Archive for June, 2015
Tuesday, June 30th, 2015
For the past several decades, the idea that high levels of inequality were good for the economy dominated political and economic thought. Politicians believed the trickle-down theory that enabling “job creators” to get richer would help us all, and economists provided cover for this line of thinking because they thought there was a tradeoff between growth and equity.
But, as inequality has risen to extreme levels in the United States, the foundations of the economy have weakened, and America is now experiencing the kinds of problems that plague less-developed countries. The United States now must confront high levels of societal distrust that make it hard to do business, governmental favors for privileged elites that distort the economy, and fewer opportunities for children of the middle class and the poor to get ahead—wasting vast quantities of human potential.
Fortunately, a new class of economists and policymakers are now challenging the old, flawed, ideas about inequality. Academics have begun to rethink their views about the decline of the middle class, and progressive politicians are finally starting to openly contest the logic underlying supply-side after years of failing to do so. There is a growing realization that a strong middle class is not merely the result of a strong economy—as was previously thought—but rather a source of America’s economic growth.
The new direction on economic policymaking cannot arrive soon enough, because our economy continues to suffer deeply from a financial crash caused in large part by high levels of inequality. Rebuilding the middle class is critical, as a strong middle class performs four vital functions in the US economy.
First, a strong middle class helps society run relatively smoothly, with higher levels of trust among its citizens. People need to be able to trust one another enough to do business with one another. When there is little trust, the cost of doing business shoots up—or, as economists put it, transaction costs increase.
Second, a strong middle class leads to better governance. A thriving economy depends on a well-functioning government that provides critical services, such as roads and schools, with relatively little corruption. As the middle class has weakened and inequality has risen, the wealthy have gained excessive political power and the middle class has become less civic-minded, leading to a host of governmental dysfunctions.
Third, the middle class is a source of stable consumer demand, which enables businesses to invest in new products and hire additional workers—thereby fueling growth. As consumer demand in the years prior to the Great Recession was based heavily on middle-class debt, the economy was unstable. And now that the middle class is so weak—burdened by stagnant incomes, high debt levels, and underwater mortgages—it can’t consume enough to keep the American economy going.
Finally, a strong middle class creates more human capital. In the modern economy, a skilled, healthy, and entrepreneurial workforce is a driver of economic growth—at least as much as the physical capital of factories and machines. As inequality has risen and the middle class has weakened, America has not developed the full human potential of its middle and working classes.
To have strong and sustainable growth, the economy needs to work for everyone. That’s why we need to focus policy on rebuilding our economy from the middle out.
About the Author: The author’s name is David Madland. David Madland is the author of Hollowed Out: Why the Economy Doesn’t Work Without a Strong Middle Class and the Managing Director for Economic Policy at the Center for American Progress. Follow Madland on Twitter: @DavidMadland
Monday, June 29th, 2015
The Fight for 15 has another win. Home healthcare workers, who are represented by SEIU, will get a raise to $15 by July 2018, up from a current pay rate of $13.38, with a raise of 30 cents an hour effective next week. The more than 35,000 workers care for elderly and disabled people on Medicaid, helping them bathe, running errands for them, and other tasks that help people live in their homes.
Personal care attendant Rosario Cabrera, 31, of New Bedford, said the raise means she will be able to pay her bills on time, provide for her two children, and maybe even take a vacation. Cabrera works seven days a week caring for two elderly women in their homes, and even with the money her husband makes as a machine operator, her family struggles to get by.“I’m proud of what I do because I’m helping another human being life their life,” she said. “But it’s not fair if I can’t live my life.”
Home care work is one of the fastest-growing and lowest-paid industries in the country. But Massachusetts shows that doesn’t have to be the way it is.
The minimum wage in Massachusetts is on its way to $11 in 2017 (it is now $9 an hour) and a paid sick leave law kicks in next week. Obviously that hasn’t blunted the momentum in the state to do even better for workers in low-wage industries. And note that the governor with whose administration the home care workers deal was negotiated is a Republican.
This blog was originally posted on Daily Kos on June 27, 2015. Reprinted with permission.
About the Author: The author’s name is Laura Clawson. Laura has been a Daily Kos contributing editor since December 2006 and a Labor editor since 2011.
Friday, June 26th, 2015
Last week, the U.S. Bureau of Labor Statistics issued its numbers for inflation and for real wage movements. The numbers reflected the weak numbers of the first quarter for economic growth: Zero inflation and zero real wage growth in the past three months. The economy is showing signs that it is fragile. It can be spoofed by international developments that raise the value of the dollar and slow U.S. export growth, or by bad weather—events, the Federal Reserve cannot control or easily predict.
So what is the Federal Reserve doing? At its June Open Market Committee Meeting, where Federal Reserve policy is set, the Fed stayed put on interest rates. Yet, it gave indications that it was considering giving in to the stampede for the Fed to act sometime this year to raise interest rates in a deliberate move to slow the economy. A policy to slow the economy is based on beliefs, not on the hard data before us on wages or inflation. This is regrettable.
The deeper reality is that the Fed took unprecedented moves to build up huge reserves of U.S. Treasuries. What is really going on is more that the speculators on Wall Street are nervous. They are afraid that somehow, from some unknown source, inflationary pressures will rapidly appear and the Fed will quickly unwind its position with, for some of them, disastrous consequences on bets they have placed on bond prices. They would prefer the certainty of having the Fed start to unwind its position now, slowly divesting itself of its bond reserves and easing the economy to higher interest rates. This has nothing to do with the economy, and everything to do with Wall Street speculation. Unfortunately, the press plays sycophant to these speculators, who are constantly quoted as giving “economic” advice when they state with certainty the need for the Fed to raise interest rates.
Sources of global instability abound. The discussions over the Greek debt, the Eurozone bankers and the International Monetary Fund are far from a workable solution. In the meantime, the Swiss Franc is rising uncontrollably in response to that uncertainty. Iraq, Syria, Yemen and the ongoing conflict with ISL make the Mideast equally unpredictable. And, if snows were the issue in the first quarter, the California drought, the Texas floods and Midwest tornadoes so far this quarter should not make anyone confident that the current hurricane season is going to be a sleeper. Further incidents in Charleston and now Charlotte with violent attacks on African American churches and the constant stream of discontent with the ongoing and unresolved issue of police misconduct make the domestic situation equally volatile. With so many uncontrollable and unpredictable risk factors that could slow the economy, the fears of Wall Street speculators should and must take a back seat.
These risks are not all unrelated. A more robust U.S. economy will help the world economy and help reduce some risks associated with weak economic performance; especially in the Eurozone. And a more robust U.S. economy will hopefully speed job growth to reduce the economic tensions that overlay the raw social tensions domestically.
The Fed must expand its view of measures of full-employment. The Wall Street gamblers base their assumptions on full employment from a time gone by. For instance, economists today still persist in viewing the high African American unemployment rate as a “structural” issue, since African American workers are assumed to be so low-skilled they cannot find jobs in a modern economy. So, they ignore the warning signs that job growth is frail when the African American unemployment stalls, as it has, at around 10%.
In May, the unemployment rate for adult African American workers (those older than 25) with associate degrees was 5.6%, which was higher or about the same as the unemployment rate for white, Asian and Hispanic high school graduates. Those numbers are inconsistent with full employment. They indicate a market where employers are very free to pick and choose which workers they want. A faster growing economy will force employers to be less choosy.
The slow economy cascaded higher educated workers down into jobs that require less education. If the economy does not speed up, that misallocation of productive capacity could become permanent, as employers may continue to seek only college graduates to serve coffee. This costs us in loss productivity growth. It is another sign of a labor market that is not at full employment.
Locking in high African American unemployment and college degree requirements for entry-level jobs is not in the economy’s interest. And covering Wall Street bets isn’t either.
This blog was originally posted on AFL-CIO blog on June 26, 2015. Reprinted with permission.
About the Author: The author’s name is William E. Spriggs. William E. Spriggs is the Chief Economist for AFL-CIO. His is also a Professor at Howard University. Follow Spriggs on Twitter: @WSpriggs.
Thursday, June 25th, 2015
The Montgomery County, Maryland council voted unanimously to pass a paid sick leave bill on Tuesday, making the town the 23rd place in the country to enact such a requirement.
The law is one of the most robust to be passed at the city or state level so far. “The Montgomery County paid sick days laws is one of the strongest yet, and it should serve as a model for the state of Maryland and the nation,” said Charly Carter, director of Maryland Working Families.
Once it goes into effect in October 2016, around 90,000 people will get the right to a day off when they get sick that they currently don’t have. Employees at businesses with five or more workers will be able to earn up to seven days off a year, while those at companies with fewer workers can earn four paid days and three unpaid. Many current laws in other places exempt smaller businesses completely. Amendments to exempt people under the age of 18, people who work fewer than 16 hours a week, and smaller employers all failed.
Montgomery County’s leave can also be used for a wide variety of purposes beyond taking a day off for a worker’s own illness: to care for a sick family member, to deal with a public health emergency, or to deal with domestic violence, sexual assault, or stalking.
A statewide bill in Maryland has been introduced but not yet passed, although it will be re-introduced next session, according to Working Matters, the group organizing support for paid sick leave in the state. While the country still doesn’t have a national requirement that employers offer their workers paid sick leave, unlike all other developed nations, many local governments have taken action on their own. With Montgomery County, four states and 19 cities have passed laws.
CREDIT: Andrew Breiner, ThinkProgress
Without a federal law, however, about 40 percent of America workers don’t have the ability to take paid time off when they or their family members get sick, the majority of them low-income workers who may not be able to afford an unpaid day. President Obama has called to change that, and Democratic lawmakers have introduced bills that would require all of the country’s to offer sick leave, but they haven’t moved forward.
While businesses often claim that they can’t afford to offer paid sick leave, the evidence from many of the places that have passed requirements is that the laws don’t represent an economic burden. In Connecticut, Jersey City, and Washington, D.C., employers don’t report that the laws have been costly or difficult to comply with, while some have seen benefits like decreased turnover and increased productivity. Meanwhile, job growth in Connecticut, San Francisco, and Seattle has been stronger after their laws took effect, and a majority of employers in many of these places now support the laws.
But the opposition has gained ground in other places. Ten states have passed laws that ban cities and counties from passing their own paid sick leave laws, and others are considering the same move.
This blog was originally posted on Think Progress on June 24, 2015. Reprinted with permission.
About the Author: The author’s name is Bryce Covert. Bryce Covert is the Economic Policy Editor for ThinkProgress. She was previously editor of the Roosevelt Institute’s Next New Deal blog and a senior communications officer. She is also a contributor for The Nation and was previously a contributor for ForbesWoman. Her writing has appeared on The New York Times, The New York Daily News, The Nation, The Atlantic, The American Prospect, and others. She is also a board member of WAM!NYC, the New York Chapter of Women, Action & the Media.
Wednesday, June 24th, 2015
A majority in the Senate today took sides against working families and with Wall Street and the multinationals, voting 60-37 to grant the executive branch fast-track trade promotion authority for the Trans-Pacific Partnership and future trade deals.
“This is a day of celebration in the corporate suites to be sure,” said Sen. Sherrod Brown (D-Ohio) on the floor immediately after the vote, “because they have another corporate-sponsored trade agreement that will mean more money in some investors’ pockets, that will mean more plant closings in Ohio and Arizona and Delaware and Rhode Island and West Virginia and Maine and all over this country.”
Sen. Bernie Sanders (I-Vt.) responded by noting that the fast-track legislation “was supported by virtually every major corporation in the country” while it was opposed by “every union in this country working for the best interests of working families, by almost every environmental group and many religious groups.
“In my view, this trade agreement will continue the policies of NAFTA, CAFTA (the North American and Central American free trade agreements), permanent normal trade relations with China, agreements that have cost us millions of decent-paying jobs,” Sanders said.
The fast-track legislation, which was narrowly passed by the House last week and now goes to President Obama’s desk for his signature, was passed with the support of these Senate Democrats: Michael Bennet (D-Colo), Maria Cantwell (D-Wash.), Thomas R. Carper (D-Del.), Chris Coons (D-Del.), Dianne Feinstein (D-Calif.), Heidi Heitkamp (D-N.D.), Tim Kaine (D-Va.), Claire McCaskill (D-Mo.), Patty Murray (D-Wash.), Bill Nelson (D-Fla.), Jeanne Shaheen (D-N.H.), Mark Warner (D-Va.) and Ron Wyden (D-Ore.).
One of the Democrats who voted against fast-track gave an impassioned explanation of his vote afterward.
“I’ve said this –if I can’t explain it back home, I can’t vote for it,” said Sen. Joe Manchin (D-W.Va.) “This is one, Mr. President, I could not explain back home. I could not make the people feel comfortable this was going to improve the quality of life and opportunities for them and their families.”
Manchin explained that the Trans-Pacific Partnership would lower trade barriers with countries such as Vietnam, where workers make as little as 50 cents an hour and “are not going to be as tough as we are in human rights [and] on environmental quality.”
In this debate, there were Orwellian big lies on both sides of the aisle.
Wyden argued that the trade deal represented a different frame from the NAFTA deal of the 1990s. That is in no sense true: the template that makes worker needs subordinate to interests of corporate and financial interests is essentially the same, the process of having corporate lobbyists dominate the negotiations is the same, and the people serving as trade representative come from and represent the same set of interests (corporate lawyer Mickey Kantor was the trade representative who negotiated NAFTA; former Citigroup executive Michael Froman is the trade representative leading the TPP talks).
Sen. Orrin Hatch (R-Utah) and other Republicans argued that the fast-track deal gives the United States a voice in international trade. How can that be, when in fact fast-track authorizes a process that gives away congressional power? Fast track explicitly says that Congress can only vote up or down, with no amendments and limited debate, on a trade agreement negotiated by the executive branch. The reality is that the process assures passage of a trade deal that is still being negotiated in secret and which virtually no lawmakers have seen.
Democratic votes in favor of fast track were secured with a promise of a vote later this week on trade adjustment assistance, a palliative at best. While that will help some workers who will lose their jobs one the Trans-Pacific Partnership goes into force, it will not help workers who lose wages and bargaining power when corporations threaten to move overseas, and it doesn’t help the workers hit by the ripple effects of plant closings and outsourcing. Even the workers who do get the aid more often than not don’t get back the wages and job security they lost in the first place because of unfair trade.
Robert Borosage, codirector of the Campaign for America’s Future, said that today’s vote “is a vote to continue the ruinous trade policies of the last decades that have racked up 11 trillion in trade deficits, shuttered tens of thousands of factories, and had direct and dramatic effect on undermining the middle class, and lowering wages and security for working people. Those who voted for it voted for more of the same. And they did so to serve the interests of special interests, not the common good; of contributors, not voters.”
Our allies at National People’s Action released a statement after the vote that perhaps captures best how to respond to this vote. “Coming out of this vote,” said executive director George Goehl, “we double our resolve to build an independent political movement to replace Wall Street Democrats” – and we would add corporate and anti-worker Republicans – “with politicians who put everyday people before corporate profits.”
This blog was originally posted on Our Future on June 23, 2015. Reprinted with permission.
About the Author: The author’s name is Isaiah J. Poole. Isaiah J. Poole has been the editor of OurFuture.org since 2007. Previously he worked for 25 years in mainstream media, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. His work has put him at the front lines of ideological battles between progressives and conservatives. He also served as a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.
Tuesday, June 23rd, 2015
Judge Jerry Smith is a deeply conservative judge. He once voted to allow a man to be executed despite the fact that the man’s lawyer slept through much of his trial. He’s a reliable vote against abortion rights. And he once described feminists as a “gaggle of outcasts, misfits and rejects.”
So when Judge Smith writes an opinion protecting women’s access to birth control, even when their employer objects to contraception on religious grounds, that’s a very big deal.
East Texas Baptist University v. Burwell is a consolidated batch of cases, handed down on Monday, involving religious employers who object to some or all forms of birth control. These employers are entitled to an accommodation exempting them from federal rules requiring them to offer birth control coverage to their employees. Most of them may invoke this accommodation simply by filling out a form or otherwise informing the federal government of their objection and naming the company that administers their employer health plan. At this point, the government works separately with that company to ensure that the religious employer’s workers receive contraception coverage through a separate health plan.
Several lawsuits are working their way through the federal courts which raise the same legal argument at issue here. In essence, the employers claim that filling out the form that exempts them from having to provide birth control makes them complicit in their employee’s eventual decision to use contraception, and so the government cannot require them to fill out this form. So far, every single federal appeals court to consider this question has sided with the Obama administration and against religious employers who object to this accommodation.
Few judges on any court, however, are as conservative as Judge Jerry Smith, a Reagan appointee to the United States Court of Appeals for the Fifth Circuit whose law clerks frequently go on to clerk for the most conservative members of the Supreme Court. Nevertheless, Smith makes short work of the claim that the fill-out-a-form accommodation burdens religious liberty.
The federal Religious Freedom Restoration Act (RFRA) provides that the federal government “shall not substantially burden a person’s exercise of religion” except in limited circumstances. Applying this language, Smith writes in a unanimous opinion for a three-judge panel that “[t]he plaintiffs must show that the challenged regulations substantially burden their religious exercise, but they have not done so.”
The crux of Smith’s analysis is that the plaintiffs in these cases object to birth control, but nothing in the law requires these plaintiffs to do anything whatsoever involving birth control. Rather, their only obligation, if they do not wish to cover birth control, is to fill out a form or send a brief letter to the federal government — and neither of those things are contraception.
“Although the plaintiffs have identified several acts that offend their religious beliefs, the acts they are required to perform do not include providing or facilitating access to contraceptives,” Smith explains. “Instead, the acts that violate their faith are those of third parties.” Specifically, the plaintiffs object to the federal government working with an insurance administrator to provide contraception to certain workers. But the law does not “entitle them to block third parties from engaging in conduct with which they disagree.”
Indeed, Smith writes, if the plaintiffs in these cases were to prevail, it could lead to absurd challenges to basic government functions. “Perhaps an applicant for Social Security disability benefits disapproves of working on Sundays and is unwilling to assist others in doing so,” Smith explains. “He could challenge a requirement that he use a form to apply because the Social Security Administration might process it on a Sunday. Or maybe a pacifist refuses to complete a form to indicate his beliefs because that information would enable the Selective Service to locate eligible draftees more quickly. The possibilities are endless, but we doubt Congress, in enacting RFRA, intended for them to be.”
Smith’s opinion, in other words, should offer a fair amount of comfort to women whose employers seek to cut off their access to birth control coverage. Though there are signs that at least some of the justices would like for the plaintiffs in cases like East Texas Baptist to prevail, the fact that a judge as conservative as Jerry Smith rejected their legal arguments suggests that a majority of the Supreme Court will not embrace these lawsuits.
This blog was originally posted on Think Progress on June 22, 2015. Reprinted with permission.
About the Author: The author’s name is Ian Millhiser. Ian Millhiser is a Senior Fellow at the Center for American Progress Action Fund and the Editor of ThinkProgress Justice. He received a B.A. in Philosophy from Kenyon College and a J.D., magna cum laude, from Duke University. Ian clerked for Judge Eric L. Clay of the United States Court of Appeals for the Sixth Circuit, and has worked as an attorney with the National Senior Citizens Law Center’s Federal Rights Project, as Assistant Director for Communications with the American Constitution Society, and as a Teach For America teacher in the Mississippi Delta. His writings have appeared in a diversity of legal and mainstream publications, including the New York Times, The Los Angeles Times, U.S. News and World Report, Slate, the Guardian, the American Prospect, the Yale Law and Policy Review and the Duke Law Journal. Ian’s first book is Injustices: The Supreme Court’s History of Comforting the Comfortable and Afflicting the Afflicted.
Monday, June 22nd, 2015
On June 13, Los Angeles Mayor Eric Garcetti signed the city’s landmark $15 minimum wage into law. Although the city’s workers won’t be seeing that full figure until 2020, the new law will bring billions of dollars into the pockets of at least 36% of the workforce, and should be seen as the culmination of grassroots action supported by a coalition of labor groups such as Raise the Wage and Fight for $15.
But in the aftermath of its initial approval a few weeks ago, right-wing pundits, with help from mainstream news outlets, succeeded in pitting minimum-wage activists up against labor leaders, drumming up charges that the unions were acting to actually undermine the minimum-wage-increase movement. Rusty Hicks, the head of the Los Angeles County Federation of Labor, had to save face after he led a failed last-minute push to include a clause into the city’s minimum wage ordinance that would allow employees the option of having their collective bargaining agreement supercede the local minimum wage policy.
Opponents have argued that the provision potentially allows for unions to negotiate contracts that include wages below the minimum, and that unions would use the wage carve-out to offer a kind of carrot to employers in exchange for allowing the union to gain new members—assumedly leaving new union members earning, in total, less than the minimum wage.
Mostly due to the inability of Hicks or anyone else in the city’s labor movement to offer a strong and convincing rebuttal to these charges, this talking point has largely taken hold. With labor at the front of Fight for $15 battles in Los Angeles and across the country (Hicks himself has been a leader in Los Angeles’s Raise the Wage coalition), pundits on Fox News have spread the idea that “big labor” could be trying to get around the minimum wage that “they tried to impose on others.”
“They want to make unions basically the cheapest labor and have more money for themselves—that’s what this is all about,” libertarian journalist Michelle Fields told host Eric Bolling on the conservative network on May 30.
It’s an easy talking point to run with, and admittedly the optics of it are pretty bad. But those trashing the union’s attempt to insert the provision have failed to realize the nuances of the situation. Glancing at the data of union workers’ compensation in cities that already have such wage exemption provisions on the books, as well as applying a bit of logic in thinking about why a worker would vote to join or choose to stay in a union, show that such provisions haven’t and won’t result in unionized workers earning below the minimum wage, and in fact can serve to protect minimum wage increases from legal challenges from business interests.
Why do workers organize?
To explain why this is the case, let’s examine some of the arguments against the provision. The U.S Chamber of Commerce, often labor’s foe, outlined a modern history of minimum wage policy and the union carve-out in a study they published last year. The study suggested that what the Chamber calls the “union escape clause” is nothing more than a ruse to gain “new members, new dues revenue, increased political clout, and, most likely, increased payments into its pension fund.”
The Chamber’s study points to hotel worker union UNITE HERE’s explosive growth in San Francisco (where minimum wage ordinances have typically included “union escape” provisions) as an example of a “real-world correlation” between the provision and labor’s supposed self-interest:
UNITE-HERE Local 11, which represents hotel workers in Los Angeles, California, saw its membership and revenues jump after the city included a union escape clause in a minimum wage hike on hotels. Local 11’s membership increased from 13,626 in 2007 to 20,896 in 2013, while its revenue increased from approximately $7.5 million per year to nearly $12.7 million. … When San Francisco, California, passed a citywide minimum wage ordinance with a union exemption in late 2003, membership in UNITE-HERE Local 2 rose from 8,000 in 2004 to more than 14,000 in 2013. Notably, these increases occurred as union density nationally declined from 12.9% of the workforce in 2003 to 11.3% in 2013.
Reading the Chamber’s study, you would think that the principal reason UNITE HERE membership in LA and San Francisco grew during this time was the wage carve-out. But that’s absurd, and doesn’t reflect the way workers join unions or how union membership grows in general.
In case the Chamber has forgotten, workers are the ones who choose to join unions, either through a secret-ballot vote or through a “card check” process. And if they don’t like their union, they can vote to decertify it. If workers joined a union and paid dues to it every month but continued earning a wage below the minimum after they joined, why wouldn’t they vote to leave the union? They would have no financial incentive to stay, and assumedly UNITE HERE’s membership would be tanking rather than growing as workers realized they were getting a raw deal and voted to leave the union.
But of course, rather than seeing their compensation tank, hotel workers are seeing their wages and benefits increase as union members. UNITE HERE says that its members in San Francisco—remember, a city with the minimum wage carve-out for union workers—earn, on average, an hourly wage of $20.94. The deal also gets sweeter for those members when quality-of-life benefits like secure hours and compensation packages are included.
In Los Angeles, where the union’s members are also allowed to have their collective bargaining agreement supercede local wage ordinances, union workers earn slightly less, $16.47 plus benefits. Still, union workers’ wages alone are higher than the $15.37 wage floor enacted for hotel workers last year; when you include the benefits those workers typically receive through their collective bargaining agreements that most minimum wage earners do not have a right to, the total compensation becomes even higher.
Beyond hotel workers, the numbers make it clear that union workers earn on average considerably more than the minimum wage, even in cities that have these carve-out provisions. A 2014 study by the Institute for Research on Labor and Employment at UCLA reports that, when adjusted for cost of living, hourly earnings for union workers in Los Angeles stand at $20.35, whereas their nonunion counterparts earn $16.13. Clearly, few union members in the city earn less than minimum wage.
Hicks remarked at a recent press conference, “Unfortunately, too many in today’s society do not have the benefit of being a part of a collective bargaining opportunity or experience, so it can be confusing.” The confusion might have been cleared up, however, with a few concrete facts showing how collective bargaining helps put money in workers’ pockets—far more money than any minimum wage.
Safety in Supersession
Hicks had a lot of material to work with to beat back the anti-union rhetoric that he didn’t use. But his press conference did mention what is apparently the foundation for collective bargaining supersession clauses that have been included in other minimum wage laws of Los Angeles, San Francisco, Oakland and Chicago, among others: The provision is actually intended to provide a safeguard for union workers against potential legal challenges to minimum wage laws.
Herb Wesson, Los Angeles’ City Council President, has admitted as much, with his spokesperson telling KPCC, a local NPR affiliate, that Wesson “continues to have questions about the policy as it relates to exposing the city to legal liability.” The concern, KPCC reported, is that “federal labor laws could be interpreted as preventing cities from interfering with contracts between employers and unions.”
James Elmendorf, deputy director of the Los Angeles Alliance for a New Economy, a progressive policy group affiliated with the city’s labor movement, told the Los Angeles Business Journal last year upon the passing of the hotel wage ordinance that “in a previous decision, the U.S. Supreme Court recommended that local and state laws and regulations of private businesses contain such exemptions.”
The provision actually ensures that collective bargaining will trump any local statutes. If any wage increase ordinance is challenged in court (as they frequently are by industry groups), local collective bargaining agreements that were formed while new “imposed” wage floors were in place would be protected from legal challenges through the supersession clause.
When combined with the fact that employees will earn higher wages and benefits when unionized, it easy to see why this provision makes business interests and their allies jump at the chance to turn the tide in a war of sound bites.
While the $15 minimum wage ordinance became official on June 13 without the “collective bargaining supersession clause,” the ordinance may be expanded by the time it takes effect next July. The expansion could include the supersession clause, as well as two other provisions that the union fought for during the legislative process: 12 days of paid sick leave and banning restaurants from keeping bogus “service charges” rather than considering them workers’ tips.
The boost in the minimum wage will undoubtedly help improve the quality of life and economic situation for masses of non-union workers in the city. But rather than undermining those gains, Hicks’s provision would have helped protect against potentially damaging legal challenges to the real benefits and increased wages that come with unionization.
For now, one can only hope that LA’s labor leaders will speak out for the provision and get organized labor past an embarrassing and largely untrue spate of headlines to convince low-wage workers that unions are not the villains Fox News and the Chamber of Commerce are attempting to portray them as.
This blog was originally posted on In These Times on June 18, 2015. Reprinted with permission.
About the Author: The author’s name is Mario Vasquez. Mario Vasquez is a writer from Santa Barbara, California. You can reach him at email@example.com.
Friday, June 19th, 2015
Uber must pay its drivers benefits, overtime, working expenses, and other standard compensation that the company has thus far avoided providing, the California Labor Commission has ruled.
The decision is not self-executing across the state and can only be directly applied in one specific driver’s case. But it signals to the company’s other employees that the body charged with adjudicating California labor law views Uber to be an employer with all the obligations that come with the label. Uber notes in a statement that the same commission had ruled the opposite way in a 2012 case, and that neither of those rulings would be binding in any other individual lawsuit over similar complaints by other drivers.
The ridesharing start-up, whose market value recently hit $50 billion, has relied upon paying drivers as though they were independent contractors rather than employees. Classifying a worker as a contractor negates most provisions of federal labor law, saving an employer thousands of dollars per year for each person they treat as a contractor.
If a company treats a contractor like an employee by exerting substantial control over day-to-day job activities, though, it risks being found guilty of misclassifying workers. Misclassification is a widespread problem, with complaints popping up everywhere from trucking to strip clubs to beauty parlors.
In California, Uber argued that its relationship with drivers is not controlling enough to constitute an employer-employee relationship, pointing out that they don’t set drivers’ hours or require a minimum number of trips in a shift. But California’s definition of the line between employment and contract work is primarily based on whether the worker is providing a service that’s integral to the main line of business of the company paying her. Labor commission lawyers examined Uber’s policies for drivers and overall business model and found the company’s argument weak.
“Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation. The reality, however, is that defendants are involved in every aspect of the operation,” the commission ruled. By vetting would-be drivers, requiring them to register their vehicles with Uber, and terminating them if their approval ratings dip too low, the state found, Uber positioned itself as an employer rather than a non-controlling party to a contract.
The case that generated the ruling will only cost Uber about $4,000 in reimbursement payments to a driver named Barbara Ann Berwick. But its consequences could be much grander. If it cannot successfully appeal the finding, it will have to choose between fielding further individual lawsuits or reclassifying all its California drivers as regular employees to pre-empt the suits. That means paying unemployment insurance and other payroll taxes that aren’t triggered for contractors, as well as potentially being subject to overtime rules and made to reimburse drivers for work expenses like gas, tolls, and some traffic tickets.
Any multi-billion-dollar corporation should theoretically be able to absorb such costs. But they threaten to turn Uber into a much smaller-margin enterprise, one more akin to the traditional taxi company business model that the firm has made so much money disrupting. And because Uber’s market value is a fluid, on-paper number that depends on investor confidence and market analyst’s reading of the economic tea leaves, the California ruling could lead to some shrinkage in the car service’s worth and ability to raise private funds.
The ruling isn’t the end of the story, either. There are other civil cases outstanding in California and elsewhere that touch on similar issues and could be decided differently. And the sheer variety of different driver experiences, from people who drive a few hours a week for supplementary income to those who log long hours in vehicles leased from the company itself, suggests that it’s hard to pin down the entire category of workers with either the “employee” or “contractor” label that the law provides.
This blog was originally posted on Think Progress on June 17, 2015. Reprinted with permission.
About the Author: The author’s name is Alan Pyke. Alan Pyke is the Deputy Economic Policy Editor for ThinkProgress.org. Before coming to ThinkProgress, he was a blogger and researcher with a focus on economic policy and political advertising at Media Matters for America, American Bridge 21st Century Foundation, and PoliticalCorrection.org. He previously worked as an organizer on various political campaigns from New Hampshire to Georgia to Missouri. His writing on music and film has appeared on TinyMixTapes, IndieWire’s Press Play, and TheGrio, among other sites.
Thursday, June 18th, 2015
FedEx says it “lives to deliver.” Last Friday, more than 2,000 of its workers finally received a delivery of justice from a federal judge.
A settlement in the case filed in U.S. District Court on behalf of the workers, Alexander v. FedEx Ground, means the company will pay $277 million to resolve the claims of FedEx Ground and FedEx Home Delivery workers who were victims of worker misclassification since the year 2000. These are workers FedEx classified as “independent contractors” but treated largely as if they were on the company payroll.
We first wrote about this last August, when the 9th U.S. Circuit Court of Appeals ruled that FedEx’s employees (in California and Oregon, and likely many states with similar employee-protection laws) are, in fact, “employees as a matter of law” – not independent businesspeople who had the level of control over their jobs that a self-employed person would expect to have.
“The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards,” the ruling said. “FedEx tells its drivers what packages to deliver, on what days, and at what times. Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx’s consent.”
According to the Economic Policy Institute, worker misclassification is an increasingly common problem, “a business model for unscrupulous employers who use it to avoid employment-related obligations and save on labor and administrative costs.”
EPI says independent contractor misclassification occurs “when a worker who should be considered a direct employee of a business is treated as a self-employed contractor.” Françoise Carré, in his June 8, 2015 report for EPI titled “(In)dependent Contractor Misclassification,” workers who are misclassified are “ineligible for unemployment insurance, workers’ compensation, minimum wage, and overtime, and are forced to pay the full FICA tax and purchase their own health insurance.” Misclassification also “undermines their bargaining power and leaves workers more vulnerable to wage theft.”
Carré also wrote that misclassification leads to the federal and state governments losing revenue from necessary income taxes, while unemployment insurance, workers compensation and disability insurance systems are “adversely affected.”
It also makes it easy for companies to bypass requirements of the Fair Labor Standards Act and the 1986 Immigration Reform and Control Act.
The report points out that worker misclassification is most common in professions where “work is performed in isolation,” which FedEx drivers exemplify.
The ruling found that the company owes its drivers “for illegally shifting to them the costs of such things as the FedEx branded trucks, FedEx branded uniforms, and FedEx scanners, as well as missed meal and rest period pay, overtime compensation, and penalties.” Drivers were required to pay out of pocket for the trucks, uniforms, and scanners, and even the wages of other employees the company asked the drivers to hire.
After the settlement, the 2,000 workers were granted the rights and benefits entitled to employees under California’s laws. FedEx Ground’s independent contractor model was deemed unlawful, and the settlement is considered as one of the largest in recent history – showing that mislabeling workers can be economically catastrophic to a business.
That doesn’t mean that FedEx isn’t still trying to game the system so it doesn’t have to treat its workers as workers. The company has since 2011 implemented a new system in which delivery drivers are employees of a subcontractor to FedEx, and the trade publication Transport Topics quoted a FedEx spokesperson as saying that the company would “complete the transition to a new independent service provider agreement later this year.”
After Friday’s settlement, FedEx did tweet that new job openings were available. We’ll see if FedEx has learned its lesson about worker misclassification – or if the company is absolutely, positively delivering new ways to scam its workers.
This blog was originally posted on Our Future on June 16, 2015. Reprinted with permission.
About the Author: The author’s name is Emily Foster. Emily Foster is a regular contributor to Our Future.
Wednesday, June 17th, 2015
The Obama administration will soon unveil its new overtime pay rules, which will mean that millions of additional workers will get overtime pay when they work more than 40 hours a week. Many low-wage employers are obviously upset about this—they’ve been using the weak overtime rules to make salaried employees work more than 40 hours a week for no extra pay, and they like it that way. Industry groups have been trying to make the case for keeping the overtime eligibility level low—it’s currently less than $24,000 a year—but the Economic Policy Institute’s Ross Eisenbrey shows just how weak those arguments are, taking a National Retail Federation report to the woodshed:
If the threshold is raised to $42,000, the NRF predicts significant changes in retail employment: while some employers will raise salaries for employees near the threshold to guarantee that they continue to be excluded from overtime protection, many salaried employees (some of whom work 60-70 hours a week for no extra pay) will have their hours reduced and as a result, 76,000 new jobs will be created averaging 30 hours per week. Altogether, half of the retail workforce that is currently excluded from coverage will be guaranteed coverage by the law’s overtime protections. That all sounds pretty good to me.The NRF’s projections are intended to be critical of the Labor Department’s rules update, but I have a hard time seeing why it would be a bad thing to create 76,000 new retail jobs, given that 8.6 million Americans are currently unemployed. Moreover, if I were a poorly paid bookkeeper or clerk in a department store, working 60 hours a week and getting paid no more than if I worked 40 hours, I’d be happy to see my hours cut and the extra work shifted to hourly employees.
Eisenbrey also points out that the NRF report suggests that the lobby group doesn’t think its members are following existing law: One of the requirements to exempt workers from overtime eligibility is that a worker have a managerial role, but the NRF report lists many traditionally non-managerial jobs such as bookkeepers, clerks, and secretaries as exempt from overtime.
Raises for some, fewer hours of work for others, and job creation. Gosh, those are some terrifying predictions for changes in overtime rules.
This blog was originally posted on Daily Kos on June 15, 2015. Reprinted with permission.
About the Author: The author’s name is Laura Clawson. Laura Clawson has been a Daily Kos contributing editor since December 2006 and a Labor editor since 2011.