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Hedrick Smith Speaks to the Community about Who Stole the American Dream.

PaperbackCoverIf you are like me, you have probably never heard of Hedrick Smith before.  Those people a little older than me know his work very well.  Hedrick was a journalist and the former head of the Washington D.C. bureau for the New York Times.  He covered at least four Presidents as a reporter and is an accomplished author.  Hedrick even won a Pulitzer Prize for his work in Russia and Eastern Europe in 1974.

Hedrick’s newest book is called ‘Who Stole the American Dream?’ and it provides a very detailed description of what happened to the middle class in America.

  • What lead to the sub-prime mortgage crisis that nearly bankrupted America?
  • What happened to the labor unions and prosperity of the middle class?
  • Why is business now more powerful in Washington than the people our elected officials are supposed to be representing?

HSmith 2Hedrick addressed all these topics in his lecture to a group of about 50 people at the NH AFL-CIO office last week.

After saying that “being here reminds me of the heyday of the labor movement,”  Hedrick started his lecture by asking the question “How did we get to here?”  How did we get to a point in America where you are either just barely getting by or one of the ultra-wealthy?

Hedrick said “Some people ask me, aren’t you preaching to the choir?” when speaking to labor groups.  His response: “All the choir members need to sing from the same sheet music.”  We will not be able to fight back against these changes until we understand how we got here.  Hedrick described his book as an intellectual arsenal for the labor movement and other socially progressive organizations.

Rebuilding America with excess money from the DOD.

“Labor is a strong protector of the middle class,” Hedrick said. “The heyday of the middle class was a time when the labor movement was strong.”

Hedrick talked about how we need to rebuild our infrastructure and get Americans back to work, how we need to focus on what is happening here, and stop spending all of our tax dollars fighting in other countries.  “Why are we building bridges in Kandahar, and not in Kansas?” Hedrick asked.  He explained that too much of our federal budget is going to the Pentagon; Defense spending is higher now than it was in the Cold War – even though, during the Cold War everyone was afraid of an all-out nuclear war.

In his book, Hedrick details how much money we have spent on the current ‘wars’ that we are involved in: an estimated $3.5 to $4.5 trillion dollars have been spent, even though taxes have not been increased to pay for it.  Even now, as the conflicts in Iraq and Afghanistan are winding down, the “extra” money Congress spent on those war efforts is still in the federal budget.  That means Defense is enjoying grossly inflated appropriations – even though there are no actual ‘wars’ to fight.

Hedrick suggested that if we need to find the money to rebuild our roads and bridges, we should start by looking at the Pentagon budget.  He also proposed the idea of mandatory military service, if not for everyone then for everyone in Congress.  “We would go into a lot less wars if we had mandatory (military) service,” he said.  Hedrick also questioned Congress’ ability to make decisions about war if the representatives have never served themselves.

Stakeholder Capitalism vs. Shareholder Capitalism

HRSmith 4There are two very different perspectives about how a business should be run.  On one hand there is the view – best described by Henry Ford – that a company is there to produce something, and pay people a wage high enough that they could become your customers.  This is commonly referred to as ‘Stakeholder Capitalism’.

There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.”
HENRY FORD

On the other hand, there is the current business philosophy that companies are only there to make their owners and shareholders money.  This is called ‘Shareholder Capitalism’.

This difference is a major focus in Hedrick’s new book.  He spent a majority of the time during last week’s discussion talking about the differences between these two views – and how ‘Shareholder Capitalism’ has led to the decline of the middle class.

Hedrick explained that ‘Stakeholder Capitalism’ drove the American economy after World War II.  From 1945-1970, the productivity of American workers went up by 96%.  At the same time, the average median income grew by 94%.  “Growth in productivity lead to shared prosperity,” Hedrick observed.  Everyone from the poor to the wealthy prospered during these years – in fact, those at the bottom of the wealth spectrum benefitted even more than those at the top.

Then, beginning in the 1970s, businesses moved into ‘Shareholder Capitalism’.  Productivity continued to rise by leaps and bounds, yet workers’ wages stayed flat.  The added revenue the company received from the higher productivity had to go somewhere – and it went right to the executives and shareholders. This is why the average CEO’s salary is now 380 times higher than the average worker’s salary.  [Read Citigroup’s report “Plutonomy: Buying Luxury, Explaining Global Imbalances” here.]

Through the 1970s, CEOs knew that shared prosperity was good business. “The job of the CEO was to balance the needs of all the Stakeholders,” Hedrick explained.  That means balancing the wages of the workers with the cost to consumers, and the need to turn a profit for the shareholders.  This was the job of the CEO.  Some of those needs were very simple.  The workers needed money.

The middle class had been the major consumer in our economy.  Middle class Americans are spenders, not savers: they spend 90% or more of what they bring home.  For the majority, the only savings they accrue is paying off their mortgages.   If the middle class does not have money to spend (like our current situation) then the economy is very slow to recover from any economic downturn.

In 1948, the United Auto Workers (UAW) and the CEO of General Motors Charlie Wilson signed the first collective bargaining agreement that included a lifetime pension.  This means that after you put in your many years of service to GM they would pay you a salary for the rest of your life.  This trend continued in union and non-union companies for the next few decades.  GM became the model for industry and labor relations throughout the country.

By 1980, 84% of all companies with 100+ employees had a full pension for their retired workers; 70% of them had full healthcare coverage for retirees as well.

Hedrick ArnieAlpertNow that ‘retirement security’ has all but disappeared.  Only 30% of companies with 100+ employees offer a pension; and only 18% offer retiree healthcare.  Those numbers go down every year, as workers who retired with these ‘outdated’ pensions are passing away.

GM used to be the template for a successful industry, now Wal-Mart is the template,” said Hedrick.  Wal-Mart is the modern day success story in the world of ‘Shareholder Capitalism’: they have experienced massive growth and high stock returns.  Just disregard the fact that they do not offer healthcare to the majority of their employees, or pay wages that would keep their workers out of poverty.

In ‘Shareholder Capitalism’ the stakeholders (consumers, shareholders, and workers) are in conflict with each other.  The shareholders are the only people the CEO cares about: business is all about profits and stock prices.  This is also why corporations like Wal-Mart buy back their stock to continue to drive up stock prices.

The middle class is not getting their share of the pie,” said Hedrick.  “The system (economy) will not work until the middle class get more of the pie

The middle class used to drive the political bus

Hedrick discussed how the middle class used to drive our political system.  Especially from the 1960s through the 1980s the middle class effected the most change.

The middle class was made up of many different movements, including the civil rights movement, the environmental movement, and the women’s movement.   Hedrick noted that organized labor was right there in the middle of it: labor was there helping to safeguard the rights of all workers, regardless of color or gender, and ensuring that all were paid equally.

For many years, labor and these organizations pushed the political system.  Hedrick noted that the AFL-CIO nationally seems to be making a push to be more like the labor movement of the past.  Labor is working with outside groups to help workers who are not official union members.  Hedrick praised the union groups who are helping to push legislation in Congress and state Legislatures to raise the minimum wage.

Hedrick described one other thing that helped these organizations move the middle class ahead.  It’s something that has been completely lost in today’s political system: hope.

People in the middle class used to believe that when something was broken in Washington that together they could change it.  They effected a great deal of political change and helped move our country forward.   Many people do not feel they can make a difference anymore.  We need bring hope back. We need people to believe again.

The Shift In Political Power

All through the 1960s, the middle class prospered and dominated the political system.  Now that is completely the opposite.  Business and their paid lobbyists control Washington.  What happened to cause this major shift?

Hedrick asked, “How many of you have ever heard of the Powell Memorandum?”  Hedrick admitted that until he started writing Who Stole The American Dream he had never heard of it before either.  Even though Hedrick was a journalist in Washington, D.C. in 1974, he had never heard of it.  It was not given to the press or the public; instead, it was shared “under the table. ‘

Lewis Powell was conservative, a corporate lawyer, and eventually a Supreme Court Justice. The 1974 ‘Powell Memorandum’ drafted a plan for business and industry to counter middle class movements.  Powell said, “These movements and regulations are killing the free enterprise system.”  He argues that the business industry needed to organize (like many of the other movements of the time), that they needed to put people on Capitol Hill and use their collective will to influence the regulations and policy changes that are hurting business.

Does that sound familiar?”  Hedrick asked the AFL members.

Starting in the mid-1970s, business took this message to heart.  They created the ‘Business Round Table’, a group of businesses who pooled their resources to lobby Congress.  Now the BRT is the largest single lobbying group in the nation’s capital.  The US Chamber of Commerce went from 6,000 members in 1974 to over 600,000 members in 2010.

These changes shifted the power from the people and pushed it toward the business community.  These lobbyists started pushing more and more money into the political system and began to overpower the voices of the people.  They quickly got to work: pushing for lower taxes, lower regulations and what they called ‘business-friendly’ policies.

“They started by deregulating trucking and telecom,” said Hedrick.

In 1978, with a Democratic President and both Houses of Congress controlled by Democrats, the business lobby passed some of the most damaging laws for American workers.  For example, they changed the tax code and wrote in paragraph 401 sub-section K to allow executives to have a tax shelter for their earnings.  The 401(K) provisions quickly became the answer to lowering retirement costs and keeping more profits.  Some companies, such as ENRON, even forced their workers to use their 401(k)s to buy stock in the company – which would force stock prices up and up. But then if the company goes under, as ENRON did, the workers have completely lost their retirements as well as their jobs.

The business lobby also changed the bankruptcy law to allow the current management to continue to control the company through the bankruptcy process.  Previously, a neutral third party was brought in to divide the company assets and ensure that workers’ pensions were protected; but now, companies can file for bankruptcy and sell off all assets, leaving the workers stranded.  In his book, Hedrick uses the United Airlines bankruptcy as an example of how this policy hurts working families.  We can also see the effects of this change in the aftermaths of the Hostess and Patriot Coal bankruptcies.

The ‘Powell Memorandum’ created a political monster.  Now we have the ‘Gang of Six’, a Washington based lobbying group that “represents 40,000 member companies from beer distributors to furniture suppliers, is the dean of a bloc of a half dozen U.S. trade groups. The groups represent companies that employ more than 22 million people and generate at least $5.2 trillion in goods and services, or almost half of U.S. gross domestic product. If the Gang of Six were a country, it would constitute the world’s second-biggest economy, eclipsing Japan’s $4.7 trillion GDP.”

This ultra-powerful lobbying group is lead by Dirk Van Dongen, the “most powerful man you never heard of,” said Hedrick.  This is the guy that Carl Rove had lunch with the day after President G.W. Bush was inaugurated – that is how powerful Van Dongen is.

Making Change

What can we do about this?  How can we stop this cycle and get back to an age of prosperity again?

Many of Hedrick’s ideas have to do with fixing our broken political system. “We need to get the big money out of politics,” said Hedrick.  “We need to fix the gerrymandering” of our Congressional districts.  We need to have open disclosure on all campaign contributions.  “This may mean we need to go back to publicly funded campaigns again,” said Hedrick.   We need the Federal Election Commission to do a better job of regulating the elections and enforcing the current election rules.  Hedrick continued, “The FEC could pass a rule that would enforce open disclosure tomorrow if they wanted to.”

Hedrick talked about ‘Open Primaries’ as a way of countering gerrymandering.   There would be no such thing as safe districts any longer. Regardless of political party, all candidates would be on the same primary ballot – then the top two candidates in the primary would run against each other in the general election.    Hedrick said that in some ‘Open Primaries’ have resulted in two general-election candidates from the same party.  He also noted that places that had ‘Open Primaries’ saw a 20% increase in voter turnout – because people once again believe that their vote will make a difference.

Hedrick also suggested making changes to the corporate tax structure, particularly reducing taxes for corporations that bring jobs here to the United States and raising taxes on those that send jobs away and keep profits overseas.  “Last year corporations held $1.7 trillion in corporate profits overseas,” said Hedrick. “Now they want to bring it back, so they are pushing Congress for another ‘tax holiday’.”  A tax holiday would allow these corporations to bring their money back from overseas without any penalty.  Many of them would immediately buy up shares of their own corporations, forcing stock prices up, and increasing their returns.  The people (the government) get nothing out of this.

Summary

Income inequality, the fall of the middle class, and the rise of business profits are all related.  Our world is very interconnected and what seemed like minor policy changes 30 years ago have turned out to be some of the most damaging.   We need to take back our political system and get back to making Congress work for the people, not the corporations.

Hedrick Smith laid out a number of these ideas in his hour-long lecture – but there is so much more in his new book.  I recommend that everyone go out a get a copy of ‘Who Stole the American Dream’.

After Months Of Delay, The State Employees Association and The State Reach A Tentative Agreement

Following an explanation of the Hassan administration’s proposal for a new employment contract with over 7800 employees, the State Employees’ Association’s (SEA) Collective Bargaining Senate voted to accept this proposal as a tentative agreement (TA). They will now send this TA to the full membership for a vote with a recommendation to approve.

The state and employee contract bargaining teams began meeting in January 2013. On June 20, the SEA Bargaining Team presented an initial proposal to the SEA Bargaining Senate that produced a number of questions and concerns. Due to the complexities and uncertainties of proposed provisions, the Bargaining Senate asked the team to return to the bargaining table.

The main sticking points, a new health care plan design and dramatic changes to sick leave provisions, have been addressed and an amicable compromise has been met.  The State withdrew its proposed changes to sick leave accruals and SEA members will receive a 6% wage increase in three increments between now and 2015. The most significant change came from the members’ commitment to be “all in to win.”

“Throughout the recession, New Hampshire’s dedicated and hard-working state employees pitched in by giving up pay raises, paying more for their health care and doing more with less as the state workforce dropped by 1100 positions,” said Governor Hassan. “This is a fair agreement for both employees and taxpayers that will provide the first cost-of-living raises for employees in five years and provide important healthcare savings to the state.”

The employees’ health benefits will now include first ever deductibles for individual and family plans and a new site of service provision that is designed to further curtail medical costs.  The agreement includes a new health promotions program designed to encourage employees to adopt healthier behaviors. The settlement also includes a stand-alone dental benefit for which employees will pay monthly premiums. “We have long recognized the need to take a more active role in managing our own health and the associated costs,” said Linda Huard, a member of the SEA’s bargaining team. “The steps we have already taken over the last few years have netted more than $60 million in savings for the state.” Both the state and the SEA representatives agree that the institution of new contractual incentives for preventive care in the contract will result in better health outcomes.

“Encouraging preventive care, through basic measures like flu shots and physicals, and improving the coordination of health care will strengthen the well-being of state employees and help generate significant savings for the state,” said Governor Hassan.  “By coming together and working constructively, we have successfully achieved our shared goals of providing additional support to our state employees while strengthening the state’s long-term financial outlook through an innovative approach to reducing healthcare costs.“

“I (Governor Hassan) thank the SEA leadership team and state negotiators for their good-faith efforts to find common ground and reach a deal, within the constraints of the state budget, that is fair to all parties.”

“This has been a long process – longer than what either side would have wanted,” said Diana Lacey, president of the SEA. “The state experienced significant challenges with new software and staff shortages. It delayed their ability to produce the data we needed to analyze in order to reach this compromise. In the end, after five years without a raise, I think we have arrived at a proposal that is fair and will allow the state employees to continue to provide critical services for NH residents, while supporting their own families, too.”

“We know it took us longer to get here than the rest of the unions, but in our “all in” spirit, we have struck a deal that will better benefit the people of NH, and the rest of the employees covered by our health plan,” said Jim Nall, chair of the Executive Branch Master Bargaining Team. “The settlement gives both the employees and employer a solid stake at further lowering health costs and frees up money for wages that employees desperately need.”

SEA representatives will begin visiting worksites to discuss the proposed changes in more detail with rank and file members.  The union and the state hope to have a ratified contract in time for the health insurance provider’s open enrollment period, later in November.

Senate Pushes New Legislative Package To Revive US Manufacturing; AFL-CIO Responds

Shaheen-021109-18432- 0009With economic recovery in New Hampshire and across the country still slow-moving, U.S. Senator Jeanne Shaheen (D-NH) is renewing her call for Washington to focus on job creation, economic growth, and strengthening the middle class. This morning, Shaheen joined twelve senators at a Capitol Hill press conference to kick of a campaign to promote legislation that will spur the manufacturing industry and create jobs. The legislative package unveiled this morning includes two of Shaheen’s bipartisan proposals, the On-the-Job Training Act of 2013 and the Small Business Export Growth Act, which will help grow the economy and create jobs.

“The manufacturing industry has to be part of any efforts to create jobs and grow the economy in New Hampshire and across the nation, especially considering the industry employs more than ten percent of New Hampshire’s workforce,” said Shaheen. “The commonsense, bipartisan proposals I’ve introduced will help our small businesses grow, create jobs, and stay competitive in the global economy by making it easier to tap into emerging markets and by training workers.”

“I hope we can work together in a bipartisan manner to move forward on these common-sense plans that will spur economic growth and help create jobs.”

In addition, this morning Shaheen also pointed to the bipartisan Commercial Real Estate and Economic Development (CREED) Act that she cosponsored as a way to bolster the economy and help create jobs. The bill, which passed the Senate Committee on Small Business in June, would offer low-cost access to capital for the purposes of growing and expanding. In recent weeks, Shaheen has toured New Hampshire to meet with small businesses and employers to discuss her efforts in Washington to help New Hampshire businesses grow and expand.

After Senator Shaheen kicked off her campaign to revitalize the manufacturing base in the United States, Richard Trumka President of the AFL-CIO released the following statement:

Richard_Trumka“The AFL-CIO applauds the Senate Democrats for pulling together this broad legislative package to support domestic manufacturing. This is an example of the results-oriented approach Congress should be taking to invest in growth and create jobs, rather than engaging in divisive ideological campaigns.

We strongly support many of the themes that run through these bills, including action on currency manipulation and evasion of import duties, measures to increase the reshoring of production, more resources for skills and training, improved access to capital, help for start-ups, and domestic content requirements for government purchases.

A revival of the manufacturing sector is a crucial element for restoring balance to our economy by creating middle-class jobs. The manufacturing sector fosters innovation and has large spillover effects, making it an engine that can pull the whole economy forward. This has to be a top-level goal if we are to put the economy back on track.

We look forward to working with the Senate to enact much of this legislation. The manufacturing sector in the United States has finally begun to heal, but we must create the conditions for a long-term recovery. A comprehensive approach like this one can move us a long way in that direction.”

Expand Social Security, Don’t Cut It

Recently Richard Kirsch posted an article on The Next New Deal website.  The article ‘Block a Grand Bargain with Bold Progressive Solutions to and Medicare’ warns of what seniors and progressives have feared for a while cuts to Social Security and Medicare.

During the campaign season almost every politician said they would vote to protect Social Security and Medicare.  As a political observer it is political suicide to come right out and say you want to cut benefits to millions of seniors.

Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history.
Dwight D. Eisenhower

In spite of opposing cuts to Social Security on the campaign trail, President Obama is in favor of making changes to it.

“To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.”
PRESIDENT BARACK OBAMA IN THE STATE OF THE UNION ADDRESS, JANUARY 25, 2011

Republican leadership understands how Social Security works.

The money that goes into Social Security is not the government’s money. It’s your money. You paid for it.”Mitch McConnell

The major issue that seems to be pushing changes to Social Security comes from this widely held myth that ‘Social Security is bankrupting America’.  However the truth is quite the opposite and Senator Bernie Sanders knows it.

“Social Security has nothing to do with the deficit.” —Bernie Sanders

Now that the government is back open with a temporary band-aid (Continuing Resolution) this idea of a ‘grand bargain’ is once again alive.  As part of the Continuing Resolution passed by Congress it mandated that both houses of Congress would meet in a ‘committee of conference’ and hammer out a real long-term budget.   This round of budget negotiations opens up so many different cans of worms.  There is the forced budget cuts known as the Sequester, reforms to ‘entitlements’ (Social Security, Medicare), the Keystone Pipeline, immigration, and many more.

The idea of a grand bargain needs very careful treatment. As Kirsch said in his post, progressives should to go on the offense when it comes to Social Security.

By putting forward simple, broadly popular, progressive proposals that actually enhance benefits and add money to Social Security and Medicare, we enable Democratic allies in Congress to set the agenda and counter claims that they are not taking action to address the real solvency problems. And we also help set the agenda for the inevitable future deal to address both programs’ financing. 

Here are two simple, popular, powerful proposals. On Social Security, make the richest 5% people pay into Social Security on all their earnings, just like 95% of workers now do. Use the new revenue to both boost Social Security benefits – which are too low – and extend the solvency of the Social Security Trust fund. On Medicare, slash the cost of prescription drug prices just like the Veterans Administration and all our global competitors do, saving hundreds of billions of dollars in the next decade.” (Emphasis added)

Finally someone has a solution that ends this debate about Social Security that fixes it for decades.  By eliminating the cap on income for Social Security, millions of dollars would be added to the trust fund.  This would allow Congress to strengthen Social Security so much that the trust fund would have “enough money to pay all benefits from 2033 to 2049”.

Changes that would strengthen Social Security and provide better benefits to seniors have already been submitted to both houses of Congress (H.R.3118, S.567). Kirsch says this “would boost benefits in two ways: changing the way benefits are calculated (designed to particularly help low-and-moderate income seniors) and changing the inflation adjuster Social Security uses to the CPI-E, which more accurately captures what seniors pay. This is exactly the opposite of the chained CPI proposed by President Obama, which undercounts what seniors typically purchase.”

Congresswoman Carol Shea-Porter (D-NH) has been a strong advocate for strengthening Social Security.  In a recent email newsletter she stated why protecting Social Security is so important.

“More than one-third of Granite Staters over 65 would be living in poverty if they did not receive Social Security. And it’s not just seniors who benefit from this program.  Over one-third of beneficiaries in New Hampshire are spouses and families of workers who become disabled or die prematurely, including over 20,000 children.”

The other earned benefit that people on the hill like to talk about is Medicare.  Kirsch also suggests that we enlarge the Medicare program to help everyone.

Using its (Medicare’s) enormous purchasing power to get the same kind of low drug prices paid by the Veterans Administration or every other country on the globe. While estimates of the savings vary, they clearly would be substantial, tens of billions each year, much more than the cuts to Medicare included in the President’s budget.”

Again this type of solution has already been proposed in Congress.  Kirsch goes on to say that this solution “would work to make the point that we can strengthen Medicare by stopping the drug companies from ripping off the country”.

While we stand with the President on most legislative issues, we need to be cautious as we move forward with changes to Social Security and Medicare.  We cannot accept any type of cuts to earned benefits or quick fixes that add only a few years to the programs.  We need strong straightforward solutions that push to increase benefits, not erode them.   We need to stay united in our efforts to protect Social Security and Medicare for our seniors now to ensure that the program is there when the next generation retires.

Your Tax Dollars Are Subsidizing Low Wages

For years now there has been a massive political debate between the ‘free market, reduce government, end social programs’ politicians on the right and the ‘raise the minimum wage, strengthen workers rights, and bring jobs back from overseas’ politicians on the left.  Both sides stand strong on their positions — and we are caught in the middle.

Everyone is fed up with Congress right now.  Businesses do not trust the government and are hoarding their money instead of re-investing.  Citizens cannot trust Congress because they keep jumping from crisis to crisis, threating to destroy the economic recovery every 6-8 weeks.

I have found something that both sides should agree with, but they won’t.  If I told you how to lift millions of working families out of poverty AND reduce the government’s obligations for programs like welfare and food stamps, would you support that?   The answer is simply to raise the minimum wage.

Before you go running off hear me out, because like I said before: we can reduce the number of people receiving public assistance and put people on the road out of poverty.

Fast Food Workforce (1-1)

Image from NELP

Right now the federal minimum wage is $7.25.  There are a dozen states that have higher minimum wages, but the majority still go by the federal standard.  The biggest abusers of the minimum wage law are major corporations, especially fast-food corporations.  McDonald’s, Burger King, Wendy’s, and even my beloved Dunkin’ Donuts are the biggest abusers of minimum wage.  It is estimated that there are 2.25 million Americans who are working for the top 10 fast-food restaurants alone.

Increasing the minimum wage would allow these 2.25 million Americans to eventually lift themselves out of poverty. This would also boost the economy because these people would have money to spend again: money to go out for dinner, see a movie or buy a new car.  All of these things would be a benefit to our stagnant economy.  Of course we already knew that.

The people who oppose raising the minimum wage do so because they want to ‘let the free market decide’ what employers should pay workers.  Under this theory, if a starving man is willing to work for $1.00 an hour, employers should be able to pay him $1.00 an hour, right?  Wrong!

Our country has – historically – valued human life highly enough that we don’t let people starve to death.  Do the math: if a person worked for $1.00 hour, he would not be able to make enough money to feed himself.  This is where public assistance programs come in.  Welfare (TANF), food stamps (SNAP), WIC, reduced-cost school lunches and other programs provide some food to low-income people.

Those same politicians who oppose raising the minimum wage also scream that the government is giving out too much money for these types of social programs.  They are right!  But the way to reduce spending on food assistance is NOT to start starving low-income families.

Fast Food Workers public assistance (1-2)

Image from NELP

Remember those top 10 fast-food corporations that I mentioned before — the ones that employ over 2 million Americans alone?  Those corporations are supplementing their profits with your tax dollars, and I bet you did not even know it.

Last year those 10 fast-food corporations paid their workers so little that many of them had to rely on government assistance programs to survive.   Last year, that cost the U.S. taxpayers $3.8 billion dollars (that is with a B) in government assistance.  McDonald’s alone cost the taxpayers $1.2 billion dollars in government assistance programs.

Fast Food Profits adn CEO pay (1-3)

Image from NELP

Ensuring that needy families do not starve is part of being an American.  We all give a little and help those people on the bottom.  The problem is that we, the taxpayers, are subsidizing the profits of these massive corporations.   Last year these top 10 corporations made a combined $7.4 billion dollars in profit.  That means: after they paid for the buildings, the workers, the food, the free toys, promotional advertising, and stock buybacks, — they still made $7.4 billion dollars in profit.

McDonald;s led the way, raking in nearly $5.4 billion in profits just for that one company.

Meanwhile, today it became clear that McDonald’s actually SENDS its workers to public assistance programs, rather than paying them a fair wage.

So I am paying more in taxes to help feed the ever growing population of working poor, while their employers are making billions in profits.   That does not seem right to me.  As I said before we can reduce the number of people who are living in poverty and reduce the output of money from government assistance programs by doing one simple thing.  RAISE THE MINIMUM WAGE.

By raising the minimum wage, people will have their own money to buy food and housing — and they wouldn’t be forced to rely on taxpayer-funded social programs.  It is a win for liberals and tea-partiers alike.

(References to the images from the National Employment Law Project)

Related Posts:

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The Outrageous Truth About A $12 Minimum Wage And Your Grocery Bill.

The real story behind Congressional dysfunction

Take five minutes and watch…

Maryland Representative Chris Van Hollen explains how Speaker Boehner bends to the will of the Tea Party Caucus — and keeps the House from voting on bills that would pass, if members were just allowed to vote.

Just one example:

If the Speaker of the House brought up the comprehensive immigration bill – that has already passed the Senate – if he brought that up for a vote in the House today, it would pass.  We could have it on the President’s desk by this afternoon.

 

Unions Praise The End Of The Government Shutdown That Should Never Have Happened.

For the last two weeks federal workers across the country have been waiting for Congress to take action and reopen the government.  While the government shutdown is over, union leaders appear guarded.  They are all happy to see the end of the Government shutdown and make a plea to never let this happen again.

American Federation of Government Employees National President J. David Cox Sr. today issued the following statement:

“On behalf of the 670,000 federal employees represented by AFGE, I am thrilled that a deal was reached to put our members back to work and restore the services American taxpayers count on. But make no mistake about it, this is not a happy day for federal employees. The Senate deal is simply a brief reprieve from the suffering federal employees and their families have endured for the past sixteen days. We cannot accept another government shutdown in just a few short weeks; federal workers and the public they serve have suffered enough….”

“….I am glad that lawmakers were able to come together to end this crisis without giving in to a radical group of hostage takers. Particular credit goes to Senate Majority Leader Harry Reid, who exhibited extraordinary leadership during this trying time and held firm to his convictions.  But those who perpetrated this inexcusable catastrophe on the American people should be turned out of office in 2014.

“In the coming weeks AFGE will fight all attempts to cut federal pay, retirement, or health care as Congress hashes out FY 14 spending levels. Federal employees are nobody’s bargaining chip. Our message to lawmakers is clear: No more cuts, no more furloughs, no more sacrifices on the backs of hardworking Americans. We will also fight to protect Social Security and Medicare benefits from any reductions, including cuts from the so-called chained CPI.”

AFSCME President Lee Saunders stated:

“For two weeks, Republican congressional leaders were derelict in their duty. They allowed a fringe element in their party – one vastly out of step with American values and priorities — to shut our government down and bring the country to the brink of defaulting on its financial obligations. Their actions demonstrated a callous disregard for this nation’s citizens, businesses and the economy.

The agreement reached is by no means perfect because it continues the Draconian cuts in public services until the next deadline in January. But after 16 days, this shutdown ordeal has come to an end. It should never happen again. The hardworking women and men of this country deserve better.” Via Facebook

Richard Trumka, President of the AFL-CIO released a statement after the debt deal was announced.

Finally — after more than two weeks of government shutdown, with hundreds of thousands of Americans out of work and billions of dollars in avoidable losses — Republican leaders have stood down.  While it is good news that we have avoided a crisis, we all know that it should never have happened.  No party or faction inside a party should hold our economy hostage to extract political gains.   We commend President Obama, Majority Leader Reid, and the leadership of the Democratic party for standing firm and resisting extortion….

“….We desperately need to create an economy that works for all.  The across the board sequester cuts hamper that effort and must be repealed.  We need to focus on big ideas and the future – rather than getting bogged down in petty political battles.

Terry O’Sullivan, General President of LIUNA – the Laborers’ International Union of North America – issued the following statement:

“Thousands of LIUNA workers who have been furloughed due to the Republican government shutdown can breathe a brief sigh of relief. But the mere functioning of our democracy won’t be enough to avoid the economic brinksmanship we’ve witnessed over the past several weeks from those on the Tea Party fringe. Rebuilding America’s future will take more leaders with the moral courage to rebuild American bipartisanship. The partisan circus has to end because our tax dollars pay for both Republicans and Democrats to do their job of passing legislation that invests in our crumbling roads, bridges and waterways and reforms our broken immigration system, so that every worker has a chance to realize the American Dream.”

Even Congressional members chastised the GOP in holding the country hostage and forcing the government shutdown.  The shutdown cost taxpayers billions, all for nothing.

Congresswoman Carol Shea-Porter stated:

“The shutdown cost our economy $24 billion, and it costs thousands of Americans access to vital government services. We cannot continue to govern by crisis. It hurts small businesses, working families, and America’s economic standing in the world.

“Going forward, Congress must work out a long-term budget to reduce the deficit, invest in job creation, and strengthen the middle class. I am hopeful that cooler heads will prevail in that debate and that our country will benefit from more common sense.”

New Hampshire Governor Maggie Hassan echoed Congresswoman Shea-Porter’s sentiments.

“While I am pleased that Congress finally reached an agreement to end the federal government shutdown and avert a catastrophic default, this entire episode was reckless and unnecessary, and it caused real harm to New Hampshire’s families and economy. 

“With today’s agreement, there are new deadlines in place, but the days of Washington operating by showdown must end. The uncertainty caused by each successive confrontation hurts our economy and puts senseless strain on families.”

Even Senator Ayotte (R-NH) agrees that we need to stop jumping from crisis to crisis. 

Americans are rightfully tired and frustrated, and we owe it to them to stop governing by crisis and start working together to solve problems.”
(From the Union Leader)

This debit ceiling deal means the total economic collapse was avoided.  The deal also means that federal workers will return to work immediately and will receive back pay.  There is also another little piece of good news for federal workers.

Federal workers will received a “1 percent pay raise beginning Jan. 1.  It would be the first across-the-board pay raise for feds since 2010. ”

Where do we go from here? Do we need to start a new countdown clock till this continuing resolution expires in January and we hit the debt ceiling again in February?  This type of legislating from crisis to crisis must end.  This is one of the reasons why our national economy is still struggling to recover.  Every time things start moving forward, up pops another crisis.

The GOP is in for a rude awakening in 2014 if they do not start working with Democrats in the House and Senate.  The American people are pissed off at Congress at a whole but most of the blame falls squarely on the Republican leadership in the House.

 

Only 89 Days (or less) till the next crisis.

Labor Rights Are Human Rights (Blog Action Day 2013)

Today is ‘Blog Action Day’.  Once a year thousands of bloggers around the world come together to bring awareness to one common theme in their own special way.  This year the Blog Action Day is focused on ‘human rights’.   Below is my post for this year’s event.

 

Labor Rights Are Human Rights

Everyone should have the right to work in a safe place. Safety in the workplace is one of the biggest issues facing workers around the world.  There are too many examples of workers being hurt or killed on the job.  Unsafe working conditions are just one of the reasons workers have always turned to unions.

In the early days of the industrial revolution corporations were only focused on one thing, profits.  Many of these jobs were in the factories and mills, producing textiles.  They would pack hundreds people in rooms with little to no space to move.  These workers, mostly women and children, would be forced to work for 16 hours a day.

The perfect example of this was the Triangle Shirtwaist Factory in New York City. March 25th of 1911 started like any other day for hundreds of women at the Triangle Shirtwaist factory.  Over 500 workers piled in to work early in the morning and began their 16-hour day.

Around 4pm a fire broke out on the sixth floor of the Asch building. The seventh floor was the main manufacturing floor where the majority of the workers were located.  The sixth floor was used to store rolls of fabric.  It did not take long for the entire sixth floor to be engulfed in flames.

Triangle FireTo protect themselves from theft the mill owners decided to lock all the exits on the manufacturing floor.  This prevented the workers from being able to escape the rapidly growing fire.  To escape the fire, workers jumped from seventh floor windows.  Many of them knew they would probably not survive the fall, but they knew they would never survive the fire.

When the fire was finally put out, 146 people lost their lives in this devastating fire. 

Workers Protest after Triangle Shirtwaist Fire

Workers Protest after Triangle Shirtwaist Fire

After the fire, workers in other textile mills joined together with union organizers to fight for better safety regulations.  These regulations mandated maximum room occupancy, fire extinguishers, and escape plans.

Many people know the story of the Triangle Shirtwaist fire.  In the United States it became a driving force for labor rights and workplace safety for decades.  Unfortunately the United States cannot regulate other companies.

Hasan Raza/Associated Press

Hasan Raza/Associated Press

In November of 2012 over 100 workers lost their lives in a textile factory in Bangladesh. The fire was eerily similar to the Triangle fire.  Workers were trapped inside with no way to escape.   Fire inspectors actually found that none of the emergency exits opened to the outside.

Once again we see that corporations are more interested in profits than worker’s safety.  It begs the question, what is a human’s life worth?

This is where labor and human rights merge.  Labor has always put workers safety above all else.   Thanks to labor we now have regulations and an entire government agency (OSHA) devoted to protecting workers.

We have much more to do.  Organizations like Global Labor and Human Rights Organization are focused protecting human rights through strong labor rights.

“As workers across the developing world fight for their right to work in dignity, in healthy and safe workplaces, to earn a living wage and to organize independent unions, the Institute will provide solidarity and international visibility to support their efforts, and we will continue to demand that corporations be held legally accountable to respect core internationally recognized worker rights standards.”
From the Global Labor and Human Rights

Workers rights are human rights. Stronger organized labor will lead to higher regard for human rights in the workplace.

 

For more information about Blog Action Day click here

Orlando Health Deploys Anti-Union Tactics Bringing Workers Closer Together

Nurses and Respiratory Therapists from Orlando Hospitals deliver petitions to Sherrie Sitarik. (Sarah Collins second from left, Sarah Lasher, third from left)

Nurses and Respiratory Therapists from Orlando Hospitals deliver petitions to Sherrie Sitarik. (Sarah Collins second from left, Sarah Lasher, third from left)

A couple of months ago Sherrie Sitarik the CEO of Orlando Health stated that hospital worker’s differentials would be cut in an effort to save on operating costs.  In a recent interview on WFTV, Sitarik said the cut was to bring differentials more in line with other area hospitals.   This is just a corporate excuse to push workers down.

The workers are not buying it.  Sarah Lasher a nurse in one of Orlando Health’s hospitals is looking to organize the workers with National Nurses United.  NNU is one of the unions that specialize in representing workers in the medical field.   Sarah and NNU have quickly gained support from other workers at Orlando Health who are fed up with Sitarik’s race to the bottom.

As you would expect, Sitarik does not want workers to organize and form a union.  Sitarik told WFTV, “I really don’t believe we need a third party getting involved in relationships that over many years have allowed us to have the success we’ve had.”

There are two things wrong with that statement.

  1. A union is not a third party.  It is workers speaking with one voice.  The workers are the union, and the union speaks for the workers.
  2. If the relationship is so good, why is Orlando Health slashing the take home pay of workers without any discussion with the employees? If the workers were truly happy and treated well they would not be forming a union.

After the announcement that workers were in the process of forming a union, management deployed their anti-union tactics.

WFTV reports: “Eyewitness News obtained an email that suggests what hospital security officers should do if they hear nurses at Orlando Health talking about forming a union. 

The email, “Union Training for Security Officers,” was sent out by the hospital’s head of security.

In part, it instructs security officers to “immediately alert their supervisor if they see or hear any potentially inappropriate collective bargaining activity while on duty.”

Sarah Lasher told WFTV, “We’re entitled to do so, and does that mean that we’re going to have security strolling by our tables while we’re eating and listening to what we say? This concerns me.”

Sarah Collins, the creator of the original petition to stop the pay cuts told the NH Labor News, “We will not be swayed by the Organization’s anti-union pursuits. We know our rights, and we are going to fight for them.

The right to organize and form a union is protected by the National Labor Relations Act.   After nurses found out about the leaked email, they sent their own letter to CEO Sitarik notifying her of the illegal activities being conducted by her management staff.

“We appreciate your commitment to our rights and for us to have full information as we make our decisions with regards to collective bargaining.  You may not know that hospital supervisors are ordering us not to discuss forming a union or to talk about collective bargaining.  Additionally, the supervisors are confiscating and destroying our reading materials, and directing security to spy on us and report our conversations.  A good start toward respecting our rights would be for you to order that these violations be stopped.

Sarah Lasher explained in more detail how workers rights to organize are being crushed by management officials.

They have changed their solicitation policy TWICE in the past month and the new one states we are not allowed to visit our campus we work at unless we are scheduled to work, have a doctor’s appointment, or have a class. 

We have never been denied access before and that is unacceptable.”

This is contrary to what the law clearly states, that workers are allowed to organized while off-duty or on break.

Sarah Lasher did say that she spoke with some mangers from the Human Resources department.  Lasher questioned why they were not allowed on campus during off-duty times.  One manager, Michelle Radcliffe responded by asking another question. “Why would you need to come up here if you were not working or didn’t have an appointment or class?” Lasher responded, “to put up my union posters in appropriate areas.” Radcliffe ended the conversation by stating, “well its just not safe.

It is not safe for a trained professional to walk around the campus of the hospital they work at? The truth is they do not want workers posting pro-union materials.

We have the right to organize and we are exercising that right,” said Sarah Collins.

This is why it is important to know your rights.  You have the to form a union, and collectively bargain with your employer.  These types of anti-union activities are far too common and the more people that know their rights the easier it will be to stop this type of activity.
(Click here to see your rights to form a union in your workplace)

Private Prisons: Your Tax Dollars Hard At Work Lining The Corporation’s Pockets

Prison bars lockup handsFor many years our state and local governments have been looking for ways to save money in their budgets. Some have turned to privatization as a way to reduce cost.  Privatization ultimately ends up costing taxpayers more money in the long run no matter how much they save up front.  The private prison industry is no different.

Private prisons have been popping up all across the country. They offer to build a new prison and then lease it back to the state.  Also part of this agreement is that the state will pay the private prison company to operate the prison.

The initial savings come from the fact that the private prison company coughs up some of the money to cover the cost of constructing a new building.  Many state’s budgets are so thin that they cannot afford to do major investments like building a new prison.  This may save the taxpayers money in the actual construction, but the private prison industry makes their money back and more on the occupancy of the prison.

In a new report released yesterday, Criminal: How Lockup Quotas and “Low-Crime Taxes” Guarantee Profits for Private Prison Corporations,” we see exactly how private prisons are actually taking extra money from the taxpayers.

The study documents the shocking prevalence of contract language between private prison companies and state and local governments that either guarantees prison occupancy rates (“lockup quotas”) or forces taxpayers to pay for empty beds if the prison population falls due to lower crime rates or other factors (“low-crime taxes”).

That’s right, you are paying a corporation for empty beds in private prisons.

Nationally we all have been working to reduce the number of prisoners in our penal system.  Reducing the number of inmates would also help reduce our state budgets, right? Wrong.  With ‘Lockup Quotas’ it does not matter how many people are in the prison, the corporation still gets a minimum fee.

In The Public Interest, who released the above report, found “nearly two-thirds (65 percent) include occupancy guarantees and force taxpayers to pay for empty prison beds if the lockup quota is not met.”

ITPI research also found that “lockup quotas in private prison contracts range between 80 percent and 100 percent; 90 percent is the most frequent occupancy guarantee requirement. Arizona, Louisiana, Oklahoma and Virginia have the highest occupancy guarantee requirements, with quotas requiring between 95 percent and 100 percent occupancy.”

Image from ITPI Report

Image from ITPI Report

Donald Cohen, Executive Director of ITPI stated: “Private prison companies are gaming the system to guarantee themselves profits at the expense of taxpayers and, worst of all, at the expense of people’s freedom.  Governments should cease working with this corrupt industry and reclaim public control of corrections.”

Alex Friedmann, Managing Editor of Prison Legal News, a project of the Human Rights Defense Center stated: “As a private prison expert who began researching the industry while incarcerated in a for-profit prison, I can tell you firsthand that private prison companies are profitable only because they are ethically bankrupt, with taxpayers footing the bill.”

You can read ITPU full report here.

The story does about the private prison industry does not stop there.  One of the largest private prison corporations, Corrections Corporation of America (CCA), uses inmates as slave labor.   Forcing inmates to work for as low as $.50 an hour.

Arizona inmates working for private agricultural companies are paid a “whopping fee” of “more than 50 cents an hour.”  Read “How US prison labour pads corporate profits at taxpayers’ expense” in The Guardian here.

Liz Iacobucci talked about these atrocities before in the NH Labor News post, “Another thing that went wrong in the Bush Economy.”  That post describes how inmates in Arizona are forced to work for $2.00 an hour while CCA takes 30% to offset their incarceration costs and the state takes another 30% for legal costs.  That means inmates are being forced to work for about $.80 cents and hour.   Do you think that CCA gives that 30% back to the state to reduce the taxpayer cost of incarceration?

What do you do with an entire prison full of slave labor; you sell it to the highest bidder.  During the G.W. Bush administration the Department of Justice teamed up with the National Corrections Industry Association to promote this idea.  They even produced a recruitment video (circa 2004) to draw manufactures to set up shop in the prisons.

Industry spokesmen describe the program as a “win-win” – but that’s from their perspective.

“I asked an NCIA spokesperson how private companies can get away with what could reasonably be described as forced labor. He explained that the PIE program classifies certain work functions as a ‘service’ rather than an actual ‘job’, and therefore is not subject to [restrictions in a 1979 federal law]. Conveniently, then, the backbreaking work of picking crops in the blistering sun counts as a ‘service’, so prisoners can be paid even less than the immigrants who have traditionally performed this work.”

It is no wonder that CCA spent over “$12 million dollars between 2002 and 2012 lobbying for policies that protect their bottom line and keep pro-privatization politicians in office”.  The AP reports, “the industry’s giants — Corrections Corporation of America (CCA), The GEO Group, and Management and Training Corp. — have spent at least $45 million combined on campaign donations and lobbyists at the state and federal level in the last decade.”

The private prison industry is very lucrative for those at the top.  CCA brought in $178 million in 2012 and GEO brought in $78 million.  Over 40% of CCA’s total revenue comes from federal contracts. That is your tax dollars lining the pockets of these companies.

It is obvious to see that the private prison industry is a loss for taxpayers.  We are overpaying for services with ‘lockup quotas’, while they collect massive profits from slave labor camps inside the prisons.

As fiscally responsible taxpayers why would we continue to let our tax dollars fuel this corporate machine?

(Related article from AATTP “Watch The Video For-Profit Prison Corporations Don’t Want You To See!“)

 

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