Lawmakers Go After Employers Who Misclassify Workers as Contractors

Nearly three years ago, Warren, Ohio, Local 573 Business Manager Mark Catello found out the hard way how rampant is the illegal practice of misclassifying workers as independent contractors to circumvent labor law and cheat on taxes.

The local tried organizing cable workers at Baker Communications, a subcontractor for Time Warner Cable. Organizers got the majority of the 40-person unit to sign union authorization cards, but the National Labor Relations Board killed the unionization drive after agreeing with the company that most of its employees were independent contractors, making them exempt from the right to collectively bargain. “It’s a scam,” Catello said. “All the employees had to follow the company’s manual, wear the company’s uniform with the Baker Communications logo on it and follow their work schedule.”

San Francisco labor activists protest a construction contractor found guilty of cheating its employees out of wages and benefits.

Federal and state officials are now starting to aggressively crack down on employers who mislabel their employees as independent contractors—an act that cheats both taxpayers and workers out of billions of dollars.

According to Steven Greenhouse of the New York Times, more than two dozen states are stepping up their enforcement of employment laws by increasing penalties for employers who misclassify workers as contractors. And Congress recently introduced tougher legislation to punish lawbreakers.

‘Widespread Practice’

The practice is extensive, says James Parrott, chief economist of the Fiscal Policy Institute in New York. He testified earlier this year before the state Senate that an estimated 10 percent of the state’s workers are misclassified as independent contractors.

According to the Bureau of Labor Statistics, that number has been estimated to be as high as 30 percent in some states. Lax enforcement of the rules has only encouraged the practice.

In 2007, the Government Accountability Office reported that 10 million workers were classified as independent contractors, an increase of more than 2 million in just six years.

Misclassification ends up costing federal and state authorities billions in lost revenue. Companies that report employees as independent contractors avoid paying Social Security, Medicare and unemployment insurance taxes.

But misclassifying workers also cheats workers out of their rights and benefits. Laws regarding overtime, workers’ compensation, sick days and minimum wage don’t apply to independent contractors.

“This denies many workers their basic rights and protections and means less revenues to the Treasury and competitive advantage for employers who misclassify,” Jared Bernstein told the New York Times. Bernstein is a noted economist and aide to Vice President Joseph Biden. “The last thing you want is to give a competitive advantage to employers who are breaking the rules.”

The practice is particularly common in trucking and some sectors of the construction industry. It is also found in the telecommunications industry, particularly in satellite dish and cable installation.

And it’s not just fly-by-night operations that are guilty. Corporate giants FedEx, Target and Comcast have all been sued for misclassifying workers.

Counting their workers as contractors has also proven to be an easy way for employers to prevent unionization.

‘Keeps Them From Joining a Union’

For Eighth District Organizer Bob Brock, a crackdown on industry violators is long overdue.

Brock has been trying to organize workers who install home satellite dishes for more than a year. Many of these workers—located mostly in Idaho, Montana and Colorado—endure long hours, low pay, draconian work rules and unsafe working conditions. But according to their employers—including Direct TV and Star West Satellite—they are their own bosses.

“Most of these (satellite) companies operate a whole separate wing, which they staff with what they call independent contractors,” Brock said. “But they have to follow the companies’ regulations, their work hours and use their equipment. What kind of boss is that?”

Brock says that the IBEW has been successful in getting many of these workers to talk with organizers, but until their job status is changed, they can’t legally form a union.

He says he has seen workplaces where two different workers are doing the exact same job, but one is labeled an employee while the other is an independent contractor. “It’s a selective way for the company to get out of paying benefits and taxes and to keep them from joining a union.”

Educating Workers on Their Rights

But the IBEW hasn’t given up on organizing the satellite sector. The Eighth District has started an organization—Satellite Techs Allied for a New Direction—which brings together satellite workers to improve their working conditions. Organizers help workers document what’s going on in their workplace so they have evidence to back up their claims that they are full-time employees.

STAND also helps misclassified workers with tax advice and how to avoid being preyed on by unscrupulous insurance agents who try to sell them overpriced liability policies. It’s a long-term strategy, Brock says, but the campaign is starting to pick up steam. “The word is spreading throughout the industry. A lot of them don’t know about their rights and they are hungry to find out.”

The campaign is now moving into lobbying mode, with organizers talking to state leaders about rampant abuses in the satellite installation industry. “This is a good time, because with the budget shortfalls, politicians are more eager to crack down on tax cheats,” Brock said.

Rampant Abuse

Broadcasting is another industry where the practice has become widespread. “Many broadcast technicians will work for one of the big networks, be considered an employee, but then go work for another network, do the exact same job, and all of a sudden they become contractors,” said Broadcasting Department Director Ro Wratschko.

Many smaller production companies are also notorious for misclassifying employees to give them unfair advantage over local signatory companies. “They are bidding for the same work as our union shops but they are illegally getting out of paying the same taxes we do, so they have a leg up,” he said.

While not as rampant in the electrical construction industry as it is in other trades, many inside locals have confronted nonunion contractors trying to pass off their employees as contractors. Last fall, Dublin, Calif., Local 595 helped bring to light one Bay Area contractor who cost the state and her employees millions of dollars by illegally misclassifying them.

“It’s the primary means for nonunion contractors to get out of their responsibilities to their employees and try to cut into our market share,” said Kirk Groenendaal, Special Assistant to the International President for Membership Development.

Federal prosecution of companies that misclassify their workers as contractors was nonexistent under the Bush administration, says Political and Legislative Department International Representative Dan Gardner, but the tide is turning.

President Obama has promised to hire an additional 100 investigators to look at companies accused of misclassifying workers and the Internal Revenue Service announced in February that it was launching a three-year nationwide investigation of the practice.

On Capitol Hill, Massachusetts Sen. John Kerry (D) has introduced the Taxpayer Responsibility, Accountability, and Consistency Act of 2009—with Rep. Jim McDermott (D-Wash.) sponsoring a House version—which beefs up enforcement of worker classification regulations and closes tax loopholes used by unscrupulous employers.

In April, Ohio Sen. Sherrod Brown (D) introduced a similar bill—the Employee Misclassification Act—that focuses on tougher enforcement of the Fair Labor Standards Act.

The Department of Labor also recently announced tougher regulations of worker classification regulations, calling on employers to disclose to their employees their work status.

State authorities are also intensifying their crackdown. In Iowa, a six-month investigation by the labor department recently found more than 100 companies guilty of misclassifying employees, while in California, Attorney General Jerry Brown is aggressively going after lawbreakers, recently filing a $4.3 million lawsuit against a construction company with several public works contracts that he says cheated workers out of wages.

In Nebraska, a bill is under serious consideration that would target trucking and construction companies that abuse the independent contractor label.

Gardner said that the IBEW is working closely with NECA contractors and other businesses to push Congress to endorse Sens. Kerry’s and Brown’s legislation to crack down on lawbreakers. “It’s wrong for workers, wrong for taxpayers and wrong for the businesses that play by the rules and follow the law.”

This post originally appeared in IBEW.org on June 2, 2010. Reprinted with permission.

About the Author: Alexander Hogan is Communications Specialist for the IBEW.

No doubt following up on Charlie Sullivan’s post on unpaid law student internships, Steven Greenhouse at the New York Times has a story on the more general use of these internships.  It’s obviously been an issue for some time, but the bad economy has given employers more incentives to pinch pennies and made interns more desperate for experience, even the unpaid variety.  These internships can provide valuable experience and lead to a good job, but they can also undermine the purpose of wage laws and highlight class problems when only more wealth students can afford months of unpaid full-time work.  From the article:

With job openings scarce for young people, the number of unpaid internships has climbed in recent years, leading federal and state regulators to worry that more employers are illegally using such internships for free labor.

Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California and other states have begun investigations and fined employers. Last year, M. Patricia Smith, then New York’s labor commissioner, ordered investigations into several firms’ internships. Now, as the federal Labor Department’s top law enforcement official, she and the wage and hour division are stepping up enforcement nationwide.

Many regulators say that violations are widespread, but that it is unusually hard to mount a major enforcement effort because interns are often afraid to file complaints. Many fear they will become known as troublemakers in their chosen field, endangering their chances with a potential future employer.

The Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships.

The story also notes the DOL’s criteria for legal, unpaid internships, including similarity to academic or vocational training; no displacement of regular, paid workers; and that the employer derive no immediate advantage from the intern.  That last one, in particular, seems hard to reach in a lot of cases.

Remember that you heard it here first.

*This post originally appeared in Workplace Prof Blog on April 4, 2010. Reprinted with permission.

About the Author: Professor Hirsch joined the University of Tennessee law faculty in August 2004 after working in the Appellate Court Branch of the National Labor Relations Board in Washington, D.C. and serving as a judicial clerk for the Honorable Haldane R. Mayer on the U.S. Court of Appeals for the Federal Circuit and the Honorable Robert R. Beezer on the U.S. Court of Appeals for the Ninth Circuit. His practice experience focused on labor and employment law and he currently writes and teaches in this area, as well as federal courts. He also regularly speaks on various aspects of labor and employment law.

Photo by Martin Gardlin

A recent Time magazine poll found that 71% of Americans who responded want the government to place limits on the executive compensation at firms that received bailout money. Yet accomplishing this task selectively is impossible to do.

The government did appoint a czar of executive compensation for these corporations, but he approved a $7-million salary/$3.5-million bonus plan for the head of AIG, 80% of which is now owned by taxpayers. Few workers, executives included, would agree to work for less than the going rate. Executives are simply used to earning millions of dollars, and there is little that either the czar or shareholders can do about it unless Congress limits all executive compensation. But the chance of such legislation passing is slim.

Why is limiting executive compensation so difficult? Because executives have a seemingly unassailable argument — market forces — that University of Chicago professor Steven Kaplan defended in an October debate: “Market forces govern CEO compensation. CEOs are paid what they are worth.”

Of course, market forces are cited not only to justify outsized compensation for executives but also poverty wages for workers. Textbooks claim that minimum wage laws and union wages create unemployment. Just what are these market forces, and should we let them determine executive compensation and wages?

When British economists David Ricardo and Adam Smith examined this question 200 years ago, they concluded that what a person earns is determined not by what the person has produced but by that person’s bargaining power. Why? Because production is typically carried out by teams of workers, managers and machines, and the contribution of each member cannot be separated from that of the rest. A driver and a bus, for example, generate $100,000 of income a year. The driver is paid $25,000. Is this because the driver had transported 10 of the passengers without the bus while the bus had transported 30 of the passengers without the driver? The driver’s pay is so small only because the driver is so weak at the bargaining table.

It was Smith who explained that the bargaining power of each party is determined by the laws that the government passes and the way that it enforces them, and that, as a rule, the government sides with employers against employees. He was particularly concerned with anti-unionization laws. Had he witnessed the largesse that boards of directors are permitted to offer executives, and the government’s behavior toward executives in the current crisis, he probably would have added that the government also sides with executives against shareholders and taxpayers.

Despite the logic of Ricardo and Smith’s explanation that it is power, not productivity, that determines what people earn, the notion that people earn what they “deserve” persists. It dates to the Haymarket riot of 1886 in Chicago — in which police and labor protesters clashed and several policemen and demonstrators were killed — and the labor unrest that followed. Concerned about this unrest, John Bates Clark, a Columbia University professor, warned in an 1899 book: “The indictment that hangs over society is that of ‘exploiting labor.’ If this charge were proved, every right-minded man should become a socialist.”

It was thus with a clear political agenda that Clark took it upon himself to prove that the charge of exploitation of workers was dead wrong. Clark’s “proof” was to ignore the fact that production is carried out by teams and that individual contributions cannot be measured. He simply declared that the contribution of each individual worker and each machine could be measured, and that the earnings of either workers and executives or machines are simply the values of these contributions.

In this view, if the government were to raise wages by law, employers would have no choice but to fire workers, because no employer can pay out more than the worker puts in. And if the government were to set limits on executive compensation, the bright and the talented would choose to work less or limit the level of their performance.

Evidence that Clark’s theory is wrong — that production is carried out by teams and that astronomical compensation is not a requirement for good performance — can be found everywhere. In 1941, Wassily Leontief, a Nobel Prize-winning economist, tried to alert economists to the fallacy of Clark’s theory. But Leontief, like Ricardo and Smith, was ignored. And Clark’s tale that earnings are determined by productivity alone is still being taught around the globe.

Corporate executives take a different approach: picking the argument that suits them. When it comes to their workers’ wages, Clark’s theory rules: The wage of each worker is equal to the value of his or her product, and raising wages will cause unemployment. When it comes to the executives’ own compensation, however, they hide behind the idea that an individual’s contribution can’t be measured. So even when the corporations they run lose big and their stocks decline, they still collect millions in pay. Executive compensation is now so large that executives’ work effort no longer has any relation to the level of their compensation.

Adam Smith got it right: The remedy for the rule of power is the rule of law. We need new laws to check the unfair distribution of the fruits of our labor. One such law could set a maximum ratio at any given company between the highest executive compensation and the lowest worker’s wage. Another could set a minimum ratio for the division of income between labor and shareholders. Still another could raise the minimum wage and tie it to the median wage, which would make the minimum wage a consistent living wage.

Overpaid executives take more than their fair share and leave too little for the rest of us, threatening our health — and that of society.

Moshe Adler teaches economics at Columbia University and is the author of “Economics for the Rest of Us: Debunking the Science That Makes Life Dismal.”

*This article originally appeared in The L.A. Times on January 4, 2009. Reprinted with permission from the author.

About the Author: Moshe Adler teaches economics in the department of urban planning at Columbia University and is the author of the just published book: “Economics for the Rest of Us: Debunking the Science that Makes Life Dismal.”

With the calendar turning to 2010, the Associated Press took a look back at the first year of Labor Secretary Hilda Solis’ tenure, pointing out that “her aggressive moves to boost enforcement and crack down on businesses that violate workplace safety rules have sent employers scrambling to make sure they are following the rules.”

In many ways, Solis has completely reversed the course of the Labor Department that was set by her predecessor, Elaine Chao. And Solis’ crackdown has business lobbyists yearning for the days when Chao ran the show:

“Our members are concerned that the department is shifting its focus from compliance assistance back to more of the ‘gotcha’ or aggressive enforcement first approach,” said Karen Harned, executive director of the National Federation of Independent Business’ small business legal center…Chao has claimed that success was the result of cooperating with businesses to help them understand the myriad regulations. Keith Smith, a spokesman for the National Association of Manufacturers, said his members “want to build upon [Chao's] progress and recognize what’s working.”

Of course, what worked for big business didn’t work at all for workers, as Chao’s Labor Department spent eight years “walking away from its regulatory function across a range of issues, including wage and hour law and workplace safety.”

Consider some of Chao’s legacy. The Government Accountability Office found that her Department “did an inadequate job of investigating complaints by low-wage workers who alleged that their employers were stiffing them for overtime, or failing to pay the minimum wage.” In one survey, 68 percent of low-income workers reported a pay violation in the previous week alone.

The Department’s own inspector general blamed “a lack of management emphasis on worker safety” for unsafe conditions at mines leading to a jump in worker deaths, while fines for workplace safety violations fell so low that employers began “factoring them in as part of their cost of doing business rather than complying with labor laws.” In all, “workers lose $19 billion in wages and benefits through illegal practices, nearly 6,000 American workers die on the job, and at least 50,000 workers die due to occupational disease” each year.

Solis, meanwhile, “slapped the largest fine in [Department] history on oil giant BP PLC for failing to fix safety problems after a 2005 explosion at its Texas City refinery.” She is hiring 250 additional wage-theft inspectors, and “started a new program that scrutinizes business records to make sure worker injury and illness reports are accurate.”

Labor Department staffers were so disgruntled under Chao that they threw a “good-riddance party” to cheer her departure. But for big business, Chao’s tenure meant acting with impunity and facing puny fines on the rare occasions that that were caught, and they’d like to go back.

*This post originally appeared in The Wonk Room on January 4, 2009. Reprinted with permission from the author.

About the Author: Pat Garofalo is the Economics Researcher/Blogger for WonkRoom.org at the Center for American Progress Action Fund. His writing has also appeared in The Nation, The Guardian, the Washington Examiner, and at New Deal 2.0.

(Reposted from Open Left)

Wage Theft Is Rampant-Estimated at Roughly $2.9 Billion Annually

Last week I wrote a diary on a new report about widespread wage theft among low-income workers, “”Broken Laws, Unprotected Workers”".  I said that I was working on an article for Random Lengths News.  It was published on Thursday, and I’m republishing here below.

*****

Property crime is a serious concern in America today.  In 2007, the total dollar value of all property officially reported stolen in California-population about 38 million-was just over $2.8 billion, almost half of which was motor vehicle theft. The rest came to $1.47 billion.  Of that $2.8 billion close to one-third of it was recovered-$912 million.

But a new report indicates that these statistics are woefully incomplete.  ”Broken Laws, Unprotected Workers” finds that wage theft is rampant among the bottom 15 percent of the workforce, and so widespread that workers in just three cities-Los Angeles, Chicago and New York City (total population about 15 million)-had roughly $2.9 billion in wages stolen from them in 2008, a rate more than double that of reported theft in California.  As for recovering any of it, workers were more likely to get fired for asking than ever seeing a dime of what had been stolen from them.

“The reason we did this study, we were running to into this in our qualitative work,” said Ruth Milkman, a professor of sociology at UCLA who was one of eleven co-authors of the report. “My collaborators had all encountered this,” she said, “But nobody really knew how common it was.  We thought, wow, we could really figure this out.”

Paul Rosenberg :: Robbed On The Job

The study involved a representative survey of 4,387 workers, who were robbed in various different ways.  More than two-thirds-68 percent-experienced at least one pay-related violation the previous work week. The average stolen was $51-bad enough for anyone. But these are the lowest-paid workers in the economy.”Their average earnings for a week were $339,” said Milkman. “The amount lost was 15 percent.”

This equals an average yearly loss of $2,634 out of $17,616. The report estimates that over 1.1 million workers are affected. But they weren’t the only ones hurt, Milkman noted. “If these people were being fully paid, they would spend it locally and local businesses and communities would benefit,” she pointed out.”  What’s more, she added, it also hurts companies that are obeying the law, and paying workers what they’re owed, making it harder for them to compete with lawbreakers.

Breaking the violations down, the report found that 26 percent of those surveyed were paid less than the minimum wage the previous work week. Of those, 60 percent were robbed of more than $1 per hour.  Over one quarter worked more than 40 hours the previous week, of which 76 percent were robbed of legally required overtime pay. On average, this amounted to 11 hours of overtime “either underpaid or not paid at all.”

Additionally, almost 40 percent of those surveyed worked off the clock-either before or after their paid shift. Of these 70 percent were not paid for their extra work.

Milkman cites one example of a nurse’s aide she interviewed. “She told me that over and over again she would clock out for the day, and then the supervisor would say, ‘Maria, could you check in on so-and-do in Room 23?’”

Adding insult to injury is the feeling of helplessness. “She didn’t feel she could do anything about it,” Milkman said.

That feeling is common among crime victims-but how many other sorts of crime victims are victimized day after day, week after week? And what does it means to be robbed by someone you interact with every day?  What does this do corrode people’s determination and belief in the American dream?

“Great question,” Milkman responded, “But not one we tried to probe, so I can’t presume to comment.”

Tipped jobs not only suffered sub-standard pay-30 percent were paid less than the tipped worker minimum wage-but also theft of their tips-which was reported by 12 percent of tipped workers.

In a country where crime stories pepper the local tv news every night, it’s astonishing that such a massive crime wave has been going on, virtually undetected right under our noses. One reason for this is what happens to the victims if they try to complain. According to the report, one in five workers reported trying to complain to their employer, or trying to form a union in past year. For their troubles, “43 percent experienced one or more forms of illegal retaliation from their employer or supervisor.” These included suspensions or firing, threats to cut hours or pay, and threats to call immigration.

“One case that really affected me involved a woman, a housekeeper in a hotel chain, well-know, but I can’t say which one, in the Valley,” Milkman recalled. “She cleaned rooms in the hotel. She was undocumented. She received her pay in cash. She wasn’t paid even minimum wage.  She worked over 40 hours a week.  Finally, she complained to the supervisor and was told they didn’t need her the next week. She was fired.”  But there was more. “This is also a tale about tip work,” Milkman explained. “When she got done cleaning, the supervisor would go into the rooms before she returned, to steal her tips.”

“I was in tears when I heard that,” Milkman said.

There are things that can be done, and the report cites three principles that it says “should drive the development of a new policy agenda to protect the rights of workers.” First is to strengthen enforcement of existing labor laws, both by increased staffing and by new enforcement strategies.  Second is updating legal standards for today’s labor market-including strengthening the right to organize. Third is to establish equal status for immigrants in the workplace.

Now that the problem is known, action is possible-but not guaranteed.  Labor Secretary Hilda Solis has promised increased enforcement, Milkman noted, but that’s only one part of the solution. Key to a full solution is public sentiment and political will.

“The danger with this is, this is a new enough phenomena that people are horrified when they hear about it,” Milkman said. “But the real danger is that it becomes a part of the economic landscape,” she cautioned. “Now the question is what are we going to do about it?”

There is a real danger that it could become something that we simply accept, she warned  And here Milkman drew an analogy to the emergence of mass homelessness in the early Reagan era.  ”When it first started, there was a lot of distress and intense discussion and debate about it, and now we take it for granted. It’s like we live in India.”

The hope is that times are different now, and the direction of the economy can change.

“These laws were put in place when the economy changed directions during the Great Depression,” Milkman said. “We have an opportunity, with the Obama Administration, to change directions again.”

“But it’s not just going to happen,” she warned. “People have to push for it.

About the Author: Paul Rosenberg is progressive activist and journalist who is a frontpage blogger for OpenLeft.org and Senior Editor for Random Lengths News, an alternative bi-weekly in the Los Angeles Harbor Area, where he specializes in labor, community and environmental justice issues. From his anti-war and civil rights activism as a teenager in the 1960s, through his involvement in food co-ops in the 1970s, to his Central American solidarity work, media and renters’ rights activism in the 1980s, and beyond, he has focused his energy primarily on issue activism, with increasing attention to media from the mid-1980s on. He began working as a freelance journalist with a primary focus on op-eds and book reviews in 1994, and joined Random Lengths News in 2002. He’s been published in the Progressive magazine, Publishers Weekly, the LA Times, Christian Science Monitor, and Dallas Morning News.

This article originally appeared in Open Left and Random Lengths News on September 27. 2009. Re-printed with permission from the author.

Atlanta, GA, July 24, 2009 – The federal minimum wage increased today, raising wages of the lowest paid workers from $6.55/hour to $7.25/hour and providing a real boost to working families and the economy. Workers who benefit from the increase will spend it in their local communities on much needed items like milk, diapers and clothes for their children.

Marilynn Winn, is a temp worker in Atlanta earning $6.75/hour at an auto auction. “Increasing the minimum wage will help me and everyone in my community,” she says. “I help my 77 year old mother and 18 year old grandson when I can. Sometimes my mother calls asking for help to buy food and I have to say, “I can’t this week.”

Such basic needs might not sound like the elements of an economic recovery package. But according to the Economic Policy Institute, this $24 per week increase for full-time minimum wage workers will generate $5.5 billion in consumer spending over the next year – providing a helping hand to the sagging economy. Though Congress could not foresee our current economic troubles when a series of three wage increases were enacted in 2007, this minimum wage increase could not come at a better time – for low-wage,
working families and for the country as a whole.

When President Franklin Roosevelt first proposed the first federal minimum wage law in 1937, he noted that: “The increase in national purchasing power (is) an underlying necessity of the day.”

Thirty –one states will be affected by the minimum wage increase, including Georgia and Wisconsin where 9to5 has worked in coalition with business, labor, faith, nonprofit and civil rights organizations to ensure that working families receive what Roosevelt called a “fair day’s pay for a fair day’s work.” Other states where 9to5 has launched campaigns, including Colorado and California, have a minimum wage above $7.25.

Recent economic studies document that states where the minimum wage was raised had better employment and small business growth than states that did not. A letter signed by 650 leading economists, in support of raising the minimum wage, noted “most of the beneficiaries are adults, most are female and the vast majority (come from) low-income working families.” Disputing claims that these increases threaten job growth, they state, “The increase… would not have the adverse effects that critics have claimed.”

While the federal minimum wage increase will go into effect at a time when working families are struggling mightily to make ends meet, the American worker, particularly low-wage workers, need and deserve more: guaranteed paid sick days, more affordable child care for working parents and time off to be involved in their children’s school activities.

As we celebrate this minimum wage increase and all that it promises, let’s continue to move toward family-friendly workplace legislation so that the workplace works for all of us.

Cindia Cameron: As Organizing Director for 9to5, National Association of Working Women, Ms Cameron coordinates issue campaigns, provides leadership and program development to chapters and staff across the country. She is a media spokesperson and public speaker for community and employer audiences on a range of working women’s issues, including living wages, sexual harassment, working poverty and family friendly policies. Ms Cameron has a background in adult and labor education, with a BA in Economics and Labor Studies from Rutgers University. She has worked for 9to5 since 1983.

This article originally appeared at 9 to 5 on July 23, 2009 and is reprinted here with permission from the source.

Today’s increase means a full-time minimum wage earner will receive $28 more a week. This raise is badly needed. It is also categorically insufficient.

While our nation’s plunge into recession has forced many working families to tighten their belts, low-wage workers have fared even worse. The decade between 1997 and 2007 was the longest period in history without a minimum wage increase–but even with this wage hike, minimum wage workers will still make less than they did in 1956, after adjusting for inflation.

In 1968, Dr. Martin Luther King said, “We are tired of working our hands off and laboring every day and not even making a wage adequate with daily basic necessities of life.” How is it possible that his statement would still ring true 40 years later? Recent raises are so little, so late that even with the increase, America’s minimum wage is still 17 percent lower than its peak in 1968. In fact, it would take $9.83 today to match the buying power of the minimum wage of 1968.

The Center for Economic and Policy Research (CEPR) estimates that some 10 million workers–those at the minimum wage or just above it–will benefit from the increase. But the facts remain that an individual earning $7.25 an hour in a standard 2,000-hour work year would earn $14,500 per year…a salary which is still slightly below the 2009 federal poverty level for a family of two. While corporate profits have grown steadily in the past several decades, workers are not getting . As the minimum wage fell 22% in real dollars from 1973 to 2007, corporate profits have grown steadily in the past several decades, jumping more than 50% during the same time period. Statistics like these just reinforce that sad reality that although Americans are working harder than ever, they are not reaping the fair share of the profits their labor work is creating.

Although the federal minimum wage increase from $6.55 to $7.25 an hour reflects a growing understanding that workers face enormous financial burdens, it’s not nearly enough. A NY Times editorial points out: “The latest increase will slow the decline in living standards, but it doesn’t reverse the overall downward pull.” But it doesn’t have to be this way, says SEIU’s Anna Burger:

“For millions of hardworking Americans, their only opportunity for a raise is controlled by which way the political wind blows in Washington…Congress must pass the Employee Free Choice Act, a bill that would allow workers to bargain with their employers for better job security, wages and benefits to ensure that millions more Americans have good jobs with real benefits and a pathway to the middle class.”

It’s time to break the cycle of too little, too late raises. We can’t build a strong, sustainable economy if a growing share of business revenue continues to go to executive pay and profits–we need to level the playing field. The thousands of people who have already taken action know that majority sign-up is still, bar none, the fairest way for workers to negotiate for better job security and wages.

It’s important that both the House and the Senate see how much support there is for majority sign-up and the Employee Free Choice Act–

SEIU Blog

Kate Thomas: Kate Thomas works in New Media for the Service Employees International Union.

This article was originally posted on the SEIU Blog on July 24, 2009 and is reprinted here with permission from the author.

Today, the minimum wage rises to $7.25 an hour. We should all be glad that millions of people are going to get a bit more money in their pockets. But, this hike masks a very grim fact: the “recovery” is not going to happen anytime soon, if the measure we use for “recovery” is that working Americans are going to find meaningful, full-time, decently-paid employment.

Effective July 24th, 2009 the Federal Minimum Wage will increase from its current level of $6.55 (previously $5.85) to $7.25 an hour, according to the United States Department of Labor. This amounts to an increase of 10.7%. These wage floor increases were mandated by a bill passed by Congress in 2007, when the minimum was $5.15 an hour, where it had been for many years prior. With few exceptions, almost all employers are required, under the Fair Labor StandardsAct (FLSA), to pay at least the federal minimum wage to their hourly non-exempt employees for all hours they work.

Accordingly, advocates for low-wage workers believe that a higher minimum wage is a step in the right direction, even though for many people it’s barely enough to survive on. With this new increase to $7.25 an hour, a full-time worker still only earns $15,080 a year. At the nationwide work-week average of 33 hours, the worker would earn only $12,441. The United States government sets the poverty level at $10,830 for one person or $22,050 for a family of four in 48 states and D.C. A worker who is above this low poverty level would not be eligible for certain welfare-related assistance. Thereby, the new federal minimum wage will just barely put many Americans above the poverty level, exempting them from certain assistance, yet barely allowing them to live comfortably.

While the federal minimum wage applies to all states, (click here for more information on each state’s minimum wage laws), individual states have the right to pass a higher minimum wage than the federal level. Some states will not be affected by the increase in minimum wage as they already have a minimum wage above $7.25. The impact will most be felt in 30 states (see below) where the minimum wages are lower than this rate, and many of them plan to match the federal minimum once it increases. Seven states already have laws mandating $7.25 minimum pay, while 14 states and the District of Columbia exceed the new minimum. Employers are required to pay whichever is the highest, federal or state.

Employers in the following 30 states will generally see the minimum wage they are required to pay increase to $7.25 per hour on July 24, 2009:

• Alabama
• Alaska
• Arkansas
• Delaware
• Florida
• Georgia
• Idaho
• Indiana
• Kansas
• Louisiana
• Maryland
• Minnesota
• Mississippi
• Missouri
• Montana
• Nebraska
• New Jersey
• New York
• North Carolina
• North Dakota
• Oklahoma
• Pennsylvania
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Virginia
• Wisconsin (state law is not tied to federal law, so employers covered by state, but not federal law, will not be required to pay federal minimum wage.)
• Wyoming (state law is not tied to federal law, so employers covered by state, but not federal law, will not be required to pay federal minimum wage.)

In the District of Columbia, the minimum wage is automatically $1.00 per hour higher than the federal rate if that amount is greater than $7.00. Therefore, the minimum wage in the district will increase to $8.25 per hour beginning July 24, 2009.

In Nevada, the state minimum wage rate varies for employers, depending on whether the employer offers its employees health benefits, and is indexed to inflation. The increase in the federal rate on July 24^th will require Nevada employers that provide health insurance to pay their employees $7.25 per hour. Employers that do not offer qualified health insurance must pay their employees $7.55 per hour.

This year’s increase in the federal minimum wage will generally have no effect on employers in the following 19 states because they currently have minimum wages at or above $7.25 per hour:

• Arizona (the state minimum wage is $7.25 and is indexed to inflation)
• California (the state minimum wage is $8.00)
• Colorado (the minimum wage is $7.28 and is indexed to inflation)
• Connecticut (the state minimum wage is $8.00 ($8.25 on 1/1/10))
• Hawaii (the state minimum wage is $7.25)
• Illinois (the state minimum wage is $8.00 ($8.25 effective 7/1/10))
• Iowa (the state minimum wag is $7.25)
• Kentucky (the state minimum wage increased to $7.25 on July 1)
• Maine (the state minimum wage is $7.25 ($7.50 on 10/1/09))
• Massachusetts (the state minimum wage is $8.00)
• Michigan (the state minimum wage is $7.40)
• New Hampshire (the state minimum wage is $7.25)
• New Mexico (the state minimum wage is $7.50)
• Ohio (the state minimum wage is $7.30 and is indexed to inflation)
• Oregon (the state minimum wage is $8.40 and is indexed to inflation)
• Rhode Island (the state minimum wage is $7.40)
• Vermont (the state minimum wage is $8.06 and is indexed to inflation)
• Washington (the state minimum wage is $8.55 and is indexed to inflation)
• West Virginia (the state minimum wage is $7.25)

*For more information on the minimum wage laws, click here.

**For a consolidated table of state minimum wage updates effective July 1^st, 2009, click here.

Hannah Goitein: Hannah Goitein is currently a law student at the George Washington University School of Law and a legal intern for Workplace Fairness. Prior to law school, Hannah graduated magna cum laude from the Isenberg School of Management at the University of Massachusetts Amherst. Hannah previously worked for AT&T as a manager and as a manager for a restaurant before that. Through her management experience coupled with her legal and business education, Hannah became committed to helping Workplace Fairness address workers right issues and continues to be actively involved in improving the workplace. Hannah lives in Washington, DC.