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103 years later: profits are STILL more important than people

triangle_shirtwaist

Cartoon refers to the Triangle fire and depicts a woman weeping over a grave, and asks the reader: "How soon will they be all forgotten?"Today marks the 103rd anniversary of the Triangle Shirtwaist Factory fire, when 146 garment workers were trapped behind locked doors.  Some of the young women burned to death; others died of smoke inhalation; still others jumped out of windows to certain death.

The good news is: this year even some mainstream media outlets are remembering the anniversary.

The bad news is: workers are still dying on the jobBangladeshChina … Pakistan … Nigeria… Italy

… even, still, here in the United States.  About 150 American workers die each day from workplace accidents or occupational illness.  (Yes, you did read that right: 150 each day.  But since they don’t die in the same place, from the same thing, these deaths don’t make the headlines.)

When will we stop thinking of profit margins as more important than people?

[Be warned: this video is graphic and may be disturbing]

Is Detroit REALLY “broke”? Because The Math Does Not Add Up

Louis-Philippe Duc d' Orleans Saluting His Army on the Battlefield

Louis-Philippe Duc d' Orleans Saluting His Army on the BattlefieldCan’t help wondering about this scenario.

The City of Detroit owns one of the finest art museums in the world.  On Wednesday, Christie’s auction house released its appraisal of… just 5% of Detroit’s artwork.  According to Christie’s, that small fraction of the collection is worth somewhere between $452 and $866 million.  Earlier, outside experts had given a ballpark estimate of $2.5 billion – for just 38 of the museum’s 66,000 pieces.

But Detroit can’t afford to pay its retirees’ pensions?

Far more troubling is the fact that the city apparently didn’t seek federal grant money before seeking bankruptcy.

Imagine yourself in the shoes of Kevyn Orr, the “Emergency Manager” that Governor Rick Snyder appointed back in March.  If YOU were walking into a place that was in fiscal trouble, wouldn’t you look around for revenues?  (Anybody else remember “Mediscam”?)

Yeah, well, that’s apparently NOT what Kevyn Orr did.

Back in September, federal officials identified more than $300 million in grant monies that Detroit was eligible for… but somehow… hadn’t gotten.

Democratic  Sen. Carl Levin: “There are dozens and dozens of programs available – some they haven’t applied for… some have been granted and are simply sitting there waiting for the city to do what they need to be doing.”

Yep, that’s what he said: “simply sitting there, waiting for the city” (which is now headed by Emergency Manager Kevyn Orr) to do what needs to be done.

Think about all the press stories you’ve seen, about Detroit’s financial situation.  Then look at the money that was “simply sitting there” waiting for federal officials to point it out:

  • Public safety concerns? Turns out there was $28 million in federal money available to hire police and firefighters, purchase equipment and pay for programs.  Plus about another $2 million available from private foundations.
  • Public transportation issues?  There was more than $130 million in federal money to repair buses, install security cameras and expand service to areas outside the city.  Plus another $3.3 million in private foundation monies.
  • Neighborhood blight?  More than $85 million in federal money to rehab (or demolish) housing units, clean up brownfields and otherwise fight blight.  Plus another $13 million from private foundations.
  • Bleak future?  Federal officials identified another $32 million in private grant monies to help Detroit plan for its future, upgrade its technology, train its residents and bring retail and creative industries back to the city.

Now, think again about Mediscam.  In New Hampshire, public officials faced with fiscal problems got (ahem) “creative” in order to maximize federal funds.

But in Detroit, Emergency Manager Kevyn Orr left more than $300 million in grant monies… sitting there.

Now, let’s look one more level down.

All the press reports about Detroit focus on that “$18 billion” of total debt.  That includes not just pensions and retiree health care liabilities, but also all the usual long term bonds that large municipalities have (about $3.7 trillion total, nationwide).

In a bankruptcy proceeding, the question shouldn’t be “How much does Detroit owe?”  The question SHOULD be “Can Detroit afford to pay its bills?”

And – with different political leadership – the answer to that question could easily be “yes”.

At the end of each fiscal year, public entities prepare a “Combined Annual Financial Report” that provides useful information about their finances.  Detroit hasn’t released its 2013 CAFR yet (even though the fiscal year ended more than five months ago).  But here’s what Detroit’s auditors said, in their 2012 Comprehensive Annual Financial Report:  “The City has an accumulated unassigned deficit in the General Fund of $326.6 million as of June 30, 2012, which has resulted from operating deficits over the last several years.”

So… as I do the math… those operating deficits have been accumulating over several years… but just ONE year’s worth of those grants (which have been “just sitting there”)… could almost completely offset that accumulated deficit.

Whoa… without even touching that art collection?  (And without restoring state revenue-sharing that was cut under Governor Rick Snyder?)

Maybe it’s just me… but I can’t help suspecting there is something else going on here, OTHER than fixing Detroit’s finances.

 

 

Labor Rights Are Human Rights (Blog Action Day 2013)

Triangle Fire

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

Who has rights when Detroit goes to court today?

constitution

constitutionSo… you think you’ve got rights?  Right there, written in the Constitution?

Think again.

Today everybody heads to court for the first hearing in the Detroit bankruptcy filing.  And I’m guessing it’s about to get really scary.  I’m guessing that one of the questions that will be posed is: whether Detroit workers’ Constitutional rights actually matter during a Chapter 9 bankruptcy.

Here’s the thing: yesterday, the Michigan Court of Appeals halted all state court action on the matter – including the lawsuit challenging the bankruptcy filing on Constitutional grounds.

Here’s the second thing:  there is apparently a legal theory that

Under Chapter 9, a municipality has the clear authority to modify, assume or reject executory contracts, and these actions will not be subject to constitutional challenges outside of the bankruptcy proceeding while adjustment takes place.

Go back and read that again.  “These actions will not be subject to constitutional challenges outside of the bankruptcy proceedings.”

And that category “executory contracts” could include… oh, say… collective bargaining agreements and pension obligations.  (Yes, I’m thinking maybe it even includes those pension obligations written into the Michigan Constitution, back in 1963.)

And here’s the third thing: legal experts seem to agree that, under Chapter 9 bankruptcy proceedings, the federal court doesn’t have much say over what the state and municipality decide to do.  Here that is, in lawyer-language:

A bankruptcy court’s power is greatly limited under chapter 9 in deference to the Tenth Amendment of the U.S. Constitution and principles of federalism that reserve to the states sovereignty over their own internal affairs.  Accordingly, the state maintains its powers to control municipalities (subject to specific Bankruptcy Code provisions). The bankruptcy court cannot interfere with the political or governmental powers, property, revenues or use or enjoyment of income-producing property of the municipality.

So, here’s my huge question: what happens if neither the federal court nor the state court has jurisdiction to enforce the constitutional rights of Detroit workers?

Is it possible that the state of Michigan – through its Governor, Rick Snyder – really does have an unfettered ability to reject constitutionally-protected pension obligations?

Yep, looks to me like that would be a pretty scary legal theory, that I’m guessing they will start to test today.

—–

Speaking of scary…

Remember Governor Rick Snyder’s Very Busy December?  (He pushed through a replacement Emergency Manager law, and then days later he pushed through a Right to Work law?  Merry Christmas, everyone!)

Also in December… The Michigan State University Extension program issued a very interesting report:  “Chapter 9 Bankruptcy: Simulation Exercise.”  You can read it here.

It would look an awful lot like a blueprint-for-bankruptcy, to me, if not for the disclaimer: “It is not intended to provide legal or financial advice or counsel and should not be construed as such to any of its readers. If legal or financial advice is needed, the appropriate licensed professional should be contacted.”

—–

And here’s a disclaimer of my own: I AM NOT A LAWYER.  I could be totally misreading things.

Maybe Gov. Snyder really isn’t going to try to use a legal loophole to get around the rights of Detroit workers.

Maybe I’m just being hypersensitive, what with all the recent attacks on workers and government programs.  (Read today’s New York Times “House G.O.P. Sets New Offensive” here.)

Maybe I’m wrong about all this.

I really hope so.

—–
UPDATE: Breaking News from Detroit.
(Reuters) — Lawyers for the city of Detroit on Wednesday asked a U.S. bankruptcy judge to set aside all other lawsuits seeking to block the city’s petition for bankruptcy protection, arguing that federal bankruptcy court is the only venue to debate the matter.
—–

Read my Friday blog post about Detroit here.

Read Monday’s post here.

Read yesterday’s post here.

Detroit’s Pension Systems: not ‘unaffordable’, just battered by Wall Street

blaming_unions

blaming_unionsNo, no, no, no, no.  Whatever happened to checking the facts?  Asking the tough questions? Digging a little deeper?

Today, at least one Main Street Media pundit – who is supposed to have special understanding of economics – offered his version of what really happened in Detroit.  From his perspective, it’s all the fault of “the city fathers” who – he says – negotiated unsustainable retirement benefits into union contracts rather than paying their employees adequate wages over all these years.

Oooh, wow – can you feel the weight being pushed back onto our shoulders?  Everybody still wants to blame union contracts.  (Read Amy Traub’s excellent 2010 column “Your Mailman Didn’t Make the Economy Collapse” here.)

Check the facts, look a little deeper, and… wow!  There’s the real truth.  As recently as June 30, 2008, Detroit’s retirement systems were fully funded.  Well, technically, the general retirement system was only 99% funded – but the Group II Police/Fire system had a 10% surplus.

Let’s see if we can remember that far back… what was going on in 2008?!?

Oh, yeah.  Wall Street meltdown.  During the second major recession of George W. Bush’s presidency.   (Did you forget about his first recession?  It started in March 2001… and he tried to cure it with tax cuts.  But nobody paid much attention to the economy after 9/11.)

Here’s a look at the numbers, which I’ve taken straight from the Detroit retirement systems’ annual reports (available at http://www.rscd.org/annual.htm and http://www.pfrsdetroit.org/annual-report.aspx).

Detroit_assetsWhoa!  Take a look at those fund balance dips, after the recessions of 2001 and 2008.  Notice that they’re not very sharp.  That’s because retirement fund actuaries use an accounting technique called “smoothing” when they value assets.  When there is a sharp drop in values, the actuaries amortize that change over a period of several years.  (They do the same thing here at the NH Retirement System.)

So you don’t see the full impact of the 2001 recession until 2004.

Now,let’s try to figure out just how “broke” the Detroit retirement systems really are.

Detroit_ratio Again, you need to pay attention to the actuaries’ math, here.  The funding ratio depends on how the actuaries calculate future liabilities.  And – at least recently – the actuarial assumptions they’ve used have been wildly unrealistic.  “Significant actuarial assumptions used include … projected salary increases of 4.0 percent per year, additional salary increases of [up to] 4.9 percent per year based on merit and/or longevity, and cost-of-living adjustments of 2.25 percent per year.”

Now, let’s look at what actually happened: for instance, last July, Detroit’s police unions took a 10% pay cut.

Gotta wonder how that funding ratio would look if the actuaries had figured future liabilities using that 10% pay cut, rather than all those imagined increases.

Yeah, actuaries can calculate numbers any way they want.

And politicians and pundits can keep spouting the “truth” as they imagine it, rather than how it actually is.  These days, they can win over all sorts of audiences, by blaming unions.  It’s a lot easier to blame unions than Wall Street.

Truth is, we saw the effects of the stock market crash here in New Hampshire, just like they did in Detroit.

As recently as 1999, the New Hampshire Retirement System was more than 100% funded.  But then the Trust Fund lost 10% of its value in the recession of 2001. 

It lost another 25% of its value in the 2008 recession.  In June 2007, before the Wall Street meltdown, the NH Retirement System had $5.9 billion in investments, including

•             $29.7 million of stock in Citigroup, Inc.
•             $23.5 million of stock in American International Group, Inc. (AIG)
•             $14.0 million of bonds issued by Federal Home Loan Mortgage Corp. (Freddie Mac)
•             $13 million of bonds issued by Federal National Mortgage Association (Fannie Mae)

Two years later, when the recession was in full force,

•             Citigroup stock had plunged to only about 6% of its former value
•             AIG stock was worth only about a penny on the dollar
•             Freddie Mac and Fannie Mae had both been placed into federal conservatorship

and the anti-government pundits started getting lots of headlines attacking public employees’ pensions.

Yeah, here in New Hampshire we understand what’s happening out there in Detroit.  All around the country, public employee unions are dealing with the exact same fallout from the Wall Street crash and the same “truth-or-rhetoric?” political opportunism.

There’s a reason why we talk about solidarity.

—–

Read my Friday blog post about Detroit here.

Read yesterday’s post here.

 

 

What happens in Detroit WON’T stay in Detroit.

8easysteps

8easystepsIt’s amazing, the stuff you can find on the Internet these days.

Step-by-step instructions for all sorts of things, including – oh, yeah – how public employers can relieve themselves of retirement obligations through the Chapter 9 bankruptcy process.  Like they’re trying to do in Detroit, right now.

And reading through Ice Miller’s description of the process – right here, if you’re interested – it sure doesn’t seem all that hard.

Ice Miller, by the way, is a nationwide law firm that has provided services to the New Hampshire Retirement System for years.   Here’s how they summarize the bankruptcy process that Michigan Governor Rick Snyder has just started:

“A proceeding under Chapter 9 is very different than under other chapters of the Bankruptcy Code.  [Under Chapter 9,] the court must determine whether the petition was properly filed and then, at the end of the case, must determine whether a plan for the adjustment of debts is confirmable. Between those two points, a bankruptcy court cannot require the sale of assets; does not oversee the use of funds; does not interfere with political or governmental powers; cannot require tax increases; and generally does not take an active role.”

Whoa.  Doesn’t look like there’s much protection for city workers, in that process.  And according to Ice Miller, during bankruptcy a public employer can:

  • try to reject their obligations under existing collective bargaining agreements;
  • try to reduce pension contributions and retirement benefits.


Which sounds pretty much like what they’re trying to do, out in Detroit right now.

Starting to feel a little queasy here?  Let’s look a little closer.

 

Will of the voters?

Yeah, right.  The “emergency financial manager” who filed Detroit’s bankruptcy petition last week was appointed under a law passed by the Republican-led state legislature in December 2012.  Trouble is, that law is almost identical to a law rejected by voters barely a month before, in a referendum vote.  (Whatever happened to democracy?)

And then there’s the timeline.

I’m not even going to try to figure out which chicken came before which egg.  The newest emergency manager law became effective in March.  The law firm Jones Day was awarded a $3.35 million contract as Detroit’s “restructuring counsel” in March.  Jones Day partner Kevyn Orr was named Detroit’s emergency financial manager in March.  (Or maybe by then he was a former partner? Attorney Orr resigned from the firm sometime in March.)  Different media reports give different dates;  and from this many miles away, it’s impossible to figure out what happened in what order.

And then there’s the law firm.

I’m human; I can’t help but sometimes judge a law firm by its clients.  And Jones Day’s client list includes Koch Industries, as well as Mitt Romney’s old firm, Bain Capital.

And then there’s the lawsuit, filed by Jones Day lawyers, challenging a ban on political contributions by foreign sources (including foreign corporations).  And then there’s the lawsuit, filed by Jones Day lawyers not long before last year’s election, challenging an Obama administration regulation regarding insurance coverage.   (Also can’t help but wonder at all the work this law firm is apparently doing for free!)

And then there’s the attorney.

According to his official bio, Attorney Orr worked for the FDIC’s Resolution Trust Corporation in the 1990s; and while there, his duties included “serving as the agency’s chief lawyer responsible for the agency’s participation in the Whitewater investigation.”  Yeah, you read that right: the Whitewater investigation.

Starting to think that maybe there’s politics involved here, somehow?

And then there’s the Governor.

Last December was a busy month for Gov. Rick Snyder.  Not only did he push through a new emergency manager law, to replace the one rescinded by voters, he also pushed through a Right to Work bill.  Read “GOP, Koch Brothers Sneak Attack Guts Labor Rights in Michigan” here.  (Yes, there’s the Koch brothers, again.)  He was so effective at pushing stuff through the Legislature that the Washington Post named him “The Scott Walker of 2014”.

And… oh, dear:  is there really a Rick Snyder for President Facebook page?

Got a headache yet?

The big trouble here is, whatever happens with Detroit – with its very expensive law firm, with its history of highly-political cases…

whatever happens in Detroit will set a legal precedent for other politicians and other employers who may want to relieve themselves of their obligations to public workers. Yesterday’s USA Today even has an interactive graphic; read “Detroit not alone under crushing pension obligations” here.

So… you think you’ve got retirement benefits? Think again.

That Ice Miller report has a state-by-state breakdown of the requirements to go through the Chapter 9 bankruptcy process.   Including a note that, when the report was published, Michigan didn’t have any law authorizing a municipality to declare bankruptcy.  Which it didn’t, until Governor Snyder and the Republican-led Legislature pushed through “The Local Financial Stability and Choice Act” last December… just days after pushing through the Right to Work bill.

If it’s happening in Detroit, it can happen almost anywhere.

Think you have union rights? What Happens if there’s no NLRB?

Got Union Rights?

Got Union Rights?Earlier today, a federal appeals court ruled that President Obama improperly appointed three members of the National Labor Relations Board in January 2012.  The Court ruled that the Senate was “in session” rather than “in recess” when President Obama made the appointments, because the Senate held “pro forma sessions” – some lasting less than a minute – during their 20-day holiday break.

The Justice Department had reviewed the issue a year ago and determined that the recess appointments were constitutional.  Similar cases are pending elsewhere in the country — and other appeals courts could rule differently.

NLRB Chairman Mark Gaston Pearce announced today that the Board “will continue to perform our statutory duties and issue decisions” until the question is finally resolved, most likely by the Supreme Court.

That’s probably not the short-term outcome expected by Senate Minority Leader Mitch McConnell and the 41 other GOP Senators who were part of today’s lawsuit.

Probably, those GOP Senators expected to simply put the NLRB out of business.  Here’s how:

  1. In 2010, the Supreme Court ruled that the Board must have at least three members to act – voiding almost 600 decisions that had been issued by the NLRB during the 27 months it had only two members.
  2. The Senate GOP has used the filibuster to block President Obama’s nominations to the NLRB, both before and after that Supreme Court decision.
  3. If today’s appeals court ruling is upheld, then the NLRB will be left with only one Senate-confirmed member — and therefore without any authority to act.  (That would also overturn the hundreds of NLRB decisions made since last January.)

What does that mean to the country, if the NLRB has no authority to act?  Here’s how the Washington Post described this scenario, a year ago:

Workers illegally fired for union organizing won’t be reinstated with back pay. Employers will be able to get away with interfering with union elections. Perhaps most important, employers won’t have to recognize unions despite a majority vote by workers. Without the board to enforce labor law, most companies will not voluntarily deal with unions.

One more time: the NLRB can’t act unless it has at least three members.  The GOP Senators in today’s lawsuit are trying to invalidate three of the current four members, reducing Board to only one member.  And at last report, “GOP senators, including Graham and McConnell, had vowed to block confirmation of any new NLRB nominees.”

Think you’ve got union rights? 

Read more about the GOP’s assault on labor rights in The Hill here.

The Cost of Cheap Clothing

Hasan Raza/Associated Press

 

Hasan Raza/Associated Press

More than 100 people have died in a fire at a nine-story garment factory outside Dhaka, Bangladesh.

Most of the workers who died were on the first and second floors and were killed, fire officials said, because none of the exits opened to the outside.

Sound familiar?  About a century ago, 146 garment workers were killed in the Triangle Shirtwaist Fire in New York City.  [This video includes images of a 2010 fire in a different Bangladesh garment factory. Be warned the video is graphic and may be disturbing]

The Bangladesh factory that burned yesterday employed about 1,500 workers, making T-shirts, polo shorts and fleece jackets. It had sales of $35 million a year.

Babul Akhter, president of the Bangladesh Garments and Industrial Workers’ Federation, said mid-level management of the garment factories are mostly concerned with how many clothes can be produced and forget the safety issues.

Bangladesh garment industry workers have been battling for union rights for years.  The fight is becoming increasingly violent. Just eight months ago, the “tortured body” of an organizer for the Bangladesh Center for Worker Solidarity was found near the police station of a city outside Dhaka.

Read how the Triangle Shirtwaist Fire transformed American worksites here.

Read more about efforts to improve working conditions in Bangladesh here.

And when you are shopping this holiday season, think about the true cost of what you’re buying.  According to press reports and labor activists, the factory that burned yesterday makes clothing for Walmart, as well as other retailers.

 

 

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