The thing that is roiling politics right now, and may have gotten a Republican elected senator in overwhelmingly Democratic Massachusetts is the obvious asymmetry in how bankers and the super-rich are treated compared to the rest of us.
Last week the Tishman Speyer real estate empire simply walked away from a 5.4 billion dollar investment in the Stuyvesant Town development. http://www.nytimes.com/2010/01/26/nyregion/26stuy.html?em. Of course, Tishman Speyer only had 112 million into the deal; other investors carried the rest of the debt, including some pension funds.
Stuyvesant Town was built in the mid-40s by Metropolitan Life to provide low-cost housing for workers and returning WWII vets. Rents were low, and working people could afford to live in New York. During the latest real estate boom, Met Life sold the property for 5.4 billion to Tishman. Turns out that Tishman couldn't turn a profit on the deal -- so it simply walked away, screwing the investors and the many tenants who were evicted so Tishman could charge higher rents. They weren't making money so they just walked.
Meanwhile, thousands upon thousands of people have lost their homes the past few years after they (sometimes foolishly) got mortgages they could not afford after the balloon payments started, or more tragically, people lost their homes who had paid off their homes then took out second mortgages they could not pay. Most of these folks tried desperately to keep their homes. Despite the Obama mortgage "reforms," most banks refused to work with people by modifying loans.
Even greater in number than those who lost their homes are those who are still paying their mortgages even though it makes no economic sense to do so. They do this through a sense of moral obligation. They do so because they have are responsible neighbors and citizens, even though some have suggested that they simply act like the corporations and the banks that hector them to "do the responsible thing" and walk awa from their obligation. http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?scp=2&sq=mortgage&st=cse
This is why people are so angry right now. People can see that the Masters of the Universe are playing by different rules than they are, and suffering no consequences. While workers have had stagnant wages over the last decade, higher health care costs, or even had health care taken away, banks have enjoyed TARP bailouts, paid its executives ginormous bonuses and increased the ratio between CEO pay and worker pay. Obama tapped into this anger before he got into office and then, many feel, turned over economic policy to Wall Street. If he wants to stay in office he'd be wise to figure out a way to help working Americans in real, not symbolic terms.
Wednesday, January 27, 2010
Friday, January 22, 2010
Campaign Reform For All?
I haven't had the time or inclination to read yesterday's Supreme Court case that eliminated certain limits on election spending by corporations. The case, Citizens United v. Federal Election Commission, overturned decades of precedent and held that corporations could finance ads for or against political candidates. I have, however, noticed the news coverage, almost all of which mention that the case means corporations and unions can now spend as much as they like, implying somehow that unions and corporations have an equal ability to influence elections through their spending. They don't.
Although it is true that unions spent freely to try to elect candidates in the last election cycle, it is also true that unions do not have unlimited funds. Corporations practically do. Opensecrets.org estimates that in the 2008 election cycle all unions combined spend less than half of what the Chamber of Commerce spent supporting or opposing candidates. http://www.opensecrets.org/news/2009/02/labor-and-business-spend-big-o.html. These figures only count the Chamber of Commerce on the business end of things; once corporations begin to spend in earnest it will dwarf the 80 million the Chamber spent in 2008. Unions, on the other hand, will not be able to afford to lobby and spend at anything close to the same level.
The influence of corporations and business and their money can be seen in the effort to reform health care. Heatlh care firms and their lobbyists spend 1.4 million dollars a day trying to influence the effort. And influence it they did: the bill as currently written drives more consumers into the arms of insurance companies, and there is no countervailing public option to keep private insurers honest and efficient. This is a preview of coming attractions for how corporations will influence policy. As one lobbyist read the decision, lobbyists will be able to go to politicians and say “We have got a million we can spend advertising for you or against you — whichever one you want." http://www.nytimes.com/2010/01/22/us/politics/22donate.html?ref=todayspaper
To quote Anatole France, "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread." Likewise, the Supreme Court decision does remove restrictions on unions and corporations from certain spending restrictions. But let's not pretend that this decision places them in an equal position.
Although it is true that unions spent freely to try to elect candidates in the last election cycle, it is also true that unions do not have unlimited funds. Corporations practically do. Opensecrets.org estimates that in the 2008 election cycle all unions combined spend less than half of what the Chamber of Commerce spent supporting or opposing candidates. http://www.opensecrets.org/news/2009/02/labor-and-business-spend-big-o.html. These figures only count the Chamber of Commerce on the business end of things; once corporations begin to spend in earnest it will dwarf the 80 million the Chamber spent in 2008. Unions, on the other hand, will not be able to afford to lobby and spend at anything close to the same level.
The influence of corporations and business and their money can be seen in the effort to reform health care. Heatlh care firms and their lobbyists spend 1.4 million dollars a day trying to influence the effort. And influence it they did: the bill as currently written drives more consumers into the arms of insurance companies, and there is no countervailing public option to keep private insurers honest and efficient. This is a preview of coming attractions for how corporations will influence policy. As one lobbyist read the decision, lobbyists will be able to go to politicians and say “We have got a million we can spend advertising for you or against you — whichever one you want." http://www.nytimes.com/2010/01/22/us/politics/22donate.html?ref=todayspaper
To quote Anatole France, "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread." Likewise, the Supreme Court decision does remove restrictions on unions and corporations from certain spending restrictions. But let's not pretend that this decision places them in an equal position.
Tuesday, January 19, 2010
Pittsburgh Ponders Prevailing Wage
As the story below tells it, Pittsburgh is considering a prevailing wage bill that would require employers to pay employees working in buildings that received city aid the "prevailing wage" of other workers in the locality. Prevailing wages are almost always calculated using the wages that unionized workers are paid. Allegheny County is considering a similar bill.
Critics of prevailing wage rules claim that it puts employers and contractors at a competitive disadvantage. That is true, to the extent that competitive advantage is measured exclusively by labor costs. But prevailing wage legislation ensures that employers must compete on something other than wages, since everyone must pay the same wages on a project, or in the same locality. It helps insure against the race to the bottom that sets worker against worker -- who will do the job for the least.
The article reports on a rally held on Martin Luther King day in which religious leaders expressed their support of the bill. It's nice to see these leaders paying respect to Martin Luther King in a way of that truly honors his legacy. Most people forget that he was in Memphis to lend his support to the sanitation workers strike.
http://www.pittsburghlive.com/x/pittsburghtrib/news/s/s_662873.html?_s
http://www.pittsburghlive.com/x/pittsburghtrib/news/s/s_662873.html?_s
Critics of prevailing wage rules claim that it puts employers and contractors at a competitive disadvantage. That is true, to the extent that competitive advantage is measured exclusively by labor costs. But prevailing wage legislation ensures that employers must compete on something other than wages, since everyone must pay the same wages on a project, or in the same locality. It helps insure against the race to the bottom that sets worker against worker -- who will do the job for the least.
The article reports on a rally held on Martin Luther King day in which religious leaders expressed their support of the bill. It's nice to see these leaders paying respect to Martin Luther King in a way of that truly honors his legacy. Most people forget that he was in Memphis to lend his support to the sanitation workers strike.http://www.pittsburghlive.com/x/pittsburghtrib/news/s/s_662873.html?_s
http://www.pittsburghlive.com/x/pittsburghtrib/news/s/s_662873.html?_s
Tuesday, January 12, 2010
Why do Employers Fight Unemployment Claims?
Why do employers fight unemployment claims? After all, unemployment benefits are paid by the state, not by the individual employer. What employers do pay is an unemployment tax. The amount of that tax is determined by the number of claims an employer might have.
For a large employer with lots of claims, it is probably worth it to fight. However, for small employers, it probably isn't worth it, unless the employer has an axe to grind. Sometimes, though, the axe rebounds.
I had one case several years ago where one brother fired another brother who worked for him. The fired brother asked the employer brother not to fight his unemployment claim. He did. The fired brother ended up going to the Department of Labor and reporting massive cheating on prevailing wage projects. The employer brother ended up losing his business.
Recently I met with a worker who was fired from a small business after he called in sick. Well, actually, he called to say that he and his pregnant wife had been in a car accident and were going to the hospital. This employee had missed some work, not a lot, because of a medical condition; the employer does not have a sick policy. The employer is fighting this worker's right to unemployment benefits.
After meeting with the worker I was outraged by the unfair treatment, and tried to figure out a way to help him. Turns out that the employer is probably covered by the FMLA because he owns a few other satellite businesses that push him over the 50 employee FMLA requirement. Now I'm looking into an FMLA claim.
The employer gained absolutely nothing by fighting the unemployment benefits of a man who just had a baby and also a car crash. Because the employer fought this man's unemployment benefits, he now stands to lose a lot more. Was it worth it?
For a large employer with lots of claims, it is probably worth it to fight. However, for small employers, it probably isn't worth it, unless the employer has an axe to grind. Sometimes, though, the axe rebounds.
I had one case several years ago where one brother fired another brother who worked for him. The fired brother asked the employer brother not to fight his unemployment claim. He did. The fired brother ended up going to the Department of Labor and reporting massive cheating on prevailing wage projects. The employer brother ended up losing his business.
Recently I met with a worker who was fired from a small business after he called in sick. Well, actually, he called to say that he and his pregnant wife had been in a car accident and were going to the hospital. This employee had missed some work, not a lot, because of a medical condition; the employer does not have a sick policy. The employer is fighting this worker's right to unemployment benefits.
After meeting with the worker I was outraged by the unfair treatment, and tried to figure out a way to help him. Turns out that the employer is probably covered by the FMLA because he owns a few other satellite businesses that push him over the 50 employee FMLA requirement. Now I'm looking into an FMLA claim.
The employer gained absolutely nothing by fighting the unemployment benefits of a man who just had a baby and also a car crash. Because the employer fought this man's unemployment benefits, he now stands to lose a lot more. Was it worth it?
Tuesday, January 5, 2010
Defining Benefits Down
I had an interesting conversation with a friend recently about public employee benefits. My friend is a judge in California, and has always worked for the government, first as a prosecutor, then a judge. He has a good health care plan, and has the ability to retire with a nice pension when he is 65. Naturally, he is opposed to "government" health care. He also, oddly, shared the public outrage over a San Diego fire chief who retired with a large chunk of her $165,000 salary intact at age 53. http://www.10news.com/news/19584179/detail.html?ref=patrick.net. He wasn't opposed to the idea of a public employee receiving 75% of their salary upon retirement, more that the amount was too much and the fire chief too young. Of course, my friend is also a proponent of "marketplace" cures for all ills, including social security.
Leaving aside the obvious hypocrisy of someone feeding off the public tit opposed to anyone else getting government benefits, this raises an issue I hear about a lot: why should public employees get better health care and pension benefits than those in the private sector? The old argument was that public employees make less in salary, and it is made up for with benefits. That is no longer necessarily the case. Another argument for public safety employees is that without a retirement option at the end of the road, many officers would leave dangerous jobs after the piss and vinegar of youth evaporated, leaving a gap in qualified stable employees.
The real problem is that we have allowed corporations and the "free market" to dictate the terms of our health care and pensions for too long. Time was, there was a social contract in place: work for a company for your entire career, and at the end you would get a decent pension, and health care along the way. That idea is gone, replaced by the idea of shareholder profits at all costs, even the human costs involved when benefits are slashed or eliminated. The dirty little secret of health care reform is that many large companies are secretly in favor of shifting the burden of health care from their books to the government.
What is needed now is a shift in thinking about benefits. Instead of wondering why public sector employees have better benefits than the rest of us, we should be wondering why the rest of us don't have benefits like the public sector. In ten or twenty years the baby boomers will be retiring, and they will be the first generation since WWII to retire in large numbers without secured defined benefit pension benefits. How many of us have no idea how we are going to afford retirement, and keep plugging away, joking that we'll never be able to retire? The joke isn't going to be so funny once we actually have to retire.
Leaving aside the obvious hypocrisy of someone feeding off the public tit opposed to anyone else getting government benefits, this raises an issue I hear about a lot: why should public employees get better health care and pension benefits than those in the private sector? The old argument was that public employees make less in salary, and it is made up for with benefits. That is no longer necessarily the case. Another argument for public safety employees is that without a retirement option at the end of the road, many officers would leave dangerous jobs after the piss and vinegar of youth evaporated, leaving a gap in qualified stable employees.
The real problem is that we have allowed corporations and the "free market" to dictate the terms of our health care and pensions for too long. Time was, there was a social contract in place: work for a company for your entire career, and at the end you would get a decent pension, and health care along the way. That idea is gone, replaced by the idea of shareholder profits at all costs, even the human costs involved when benefits are slashed or eliminated. The dirty little secret of health care reform is that many large companies are secretly in favor of shifting the burden of health care from their books to the government.
What is needed now is a shift in thinking about benefits. Instead of wondering why public sector employees have better benefits than the rest of us, we should be wondering why the rest of us don't have benefits like the public sector. In ten or twenty years the baby boomers will be retiring, and they will be the first generation since WWII to retire in large numbers without secured defined benefit pension benefits. How many of us have no idea how we are going to afford retirement, and keep plugging away, joking that we'll never be able to retire? The joke isn't going to be so funny once we actually have to retire.
Saturday, January 2, 2010
Lessons for Labor From 2009
Labor was fully energized with the election of Obama. We supported him, we campaigned for him, we expected big things from him. After all, Obama supported the Employee Free Choice Act, reversed several Bush executive orders when he assumed the presidency, and seems to “get” unions and working people. So Labor had high hopes that Obama would remake the NLRB, enact health care and EFCA, revamp government agencies and help workers regain what was lost in the Bush Era. What labor got instead was a dismal recession, stalled NLRB and government agency nominees, the Employee Free Choice Act put on the back burner so that health care “reform” could be enacted, and the lowest wage increases since records have been kept.
The lesson of all of this is that there is only so much the man at the top can do to stem the losses in the economy, overcome fierce Republican resistance to everything Obama, and take on a congress that is as interested in campaign contributions as it is in keeping campaign promises. For years institutional Labor has labored under the illusion that change can come from the top down, starting with the AFL-CIO. The real lesson of 2009 is that change has to come from the bottom — from organizers in the trenches, from state and local initiatives, from winning the fight on the local level, not in Washington. For 2010 Labor must keep plugging away in Washington, yet always remember that the pace of change is glacial and that in reality change must percolate up from the bottom, not descend from the top.
The lesson of all of this is that there is only so much the man at the top can do to stem the losses in the economy, overcome fierce Republican resistance to everything Obama, and take on a congress that is as interested in campaign contributions as it is in keeping campaign promises. For years institutional Labor has labored under the illusion that change can come from the top down, starting with the AFL-CIO. The real lesson of 2009 is that change has to come from the bottom — from organizers in the trenches, from state and local initiatives, from winning the fight on the local level, not in Washington. For 2010 Labor must keep plugging away in Washington, yet always remember that the pace of change is glacial and that in reality change must percolate up from the bottom, not descend from the top.
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