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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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‘Tidal wave’: States fear fiscal disaster as Congress slow-walks aid

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The most vulnerable states for seeing their federal aid cut are those that already carried some of the lowest credit ratings.

Senate Majority Leader Mitch McConnell and New York Gov. Andrew Cuomo couldn’t be farther apart in their views of how Congress should help states recover from the recession. But their states are among those with the most to lose if the situation gets much worse. 

While every state is feeling the pressure, the most vulnerable ones are those that already carried some of the lowest credit ratings even when the economy was at its best — including Illinois, New Jersey, Connecticut and Kentucky. Even New York, which had good credit, has seen its outlook downgraded and will suffer without more federal help.

That’s left some local officials bitter that the federal government has been willing to cut blank checks to businesses regardless of how they are run but views helping state governments as unacceptable “blue state bailouts.” Now, with Congress debating another economic relief package that is unlikely to contain the $500 billion in aid that state officials were hoping for, they’re warning of a looming fiscal disaster, not only for themselves but for the country. 

“If Congress underestimates the economic tidal wave that is coming, even by the smallest of margins, we are all going to be swept away,” said Illinois State Treasurer Michael Frerichs. 

Already, the U.S. Labor Department has reported that some 1.5 million state and local government jobs were lost from February to June, adding to the tens of millions of private sector jobs that have been shed nationwide.

Nowhere is the politics of state aid more complicated than in McConnell’s Kentucky, which Donald Trump won by 30 points in the 2016 presidential election. Next fiscal year, its shortfall could be as high as $1 billion, according to the state’s budget director. 

McConnell has largely stayed out of the debate since setting off a political firestorm — and drawing a blistering rebuke from Cuomo — in April with the suggestion that states might use bankruptcy as a way to emerge from a fiscal crisis – a step that they’re not even allowed to take under federal law.

He walked that back a week later, saying there “probably will be” more funding from Congress.

Kentucky Gov. Andy Beshear — a Democrat — averted deeper cuts or layoffs this budget cycle by instituting hiring freezes and asking for a 1 percent reduction in agency budgets government-wide after coronavirus shutdowns suggested a potentially massive shortfall. But he warned this month that without additional federal support, cuts in the next cycle will need to go deeper than even during the Great Recession. Beshear has urged Congress and the Kentucky delegation, including McConnell, to approve more state funding.

Cuomo said the characterization that only Democratic states needed budget help was “the epitome of hypocrisy.” 

“You now have Republican states that are suffering worse than Democratic states,” he said earlier in July of the new surge of coronavirus outbreaks. “If they want to get this economy back running, you have to fund state and local governments.” 

Kentucky and New York have already begun either reductions in services or payment slowdowns, as have New Jersey and Illinois. 

While Connecticut planned to fill an operating deficit estimated to exceed $1 billion using reserve funds, the state ultimately balanced its budget through a combination of higher-than-expected revenue, tax increases and spending reductions, including by postponing service increases. Still, that the rainy-day fund is expected to quickly dry up in the future with deficits projected to increase.

The finances of those and other state governments have been upside down since the wave of economic shutdowns squeezed tax revenue. A federal delay in the tax filing deadline led many states to follow suit, which also slowed money coming in. At the same time, a historic plunge in crude oil prices further decimated oil-rich states like Alaska and North Dakota that rely heavily on royalties.

While the federal government has been able to print money to blunt the crisis’s economic blow to businesses, workers and the unemployed, states don’t have that option. Already, credit downgrades for some like New Jersey and Illinois mean future borrowing could be more costly, disrupting recovery plans. 

Still, state officials were hoping Congress would provide enough in direct grants to fill budget holes after lawmakers agreed to dole out hundreds of billions in forgivable loans to small businesses in the March stimulus bill. Then in May, House lawmakers agreed on legislation that included $250 billion to backfill state budgets.

Legislation proposed by McConnell’s Republicans on July 27 didn’t offer much room for optimism, however. The legislation calls for $105 billion to go to states for schools — but two-thirds of that is dependent on maintaining certain levels of in-person instruction.

The National Governors Association slammed the lack of additional state aid in the GOP package as “disappointing” in a statement Wednesday from Republican Gov. Larry Hogan of Maryland, the group’s chair, and Cuomo, the vice chair. 

Sen. Pat Toomey (R-Pa.) said in an interview on CNBC Tuesday that it was unlikely Congress would spend much more on local budget issues: “There’s a lot that’s already been done,” he said.

Toomey said money appropriated to states has not even been fully spent and that the Federal Reserve has set up a short-term government credit facility “that has not been drawn significantly but that is available.”

recent report from the Treasury Inspector General backs up Toomey’s argument. The report found that as of June 30, states nationwide had only used an average of about a quarter of the funds from the CARES Act, the $2 trillion economic relief package Congress approved in March. But the National Governors association countered that states have already allocated approximately 74 percent of those funds, on average.

The next agreement will probably fall short because unemployment benefits, stimulus checks and additional small business loans — not state budget deficits — have dominated the debate. 

One ray of hope for the states: Legislation proposed by Sen. John Kennedy (R-La.) in May would give them more discretion to use a $150 billion coronavirus relief fund to cover operating expenses. Congress explicitly prohibited the use of the fund for that purpose when the money was appropriated in March.Language similar to Kennedy’s bill was included in the Finance Committee portion of the Republican Senate package.

But Sen. Rick Scott (R-Fla.), a former governor of Florida, criticized the increased spending flexibility in the Republican plan. “What I don’t want to do is bail out the states,” he said to POLITICO.

“We’re not crying wolf out here in the states about some of the drastic measures that would be necessary, and we’ve got proof in past recessions that we will cut,” said John Hicks, Kentucky’s budget director. “Federal fiscal relief is just critical for us to be able to maintain education, health and public safety.”

For its part, New York’s fate is tied financially to New Jersey and Connecticut — both states in worse economic shape — putting the financial health of its massive public transportation network at risk.

The Metropolitan Transportation Authority, which also provides rail service to Connecticut, is burning through $200 million a week.

New York officials said the state has already reduced spending by $4 billion since April through a combination of hiring freezes, new contracts and pay raises, as well as holding back 20 percent of funds to some of the state’s larger cities.

“This means lower spending for police, schools, health care, roads, courts, and support for our most vulnerable neighbors,” Freeman Klopott, a spokesperson for the New York State Division of the Budget, told POLITICO. “The Federal government must act to provide states with the resources we need or the negative impacts of its failure to do so thus far will only deepen.”

New Jersey has cut $1.2 billion in spending and delayed some major payments to schools and pensions. On top of that, Democratic Gov. Phil Murphy pared operating costs and grants and has ordered 15 percent reductions across departments. The governor is trying to get clearance to borrow up to $9.9 billion, but Republicans are challenging him in court.

“I would hope this is the moment right now for Congress,” Murphy said at a daily coronavirus press briefing in Trenton. “The next three weeks is do-or-die.” 

“I can’t tell you exactly what happens to our services or programs without that federal cash, but it’s ugly,” he said. 

Financial analysts sense big trouble in Illinois, which has the worst credit rating in the nation. Even before the crisis, the state had to slow down payments because expenditures exceeded revenue, and the coronavirus has stalled them even more, according to the comptroller. The state was hit with a series of negative financial assessments in April, further imperiling future borrowing.

Democratic Gov. J.B. Pritzker signed a budget with a $6 billion deficit in June and has warned that layoffs could come without significant extra federal funding.

In a sign of how bad things have gotten, the state is among the few to have accessed short-term credit from a Federal Reserve emergency facility set up in March. Advocates for more state aid have criticized the Fed’s lending option as too expensive, but the terms were actually more favorable for Illinois than the open market because of its poor credit. 

With all the election year pressure, governors fear Congress will opt for the approach taken in the Great Recession: Let states cut their budgets and gripe about a dragged-out economic recovery later. But this time around, it’s clear that governors are laying the groundwork to blame Congress. 

“It doesn’t matter what the political party of the state’s legislature or governor is,” Hicks of Kentucky said. “We’re all in the same boat together.”

This blog originally appeared at Politico on August 3, 2020. Reprinted with permission.

About the Author: Katherine Landergan covers the state budget, tax policy and labor issues for POLITICO New Jersey.

About the Author: Kellie Mejdrich is a reporter for POLITICO Pro Financial Services.


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Thousands of federal workers say they’ve gotten COVID-19 on the job

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Even when people survive COVID-19, their health can be seriously damaged, and their lives changed. We don’t know yet how many people will suffer long-lasting effects, but we can find one sign of how widespread the physical devastation is in federal workers’ claims for disability compensation after they contracted the virus on the job.

About 4,000 federal workers have filed for disability compensation, The Washington Post reports, while 60 families are seeking survivors’ benefits. The number is expected to grow to 6,000 by August 4.

The Federal Employees’ Compensation Act program administered by the Labor Department announced in March that, for workers at high risk of being infected on the job, such as first responders, public health and medical workers, or law enforcement, it would “accept that the exposure to COVID-19 was proximately caused by the nature of the employment and will only require medical evidence that establishes a diagnosis of COVID-19, such as a positive COVID-19 test result.” Other workers have to show that they contracted the virus on the job.

”Employees of three departments with high concentrations of jobs deemed to carry the highest risk of exposure—Homeland Security, Justice and Veterans Affairs—accounted for most of the 4,011 claims filed through July 23,” the Post reports. “Of those, 1,623 had been granted, fewer than seven denied, 25 withdrawn and the rest were waiting to be adjudicated—including all of the death claims.”

But even setting aside the claims by survivors of federal workers who died, there are around 4,000 claims by people who say they contracted the virus in the course of working for the government. And they’re a drop in the bucket of federal workers who’ve gotten sick or died: more than 5,000 infections among civilian Defense Department employees and 32 deaths; more than 3,000 total cases among Veterans Affairs employees and 40 deaths; and more.

Some federal agencies have been recalling workers to the office in July, a move that exposes more to risk especially as coronavirus cases spike in many states.

This blog originally appeared at Daily Kos on July 27, 2020. Reprinted with permission.

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


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Citing discrimination, HUD denies L.A. $80M

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Katy O'Donnell, Pro-- Staff mugshots photographed Feb. 23, 2018. (M. Scott Mahaskey/Politico)The Department of Housing and Urban Development is denying Los Angeles $80 million in federal funding on the grounds that the city is violating the Fair Housing Act by discriminating against people with disabilities, according to a letter obtained by POLITICO.

The city’s plan for the disbursement of Community Development Block Grant and HOME Investment Partnership funds has been rejected, HUD Secretary Ben Carson said in a letter to L.A. Mayor Eric Garcetti Friday evening.

“As you have been notified time and again, the city is unlawfully discriminating against individuals with disabilities in its affordable housing program under federal accessibility laws, including the Fair Housing Act, and has refused to take the steps necessary to remedy this discrimination,” Carson wrote.

Garcetti told POLITICO he was “disappointed” in HUD’s decision, adding that he was “looking forward to meeting with Secretary Carson next week, so that I can speak directly to HUD’s concerns and bring this matter to a resolution that will not displace already vulnerable Angelenos.”

The city, Garcetti said in an email, had been “negotiating in good faith to resolve HUD’s concerns, most recently signing off on an offer to create 4,000 accessible housing units over the next ten years, and implementing a rigorous monitoring and compliance regime.”

HUD’s Office of Fair Housing and Equal Opportunity in April notified Garcetti that an agency review of Los Angeles’s affordable housing program had determined that the city was not complying with the Fair Housing Act’s accessibility requirements — a “widespread failure” HUD said it had first raised with L.A. in a January 2012 letter.

L.A. had recently “made a variety of representations that it had begun to achieve compliance,” FHEO Enforcement Director Lynn Grosso said in the April 1 letter to Garcetti.

“Based in part on these representations, HUD undertook additional investigation to determine whether these representations were accurate,” Grosso wrote. “HUD’s on-site compliance review of housing recently constructed or altered using funds received from HUD confirmed that they were not.”

L.A. will have 60 days to comment and to revise or resubmit its plan, according to Carson’s letter today.

“The city may also obtain approval of its Annual Action Plan once the city has entered a Voluntary Compliance Agreement that remedies its violations of federal accessibility requirements to HUD’s satisfaction,” Carson added.

This article was originally published at Politico on July 19, 2019. Reprinted with permission. 

About the Author: Katy O’Donnell is a reporter for POLITICO.


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The Trump Administration’s War on Federal Workers

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Claiming 700,000 members in the United States and overseas, the American Federation of Government Employees (AFGE) stands as the nation’s largest federal and D.C. government employee labor union. The union represents employees who provide care and support for veterans, the elderly and disabled, and people in need of housing through the Social Security Administration, the Department of Veterans Affairs, and the Department of Housing and Urban Development, along with other federal agencies.

A statement on the AFGE website describes these employees as the “vital threads of the fabric of American life.” Now, the AFGE contends, its members are under attack, thanks to recent actions by the Trump administration.

The AFGE is currently in contract negotiations with the Department of Veterans Affairs on behalf of 260,000 employees who work for the agency. In the process of these negotiations, AFGE District Office Manager Matt Muchowski says that VA management is attempting to undo labor rights that have been won by the union since its founding in 1932.

To better understand the nature of these affronts, Muchowski argues, it is important to look at three executive orders signed by President Trump on May 25, 2018. While the orders have since ostensibly been ruled in violation of labor law by a U.S. District Court in August 2018, Muchowski says that sections of the orders which limit time spent during the work day on union activities (known as “official time”) as well as due process are being pushed into the contract by VA negotiators.

This approach is “making it difficult for federal workers to do what they do,” by seeking to alter key elements of the contracts negotiated between AFGE members—including Veterans Affairs workers—and management, he says. Further, Muchowski notes, this strategy has already been employed during negotiations over the Social Security Administration contract earlier this year, which resulted in major concessions for workers. He says the Trump administration’s approach to the AFGE negotiations “represents an escalation of its anti-union tactics.”

The key elements of the 2018 executive orders fall under three categories: employees’ job protection and due process rights, official time and collective bargaining procedures.

The first order outlines limits on the use of “progressive discipline” approaches for workers in federal agencies and instead calls for the allowance of more immediate dismissals, among other more stringently dictated relations between management and workers.

The second order calls for more regulated and restricted use of “official time”: time employees are allowed to spend on union duties while still on the clock. This is a concept that has been part of AFGE’s labor contracts since the Carter administration, Muchowski notes, when the presence of unions in the workplace was seen as “part of effective governance.”

Under this model, an employee can conduct union business while using government-provided items such as office space, computers or phones. Trump’s executive order, however, calls for employees’ official time to be greatly reduced and also mandates that they should no longer be given free or reduced rate access to an office or a computer.

While the Trump administration holds that this revision is necessary to make the government “effective and efficient,” Veterans Affairs employee Germaine Clano disagrees. Clarno is a social worker at the Edward Hines, Jr., VA Hospital in suburban Chicago, and she says the loss of official time would be devastating.

Clarno provides full-time union representation to doctors, social workers and other professional employees of the VA through the official time provision, whether they are dues-paying union members or not. It’s work she describes as essential. “The culture of the VA is still very retaliatory,” Clarno says, noting that she acts as a resource for employees who would like to bring allegations of “waste, fraud or abuse” to light.

“Taking away official time means taking away employees’ security around being able to report what’s going on at the VA,” Clarno insists, “so that we can make things better for our veterans.”

The third order issued by Trump in 2018 is designed to “assist executive departments and agencies in developing efficient, effective, and cost-reducing collective bargaining agreements.” The order claims that collective bargaining agreements limit managers’ ability to either hold “low-performers accountable” or reward “high performers,” and that they are often drawn out, at the expense of taxpayer money.

The order calls for an expedited contract negotiation period, with lingering disputes to be settled by the politically-appointed members of the Federal Service Impasses Panel (FSIP). In the post-Janus era—which has brought new challenges to public sector unions—it’s notable that panel member David Osborne’s bio states that he has built a career around “offering free legal services to those hurt by public employee union officials.”

While both the FSIP and attempts to govern through executive orders are not new, they are part of an increasingly fraught era for federal workers and the Trump administration’s federal management team.

Just days before Trump issued his three executive orders, news reports noted the rising tension between workers and federal managers, who had just unveiled “an ambitious and aggressive plan to modernize the civil service,” according to Nicole Ogrysko of the Federal News Network. This plan, union leaders alleged, was intended to cut department budgets while turning more federal employees into poorly compensated temp workers.

Trump’s executive orders were contested in court by the AFGE and other labor unions, and in August 2018, U.S. District Court Judge Ketanji Brown Jackson ruled in favor of the unions. At the time, a review of the case appeared in the online news outlet, Government Executive, where reporter Erich Wagner stated that Brown Jackson found the executive orders to be in violation of the Civil Service Reform Act of 1978.

This Act upholds the value of good-faith labor-management negotiations and concludes that they are done “in the public interest.” Nonetheless, Muchowski says, the Trump administration has persisted in seeking to negotiate labor contracts with federal employees according to the 2018 executive orders. As evidence, he cites the recently settled contract between the Social Security Administration and the 45,000 AFGE members who work there.

During the contract negotiation process, SSA management and union negotiators could not agree on twelve clauses, according to a reportfiled by Tom Temin of the Federal News Network. As a result, the contract was turned over to the FSIP, which has the power to either “recommend a way to agree,” or “order specific, binding actions” that both parties must abide by, Temin states.

While some government panels are bipartisan, the FSIP is not: All seven members were appointed by Trump. Temin notes that, of the twelve disputed clauses, the FSIP sided with management on ten of them. Although AFGE members were able to keep certain grievance rights, they did lose ground on some central matters, including the implementation of a seven-year contract (the union wanted a two-year term) and the loss of both office space and hours set aside for official time.

David Cann, director of field services and education for the AFGE, says he believes the FSIP’s actions are a violation of Judge Brown Jackson’s ruling against certain aspects of Trump’s executive orders. Brown Jackson’s decision, Cann notes, found that parts of the executive orders violated collective bargaining rights outlined in the Civil Service Act of 1978, and that neither the president nor his subordinates could continue negotiations under such terms.

Because the FSIP is an entirely politically appointed body, Cann argues that its members are, in effect, Trump’s subordinates and therefore should not be allowed to settle disputes, using what he believes are the administration’s executive orders as a guide.

In a statement posted to its website, the AFGE minced no words about the dangerous precedent such a decision could set: “A panel of Trump’s union-busting appointees has imposed anti-worker provisions in a new labor-management contract for the people who ensure elderly Americans and those with disabilities can live with dignity and financial security.”

Clarno has been closely tracking the contract settlement between AFGE and the Social Security Administration and says that, for her, the “fear is that the Federal Service Impasse Panel will push the same thing” for VA workers in contract negotiations. “Federal employees can’t strike,” she states. “Really, what leverage do we have? We have none. It’s very, very concerning.”

This article was originally published at In These Times on June 14, 2019. Reprinted with permission.

About the Author: Sarah Lahm is a Minneapolis-based writer and former English Instructor. She is a 2015 Progressive magazine Education Fellow and blogs about education at brightlightsmallcity.com.


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Responding to a proposed disciplinary action

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There is short window to give your formal reply

Employees of federal agencies have many rights that do not apply in the private sector. One important protection is the right to be notified in advance of disciplinary action.

If you are facing an adverse action – suspension, demotion or removal – you may have as little as seven days to give your formal reply. With your job and possibly your federal career on the line, you should involve an attorney who practices federal employment law.

The dreaded proposal of adverse action

You may find your job in jeopardy due to supposed misconduct or performance issues. Your federal agency must give you a written proposal that outlines (a) the evidence of wrongdoing or poor performance and (b) the adverse employment action that is proposed. The proposal must be provided at least 30 days in advanced of the sanctions.

The agency must give you an opportunity to provide a formal reply to the proposed sanctions. This time frame may be as short as seven days, depending on the agency and the type of action.

Your reply is reviewed by a higher level manager. Even if the agency upholds the proposal and implements the proposed action, your formal reply will serve as the foundation for appeal. It is important to provide a detailed and timely response. Your attorney can help you draft a reply that complies with your agency’s protocols.

Appealing an unfavorable decision through the MSPB

If you are slated for termination, downgrade or suspension of 14 or more days, you can appeal to the Merit Systems Protection Board. Your case will be heard in an MSPB hearing or, or in an arbitration if you are a member of a union.

This blog was originally published by Passman & Kaplan, P.C., Attorneys at Law on November 2, 2018. Reprinted with permission. 

About the Author: Founded in 1990 by Edward H. Passman and Joseph V. Kaplan, Passman & Kaplan, P.C., Attorneys at Law, is focused on protecting the rights of federal employees and promoting workplace fairness.  The attorneys of Passman & Kaplan (Edward H. Passman, Joseph V. Kaplan, Adria S. Zeldin, Andrew J. Perlmutter, Johnathan P. Lloyd and Erik D. Snyder) represent federal employees before the Equal Employment Opportunity Commission (EEOC), the Merit Systems Protection Board (MSPB), the Office of Special Counsel (OSC), the Office of Personnel Management (OPM) and other federal administrative agencies, and also represent employees in U.S. District and Appeals Courts.


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Does security clearance expire?

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Once you are cleared to work for the federal government, the clock starts ticking on your security clearance.

If you stay in your job, you will have to be “reinvestigated” periodically. If you leave your federal agency or contractor job, your clearance can lapse in two years. As you move up the ladder, you may need to obtain a higher level of clearance.

The key is to know your clearance status and be proactive to retain clearance, upgrade or get reinstated.

When does security clearance lapse?

Confidential level clearance, the lowest security threat, is good for 15 years. Secret clearance lasts 10 years. Top Secret clearance must be reinvestigated (reauthorized) every 5 years. This assumes no incidents or allegations arise that would cause the government to scrutinize your clearance.

If you are separated from federal employment (voluntarily or involuntarily), your security clearance can lapse. If you resume work for another federal agency or a federal contractor within that time frame, your clearance is reactivated without an investigation. But if the clock expires, you will essentially have to re-apply for security clearance.

How long does it take to get cleared or re-cleared?

The background investigation accounts for the bulk of the processing period. Clearance for lower level jobs rely more on database searches, while positions with higher security involve interviews and other field work.

According to the National Background Investigations Bureau (NBIB), the average processing time for all security clearances in the defense industry is 325 days:

  • Secret and Confidential clearances average 259 days, and 220 days for reinvestigations.
  • Top Secret clearances average 543 days, and 697 days for reinvestigations.

Why does security clearance take so long?

The government clears about 4 million people per year, but that is not keeping pace with demand. There is an estimated backlog of 700,000 security clearance cases, about one-third of whom are federal contractors. Top Secret (TS) security clearances used to be performed in less than three months. Now even the most straightforward TS cases take a year or more.

The administration aims to shift all security clearance from the NBIB to the Department of Defense. Even if that is more thorough and efficient in the long run, such a huge transition will likely increase the backlog and chaos in the short term. Applicants will slip through the cracks. Hiring and advancement will be stymied. Agencies and defense clients will get restless.

The government is also shifting to “continuous evaluation,” rather than more labor-intensive field work, to manage clearance and renewals. This will ideally speed processing times and reduce the backlog, but again the growing pains will likely be felt by federal employees and contractors who get lost in the shuffle.

This blog was originally published by Passman & Kaplan on September 8, 2018. Reprinted with permission. 

About the Authors: Founded in 1990 by Edward H. Passman and Joseph V. Kaplan, Passman & Kaplan, P.C., Attorneys at Law, is focused on protecting the rights of federal employees and promoting workplace fairness.  The attorneys of Passman & Kaplan (Edward H. Passman, Joseph V. Kaplan, Adria S. Zeldin, Andrew J. Perlmutter, Johnathan P. Lloyd and Erik D. Snyder) represent federal employees before the Equal Employment Opportunity Commission (EEOC), the Merit Systems Protection Board (MSPB), the Office of Special Counsel (OSC), the Office of Personnel Management (OPM) and other federal administrative agencies, and also represent employees in U.S. District and Appeals Courts.

 


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Can federal workers blatantly discriminate against LGBTQ people? Jeff Sessions isn’t sure.

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During Wednesday’s Justice Department Oversight Hearing, Sen. Dick Durbin (D-IL) asked Attorney General Jeff Sessions about the Department of Justice’s new “religious freedom” guidance. In particular, Durbin was concerned about how the guidance might enable anti-LGBTQ discrimination, asking Sessions to respond to several hypotheticals.

“Could a social security administration employee refuse to accept or process spousal or survivor benefits paperwork for a surviving same-sex spouse?” Durbin asked.

There was a long pause. “That’s something I never thought would arise, but I would have to give you a written answer to that, if you don’t mind.” Sessions responded.

Durbin countered, “I’d like to have that,” then launched right into another hypothetical. “Could a federal contractor refuse to provide services to LGBTQ people, including in emergencies, without risk of losing federal contracts?”

“Likewise, but I would say to you — are you citing Title VII for this? Or the guidance? I’m not sure that’s covered by it, but I’ll look.”

It is highly unbelievable that Sessions had never considered these examples prior to Wednesday. More than two years ago, when he was still in the Senate, Sessions was one of the original co-sponsors of the First Amendment Defense Act (FADA), a bill that would grant those who have religious objections to same-sex marriage a license to discriminate. Many of the provisions in the new guidance mirror FADA’s language.

 In response to that bill’s introduction, the ACLU and LGBTQ advocacy groups pushed back, saying that it would be used to prop up discrimination. The ACLU, in particular, outlined FADA’s “parade of horribles” in a 2015 blog post, including the following two:
  • [It would] permit government employees to discriminate against married same-sex couples and their families – federal employees could refuse to process tax returns, visa applications, or Social Security checks for all married same-sex couples.
  • [It would] allow federal contractors or grantees, including those that provide important social services like homeless shelters or drug treatment programs, to turn away LGBT people or anyone who has an intimate relationship outside of a marriage.

Those are nearly identical to the hypotheticals Durbin asked Sessions to respond to on Wednesday. Still, years after they’d been highlighted by advocacy groups, Sessions claimed they had somehow never occurred to him before.

After Sessions’ dodged Durbin’s hypotheticals, the senator asked the attorney general to comment about the fact that “people are discriminating in the name of their own personal religious liberty.”

Sessions responded:

Yes, I would say that wherever possible, a person should be allowed to freely exercise their religion and not to carry out activities that further something they think is contrary to their faith. But at the same time, if you participate in commercial exchanges, you have limits on what you can do under those laws — public accommodation type laws. And so the balance needs to be properly struck — and I think we have. Those issues were discussed as we wrestled with this policy.

It’s unclear with whom Sessions discussed those issues. The Department of Justice apparently held “listening sessions”, but has refused to name which groups it consulted. The reason the public even knows these consultations took place at all is because the Alliance Defending Freedom — an anti-LGBTQ hate group that defends business owners who discriminate and challenges nondiscrimination protections in the name of “religious freedom” — bragged that it had participated in them.

Given Sessions said in an interview last week that he believes such discrimination should be allowed in the case of the anti-gay baker whose case is headed to the Supreme Court, it’s not hard to imagine how he might respond to Durbin’s hypotheticals, if pressed.

This article was originally published at ThinkProgress on October 18, 2017. Reprinted with permission. 

About the Author: Zack Ford is the LGBTQ Editor at ThinkProgress.org, where he has covered issues related to marriage equality, transgender rights, education, and “religious freedom,” in additional to daily political news. In 2014, The Advocate named Zack one of its “40 under 40” in LGBT media, describing him as “one of the most influential journalists online.” He has a passion for education, having received a Bachelor’s in Music Education at Ithaca College and a Master’s in Higher Education at Iowa State University, and he relishes opportunities to return to classroom settings to discuss social justice issues with students. He can be reached at [email protected]


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Federal government is the biggest low-wage employer in South Carolina

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Many workers whose jobs are funded by the federal government don’t work for the federal government—they work for companies with federal contracts. And many of those jobs don’t pay a living wage, effectively making the government a low-wage employer. In South Carolina, it’s actually the largest low-wage employer in the state, a new analysis by Good Jobs Nation finds:

These low-wage jobs are in occupations such as home healthcare aides (4,336), construction (1,185) security guards (876) and food service workers (444). And, just as Demos found for the nation as a whole, the 30,000 low-wage jobs subsidized by federal funding streams in South Carolina make the U.S. government the single largest creator of low-wage private sector jobs in the State, outranking Wal-Mart and McDonald’s combined, which employ an estimated 20,600 and 8,900 low-wage workers respectively within the State.

President Obama signed an executive order raising the minimum wage for federal contract workers to $10.10 an hour in 2014, but that is going into effect gradually. And $10.10, while a big improvement over the federal minimum wage of $7.25 an hour, is not enough.

This blog originally appeared in dailykos.com on February 27, 2016. Reprinted with permission.

Laura Clawson has been a Daily Kos contributing editor since December 2006 and Labor editor since 2011.

 


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Uncle Sam’s Hiring Practices

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Bruce VailA pair of reports released this week show that the federal government routinely ignores worker safety and labor law violations when awarding contracts to private companies—and that American taxpayers are cheated in the process.

The first  comes from the staff of the Senate Health, Education, Labor, and Pension (HELP) Committee, which conducted a yearlong investigation of federal contracting records. Unveiled Wednesday by HELP Chairman Sen. Tom Harkin (D-Iowa), the report provides a long list of specific companies that break safety and labor laws yet continue to receive big government contracts. In particular, it names 49 law-breaking contractors that got more than $81 billion from Uncle Sam in 2012 alone—including AT&T, Home Depot and GM.

The HELP report was paired with one from the Center For American Progress (CAP) Action Fund, a Democratic Party advocacy group, which examined whether government contractors are actually fulfilling their contracts. The CAP report found that a number of companies shortchange taxpayers through poor performance, and names specific companies that stand out in this respect, including Lockheed Martin and KBR. Some of these scofflaw companies, such as international oil giant BP, overlapped with the HELP report lists.

The CAP report was presented Wednesday by Chairman John Podesta in a joint appearance with Harkin at CAP’s Washington D.C. headquarters.

Both Harkin and Podesta trace the origin of their respective reports to a 2010 study by the U.S. Government Accountability Office (GAO) that analyzed official data on safety and labor law violations by government contractors. That GAO report found that known violators routinely received new government contracts. It failed to name the specific contractor companies guilty of violations, however, and the HELP report was designed to provide the public with those names, as well as to bring the information up to date through 2012, according to Harkin. CAP report co-author David Madland says his effort “provides a nice complement” to the HELP analysis by highlighting that the contracting problem is not solely a labor issue, but also one of good government administration and the concern of taxpayers over wasteful spending.

The names of federal contractors guilty of fatal worker safety violations will be familiar to most Working In These Times readers. Harkin began his presentation by pointing to the workplace deaths of 10 employees in three separate incidents at the facilities of laundry operator Cintas Corp., shipbuilder ST Engineering Ltd. and oil refiner Tesoro Corp.  Despite these deaths, all three companies received federal contracts in 2012, with Tesoro alone getting $463 million last year, the report states. A lengthier list of safety violators (some fatal, some non-fatal) includes international oil giant BP, commodities conglomerate Louis Dreyfus Group, beef and chicken processor Tyson Foods, auto manufacturers General Motors and Chrysler, and defense contractor General Dynamics. Eighteen such companies received almost $23 billion in federal contracts between 2006 and 2013, the report details.

Harkin pointed out that of 18 companies with terrible safety records, only one, BP, had ever been barred from federal contracts—and that suspension from new contracts was spurred by the environmental damage from the 2010 Deep Water Horizon oil rig explosion, not from the safety violations (although 10 workers were killed). Federal contracting officers routinely ignore the bad worker safety records of companies competing for government business, he added, and reforms are needed to correct the problem.

Similar issues are raised when analyzing the records on wage-and-hour law violations, according to both HELP and CAP. Again the HELP report unearths many household names from the Department of Labor records of companies obliged to make back wage payments to workers for legal violations. Among them are Hewlett-Packard Co., AT&T, General Dynamics, Nestle S.A., Lockheed Martin Corp., Cerberus Capital Management, and Home Depot Inc. A group of the 32 worst offenders received  $73.1 billion from the federal government between 2007 and 2012, the HELP report says.

Harkin conceded that not all violations are so serious that contractors should be punished by exclusion from government business. Some violations apparently arise from simple errors, unavoidable accidents or other benign sources, he said. However, when the Labor Department finds willful and repeated violations, it can assess civil penalties. Harkin suggested that the contractors penalized in this way should receive special scrutiny before any new contracts are awarded. HELP researchers came up with the names of Sprint Nextel Corp, UnitedHealth Group, Marriott International, C&S Wholesalers Inc., Acosta Inc. and University of Pittsburgh Medical Center as examples of contractors already assessed for “severe and repeated” violations of labor law. Together, those six companies received about $470 million in federal contracts in 2012 alone, the report said.

Like the safety violators, none of the wage-and-hour labor-law violators have been barred from the further government contracts, Harkin emphasized. “There is an existing legal requirement (that contractors obey labor law) but it’s clear to me that compliance is not being considered” when new contracts are awarded, he said.

CAP came up with some of the same names when it separately analyzed the government data and “found that the companies with the worst records of harming workers were also guilty of shortchanging taxpayers through poor performance on government contracts and similar business agreements in ways that defraud the government and otherwise provide a bad value for taxpayers.”

Cited in this regard were:

  • KBR, a construction and defense contractor notable for its work in Iraq and Afghanistan, which received $11.4 billion in contracts between 2009 and 2013
  • BP, the international oil giant, which received $4.6 billion in contracts (plus $433 million in offshore oil and gas leases) 2009-20013
  • Corrections Corporation of America or CCA, the nation’s largest operator of private prisons, which got $2.3 billion in government contracts 2009-2013
  • Akai Security, notable for its agreements to provide private security at Department of Justice facilities nationwide, which got $3.6 billion on government contracts 2009-2013
  • Wackenhut Services, whose subsidiary ArmorGroup of North America provides private security guards at U.S. embassies overseas, which got $1.7 billion 2009-2012
  • Lockheed Martin, a diversified military contractor, which got $170 billion 2009-2013
  • Group Health Cooperative, a health maintenance organization (HMO), which got $20.2 million 2009-2012

Both Harkin and Podesta were full of righteous indignation about this state of affairs at their joint appearance Wednesday, but neither offered any sweeping new proposals to fix the problem. The HELP report states that existing law allows federal contract administrators to exclude offending companies and suggests that improved reporting and database management by the Labor Department could make it easier to bar scofflaw companies. It also proposes that President Barack Obama issue several small-scale executive orders that would streamline the process of legally excluding some companies. The CAP conclusion was even less ambitious, merely blaming “weak guidance and lax enforcement of the regulations” for the chronic contracting problems.

It’s possible that in ignoring the possibility of stronger federal laws, both reports implicitly recognized the impracticality of any new legislative initiative in Washington’s current political environment.

CAP’s Madland tells Working In These Times that the new reports represent a continuing effort by Democrats to wrestle with the contracting issue. Reform proposals early in the Obama administration known as “high road” contracting were abandoned in the face of political opposition, he says, but the need to make reforms to the contract process remains. “Workers are being killed because companies cut corners. …The system is broken and needs to be reformed.”

This article was originally printed on Working In These Times on December 12, 2013.  Reprinted with permission.

About the Author: Bruce Vail is a Baltimore-based freelance writer with decades of experience covering labor and business stories for newspapers, magazines and new media. He was a reporter for Bloomberg BNA’s Daily Labor Report, covering collective bargaining issues in a wide range of industries, and a maritime industry reporter and editor for the Journal of Commerce, serving both in the newspaper’s New York City headquarters and in the Washington, D.C. bureau.


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