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“The Right Question To Ask About Government”: What Steps Does Government Take To Empower Citizens And Expand Their Rights?

Many conservatives and most libertarians argue that every new law or regulation means that government is adding to the sum total of oppression and reducing the freedom of individuals.

This way of looking at things greatly simplifies the political debate. Domestic issues are boiled down to the question of whether someone is “pro-government” or “anti-government.”

Alas for the over-simplifiers, it’s an approach that misreads the nature of the choices that regulators, politicians and citizens regularly face. It ignores that the market system itself could not exist without the rules that government establishes, beginning with statutes protecting private property and also the various measures against the use of force and fraud in business and individual transactions.

More important, it overlooks the ways in which the steps government takes often empower citizens and expand their rights. Nowhere is this more obvious than in the realm of work.

The run-up to Labor Day this year brought a spate of news articles and commentaries on the actions of the National Labor Relations Board and other government agencies to strengthen the rights of workers and enhance their bargaining power relative to employers.

Last week, Noam Scheiber offered an important account in the New York Times of how the Obama administration has been “pursuing an aggressive campaign to restore protections for workers that have been eroded by business activism, conservative governance and the evolution of the economy in recent decades.”

Among the milestones Scheiber cited was a recent U.S. Court of Appeals decision upholding an Obama-era rule providing minimum-wage and overtime protections to nearly 2 million home health-care workers. They certainly felt empowered by government, not oppressed. So did the employees of contractors and franchises who were granted collective bargaining rights by the National Labor Relations Board.

Fast-food chains provide the obvious example of how loopholes related to new work arrangements and franchise agreements can let employers out of their traditional obligations. In the case of purveyors of hamburgers and chicken tenders, the parent companies set all sorts of detailed requirements for how these businesses should operate — and then turn around and claim that when it comes to workers’ rights, their franchises are utterly independent.

One of the most fascinating struggles, still ongoing, is over new regulations that the Labor Department is trying to establish to ensure that those who give investment advice to people with 401(k)s and individual retirement accounts base their judgments on the best interests of their clients. Along with defined-contribution retirement plans, they involve some $13 trillion in investments.

The Labor Department proposal would require investment advisers to abide by a “fiduciary” standard — meaning that the best-interest-of-the-client yardstick should be their sole criterion in offering counsel to clients. If this seems obvious, that’s not what the current law requires. As Labor Secretary Thomas Perez said in an interview, the standard now is only that an investment be suitable. “What the hell is ‘suitable’?” Perez asked, noting that he would hope for more than just “suitable” advice from his doctor.

The issue is whether some investment advisers might offer conflicted guidance influenced by “backdoor payments and hidden fees often buried in fine print,” as the Labor Department put it in a document explaining why change is needed.

“I don’t believe that folks who provide advice wake up with malice in their hearts,” Perez said. But he added that it is only natural that advisers might lean toward investments from which they can also benefit. “Surprise, surprise, if you have four or five products that are suitable and one gives you a commission, guess where you will go?” The new rules, which are being heavily contested by parts of the financial industry, are an attempt to realign the incentives, Perez argued.

The investment-rule battle is a near-perfect example of how the government is plainly promoting free markets — what’s more market-oriented than building an investment portfolio? — but is also trying to make sure that the rules regulating the investments tilt toward the interests of the individual putting money at risk.

As long as there are markets, government will have to establish rules determining how they operate. These necessarily affect the interests of market participants. Many of the choices are not between more or less government. They are about whether what government does provides greater benefit to workers or employers, management or unions, individual investors or investment firms.

“Which side are you on?” This question from the old union song is the right question to ask about government.

 

By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, September 6, 2015

September 7, 2015 Posted by | Government, Labor Day, Workers Rights | , , , , , , , , | 1 Comment

“The Boost That Comes From Raising The Minimum Wage”: Au Contraire, Raising Wages Does Not Destroy Jobs

The standard argument — really, the only argument — against raising the minimum wage is that it will lead to job loss. The argument is beloved by die-hard opponents of raising the wage because it provides them with a veneer, however flimsy, of concern about the welfare of the working poor.

Economic studies have repeatedly shown that argument to be spurious. Now the latest survey of 350,000 small businesses from Paychex, a payroll provider company, and IHS, a business analysis firm, provides strong indications that the exact opposite may be true.

In April, the Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington — the state with the highest minimum wage in the nation, $9.32 an hour. The metropolitan area with the highest percentage of annual job growth was San Francisco — the city with the highest minimum wage in the nation, at $10.74.

This suggests that the relationship between a high minimum wage and job creation needn’t be inverse. If anything, it suggests that relationship is direct.

To be sure, the Bay Area economy is booming, but minimum-wage opponents would nonetheless have us believe that mandating the payment of close to $11 an hour must cause job loss at least in fast-food joints and Chinatown’s kitchens. San Francisco shouldn’t be creating more small-business jobs than any other city. It’s theoretically impossible.

So much for the theory. San Francisco is doing exactly that.

The compatibility of higher wage standards and job creation shouldn’t come as a surprise. A classic study of fast-food employment by former White House economic adviser Alan Krueger and Berkeley economics professor David Card demonstrated that raising the minimum wage does not lead to an appreciable decline in employment. Opponents of a higher wage have invoked a recent study by the Congressional Budget Office that argued a raise in the national minimum wage from $7.25 to $10.10, as President Obama has advocated, might cost up to 500,000 jobs. But even that study said that the raise would increase the wages of 16.5 million Americans — at least 33 times the number of those who might lose jobs — and elevate 900,000 people out of poverty.

What critics of a higher minimum wage ignore is that, by putting more money into the pockets of the working poor — a group that necessarily spends nearly all its income on such locally provided basics as rent, food, transport and child care — an adequate minimum wage increases a community’s level of sales and thereby creates more jobs. The Los Angeles Economic Roundtable recently concluded that raising the hourly minimum to $15 in Los Angeles County — the nation’s largest, home to 10 million people — would generate an additional $9.2 billion in annual sales and create more than 50,000 jobs.

The Seattle City Council is expected to enact a proposal from Mayor Ed Murray, developed by a business-labor task force, to phase in a $15 citywide minimum wage over seven years. The progress of the measure is a testament not only to the fast-food workers nationwide who’ve been campaigning for $15 hourly pay from McDonald’s and other chains but also to local labor and community leaders. They injected that issue into last year’s mayoral election, winning a pledge from Murray to push for the $15 standard. With direct employee-employer collective bargaining close to a dead letter in the private-sector economy, the likely success of the Seattle measure points to a new model for bargaining, in which progressive governments respond to worker pressure by legislating the wage increases employees can no longer win in the workplace.

In a nation where most people’s wages have been stagnant or dropping for many years, and where the combination of globalization and de-unionization has stripped from workers the bargaining power they once possessed, the role of government in addressing wage issues has become more central than ever. By investing in job-creating public works, by raising the minimum wage, by lowering taxes on those corporations that give their workers annual productivity increases and raising taxes on those that don’t, government can take up the slack created by the suppression and near-disappearance of private-sector unions. But first, it must dispel the canard that raising wages destroys jobs. Now it can point to San Francisco and Washington as evidence that it doesn’t.

 

By: Harold Meyerson, Opinion Writer, The Washington Post, May 21, 2014

May 25, 2014 Posted by | Jobs, Minimum Wage | , , , , , , | 1 Comment

“A Mislearned Lesson”: McDonald’s Indigestible Excuse For Low Pay

When Henry Ford realized it was good business to pay employees enough to buy the products they built, it was a breakthrough, not only because the idea challenged the reflex to pay as little as possible, but because the product was a car. He was talking real bucks.

McDonald’s has mislearned the lesson.

In response to escalating protests by McDonald’s employees calling for higher wages and the right to form a union without retaliation, McDonald’s chief executive, Don Thompson, defended the company at the annual meeting on Thursday, saying that McDonald’s pays a competitive wage.

But what constitutes “competitive” in the fast-food industry is precisely the problem. Hourly pay averages about $9. The low pay is possible in part because employers rely on taxpayers to subsidize it through public assistance and on non-unionized workforces to swallow it. The competitive fast food wage, in short, is not enough to live on.

Mr. Thompson presumably knows that. But he is paid not to understand what the protestors are demanding because his own pay is based on profits that are derived in part by keeping worker pay low.

Of course, if the political economy were functioning as it is supposed to – with Congress imposing reasonable boundaries on businesses, markets and the economy – workers wouldn’t have to get their bosses to understand what it’s like to live on $9 an hour, because Congress would make sure that no one had to.

The McDonald’s workers are asking for $15 an hour. That sounds like a lot compared to the current minimum wage of $7.25 an hour and compared to the Democratic proposal to raise the minimum to $10.10. But it’s actually closer to where the minimum wage would be today if it had kept pace over the years with growth in labor productivity.

McDonald’s workers are not asking for too much. Democrats are asking for too little and Republicans won’t even go along with that.

 

By: Teresa Tritch, Taking Note, The Editors Blog, The New York Times, May 23, 2014

May 24, 2014 Posted by | Minimum Wage | , , , , , , , , | Leave a comment

“Yes, McDonald’s Can Do Better”: More Than Greed, Profitable Fast Food Companies Could Pay A Living Wage

When I was 18, I spent a year and change flipping burgers in one of those restaurants where customers eat from a tray balanced across their car windows. It was one of the three jobs I held at the time, affording a simple budget and enough left over to save up to go to college after a couple of years. I put in hard hours for my employer and it eventually worked out just fine for me. It also makes for a nice story, but one that is embarrassingly dated. The fast food industry in which I worked is not the fast food industry of America today—just ask the thousands of workers on the streets, standing up for same opportunity to get by and get ahead that built the American Dream.

For today’s fast food work force, erratic scheduling makes holding down more than one job impossible—you can’t commit to a second employer if you’re on call for the first. At the same time, low wages barely cover basic household needs, leaving millions of workers in poverty despite being employed, and making saving for the future impossible. And the 18-year-old serving your root beer float? Now she is 29, and likely to have been to college and have a family to support.

What else has changed since I was behind the counter? Oh yeah, fast food companies are making more money than ever.

In our report “A Higher Wage is Possible,” my co-author Amy Traub and I show how Wal-Mart could meet worker demands for a fair wage without passing costs onto consumers. Every year, Wal-Mart directs a portion of its profits to buying back its own public stock, consolidating ownership and increasing earnings per share. If they used that money to invest in their workforce instead, Wal-Mart could offer a raise of $5.83 per hour to all of its 825,000 low wage workers. In addition to pulling thousands of families out of poverty, Wal-Mart would see lower turnover and higher productivity and contribute to economic growth that benefits Wal-Mart, retail, and the economy overall.

Share repurchases have become an increasingly popular business strategy. Last year, McDonald’s Corp spent $2.6 billion on them. YUM! Brands Inc, which includes Taco Bell, KFC, and Pizza Hut, spent $965 million. But while the long term value of buying back shares accrue mainly to those executives whose compensation is tied to stock performance, using that money to invest in the workforce would have benefits that apply to all stakeholders—workers, customers, communities, and shareholders too.

A quick calculation shows that McDonald’s and Yum could give raises of $2 to $3 per hour to every U.S. worker at their restaurant locations using just the money they now spend buying back shares. Since the details of their corporate pay structures are not public record, that is a raise applied to even the workers already earning above the threshold of $15 demanded on the streets. If we broke out the low-wage workers, or added in the billions in additional money paid to dividends each year, that raise could go even higher—without costing customers a dime.

There are lots of good reasons why fast food employers should do better for their workforce. It’s a win-win situation for everyone with a stake in the economy—and that is everyone. Moreover, fast food can do better, by using the money now syphoned to the top to invest in their workers and grow the economy.

To people like me who made their way through jobs similar to those of the workers on the street yesterday, the cripplingly poor terms of employment in today’s fast food industry look like more than just greed. It looks like the end of opportunity and the exchange of performance on paper for the substance of the American Dream.

 

By: Catherine Ruetschlin, The American Prospect, December 6, 2013

December 8, 2013 Posted by | Corporations, Minimum Wage | , , , , , , , | Leave a comment

“Higher Wages Are Good For Companies Too”: The Intellectual Rigors Of Low-Wage Work Are Too Frequently Dismissed

Barbara Gertz is 25 and works at a Walmart in Aurora, Colorado, stocking shelves on the overnight shift. She and her husband, a cement mason, can get by most months, but there have been days Barbara has called in sick because she can’t afford the gas to drive to work.

Higher wages would obviously benefit Barbara and her colleagues at Walmart who protested last Friday. They would also benefit fast food workers striking tomorrow in 100 cities across the country who earn, on average, $11,000 a year.

But according to Zeynep Ton, an adjunct professor at MIT Sloan School of Management, higher wages are better for companies, too.

Ton’s book, The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits, comes out in January and in it, she describes how large retail companies like Mercadona, Trader Joe’s and Costco have been able to invest in workers without raising prices. “These companies think about employees not as costs to minimize but as capable human beings with the potential to generate sales and profits,” Ton recently wrote on her blog. “Doesn’t all this cost a lot? Of course it does. But that’s only part of the strategy. These companies also design and manage work in a way that makes their employees more productive and takes full advantage of a committed, motivated, and capable (that is, well-paid, well-trained, and well-treated) workforce.”

Here’s one of Ton’s favorite examples of why the so-called Good Jobs Strategy works: During the recession, both Walmart and Mercadona, Spain’s largest supermarket chain, had to cut costs and did so by reducing the variety of products they carried. Walmart customers were annoyed when their local store stopped carrying their favorite brand of potato chip, or toilet paper or T-shirt. Sales dropped; Walmart’s chief merchandising officer had to leave the company. At Mercadona, customers were unfazed if an item they wanted was out of stock because workers, who as a matter of company policy are trained in every department, were able to recommend a replacement. Sales figures increased, even after Mercadona reduced its prices by 10 percent. Workers would let management know if there was a particular product that too many customers seemed to miss. “They could do this because they are empowered, cross-trained and have the time to engage the customer,” Ton writes. By comparison, Barbara told me that “there’s just a total lack of respect” for associates at Walmart. She mentioned a friend who politely pointed out an inventory problem to her supervisor and was fired the next day for the very mistake she tried to correct.

Ton’s argument is that workers who are paid fairly and treated respectfully are more productive and more innovative, across industries and on all salary levels, at Google or at Walmart. “Low-cost retail work is not trivial and how you perform that work makes a big difference for the company’s bottom line,” Ton has written. Retail work requires intuition and charm, quick decision-making, a good memory. As Mike Rose, an education professor at UCLA, has eloquently written the intellectual rigors of low-wage work are too frequently dismissed.

Ton’s Good Jobs Strategy also applies to fast food industry. In-N-Out Burger, the cultishly beloved West Coast hamburger chain, is a good example. The starting wage is $10.50 per hour, significantly higher than at McDonald’s. They have the lowest turnover rate in the fast-food industry. Like Mercadona and Trader Joe’s, In-N-Out keeps overhead low by limiting their offerings, by doing just a few things—hamburgers, cheeseburgers, milkshakes—really, really well.

With more than half of fast food workers on public assistance, costing taxpayers an estimated $7 billion a year, the demands of Thursday’s strike is in the public’s best interest as well. On Tuesday, the Washington, DC, Council voted to increase the minimum wage to $11.50 per hour and to extend paid sick leave to tipped workers, having found, despite theories to the contrary, that such a policy does not discourage new businesses from opening or cause preexisting businesses to relocate. President Obama recently endorsed raising the federal minimum wage to $10.10 an hour.

If political pressure and public protest don’t cause McDonald’s and Walmart to increase worker pay, perhaps pure profit-driven thinking will. After all, what if Barbara had to call in sick on one of the busiest days of the year?

 

By: Jessica Weisberg, The Nation, December 4, 2013

December 6, 2013 Posted by | Corporations, Minimum Wage | , , , , , , , | Leave a comment

   

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