“Demand A Higher Wage, People!”: The Status Quo Of Wage Injustice And Greed-Driven Inequality Relies On Our Complicity
Chasten Florence was on his lunch break when he decided to join a protest outside a McDonald’s in New York City on Wednesday. To be honest, Florence wasn’t really sure what he was helping protest. But as he lay his body down on the sidewalk at a die-in of low-wage workers demanding a $15 wage and a union, Florence simply explained, “These are my people.”
Didn’t Florence need to eat lunch? Sure, but he could spare five minutes. Working concrete on construction jobs, Florence earns more than $15 an hour and thinks everyone else should, too. “I don’t know how you can raise a household on less,” said Florence. And he’s right. You can’t.
On April 15, workers from McDonald’s, Walmart and other low-wage employers were joined by college students and adjunct faculty, domestic workers and leaders from the Black Lives Matter movement. In all, tens of thousands participated in protests in 200 cities across the United States to demand a $15 minimum wage and a union. The #FightFor15 is unconventional in that, instead of focusing on Congress to raise wages, workers and advocates are pressuring employers and also the general public—trying to foster awareness about dismal wages and working conditions and create a groundswell of support for change.
The nationwide protests were organized on Tax Day, April 15, because 4/15 is a short-hand for the campaign’s wage demands. But it was also meant to highlight the fact that the poverty wages paid by fast food restaurants and employers are so low that many low-wage workers are forced to rely on public assistance benefits to get by. In fact, almost three-quarters of Americans who depend on public assistance programs like food stamps and Medicaid are members of a family headed by someone who has a job.
In other words, in America today, many people are poor not because they don’t have a job but because they have a job that pays poverty wages. If the minimum wage had grown at the same rate as overall productivity since 1968, then the minimum wage would now be $18.50 an hour—instead of $7.25, the current federal minimum wage. In fact, adjusted for inflation, the federal minimum wage has actually dropped. In 2014 dollars, the 1968 minimum wage was equal to $9.54 an hour.
The stagnation of working class wages cannot be explained by a lack of hard work or skills. Low-wage workers have more education than their 1968 counterparts—and yet are still being paid less. And as this graph from Mother Jones shows, while worker productivity has steadily risen over the past several decades, overall wages have not grown at the same pace—even though the income of the top 1% has spiked dramatically.
As taxpayers, we foot the bill for greedy employers who pay poverty wages. For instance, because McDonald’s won’t pay its workers a living wage, taxpayers are paying $1.2 billion per year in food stamp costs and other public assistance just for McDonald’s workers alone. That’s like our tax dollars subsidizing McDonald’s profit—and greed.
Recently McDonald’s announced it would raise wages by $1.00 an hour for workers in its corporate-owned stores, which since most McDonald’s are franchise operations, means the raise will affect less than 10 percent of McDonald’s workers. Beth Schaffer, who works at a McDonald’s in Charleston, South Carolina, and came to New York for the protests, shrugged her shoulders about the raise. After all, every single McDonald’s in South Carolina is a franchise not covered by the $1.00-an-hour increase. “My customers show me more respect than my employer,” said Schaffer. As her tone made clear, that’s not saying much.
As I left the Fight for $15 protest, one of several staged throughout New York on Wednesday, Chasten Florence walked one way back to his construction site and I walked the other way. I passed the tony restaurants of New York’s Upper West Side, on what seemed like one of the first real days of spring, men and women in business suits sitting at tables on the sidewalk, taking in the sun. Most were probably spending more on lunch than the workers at the protest earn in a week. Myself included.
And there’s nothing wrong with that, with wealth and success and enjoying what comes with it. The question is, are we paying enough attention to the costs? I wondered whether the people eating their expensive lunches knew that the bussers taking their plates can barely afford to feed their own families, that the workers at their children’s daycares don’t have health insurance, that the cheap stuff they order conveniently on Amazon.com is definitely comes at a high cost to the workers who make and ship those goods.
The construction worker who joined the Fight for $15 protest didn’t know that much about the issues or the protest demands, either. But he was going out of his way to learn, and to be supportive. “These are my people,” he said. Yes, they’re all of our people. It’s time we all wake up, pay attention, be angry and stand with our fellow human beings to do something about it. The status quo of wage injustice and greed-driven inequality relies on our complicity, whether by silence or ignorance. But it cannot survive if we all stand up together and fight.
By: Sally Kohn,
“There’s Plenty Of Money, Really”: Congressional Republicans Continue To Make Believe That Spending Cuts Are Good For Everyone
Don’t think for a second that congressional Republicans sincerely believe draconian cuts in federal spending stimulate the economy.
I know. They uniformly claim that spending cuts spark growth. But consider this.
During the 15-day shutdown of the federal government one and a half years ago, the United States lost some $24 billion in economic activity, according to a 2013 Standard & Poor’s report. Only Texas senator Ted Cruz and the conservative wing wanted the shutdown, while the rest of the Republican Party bore the brunt of cratering public opinion polls.
So when House Budget Committee chair Tom Price, a Georgia Republican, introduced a plan last month to cut more than $5 trillion in spending to balance the budget in nine years, take it for what it is — a purely political ploy to arouse conservatives in preparation for 2016.
The Price plan has no chance of becoming law with a Democrat in the White House, and a slim chance even with a Republican president. In repealing the Affordable Care Act and eviscerating food stamps while allocating tens of billions in defense spending (more than requested), it’s irresponsible. But in calling for the partial privatization of Medicare, it’s politically toxic. Beyond that, a Price plan put into law would be downright destructive. Sucking that much money out of the economy could possibly trigger, at the very least, another painful recession.
Still, congressional Republicans will continue to make believe that spending cuts are good for everyone, because like all make-believe stories, the Price plan has the advantage of sounding plausible. And because it sounds plausible, it feels persuasive to many voters. After all, growth is sluggish. Wages are flat. There isn’t enough money. It’s time to get serious and cut. That’s why Price titled his plan “A Balanced Budget for a Stronger America.”
In fact, there is enough money. Always has been. The trick is looking beyond one class of taxpayer dutifully paying its fair share to another class with the power, and the privilege, of avoiding paying its share.
According to a new report by Citizens for Tax Justice (CTJ), 304 of the 500 top U.S. corporations stashed more than $2 trillion in profits in offshore accounts in 2014, avoiding as much as $600 billion in U.S. taxes.
Among these are the most popular American brands: Apple, Nike, Microsoft, Safeway, and Clorox. These are among just 28 of the top 500 companies to report the tax rate they would pay if they had repatriated profits to the U.S. The rest didn’t bother. They don’t have to report.
But even those reporting to the IRS were probably lowballing their total U.S. tax liability. If they said they earned their enormous profits in tax havens, they probably didn’t, because the countries that shelter the money, like Bermuda or the Cayman Islands, don’t have economies that can produce such enormous profits. Those profits can only be earned in countries with robust economies like the U.S.
Furthermore, the foreign tax rate they paid was far lower than the tax rate they would have paid in the U.S. Indeed, the 28 firms bothering to tell the IRS what they would have paid in U.S. taxes paid a foreign tax rate of about 10 percent on a total of $470 billion. You almost certainly paid a higher percentage on less income.
Ironically, the offshoring trend has grown since the economic collapse of 2008, the very event Republicans cite when calling for more and deeper spending cuts. The CTJ survey found 77 firms increased their caches by at least $500 million while another seven U.S. companies — Apple, General Electric, Microsoft, IBM, Google, Oracle, and Gilead Sciences — piled high their cash hoards with more than $5 billion.
The trend is poised to become permanent. CTJ researchers report an acceleration of what’s known as “corporate inversions,” meaning American firms reincorporate in foreign countries to avoid paying most or all taxes on profits earned in the U.S.
And — no surprise here — the firms with the most money overseas are the first to lobby Congress to avoid paying taxes on that money. To stop this vicious cycle, CTJ researchers recommend putting an end to something called “deferrals,” an SEC rule that incentivizes tax sheltering. Then all profits earned by U.S. corporations anywhere in the world would be subject to U.S. taxes in the year they were earned.
The CTJ report does more than offer advice on creating a more equitable tax code. It reminds us that the frame of our budget debate is much too narrow. It is typically limited to spending, not revenues, much to the benefit of Republicans, while Democrats are left complaining about the unfair treatment of the middle class.
But the CTJ report does something else, something its authors don’t come right out and say. Our very narrow budget debate is as much about patriotism and national character as it is about justice and fiscal responsibility. Or at least it should be.
Billions and billions are hidden overseas while the rest of us are forced to fight over crumbs. That’s degrading and undignified but also unpatriotic. Prosperity is not only for the very few with the power to enjoy it. This isn’t feudal England.
This is America.
By: John Stoehr, The National Memo, April 14, 2015
“Power And Paychecks”: There’s No Excuse For Wage Fatalism; We Can Give American Workers A Raise If We Want To
On Wednesday, McDonald’s — which has been facing demonstrations denouncing its low wages — announced that it would give workers a raise. The pay increase won’t, in itself, be a very big deal: the new wage floor is just $1 above the local minimum wage, and even that policy only applies to outlets McDonald’s owns directly, not the many outlets owned by people who bought franchises. But it’s at least possible that this latest announcement, like Walmart’s much bigger pay-raise announcement a couple of months ago, is a harbinger of an important change in U.S. labor relations.
Maybe it’s not that hard to give American workers a raise, after all.
Most people would surely agree that stagnant wages, and more broadly the shrinking number of jobs that can support middle-class status, are big problems for this country. But the general attitude to the decline in good jobs is fatalistic. Isn’t it just supply and demand? Haven’t labor-saving technology and global competition made it impossible to pay decent wages to workers unless they have a lot of education?
Strange to say, however, the more you know about labor economics the less likely you are to share this fatalism. For one thing, global competition is overrated as a factor in labor markets; yes, manufacturing faces a lot more competition than it did in the past, but the great majority of American workers are employed in service industries that aren’t exposed to international trade. And the evidence that technology is pushing down wages is a lot less clear than all the harrumphing about a “skills gap” might suggest.
Even more important is the fact that the market for labor isn’t like the markets for soybeans or pork bellies. Workers are people; relations between employers and employees are more complicated than simple supply and demand. And this complexity means that there’s a lot more wiggle room in wage determination than conventional wisdom would have you believe. We can, in fact, raise wages significantly if we want to.
How do we know that labor markets are different? Start with the effects of minimum wages. There’s a lot of evidence on those effects: Every time a state raises its minimum wage while neighboring states don’t, it, in effect, performs a controlled experiment. And the overwhelming conclusion from all that evidence is that the effect you might expect to see — higher minimum wages leading to fewer jobs — is weak to nonexistent. Raising the minimum wage makes jobs better; it doesn’t seem to make them scarcer.
How is that possible? At least part of the answer is that workers are not, in fact, commodities. A bushel of soybeans doesn’t care how much you paid for it; but decently paid workers tend to do a better job, not to mention being less likely to quit and require replacement, than workers paid the absolute minimum an employer can get away with. As a result, raising the minimum wage, while it makes labor more expensive, has offsetting benefits that tend to lower costs, limiting any adverse effect on jobs.
Similar factors explain another puzzle about labor markets: the way different firms in what looks like the same business can pay very different wages. The classic comparison is between Walmart (with its low wages, low morale, and very high turnover) and Costco (which offers higher wages and better benefits, and makes up the difference with better productivity and worker loyalty). True, the two retailers serve different markets; Costco’s merchandise is higher-end and its customers more affluent. But the comparison nonetheless suggests that paying higher wages costs employers a lot less than you might think.
And this, in turn, suggests that it shouldn’t be all that hard to raise wages across the board. Suppose that we were to give workers some bargaining power by raising minimum wages, making it easier for them to organize, and, crucially, aiming for full employment rather than finding reasons to choke off recovery despite low inflation. Given what we now know about labor markets, the results might be surprisingly big — because a moderate push might be all it takes to persuade much of American business to turn away from the low-wage strategy that has dominated our society for so many years.
There’s historical precedent for this kind of wage push. The middle-class society now dwindling in our rearview mirrors didn’t emerge spontaneously; it was largely created by the “great compression” of wages that took place during World War II, with effects that lasted for more than a generation.
So can we repeat this achievement? The pay raises at Walmart and McDonald’s — brought on by a tightening job market plus activist pressure — offer a small taste of what could happen on a vastly larger scale. There’s no excuse for wage fatalism. We can give American workers a raise if we want to.
By: Paul Krugman, Op-Ed Columnist, The New York Times, April 3, 2015
“The Supreme Court’s Extreme Faith”: The Menendez Case Proves The Supreme Court Was Naive About Campaign Finance Laws
No cameras are allowed inside the main Supreme Court chamber, but on Wednesday, a group of activists—for the second time this year—evaded tight security controls and snuck one in to record themselves causing disorder in the court. Their goal: Decry two of the court’s most controversial rulings on campaign finance, Citizens United v. FEC and McCutcheon v. FEC, which have paved the way for powerful donors and corporations to influence elections.
“Justices, is it not your duty to protect our right to self-government?” a protester is heard yelling in a video posted on YouTube. “Reverse McCutcheon. Overturn Citizens United. One person, one vote.” Court police escorted her out, followed by other protesters, including a man chanting, “We who believe in freedom shall not rest.”
Chief Justice John Roberts was not impressed. SCOTUSblog’s Lyle Denniston, one of the few reporters at the scene, noted he grew impatient and later said, “Oh please,” on top of threatening contempt sanctions against the protesters.
Say what you will of the activists’ stunt or the chief’s reaction—because really, no protest in the world will ever overturn a Supreme Court precedent. But consider what Roberts himself proclaimed in McCutcheon, which turned one year old today: “Spending large sums of money in connection with elections, but not in connection with an effort to control the exercise of an officeholder’s duties, does not give rise to quid pro quo corruption. Nor does the possibility that an individual who spends large sums may garner influence over or access to elected officials.”
McCutcheon invalidated something very specific—the limit on the total amount a person can give to all federal candidates during a two-year election cycle—but Roberts didn’t stop there. Time and again he kept singling out blatant quid pro quo arrangements as the only thing Congress could regulate. Not so with meager attempts to “prevent corruption” or curbing “the appearance of mere influence and access.” Those things aren’t as big a deal under the Constitution. Only tit-for-tat corruption is.
Compare that to the other case the protesters targeted, 2010’s Citizens United, a ruling as grand as it was shocking for the dearth of evidence on which it rested: “We now conclude that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” The court went on: “The appearance of influence or access … will not cause the electorate to lose faith in our democratic order.”
But it turns out corruption, appearances, and influence-peddling are all at the crux of federal charges against New Jersey Senator Bob Menendez. He was indicted Wednesday on several counts of bribery and other offenses, stemming from an allegedly cozy relationship with Salomon Melgen, a Florida ophthalmologist and longtime friend who is accused of giving lavish gifts to the senator. These included a trip to a luxury hotel in Paris, a stay at an upscale villa in the Dominican Republic, contributions to a legal-defense fund, and more than $1 million in donations to various political action groups supporting Democratic candidates—all in exchange for political favors for Melgen, his business interests, and his numerous girlfriends.
Whether these salacious allegations stick or lead to some kind of plea deal will soon be decided; Menendez pled “not guilty” on all charges Thursday. But a sizeable contribution listed in the indictment calls into question the Supreme Court’s extreme faith that large sums of money not directly given to a candidate fail to amount to corruption.
According to prosecutors, Melgen, through his own company, contributed $600,000 to a political action committee aimed at helping Democrats retain control of the Senate. That’s all well and good under Citizens United,except Melgen allegedly earmarked the money so it went directly to the Menendez re-election campaign. That’s also kosher under campaign regulations, except the indictment alleges Menendez “sought and received” the donation—comprised of two checks for $300,000 each, sent to the super PAC in exchange for Menendez’s assistance in resolving a Medicare-related dispute. Interestingly, the indictment notes that Melgen cut one of the checks on the same day he attended an annual fundraiser Menendez hosted.
The legal process will determine the extent to which the alleged favors and contributions are related. But even if they weren’t and the case went away, the Menendez indictment undermines the Supreme Court’s facile conclusion that merely spending large sums of money—absent a clear showing of quid pro quo—isn’t enough to prove that corruption has taken hold. Or the notion that the mere appearance of influence and access to elected leaders fails to be an interest compelling enough to require strong campaign-finance laws—the kind that governs how big donors and big money behave each election cycle.
Chief Justice Roberts may not be too pleased with the recent protests and security breaches at the Supreme Court, but the Menendez case opens the door for some introspection on how recent campaign-finance rulings are reshaping who calls the shots in our democratic order.
By: Cristian Farias, The New Republic, April 2, 2015
“Indiana And Federal Statutes Not Wholly Identical”: Three Factors That Make Indiana’s Religion Law Different From Other States’
The Indiana statute is the culmination of a long, murky legal history that reaches back to the 1990 Supreme Court case Employment Division v. Smith, which significantly changed the standard interpretation of the First Amendment’s free exercise clause. At issue was whether a Native American group could use peyote in religious rituals in violation of an Oregon law. The court ruled that it could not — because the state law was “neutral,” in that it was not motivated by a desire to curtail religious rights, and because it applied to everyone in the state.
Legal precedent prior to 1990 dictated that the government could substantially burden a person’s practice of his or her religion only if its action was necessary to achieve a compelling government purpose. But in Smith, the court established that the free exercise clause could not be used to challenge a neutral law of general applicability no matter how much the law burdened religion.
So, before Smith, a priest in a dry county who wanted to use wine in communion surely would have prevailed in court. After Smith, he would have lost because the law prohibiting consumption of alcohol was a neutral law of general applicability.
In 1993, Congress, with strong bipartisan support, passed and President Clinton signed the federal Religious Freedom Restoration Act. Its stated goal was to restore religious freedom by statute to what it previously had been under the Constitution. The law provides that whenever the government substantially burdens religion, even with a neutral law of general applicability, its action is illegal unless proven to be necessary to achieve a compelling government interest.
The next development came in 1997, when the Supreme Court declared the act unconstitutional as applied to state and local governments because it exceeded the scope of Congress’ power. But the law remained constitutional as applied to the federal government, and was the basis for the court’s decision last June in Burwell v. Hobby Lobby. In that case, the court held, 5 to 4, that it violated the Religious Freedom Restoration Act to require a closely held corporation to provide contraceptive coverage if that contradicted its owners’ religious beliefs.
The new Indiana law has the same title and contains the same language as the federal statute. Like the federal law, the Indiana version provides: “A governmental entity may substantially burden a person’s exercise of religion only if the governmental entity demonstrates that application of the burden to the person: (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.”
But the Indiana and federal statutes are not wholly identical. The Indiana law, unlike the federal RFRA, builds on Hobby Lobby by expressly providing protection to corporations and other business entities. That’s one reason to worry that the purpose of the Indiana law is to allow discrimination against same-sex couples based on business owners’ religious beliefs.
Another reason for concern is timing. Why is Indiana adopting the law now, 25 years after Employment Division v. Smith and 22 years after the enactment of the federal statute? There is a widespread consensus across the political spectrum that the Supreme Court is about to recognize a right to marriage equality for gays and lesbians and hold that state laws prohibiting same-sex marriage violate the Constitution. This law appears to be a reaction to that development.
The rhetoric surrounding the Indiana law is also troubling. In fact, over and over in his interviews, Pence has refused to deny that the law would permit discrimination. He also was emphatic that there would be no expansion of rights for gays and lesbians on his “watch.”
This is why there are loud protests against the Indiana law and calls for boycotts of the state. But Indiana could easily solve this controversy by amending the law to provide that no one can discriminate against others based on sexual orientation, sex or race under the statute or on the grounds of religious beliefs.
By: Erwin Chemerinsky, Dean of the University of California, Irvine School of Law, The Los Angeles Times; The National Memo, April 1, 2015
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