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One City’s Pioneering Project to Push Police Funding Into Housing the Homeless

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Homelessness in the U.S., which was already on the rise prior to the COVID-19 pandemic, increased in 2020, exacerbated by the economic realities of the pandemic. Austin, Texas, is no exception, with an estimated 11 percent increase in homeless people counted in the city and Travis County between 2019 and 2020, according to the point-in-time (PIT) count reported in the Austin American-Statesman. Of Austin’s population of roughly 1 million, an estimated 2,500 people experience homelessness on any given night, according to the 2020 PIT count. Austin City Council member Gregorio Casar says this is a number “a community of [more than] a million folks should be able to care [for].”

In an effort to do so, the city of Austin has been purchasing underutilized hotels and transforming them into housing and services for people experiencing homelessness. In a February 4 meeting, the Austin City Council approved the purchase of a fourth hotel—which will provide 150 new homes to the homeless population in the city. Casar says the city plans to move forward on purchasing a fifth and a sixth hotel in the future.

“We have found sufficient resources in the city budget to acquire more hotels because we really believe that it’s a strategy for significantly reducing homelessness in the city,” he says.

In addition to providing long-term and transitional housing to people experiencing homelessness, the hotels purchased by the city will also provide supportive services, including mental health services, trauma services and job services.

“We are working with trusted community groups and nonprofit organizations to provide services at the hotels because we know that there are lots of folks who have experienced real trauma while living on the street and who need support so that their homelessness can permanently end,” Casar says. “And then there are lots of other folks who just need a connection to a job and a stable address for a while so that they can get back on their feet.”

According to Tara Pohlmeyer, communications director for Council Member Casar, Integral Care and Caritas of Austin have submitted letters of interest in operating the hotels and providing services, and the Homeless Services Division (HSD) anticipates negotiating a contract with a service provider/operator for each hotel in April.

He says while shelters provide an important service, oftentimes, they’re just temporarily addressing the issue. The plan for the converted hotels is for them to serve as a more permanent housing solution, to address the real needs of each person they house.

“That’s the way that we can reduce the amount of homelessness in the city, instead of just sort of hiding it, or moving [the homeless population] around while the numbers grow,” Casar says.

To pay for these supportive services, the city will reallocate dollars originally assigned to the police budget, as part of its project to reimagine safety, in response to the Black Lives Matter (BLM) movement and public demand. Funding for operations and services of the hotels will come from Austin Public Health, using a portion of the additional $6.5 million added to the Fiscal Year 2021 budget to address homelessness during the city council’s efforts to reimagine public safety.

“We have never had so many people engage in local government before [the BLM movement],” he says. “There were tens of thousands of people that contacted my office alone. In the weeks of protest over the summer [in 2020], we had hundreds of people testifying at city council meetings, for hours, about the changes that they were calling on us to make. I think that was really important. It shifted all of our perspectives. The community here in Austin is calling on us to be real leaders for our community and for people across the state and across the country. Austin, I think, actually responded to the call to transform police budgets in a way that very few cities across the country did.”

Casar says while cities often have the dollars to make the capital investment in property to house the homeless, the long-term funding for operating those buildings and providing supportive services tends to be the challenge. He says prior to last summer’s BLM movement, which pressured cities across the nation to reallocate police funds into supportive services, one of Austin’s greatest challenges regarding homelessness was related to finding that long-term funding.

“The dollars from the police budget are going to provide the services and operate the hotels,” he says. “No matter how many changes I and some others have tried to make to the budget in years past, we’ve, oftentimes, struggled to make really transformative change because so many dollars get wrapped up in the police budget. This last year, there was finally an opportunity for us to rethink that budget and recognize that we were spending so many dollars on jailing folks experiencing homelessness and policing people experiencing homelessness—but that actually doesn’t reduce homelessness.”

Between the four hotels the city has purchased, there are about 300 rooms, some of which might be able to house a couple of people, and many of them just a single person. The plan is for the city to continue to purchase additional hotels and expand the programs offered, Casar says.

“We have to pull hundreds of people off the streets this year,” Casar says. “I think that would make a really significant difference.”

The extreme winter weather experienced in Texas through February and March makes the need to provide safe shelter and supportive services for people living on the streets all the more urgent.

“In a city as prosperous as Austin, no one should have to live on the streets, period. That became even more clear as we saw folks still sleeping out under bridges when we knew that zero-degree temperatures were coming—and sometimes there were hotels or lit-up buildings right across the streets where they could have safely stayed,” Casar says. “It’s clearly already so dangerous to live outdoors and without a home, and these extreme weather events make it even more clear why we can and should reorganize our resources and our priorities to make sure that everybody has a place to lay their head at night that is safe.”

This article was produced by Local Peace Economy, a project of the Independent Media Institute.

About the Author: April M. Short is an editor, journalist and documentary editor and producer. She is a writing fellow at Local Peace Economy, a project of the Independent Media Institute. Previously, she served as a managing editor at AlterNet as well as an award-winning senior staff writer for Santa Cruz, California’s weekly newspaper. Her work has been published with the San Francisco Chronicle, In These Times, Salon and many others.


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Rebuilding U.S. Manufacturing Is the Only Path to an Economic Renaissance

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Brad Greve knew it was just a matter of time before the computer chip shortage disrupting the auto industry had a ripple effect on aluminum manufacturing in Iowa.

Greve and his colleagues at Arconic Davenport Works—members of United Steelworkers (USW) Local 105—supply the Ford F-150 pickup and other vehicles.

Automakers forced to cut production because of the semiconductor crunch scaled back the amount of aluminum they take from the facility, just as Greve expected, posing another potential setback to a plant already fighting to rebound from the COVID-19 recession.

America cannot afford to jeopardize major industries for want of parts.

The nation’s prosperity depends on ensuring the ready availability of all of the raw materials and components that go into the products essential for crises and daily life.

That will mean ramping up domestic production of the semiconductors—now made largely overseas—that serve as the “brains” of automobiles, computers, cell phones, communications networks, appliances and life-saving medical equipment.

But it will also require building out supply chains in other industries. For example, America needs to produce titanium sponge for warplanes and satellites, pharmaceutical ingredients for medicines and the bearings that keep elevators and other machinery running.

The failure of just one link in a supply chain—as the semiconductor shortage shows—has the potential to paralyze huge swaths of the economy. That’s why it’s crucial not only to source components on U.S. soil but also to incorporate redundancy into supply lines so that an industry can survive the loss of a single supplier.

“It’s that ripple effect,” said Greve, president of Local 105, recalling the time when a fire at a die-cast parts supplier disrupted production of the F-150. “If you shut down a car manufacturer—or they can’t get one part—you can affect a whole lot of jobs around the country.”

COVID-19 interrupted computer chip production even as demand for televisions, home computers and other goods soared among consumers locked down in their homes. Now, neither U.S. automakers nor manufacturers of other goods can obtain adequate amounts of the semiconductors they need.

Because of the shortage, carmakers cut shifts and laid off workers. The production cuts come when the nation needs the boost from auto sales—and other items containing semiconductors—to climb out of the recession.

Although the decreased aluminum shipments haven’t resulted in layoffs at Davenport, the automotive supply-chain meltdown couldn’t have come at a worse time. When the pandemic curbed air travel last year, airplane manufacturers cut back on the aluminum they get from Arconic.

“Automotive is what kept us going,” Greve said.

America was once a leader in computer chip manufacturing. But as with many other industries in recent decades, the U.S. frittered away the upper hand while other countries boosted production.

The nation’s share of chip manufacturing capacity fell from 37 percent to 12 percent over the past 30 years. And although demand for chips continues to grow, the U.S. stands to gain only a fraction of the additional capacity currently in the pipeline.

That leaves the country overly reliant on foreign suppliers who can encounter their own production shortfalls, as happened during the pandemic, or who can cut off shipments for political or economic reasons at any time.

“If you’re going to war with somebody, they’re not going to sell you anything,” Greve said, noting dependence on overseas supplies threatens the nation’s ability not only to make cars and other consumer goods but also to obtain the chips needed for defense and intelligence purposes.

Although the current crisis centers on semiconductors, neglect of the nation’s manufacturing base decimated America’s capacity to produce parts and components for many other industries.

“It affects everybody,” Libbi Urban, vice president of USW Local 9231, said of hollowed-out supply chains that threaten jobs and access to goods. Because of the semiconductor shortage, automakers now take less of the galvanized steel she and her coworkers make at Cleveland-Cliffs’ New Carlisle, Indiana, Works.

Shortages of medical and safety equipment during the pandemic revealed how much manufacturing power the nation let slip away.

But it wasn’t only the finished products, like face masks, America found itself ill-equipped to produce. Makers of hand sanitizer and cleaning products struggled to obtain adequate supplies of the hand pumps and spray triggers made overseas.

“How much time and money are being lost waiting on overseas companies to get products and supplies to the U.S.?” Urban asked.

President Joe Biden took the first step toward rebuilding manufacturing power with an executive order in February requiring immediate reviews of supply chains for the semiconductor, pharmaceutical, electric-battery and rare earth minerals industries as well as longer-term reviews of other sectors.

But after identifying weaknesses, America needs to implement a strategy for restoring supply lines and ensuring long-term resiliency.

That will include direct investment in U.S. manufacturing facilities, such as the $37 billion Biden proposed to ramp up chip production.

It involves strategically using tax incentives to encourage employers to expand operations and invest in new technology. And it means building strong markets for U.S. products, partly through policies that encourage federal contractors and other companies to buy domestic goods.

Besides cutting shifts, Greve noted, automakers have been trying to weather the semiconductor shortage by allocating chips to their most popular models or leaving vehicles partially completed until chips arrive.

GM even eliminated an important feature, an advanced fuel management system, in some models just to save chips and get vehicles to market.

“We shouldn’t have that happen in this country,” Greve said. “If we don’t make the supplies here, then we have no control.”

This article was produced by the Independent Media Institute.

About the Author: Tom Conway is the international president of the United Steelworkers Union (USW).


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Black workers, hammered by pandemic, now being left behind in recovery

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Black Americans, who were among the hardest hit by coronavirus layoffs, are now recovering at the slowest rate, a one-two punch that threatens to worsen the United States’ already stark wealth and income disparities long after the pandemic recedes.

While Hispanic workers initially saw the sharpest uptick in unemployment when business shutdowns began last spring, Black people have seen a slower return to work even as the economy is poised for a robust rebound, government data and economic analyses show. When the overall unemployment rate ticked down in February, Black workers were the only group that saw a rise in joblessness, a 0.7 percentage point increase.

The share of Black Americans holding jobs also dropped over the month while it continued to move up for all other races and ethnicities. Over the past year, white, Asian and Hispanic Americans have regained roughly two-thirds of their initial job losses in terms of what share of their population is working, a key measure of labor and unemployment known as the “employment-population ratio.” Black workers have only recovered slightly more than half.

The data has fueled fears that the nascent recovery will not be evenly shared, a dynamic that would exacerbate income and wealth inequality while prolonging the return to full employment. The trend is reminiscent of the Great Recession, when Black workers saw a worse downturn and slower rate of return to normal. And this time, it has caught the attention of top policymakers across the Biden administration and in Congress.

“We’re trying to make sure that it is not like so many other recoveries,” said House Majority Whip Jim Clyburn (D-S.C.), the most senior Black lawmaker in Congress and chair of the Select Subcommittee on the Coronavirus Crisis. “Slow for everybody, and a snail’s pace for Black and brown communities.”

The headwinds that Black workers face are plenty, some unique to the coronavirus recession but others the result of structural inequities that have long contributed to high rates of unemployment — typically double that of white workers even in strong economies.

For one, many of the industries in which Black workers are heavily represented are not recovering as quickly as others as the economy reopens — or are even continuing to backslide. State and local governments have long been a major employer for African Americans. But while the labor market broadly improved last month, state and local governments shed another 83,000 jobs and remain down 1.4 million workers from a year ago.

“Those sectors in which the rebound is really not happening, or not happening in impactful ways, are really almost the same industries in which African Americans are overrepresented,” said Michelle Holder, a labor economist at John Jay College of Criminal Justice in New York. She cited transportation, a major employer for Black men, and health services, where Black women are heavily represented, as two other industries that have taken longer to come back, keeping the unemployment rate high.

The devastation of the child care sector amid the shutdowns has also heavily affected Black and Hispanic women, who are more likely to work at child care centers and to depend on them in order to be able to take jobs elsewhere.

And while employment in high-wage sectors has almost completely recovered, low-wage industries remain down 28 percent from a year ago, according to Harvard’s Opportunity Insights tracker — a disparity that disproportionately affects workers of color.

Structural inequities in the U.S. labor market that have affected Black and Hispanic workers’ ability to advance out of low-paying jobs, as well as discrimination in hiring practices, are also likely having an effect, some economists say.

When unemployment spiked in April, the gap between Black and white rates of joblessness narrowed significantly, indicating the losses were spread across the board. But it has steadily grown since then as white workers have returned to work faster — which William Spriggs, chief economist at the AFL-CIO, said he took as “proof” of the effect of discriminatory hiring practices.

Spriggs also said that for much of the past year, unemployment has been higher for all Black workers, including those with college degrees, than for those of all races with less than a high school education.

“This is not a matter of skills,” Spriggs said. “It’s a matter of the way discrimination takes place within the recovery.”

One way to address the slower recovery among workers of color is to ensure that federal support remains in place as long as Black and Hispanic unemployment remains elevated, advocates say, rather than cut it off once the levels return closer to normal. And given that these workers typically remain out of work the longest, President Joe Biden will need a prolonged economic recovery to ensure the labor market gets tight enough to pull them back in from the sidelines.

Clyburn’s focus is two-fold: tracking the Covid relief money as it goes out to ensure that it’s being spent equitably, and pushing the Biden administration to invest heavily in a second stimulus package focused on infrastructure, which would spark job creation across the country.

Clyburn said he has spoken about the need to address the uneven recovery with both Biden and Susan Rice, the president’s top domestic policy adviser, adding that Biden has made clear “he plans to do the right thing.”

There are signs the administration is focused on the disparities. The White House Council of Economic Advisers highlighted adjusted unemployment rates, which include those who have given up the search for work, broken down by race and gender after the latest jobs data was released for February. The report showed that the Black unemployment rate stood at nearly 15 percent — affecting nearly 1 in 6 workers — compared to an overall rate of 9.5 percent. The adjusted Hispanic unemployment rate is 12.4 percent.

At the Labor Department, chief economist Janelle Jones penned a blog post last month stressing the disproportionate economic impact of the pandemic on Black Americans, particularly women.

And Federal Reserve Chair Jerome Powell says he is tracking the Black and Hispanic unemployment rates, among other statistics, because elevated joblessness there signals weakness in the broader labor market.

“This particular downturn, of course, was just a direct hit on a part of the economy that employs many minorities and lower paid workers… and it’s the slowest part of the economy to recover,” Powell said at a March 17 press conference. “We’d like to see those people continue to get support as the broader economy recovers, as it’s very much doing now.”

The longer the rate of recovery for Black workers continues to lag, the more likely it is to have a lasting impact. Workers who fall into long-term unemployment — defined as being out of a job for six months or more — take longer to return to work and are more likely to drop out of the labor market entirely.

Black workers are also far less likely to have had savings to lean on to weather an extended period of joblessness — the net worth of an average Black family is about one-tenth that of a white family — and therefore more vulnerable to falling into debt or losing their homes. And another prolonged economic recovery for Black Americans could worsen the already dramatic racial wealth gap, particularly as it drags on both personal savings and future earnings.

The key to addressing the inequities lies in promoting a strong economic recovery for everyone, while recognizing that some communities and workers will take longer to return to normal and require more help than others, economists say.

“People love the quote [from] John F. Kennedy, ‘A rising tide lifts all boats.’ It lifts all the boats that got solid bottoms,” Clyburn said. “If the bottoms got holes in them or if the boats have deteriorated, a rising tide ain’t gonna lift them.”

This blog originally appeared at Politico on March 23, 2021. Reprinted with permission.

About the Author: Megan Cassella is a trade reporter for POLITICO Pro.


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God’s Work: Labor in the Church

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In this episode, we talk to Rev. Lindsey Joyce of the United Church of Rogers Park in Chicago and the Institute for Christian Socialism. We discuss Pastor Joyce’s life and path to being a full-time pastor and the community she serves. We also discuss the work of ministry: What is it like to be a worker who works in the church? What is the relationship between the higher calling?—?the vocation of being a pastor?—?and the daily labor that goes into fulfilling that role in the church and the community?

This blog originally appeared at In These Times on February 26, 2021. Reprinted with permission.

About the Author: Maximillian Alvarez  is a writer and editor based in Baltimore and the host of Working People, ?“a podcast by, for, and about the working class today.” His work has been featured in venues like In These Times, The Nation, The Baffler, Current Affairs, and The New Republic.


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A Minimum Wage? A Fake Debate

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Capitalism’s “conservative” defenders yet again oppose raising the minimum wage. They fought raising it in the past much as they tried to prevent the Fair Labor Standards Act (1938) that first mandated a U.S. minimum wage. The major argument opponents have used is this: setting or raising a minimum wage threatens small employers. They may collapse or else fire employees; either way, jobs are lost. What is conveniently assumed here is a necessary contradiction between minimum wages and small business jobs. That assumption enables opponents to claim that not setting a legal minimum wage, like not raising it, saves jobs. The system thus presents very poorly paid workers with this choice: low wages or no wages.

“Liberals” in the United States have mostly accepted the assumption of that contradiction, the necessity of that final choice. However, they try to demonstrate that the social gains from a higher minimum wage would exceed the social losses from the reduced employment they admit. Their idea, in effect, is that a higher minimum wage would increase demand for goods and services. Any workers fired because of the minimum wage would be rehired elsewhere to meet the rising demand. Countless empirical studies by conservatives and liberals yield, as usual, correspondingly conflicting conclusions.

In the actual history of U.S. capitalism, the minimum wage has been undercut from the outset. In real terms (what the minimum wage can actually buy), its long-term decline began from a peak in 1968. It was last raised in 2009 (to $7.25 per hour) despite a rising consumer price index every year since then. U.S. business interests plus the “conservative” politicians, media, and academics they support have inundated the public with the idea that raising the minimum wage will hurt poorly paid workers (by losing mostly small business jobs) more than help them. This debate over the minimum wage, intensified whenever proposals to raise it gain public attention, has been “won” chiefly by the conservative/business side.

Despite its political effectiveness for conservatives and big business till now, their argument—like the entire debate—is flawed logically. Its underlying, shared assumption is unnecessary and inaccurate. It serves chiefly to undercut the level, purpose, and social effects of the minimum wage in the United States.

Paying a decent living wage to workers by raising the minimum wage need not threaten the viability of small businesses. The latter need not collapse nor fire workers when minimum wages are raised. Indeed, raising the minimum wage can and should be one basis for a mutually beneficial alliance between wage workers and small businesses.

Few dare quarrel with the notion that in the U.S. today, paying the federal minimum wage of $7.25 per hour is an outrage against decency. It is among the very lowest minimum wages of industrialized economies: quite the achievement for one of the “richest countries in the world.” So the defense of such an outrage has always begun by focusing attention elsewhere. We are asked to sympathize with the small businesses whose profits and thus viability will be undone if they are required to pay a raised minimum wage. We are asked likewise to sympathize with the plight of minimum wage workers who will become jobless when their employer cannot pay a raised minimum wage. Thus the conclusion beloved by opponents of raising the minimum wage: it lies in the interest of low-paid workers and small businesses to join the opposition to raising the minimum wage.

So many flaws attend such logic that it is not easy to decide where to begin its demolition. We might note that it clearly implies that were we to drop the minimum wage even further, below $7.25 per hour, we might achieve lower unemployment rates. But that is so gross an idea that right-wingers rarely go there. They don’t dare.

There is a parallel example we can draw from the history of wage workers when they included children as young as five years old. The parallel logic then held that allowing child labor (with the oppression and abuses it entailed) was doing poor families a favor. Were child labor to be outlawed, capitalism’s defenders then insisted, two tragedies would necessarily follow. First, poor families would suffer an income loss because they could no longer sell their children’s labor power to capitalist employers for a wage. Second, businesses whose profits depended at least partly on low-wage child labor would collapse and render adults jobless too.

It is important to note that after sustained political agitation, child labor was in fact outlawed. The logic of its defenders was rejected and rarely resurfaced afterward even in right-wing and “conservative” literature. Former capitalist employers of children found other means (paying adults more, improving productivity, economizing on other inputs, and so on) to profit and grow. As we know, U.S. capitalism over the last century prospered without child labor. And where U.S. capitalists relocated abroad to employ children, opposition there has replicated what happened in the United States, albeit slowly. What happened to child labor can and likely will happen as well to abysmally low minimum wages.

How then might a civilized society raise its minimum wage to provide a decent livelihood to workers and protect its small businesses? The solution is straightforward. Offset the extra labor costs for small businesses from a higher minimum wage by providing them with some combination of the following: a new and significant share of government orders, tax breaks, and government subsidies. Such supports now overwhelmingly favor big business and thereby facilitate its many efforts to destroy and replace small businesses. Those supports should be reapportioned with special consideration/targeting for small businesses. To be eligible, small businesses would need to show how raising the minimum wage increased their total wage bill. In this way, society can concretely support small business and a decent minimum wage as twin, shared social values.

In effect, this proposal changes the terrain of the minimum wage debate. It brings into stark relief that raising the minimum wage leaves open the question of which part of the employer class will bear the burden of compensating for that in the short run. An effective political coalition of low-wage workers and small businesses could require big business to pay by losing some of its government business, paying higher taxes, or obtaining lower subsidies—all to compensate small businesses for a raised minimum wage. For decades, an alternative political coalition—of big and small business—blocked or delayed minimum wage increases. Nothing requires this latter coalition to always or, indeed, ever prevail over a competing coalition of labor and small business that seeks a higher minimum wage for one plus greater state supports for the other. Likewise, nothing warrants continuing the current debate over raising the minimum wage as if only small business would always have to absorb its possible costs.

The debate over the minimum wage has been lopsided for a very long time. Uncritical media coverage of the debate has allowed big business to evade its proper share of paying to sustain a viable small business sector. Meanwhile, workers and small businesses pay taxes that favor big business. Most Americans want a thriving small business sector. Most also increasingly criticize big business: “antitrust” remains part of government regulation as well as a part of popular ideologies. We can and should correct the old debate now to enable a different political coalition to shape minimum wages in a different way from the past.

This article was produced by Economy for All, a project of the Independent Media Institute.

About the Author: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or ItselfUnderstanding Marxism, and Understanding Socialism.


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Manchin and Sinema are poised to tank $15 minimum wage, so here come the insulting ‘compromises’

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A minimum wage increase goes before the Senate parliamentarian on Wednesday to find out if it passes muster for inclusion in the COVID-19 relief package being passed under budget reconciliation. Democrats feel good that a recent Congressional Budget Office analysis shows the measure has enough budget impact for reconciliation, allowing it to be passed by a simple majority vote. But even if the parliamentarian agrees, the plan for a $15 minimum wage in 2025 is in deep peril thanks to Democratic Sens. Joe Manchin and Kyrsten Sinema. So now the rush is on for senators to float proposals trying to make themselves look like heroes of the low-wage worker without, you know, supporting anything like an actual living wage.

Sens. Tom Cotton and Mitt Romney came out with a plan for a $10 minimum wage by 2025. This is pitifully low—in fact, Cotton’s own state of Arkansas has an $11 minimum wage right now, following a 2018 ballot measure that got the support of 68% of Arkansas voters. When opponents of a $15 minimum wage (who themselves make much, much more) start talking about how it’s just too much for some regions of the country, consider that Arkansas vote.

Cotton and Romney also want to tie their insultingly inadequate pay raise to an anti-immigrant measure, requiring all employers to use E-Verify to ensure they don’t hire undocumented immigrants. In other words, Republicans are advancing an unacceptable bill in hopes of claiming that Democrats were the ones to block a minimum wage increase.

Again, 68% of Arkansas voters passed an $11 minimum wage measure in 2018. In 2020, just over 60% of Florida voters passed a $15 minimum wage measure, which will raise the state’s minimum wage to $10 on Sept. 30, 2021 and get to $15 in September 2026.

Manchin, too, has his own insulting minimum wage proposal. He’s pushing for $11, claiming it’s more appropriate for states like his own West Virginia. Except $11 is not a living wage in West Virginia. Not only that, but back in 2014, Manchin backed a $10.10 minimum wage. Seven years later, he’s only gone up to $11? Sinema similarly backed the $10.10 minimum wage in 2014, by the way.

Cotton and Romney’s proposal is a nonstarter. Manchin at least offers Democrats something to work with since he doesn’t seem intent on attaching a poison pill to an inadequate raise. He and Sinema should come under intense pressure to do the right thing. While they should—if they have any allegiance either to low-wage workers or to economic realities—pass the Raise the Wage Act, getting the federal minimum wage to $15 in 2025, there may not be enough pressure in the world for these two drunk on their own power as swing votes and in love with their conservative Democrat self-image.

Here’s where we are now as Manchin and Sinema hold up a series of gradual increases to $15. The $7.25 federal minimum wage hasn’t gone up since 2009, and given inflation since that time, it would need to be $8.81 an hour to have the same buying power it did in 2009. Full-time work at $7.25 an hour puts the single parent of one child below the federal poverty threshold, or puts a single worker with no dependents only slightly out of poverty. 

The highest the minimum wage has ever been, as far as inflation and buying power, was in 1968, when it was the equivalent of $12.27 in today’s dollars. At the moment, 29 states and the District of Columbia have higher minimum wages than $7.25 an hour, including Manchin’s West Virginia ($8.75) and Sinema’s Arizona ($11). Full-time, year-round work at $15 an hour yields an annual income of just over $31,000. Does that sound outrageously high? In fact, right now, never mind in 2025, even $15 an hour isn’t truly a living wage.

This is what Manchin and Sinema—to say nothing of every single Republican—are moaning and groaning about.

But if there is no amount of pressure enough to make them do the right thing, then a compromise could, under some circumstances, be better than nothing. The Raise the Wage Act reaches $11 in 2022, $12.50 in 2023, $14 in 2024, and $15 in 2025; after that, the minimum wage becomes indexed to the median wage. If Manchin and Sinema could sign on to hitting one of those intermediate steps—say, $12.50—and indexing it to the median wage while also raising the tipped worker subminimum wage that has been stuck at $2.13 an hour since 1991, well … it wouldn’t be enough, but it would help millions of workers, and indexing the minimum wage would ensure that those workers never again go more than decade without a raise.

A $15 minimum wage should be the starting point in a discussion. Unfortunately, the United States’ broken politics and the minority rule of the Senate may put it out of reach, consigning millions of U.S. workers to poverty for years to come. That’s something to mourn, and to organize to change. In the short term, Democrats need to do the best they can do by working people.

This blog originally appeared at Daily Kos on February 24, 2021. Reprinted with permission.

About the Author: Laura Clawson has been a contributing editor since December 2006. Clawson has been full-time staff since 2011, and is currently assistant managing editor at the Daily Kos.


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Biden continues using executive power to help working people

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President Joe Biden will sign an executive order strengthening Buy American policies on Monday. While such provisions, which encourage federal agencies to buy U.S.-made products, already exist, they’re filled with loopholes and haven’t always been followed. 

“Existing Buy American rules establish a domestic content threshold—the amount of a product that must be made in the U.S. for a purchase to qualify under Buy American law,” a White House fact sheet explains. “This Executive Order directs an increase in both the threshold and the price preferences for domestic goods—the difference in price over which government can by a product from a non-US supplier. It also updates how government decides if a product was sufficiently made in America, building a stronger foundation for the enforcement of Buy American laws.”

Enforcement is always an issue, which is why it’s important that Biden’s executive order also sets up a new director of Made in America position at the Office of Management and Budget to ensure there’s follow-through on the good intentions behind the order. Also included are a review process for when agencies seek waivers on Buy American requirements, and biannual reports on agency implementation of the requirements. In other words: No, really, we mean it this time.

While Donald Trump made a big deal of signing Buy American orders, his administration didn’t finalize it until he was almost out of office. Biden is setting a 180-day deadline for changes to take effect.

Labor leaders hailed the move.

“The Trump administration used the right words but never put in place policies to affect meaningful change. This executive order will close loopholes that allow agencies to sidestep Buy American requirements and increase the thresholds for domestic content,” AFL-CIO President Richard Trumka said in a statement. “We know that when America’s workers are given a level playing field, we can compete with anyone. This order is a good first step in revitalizing U.S. manufacturing, which Trump’s policies failed to do over the past four years.”

According to United Steelworkers President Tom Conway, ”Today’s order strengthening domestic content requirements, closing loopholes in how domestic content is measured and calling for stricter enforcement of existing legislation like the Jones Act is an important step toward revitalizing our manufacturing base, as well as protecting and creating thousands of good, family-sustaining jobs.”

Biden continues using executive orders to do what he can, but on so many important things, Congress will need to act.

This blog originally appeared at Daily Kos on January 25, 2021. Reprinted with permission.

About the Author: Laura Clawson has been a contributing editor since December 2006. Clawson has been full-time staff since 2011, and is currently assistant managing editor at the Daily Kos.


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Biden’s big challenge: A growing racial wealth gap

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When he takes office on Jan. 20, Joe Biden will face a gap between Black and white wealth that has grown into a yawning chasm during the past 10 months.

The pandemic has shuttered tens of thousands of businesses and left millions out of work. And communities of color have borne the brunt of the economic devastation, particularly Black-owned businesses that have failed at a far greater rate during the pandemic than white-owned businesses. Many that remain may not survive the current pandemic wave without significant help from the federal government before effective vaccines finally arrive.

Biden’s presidency may rise or fall on his ability to execute policies — possibly with a GOP majority in the Senate — that address systemic economic inequality, which often leaves Black families and businesses far more vulnerable to economic shocks. Black families have faced a well-documented pattern of financial discrimination that has stymied their ability to accumulate wealth at the same rate as white families, forcing them to live in neighborhoods with fewer resources. For example, they are denied loans at much higher rates than white families with similar credit profiles — and face higher interest rates when they do qualify.

Biden won the White House with enormous help from African American voters, which he acknowledged in his victory speech: “The African American community stood up again for me. They always have my back, and I’ll have yours.”

Now, his supporters say, he must deliver.

“Had it not been for Black people it would have been difficult for [Biden] to win,” said Ron Busby, president, CEO and founder of the U.S. Black Chambers. Busby said the pandemic exposed inequalities that have long existed: Black people were more likely to get the virus and die from it, more likely to be forced to go into work and less likely to be eligible for federal stimulus programs designed to prop up the economy.

“We’ve got to fix that and hold this administration accountable so we can provide opportunities for our own,” he said.

People close to the Biden transition team say targeting the higher rate of Black-owned business failures — and the racial wealth gap more broadly — will be a central focus of the new administration. Early measures to target the problem will likely include language in any new stimulus package aimed at making sure money from the Paycheck Protection Program, which is focused on aiding small businesses, goes to firms that may not have gotten access to previous funds, especially minority-owned businesses.

“The administration really needs to think creatively to make sure aid gets to some of these small businesses that have been hit so hard,” one person close to the transition said on condition they not be identified because they were not authorized to speak publicly. “We can’t leave them behind. It’s got to be better than what happened before.”

Despite Biden’s intentions, he’ll face significant roadblocks, including a divided Congress, a range of pressing priorities and a problem that has deep historical roots. New census data out this week showed white households with median wealth of $171,000 compared with $25,000 for Hispanic households and $9,567 for Black households in 2017. That gap has only widened among people with college education: Families headed by a college-educated Black person saw their wealth decline by nearly half compared with families headed by a college-educated white person between 1989 and 2016, according to the Federal Reserve Bank of St. Louis.

“The Biden administration can certainly begin to do this work and begin to support policies that will eliminate racism and discrimination in our economy,” said Rep. Maxine Waters, (D-Calif.) who chairs the House Financial Services Committee. Waters said that more banks and other financial institutions have been receptive to addressing the wealth gap and ending lending discrimination since George Floyd’s death in May. “But it certainly is not something that in a few months or a few years, all of a sudden, he’s going to be able to wipe away all the instances and ways by which inequality has grown and developed.”

Many federal government programs created in the stimulus package are set to expire at the end of the year including an eviction moratorium, enhanced unemployment benefits and the Paycheck Protection Program. Black business owners and worker groups say they were largely shut out of the $2 trillion CARES Act.

From April to June of this year, 13 percent of jobless Black workers received unemployment benefits, compared with 22 percent for Hispanic workers and 24 percent for white workers, according to analysis from Nyanya Browne and William Spriggs at Howard University. (Their analysis was based on survey data from the National Opinion Research Center at the University of Chicago.)

Spriggs, also chief economist at the AFL-CIO, said Black people are more likely to work in service industry jobs not covered by unemployment assistance programs and live in Southern states that were slow to roll out benefits. He said that to address the imbalance Congress and the new administration would have to redesign unemployment insurance programs instead of just renewing the current program when it lapses at the end of this year.

“We are going to have a long period of a very disrupted labor market,” Spriggs said. “They have to think, ‘Am I just going to patch this up? Or do I conceive of something different.’” If all they do is put it back together, Spriggs said, they’ll just end up replicating existing inequities.

In addition PPP funds haven’t reached Black businesses owners, which have been especially hard hit because of pandemic related shutdowns and a drop in demand. Between February and April of this year, 41 percent of Black-owned businesses closed, compared with 17 percent of white businesses, according to the New York Federal Reserve.

That’s likely because Black-owned businesses often have thinner financial cushions. According to Goldman Sachs, 43 percent of Black-owned businesses expect cash reserves to be gone by the end of this year without more stimulus from Washington. Overall, that number is 30 percent.

But the problem with using PPP is that the program relies on banks as intermediaries to distribute capital. And Black-owned businesses often don’t have relationships with banks participating in the program.

“There are things implicit in PPP that are detrimental to Black businesses,” said Darrick Hamilton, founding director of the Institute for the Study of Race, Stratification, and Political Economy at The New School. “Using banks as an intermediary won’t help if you don’t have a strong relationship with a commercial bank. It’s a justice issue. Black people should have the same access to capital as white people.”

Hamilton suggested the administration focus on direct grants to heavily impacted minority-owned businesses, either through new legislation or through the Small Business Administration.

Breaking up big companies is another area progressive economists want the Biden administration to pursue. Outside of going after big tech giants the president didn’t like, the Trump administration did not prioritize legally targeting some of the nation’s largest and most dominant companies such as Amazon and Facebook. But those who study the racial wealth gap suggest that the concentration of growth in a smaller number of very large companies is a critical factor in driving inequality.

“For small businesses to thrive you need to have a robust antitrust agenda,” said Heather Boushey, president and CEO of the Washington Center for Equitable Growth. “It’s a super important and under-recognized factor. There is lots of empirical evidence that these things are connected.”

The Biden administration can also take steps to address the wealth gap even if Congress doesn’t cooperate. One way to tackle it is through federal contracting. Federal officials could reverse a Trump administration policy of not sharing which firms get federal funds and reinstate an Obama administration policy of paying suppliers upfront for contracts.

John Rogers, co-CEO of Ariel Investments, said there should be more transparency around how federal funds are spent. The federal government should track contracts by race and category to ensure that Black-owned businesses are getting deals for professional services — and not just contracts forjanitorial or other low-margin industries. What’s more, Rogers said, the administration should use their bully pulpit to ensure private companies are doing the same.

When the state of Illinois mandated diversity in company boards, more Black executives benefited from new opportunities, Rogers said.

“A lot of companies had a Jackie Robinson moment,” he said. But even forcing companies to be transparent about who gets contracts and sits on boards can create more diversity.

“Then pressure builds to move into the 21st century,” Rogers said. “And do the right thing.”

This blog originally appeared at Politico on November 18, 2020. Reprinted with permission.

About the Author: Renuka Rayasam covers Texas politics, policy and health care for POLITICO. Rayasam grew up outside of Atlanta, Ga. She studied political economy and German at the University of California, Berkeley and has a Master of International Affairs from Columbia University.


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Toomey calls for Fed special loan programs to end, setting up clash with Democrats

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The Federal Reserve has doled out billions of dollars in emergency loans to keep the economy afloat during a crippling pandemic, garnering broad bipartisan praise.

Now, the lawmaker who is likely to head the powerful Senate Banking Committee if Republicans keep control of the Senate is signaling that the Fed should stop.

“If someone wants to make the case that we need the government to give money to people or businesses because they’re struggling, by all means you can make that case,” Sen. Pat Toomey told POLITICO. “But that’s not a Fed exercise.”

The Pennsylvania Republican believes that the central bank’s emergency programs — which he called “wildly successful” — should wind down at the end of the year, a spokesperson confirmed. He’s concerned that if the programs are extended, they will be seen as a substitute for fiscal policy, the tax and spending decisions that are the responsibility of Congress and the president.

“That would be a huge mistake,” he said.

While the Fed is an independent agency whose board makes its own policy decisions, it is overseen by the Banking Committee and is sensitive to its views.

Toomey’s stance could put him at odds with the next presidential administration, which will want to continue to prime the pump as much as possible to boost the economy as the coronavirus crisis shows little sign of abating.

It will also set up a conflict with Democrats, such as House Financial Services Chair Maxine Waters (D-Calif.), who have faulted the Fed for not doing enough to provide financing for state and local governments, as well as small and midsized businesses that are relying on temporary lending programs.

They have urged the central bank to make the loan terms more generous as the darkening financial outlook for many companies and municipalities heightens the risk that even more Americans will be put out of work.

But Republicans like Toomey, who have historically sought to limit the central bank’s role in the economy, say the Fed’s emergency lending programs have largely served their purpose.

The mere existence of the programs helped restore stability to the financial system after panic over the coronavirus earlier this year threatened to shut down key debt markets. That means borrowers can go to private markets to obtain funds at reasonable rates without needing to turn to the Fed, GOP lawmakers say.

The divergent opinions put the Fed, which seeks to avoid the political spotlight, in an awkward position as the parties debate how much additional money is needed to sustain the economic recovery.

“I would not want to turn what are supposed to be liquidity backstop credit programs into a fiscal, giving-away-money program,” said Toomey, who also sits on a congressional watchdog overseeing $500 billion in coronavirus relief funds.

The emergency lending facilities are already set to expire at the end of the year, though the Fed and the Treasury Department, which together have authority for designing the programs, could choose to extend that deadline. Fed Chair Jerome Powell told reporters Thursday that they were “just now turning to that question” and had not made a decision.

The central bank might want to maintain its ability to buy corporate bonds on the open market in case investors once again get spooked. It has made more than $13.4 billion in purchases so far, one of its most controversial moves during this crisis, with critics saying it’s propping up weak firms and subsidizing large ones like Apple and Amazon that don’t need help.

If Joe Biden wins the presidency, a new Treasury secretary would also have the power to nudge the Fed to take on more risk in who it lends to. The Fed, in consultation with Treasury Secretary Steven Mnuchin, has been extending credit with the expectation that most of the funds will be paid back. That means the aid won’t go to some of the borrowers that need it the most.

Neither the Fed’s municipal lending program nor its “Main Street” lending program — intended for businesses and nonprofits with fewer than 15,000 employees — have come close to doling out all of the funds that are potentially available.

Treasury has set aside as much as $75 billion of CARES Act relief money to cover potential losses from up to $600 billion in Main Street loans, although only about $4 billion in loans have been made under the program, which opened its doors this summer.

Similarly, the Fed has only lent to two entities through its municipal facility: Illinois and New York’s public transit system.

A Biden-appointed Treasury secretary could take a different tack.

“What will be the attitude of the new Treasury secretary who can get through a Republican confirmation?” said Peter Conti-Brown, a Fed expert at the Wharton School of the University of Pennsylvania. “Is it going to be more hands off? Is it going to be more dictating terms?”

He noted that banks have been hesitant to make loans under the Main Street program — under which the Fed will buy 95 percent of a bank loan to a qualifying company or nonprofit — because they still have to do extensive underwriting and bear the risk if a loan defaults.

“The Main Street program has been criticized for having a cumbersome procedural structure that was instigated by the Treasury, so it’s possible that gets relaxed and might see a lot more take up,” Conti-Brown said.

In the meantime, some Democrats have criticized the Fed for not doing more to make the terms attractive to key sectors of the economy that are struggling.

Last Friday, the Fed did move to make its “Main Street” program available to more small firms by lowering the minimum loan amount to $100,000 from $250,000, which could provide struggling small businesses with a low-cost lifeline as the pandemic rages on. But it’s unclear if that will push up demand for the Fed-backed loans.

Bharat Ramamurti, a former aide to Sen. Elizabeth Warren (D-Mass.) who now serves on the Congressional Oversight Commission with Toomey, said the Fed should ensure that state and local governments don’t needlessly lay off workers by lowering the rate they charge municipal borrowers and lengthening the terms of the loan.

“To me, it is consistent with the overall mandate of the Fed to provide this money in a way that seeks to promote employment, and I think the state and local program is the most obvious example of that,” Ramamurti said.

“The relevant section of the CARES Act says this money is supposed to be used to address liquidity problems related to Covid,” he said. “It’s a huge stretch to read the word liquidity as just ensuring that private markets provide the loans.”

This blog originally appeared at Politico at November 5, 2020. Reprinted with permission.

About the Author: Victoria Guida is a financial services reporter covering banking regulations and monetary policy for POLITICO Pro. She covers the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency, as well as Treasury, after four years on the international trade beat, most recently for Pro and previously for Inside U.S. Trade.


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Jobless Americans face debt crunch without more federal aid as bills come due

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A new phase of the economic crisis is looming for the winner of Tuesday’s presidential election: potentially massive defaults by jobless Americans on consumer loans as the chances for more federal relief this year diminish.

Both President Donald Trump and Democrat Joe Biden have called for robust new rescue packages for an economy still suffering from the pandemic, but Congress’s inability to agree on key issues such as the size of unemployment benefits has kept the talks at an impasse for months. Now, millions of Americans are running out of money and will face hard choices between food purchases and payments on rent, credit cards and student loans.

Generous unemployment benefits and stimulus checks given out earlier this year helped many people weather the early months of the crisis — with some even managing to increase their savings. But that support has faded and some of it will run dry by the end of the year. JPMorgan Chase Institute found that in August alone, typical unemployed families spent two-thirds of the additional rainy day funds that they’d built up over the previous four months.

“I fear jobless workers are going to have to make tough choices,” said Fiona Greig, director of consumer research at the institute.

The “Lost Wages Assistance” aid program that Trump ordered after the expiration of more generous federal benefits — including a $600-a-week boost in jobless payments that ended on July 31 — helped bolster some families in September. But by early this month, much of that small pot of money had already been depleted. As a result, the largest U.S. banks warned investors this month that they expect credit card delinquencies to start mounting early next year.

And with coronavirus cases spiking in places like the Midwest, pressure could increase on already struggling small businesses, pushing jobless numbers back up.In a Census Bureau survey this month, roughly a third of small businesses reported only having enough cash to get them through a month or less.

The Labor Department said Thursday that more than 22 million people were claiming benefits in all federal programs as of the week ending Oct. 10.

Other government data released at the same time showed that the economy in the third quarter regained roughly 60 percent of the economic activity it lost, as many businesses have reopened. But Greig said without additional government support, the results could still be severe for many families, particularly if there is not more improvement in the job market.

“The GDP growth recovery looks much better than the job market numbers” because people are buying goods, but there’s still a severe drought in using many services, which is where most people are employed, said Greig, whose think tank has access to proprietary data from Chase Bank.

The burdens of the pandemic are falling disproportionately on lower-income workers; people making less than $27,000 have seen a nearly 20 percent drop in employment since January, while the job market is almost fully recovered among workers making more than $60,000, according to private-sector data compiled by Opportunity Insights.

Some relief measures are still in place; there’s a nationwide ban on evictions until the end of the year, and many borrowers have had the chance to put off credit card, student loan and mortgage payments. Roughly 7 percent of households with mortgages and 41 percent with student loans were skipping or making reduced payments as of the beginning of October, according to Goldman Sachs researchers.

But those debts are still piling up in the background, which could leave consumers with a crushing burden once those protections expire without something to keep them afloat.

“There will be a massive balloon payment on what people are supposed to pay,” said Megan Greene, an economist at Harvard’s Kennedy School of Government. “Lots of people won’t be able to afford that.”

“It’s been surprising to me how long consumers have been able to hold on,” she added. “We’re tempting fate by waiting until next year to re-up some of the stimulus measures.”

Thanks to government aid, aggregate personal income is still up from before the coronavirus crisis, even though wages and salaries are still below pre-pandemic levels, according to economic data released by the U.S. Bureau of Economic Analysis.

Personal income decreased $540.6 billion in the third quarter, after rising $1.45 trillion in the second quarter, a drop the agency attributed to a decrease in pandemic-related relief programs.

Part of the danger is that complete information isn’t available, so some areas may be suffering more than we know.

“A lot of the work I do focuses on rural communities, and there’s just not a lot of good data there,” said Gbenga Ajilore, senior economist at the Center for American Progress. “There are canaries in the coal mine, but … we don’t see the areas that are getting hurt because we don’t measure those areas.”

Researchers at Columbia University found that the monthly poverty rate increased to 16.7 percent in September from 15 percent in February, with about 8 million people falling into poverty since May.

Life has gotten harder for the poorest Americans. “We find that at the peak of the crisis (April 2020), the CARES Act successfully blunted a rise in poverty; however, it was not able to stop an increase in deep poverty, defined as resources less than half the poverty line,” that report said.

Maurice Jones heads up the Local Initiatives Support Corp., one of the largest community development financial institutions in the country, and said this has been the biggest year ever for the nonprofit — both in terms of donations and in relief they’re paying out.

“We have something called financial opportunity centers, and the focus of them historically has been on getting people prepared to compete successfully for living wage jobs — thinking more long term, if you will,” he said. “We have had to really adjust and focus on immediate relief. … People are literally having to choose between paying rent and buying groceries.”

Jones said his firm gave out $225 million in grants or forgivable loans between March and the end of September. “We’ve never had a six-month period like that in our history with that kind of deployment of those kinds of dollars,” he said.

He said it could be “a decade’s work” to get poor people back to where they were before the pandemic.

Also, many people don’t have ready access to aid from institutions like Jones’s, which focus on underserved markets, and banks have been tightening lending standards as the financial picture darkens for many borrowers. That means low-income Americans will turn to high-cost payday loans and check cashers to pay their bills, which can mean getting caught in a cycle of debt.

“These are not folks who are in a position to absorb loans at this stage of the game,” Jones said. “We’re not talking about a small chunk of the population. We’re talking tens of millions of people.”

“We gotta get this election behind us and get back to the federal government’s next chapter in helping folks weather the storm.”

This blog originally appeared at Politico at October 29, 2020. Reprinted with permission.

About the Author: Victoria Guida is a financial services reporter covering banking regulations and monetary policy for POLITICO Pro. She covers the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency, as well as Treasury, after four years on the international trade beat, most recently for Pro and previously for Inside U.S. Trade.


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