 50,000 civil service jobs were slated to become political appointments under a Trump-era executive order. If Donald Trump returns to the White House, there’s a chance he’ll reinstate it, leading to the biggest federal workforce shakeup in nearly 150 years. Also in this episode: A new resource for farmers market pricing and the key to sustainable wage growth.

Personnel is policy. That's the expression, right? From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl. Thursday, today, October the 31st. Good as always to have you along, everybody. A distinctly not scary number on inflation today, 2.1% year over year. So we learn from the personal consumption expenditures price index, which was out this morning. So, you know, that's good. Along with it, we got another key indicator the Fed keeps a close eye on, the employment cost index, which showed that in the third quarter it was almost 4% more expensive to employ somebody than it was a year earlier.

That is a slower rate of increase than the previous quarter, but still, as you can tell, about 2 percentage points ahead of inflation. The challenge here, of course, is keeping inflation and wages, wages being the key component of employee costs, right? It's keeping them in some kind of balance. As Marketplace's Justin Ho reports, the secret sauce to that is making workers more productive. According to the Labor Department, productivity has grown in six of the last seven quarters.

One reason? Unemployment is low. People are actually working. Which means? They have time to move from lower productivity jobs to higher paying, higher productivity jobs. And they get time to train up their new occupations. That's Preston Mui, Senior Economist with the research group Employ America. He says the government's also invested a lot in American manufacturing. Plus, supply chains have improved. So, Moe says, workers are more efficient.

We're seeing an uptick in the growth rate of productivity, which means that we're seeing a fall in the growth rate of costs. And that means businesses have fewer reasons to raise prices and that bosses can pay their workers more. This is basic, I would say a very basic building block of how we would think about sustainable wages over time. That's Tim Dewey, chief U.S. economist at SGH Macro Advisors. He says this is how the Federal Reserve thinks about sustainable wage growth.

Earlier this month, Fed Governor Christopher Waller said wage growth could sit comfortably at around 4 percent or even more because productivity keeps growing. As long as productivity is high enough, then it will be sustainable and it will not create higher inflation. But it's not a given that productivity will keep growing. Sarah House, a senior economist at Wells Fargo. Productivity is very volatile on a quarter to quarter

or even year to year basis. House says there are plenty of reasons to believe that productivity will stay strong. A big one is that the tight labor market of the last several years prompted employers to invest in upgrades. New software that make workers more efficient. Also, increased spending on research and development that can help that next big innovation that can boost productivity. Howe says that means the current pace of compensation growth at around 4% is looking pretty sustainable. I'm Justin Howe for Marketplace. On Wall Street today, frightful, actually.

We'll have the details when we do the numbers. This planet is, for the foreseeable future anyway, a petroleum-based economy. Crude oil and natural gas, about which there is a report out today from the Energy Information Administration fracking what it's meant for oil and net gas production here and what it means for the U.S. economy. Marketplace's Elizabeth Troval has that one. Natural gas production has more than tripled in the Permian, Eagleford, and Bakken oil plays over the past decade. And the balance of oil and natural gas has shifted more towards natural gas. Trinity Manning-Pickett is with the Energy Information Administration.

As more crude oil is being produced from these wells, more natural gas will come to the surface over time. It's been an exciting decade in the industry. Natural gas intelligence's Letitia Gonzalez. The advent of shale, obviously, changed the game. And so we've seen much lower prices since then. And the U.S. started shipping liquefied natural gas to Europe and increasingly Asia. That has been the biggest driver of demand here over the last several years. It's expected to continue rising over the next decade at least. The U.S. has actually become a net exporter of natural gas, and the cheap, abundant fuel source has been good for consumers here at home, says Timothy Fitzgerald with the University

of Tennessee. Timothy Fitzgerald, University of Tennessee, U.S. Natural Gas and Energy It provides a lot of choice and flexibility and helps lower consumer energy bills, both for gas bills and for power bills. Natural gas has also helped the U.S. phase out a dirtier source of electricity, coal. But these are still hydrocarbons we're talking about. UT Austin's Kerry King. We're not really doing anything different in terms of natural gas and making it lower

carbon. He says even though natural gas is cheap, decarbonizing the natural gas supply chain would cut into company profits, and there's much work left to do if we want the industry to be cleaner. I'm Elizabeth Troval for Marketplace. Project 2025. You've heard of it by now, one imagines. The 920-page offering from the Heritage Foundation and alumni of the Trump White House, a guide for what a second Trump administration should do across all areas of government.

Immigration, education, law enforcement, also how the federal civilian workforce should be organized, specifically something called Schedule F. We will spare you the details of how Schedule F would change the Civil Service Reform Act of 1978, but to suffice it to say, it would turn tens of thousands of government workers currently afforded civil service protections into political appointees who serve at the pleasure of the president. That would be a change, a big one. And to understand why it matters, you've got to understand how we got here. So the first thing I want you to do, and Nancy, you get to go first, is tell me exactly who you are and how you want

to be identified. My name is Nancy Unger. I'm a professor of history at Santa Clara University. And if you're asking, please feel free to call me Nancy if that's what you're asking. All righty. I will try to remember. I don't always get that. You might get a mam out of me here and there. That's kind of the way I roll. Whatever makes you most comfortable. All right. Mark, what about you? Sure.

Well, I'm Mark Summers. I teach at the University of Kentucky. And you can call me Mark. That would suffice. Historians, both specialists in the Gilded Age, the late 1800s, and the politics of that time. I want one of you to tell me about the spoils system, what it was and how it came about. Nancy, you wanna do it?

Sure. So the spoils system got that name. It was derived from the phrase, "'To the victor belong the spoils' by New York Senator William Marcy. And he was referring to the victory of Andrew Jackson in the election of 1828. Basically, the idea is that the spoils systems gives federal jobs to political supporters, family and friends of the Winnick administration. So you get a job in the federal government, not because you're qualified, but

because it's a payoff for your support. Mark, how bad was it? I mean, you know, not being qualified is one thing, but just getting something because you're somebody's cousin or nephew, that's all another thing. Well, it wasn't bad. It was worse, actually. You know, I mean, people that have a good loyalty, sure, they can actually be competent, they can be able, but ultimately, if you're giving people jobs because they have got out the vote or they've made sure to provide the money for it, well, what you're doing is you're hiring people that are going to be working as clerks that don't know how to write or can't figure out which end of the pencil goes on the paper, you're gonna be choosing

people that are gonna be feathering their nest. Political appointees have been a part of government forever, of course, as they are today. What made the spoil system different was the jobs at every level of government were handed out as favors, until they weren't. Mark, get me to 1883, the Pendleton Civil Service Act of that year. Sure. How did we get there? It's tricky how we got there.

I'd say to start out with already by the end of the Civil War, the government has, comparatively speaking, ballooned in size. I mean, there's more and more places that need post offices, right? And the government appoints the postmasters out there, the kind of people that not only have to know how to deliver the mail, but if there's another party's newspaper coming in, that newspaper may suddenly get lost and never get to its subscribers. Oh dear. You know, that kind of thing. A number of people began to argue that we need to have a system of hiring

government employees based on merit. You know how I say sometimes history matters. Here's why. James Garfield is elected president in 1880 and then four months after his inauguration, Garfield is killed by an office seeker who didn't get a job. Charles Gouteau, who felt he was owed a job for his work getting Garfield elected. There's this enormous clamor, and under his successor, Chet Arthur, they decide they've got to put through this democratic proposal and named after a gentleman, George Pendleton

of Ohio, called the Pendleton Act. Nancy, what does it do? So what the Pendleton Act does is it requires that most federal positions be awarded based on merit, that you have to pass an exam. You have to demonstrate that you were qualified to do this job. And so if you're going to be a postal carrier, for example, you have to take the civil service exam that proves that you can understand these addresses, get things delivered where they need to be. And I would add that being civil service jobs, particularly in this period, these are great jobs.

These are jobs that come with pensions, they're stable. And the Civil Service Commission is also created at this time to enforce this act. So this is really a dramatic change and it's going to affect federal employees, civil service employees all the way through to this day. Well let's roll with that Mark. Is it fair to say that the Pendleton Act is the beginning of what we have come to know as the federal civilian workforce? Yes, it is really. And with every president, the size of that workforce that's under the civil service rules

gets larger. And they get larger because every president has the power to classify more of the offices outside of the system as civil service jobs, where you can't fire them because of their politics, they have a fixed term, and if they want to be promoted, they have to take another test to see if they can go to the next level. And one assumes, Nancy, that this is the point where the federal civilian workforce can specialize and you have not just the postal service workers, but eventually you will have food and drug inspectors and water inspectors and aviation

inspectors and all of that. Yeah, exactly. And the idea here is that we're going to have qualified people who are really going to make changes in the lives of everyday Americans. So you have things like the terrible triangle shirt waste factory. And with the Civil Service Act, you say, okay, look, now we actually have to have regulations. How many fire exits do there have to be? And we have to have inspectors who are going to go in and make sure that these are actually enforced. So this is going to change the lives for the better for Americans of all walks of life. There are today more than 2 million civilian employees of the federal government, give

or take 4,000 of whom are political appointees. And there are, of course, entire agencies that didn't exist back in the 19th century. So after the break, what would happen to this economy if one of those agencies in particular gets politicized? But first, let's do the numbers. ["The Star-Spangled Banner"] Yeah, the wah-wahs today.

Dow Industrial's off 378, 910%, 41,763. The NASDAQ, get this, dipped 512 points, two and three quarters percent, 18,095. The S&P 500 gave back 108 points, one and eight tenths percent, 57.05. I will add here, markets go down two people. Investors are reacting to tech giant earnings reports. Meta, Facebook's parent company dropped 4%.

Microsoft down 6%. Alphabet, of course, Google's parents sank 1.9%. Today, Ford said it would temporarily halt production of its F-150 Lightning until early next year to manage an overstock of the electric truck. That is to say, not selling as many as they thought they would. Symptomatic of the broader trend among automakers with EV sales slowing Ford decelerated one and seven tenths percent day candy makers on Halloween sure we can do that Tootsie roll tumbled one and eight tenths percent today Montalees International makers of Swedish fish boo

Shed one and nine tenths percent don't at me. You're listening to Marketplace. What do they say? More money, more problems, and way more questions from your kids, right? But not to worry. Million Bazillion, a podcast from Marketplace.com. What do they say? More money, more problems, and way more questions? From your kids, right? But not to worry. Million Bazillion, a podcast from Marketplace, has you covered. I'm Bridget Bodner and with my co-host, Ryan Perez, we take you and your young ones on grand adventures and comedic sing-alongs to answer all the questions your little ones have about money. Join us as we explain how banks work, why name brands are more expensive, and what happened to Black Friday sales. Listen to Million Bazillion wherever you get your podcasts.

This is Marketplace. I'm Kai Rizdal. We get the October jobs report tomorrow from the good people at the Bureau of Labor Statistics. The BLS, as it happens, is part of the federal workforce that would be restructured if Schedule F actually went into effect. I guess I'm former commissioner of the Bureau of Labor Statistics. He really was. President George W. Bush appointed Keith Hall to run the BLS, which he did from 2008 until 2012.

After that, Hall was the director of the Congressional Budget Office, which is to say, government data is his thing. I think federal statistics are part of the infrastructure of the economy. You've got households who are making decisions about their jobs, what they want to do. You've got businesses who are making decisions. Then you've got policymakers who are making decisions. If you're talking about the American labor market, BLS data is the nonpartisan apolitical gold standard.

The data is collected by dozens of people. In fact, the whole monthly reports, maybe hundreds of people are helping put that together. They follow standards, they follow procedures, and they're people who don't have an agenda. They're professionals. In fact, the folks at BLS are hired because of their technical expertise, their ability to collect and understand data and keep the quality high. A bit more than 2,000 people work at the BLS, only one of whom, the commissioner, is a political appointee named to fixed four-year terms.

What would happen if Schedule F goes into effect, if a second term Trump presidency reclassifies federal workers, thousands of them, to make them easier to hire and fire and make them more politically dependent on him? What happens to the work the BLS does? It would be frustrating for them to see politics come into what they do. As a manager of some of these places, I consider it somewhat my job to protect the career people. I don't think you want a statistical agency flinching when they have to deliver bad news or hiding bad news. And again, if you bring in too many politicals,

if you do the schedule F stuff, I think you run a danger there. I'm Eric Groschen. I am senior economic advisor for the Cornell ILR school and the former commissioner of the US Bureau of Labor Statistics. 2013 to 2017. As commissioner, I saw no number before it was final.

And there were a lot of limitations on what I could see, and I was happy with that. That right there, that's the firewall between politics and critical economic data. Now if you convert a large swath of the senior civil servants to political appointees, then you're really going to seriously undermine trust in the objectivity of the data. Spinning release narrative. So right now, BLS basically uses only a very limited number of adjectives in its releases, right? They stick to counting those beans and having itives in its releases, right? They'd stick to counting

those beans and having it be just bean counting, right? You could have speeding up or withholding releases at will for political purposes. There are just a lot of opportunities for this kind of interference. What's your level of concern about all this? Scale of one to ten, are you like at a five-ish or where are you? Oh, no, I'm much closer to ten on this. I really think that the norms and the agencies are absolutely critical to their success, right? And Schedule F would just really undermine those norms and not, maybe not right away, not immediately, but within a few years, you'd have people grasping at what other, any other sources of data that they could, but they're no substitute because they don't have the breadth and they

don't have the transparency and they don't have the history that you get from statistical agencies. We call the Heritage Foundation the think tank behind Project 2025 for comment. They declined, but the architects of Schedule F have said on the record elsewhere they believe all levels of government should be more broadly aligned politically with the president's agenda. That would mean the biggest change to the federal workforce in more than a century and as yet unknown changes to the quality of critical economic data. Music We had a story yesterday about farm incomes and how the Department of Agriculture figures they are going to be down this year about 4.5%.

For a lot of small growers, farmers markets can be an important chunk of that income, but raising livestock or chickens or cultivating and harvesting produce and then selling it in person at weekend or evening markets takes up a ton of time and energy. And the market prices that those growers can get sometimes doesn't reflect all that work. Researchers at Cornell are hoping a new weekly pricing report might help those farmers and growers squeeze out some more profit. North Country Public Radio's Kaep Kevin Wheeler has more on that. In Potsdam, New York, the farmer's market is bustling on Saturday mornings.

Customers wander from booth to booth, checking out local maple syrups and small batch baguettes. Some people are here for weekend groceries, hustling through the crowd carrying over-stuffed canvas bags. At one stall, a customer picks out vibrant green onions and a couple of squash. Okay, how much for all that?

Uh, four. These stands are filled with small-scale farmers who come from the surrounding rural communities. Their produce is painstakingly grown and when they come to the market they have to figure out how to price it. Usually I talk to the other vendors. I almost hate to say it but I'll go to Walmart and see what their prices are too. Greg Hargrave grows vegetables on his farm in Madra, New York. I do have to be competitive on things, but I'd like to think we have a better quality

product than Walmart or whatever. His farm is a small operation, not Walmart scale. A lot of this stuff is really labor intensive and it's tough trying to, you know, figure everything out or whatever, striking that balance, I guess. There are a lot of factors that go into pricing the colorful heirloom tomatoes or the bright green arugula that farmers like Hargrave bring to the market. There's the cost of the equipment at the farm, the time it takes to weed and harvest, the gas to get the produce to the market, and the commitment to run a booth.

Matt Larue with Cornell University says often local farmers undercharge at the market. They can be nervous about setting the prices up where they really need to be. Larue says that's why he and a team of researchers created weekly pricing reports for farmers. Producers can look up items like honey nut squash, cherry tomatoes or eggs and see how much they're selling for at farmers markets around New York State. It takes out the guesswork. Just seeing what's going on out in the marketplace, seeing what the prices are at stores, seeing what's happening at other farmers markets.

Here's how it works. Farmers sign up to be a part of the pricing database and researchers connect to their point of sale system, Square. Researchers collect the data and create weighted average prices for each item and then post the reports online for free. For farmers, these markets aren't usually the way they pay their bills. They rely on wholesale orders or community-supported agriculture subscriptions. But the markets are often great for connecting with the community. and LaRue says earning a little more could make the markets a better investment. In other words, to give them a better day at the farmers market because they're going

to be there for eight hours or six hours, whether they make $400 or $800. So we're looking for how can we help them earn more in those hours. These pricing reports can pool the business experience of a lot of farmers across the state, and that can be especially helpful for beginners, like Morgan Leeson, who sells organic produce at a couple of markets in northern New York. On this market day, Leeson is writing prices on chalkboards next to her produce. Two dollars for a head of garlic, three for a bag of kale. She's only been farming for a few years, and Leeson says she typically prices based

on the advice of more seasoned farmers, like the one in the booth next to her. What do you think I should charge for this pound of grapes? And he's like, oh, I'm thinking like one or two dollars. He's like, five. Five dollars. That's what, you know, I'm just like, and he's experienced, he knows what he's talking about. There's dried oregano and sage hanging from the top of her pop-up tent and the last harvest of

fresh raspberries are displayed on her table. Her prices are a bit higher than they were last year. I want to stay really fair to the people who are buying from me and keep it affordable but also make sure I'm making enough to keep myself going so I can keep serving the community. I'm making enough to keep myself going so I can keep serving the community. LeeSin says Cornell's pricing tool will be a real help, especially over winter, when she hunkers down to work on her business plans. In Potsdam, New York, I'm Kathryn Wheeler for Marketplace. This final note on the way out today in which the economy thanks you, the American consumer, for your participation in the festivities this afternoon and this evening. Consumer spending, as we know, makes this economy go round, so I will offer this data

point from the National Retail Federation, which I think I told you about when it came out about a month or so ago. By the time all the candy's eaten and all the costumes are put away, we're going to collectively have spent more than $11.5 billion on Halloween 2024. Good job, people. John Buckley, John Gordon, Noya Carr, Diantha Parker, Amanda Peacher, and Stephanie Seek are the Marketplace Editing staff. Amir Bibawe is the Managing Editor.

And I'm Kai Rizdal. We will see you tomorrow, everybody. This is APM. I'm Kai Rizdal, and on how we survive, we've embedded on the front lines of a fight between the U.S. military and climate change. But that fight's not happening on traditional battlefields. Instead, it's at places like the edge of the Arctic Ocean. Oh my God! It's a little windier out here. Just a little. On changing terrain. And sea level rises, storms like that will do more and more damage.

And in state-of-the-art military facilities where I became a lab rat. We're going to drop it from 110 degrees Fahrenheit down to 34 degrees Fahrenheit. I can feel my muscles tensing, right? Discover how the U.S. military might shape our climate future. Listen to How We Survive wherever you get your podcasts.