Mayor Gray Should Sign the Large Retailer Accountability Act
Washington, DC, Mayor Vincent Gray has not announced a decision yet on whether he will veto the bill to require big, billion-dollar retailers to pay a fair wage to their employees in the District of Columbia. The writing seems to be on the wall, however, given that Gray’s deputy mayor for planning and economic development, Victor Hoskins, is holding the bill up as a “job killer.”
Why is a bill that requires total compensation far below the national median wage ($16.30) considered a job killer? The Large Retailer Accountability Act would require the biggest retailers to pay $12.50 an hour in total compensation (wages and benefits), barely more than the federal poverty income threshold of $23,550 for a family of four and nowhere near what it costs to live in the District. The LRAA is flexible and permits a lower wage: it would permit an $11.50 an hour wage, for example, if the business paid other benefits like health care or a pension contribution that equaled at least $1.00. How is that a job killer for a billion dollar corporation? Well, it just is, says Walmart, which has threatened to abandon plans for three new stores in DC if the bill is enacted.
For politicians, the prospects of visible new jobs (no matter how poorly they pay) are almost irresistible, so any threat to the three Walmart stores, however much it smacks of bullying and exploitation, makes some of them blind to the other implications of Walmart jobs paying about $8.90 an hour.
What to Watch on Jobs Day: Public Sector Job Growth
In last month’s jobs report, virtually every indicator demonstrated that, more than four years since the official end of the Great Recession, we have not yet entered a robust jobs recovery. That main point will not change when the August numbers are released on Friday; we will very likely see a continuation of these troubling labor market trends that persist due to weak hiring.
Additional Indicator to Watch: It is possible that the public sector will have added jobs in August. If so, this would be the second month in a row of gains (in July, the public sector added 1,000 jobs). This would represent an important step in the right direction—jobs losses in the public sector have been an enormous drain on the recovery. However, it’s useful to keep in mind just how large a public-sector jobs hole in the economy faces. Since the recovery began in June 2009, the public sector has lost 733,000 jobs. Public sector employment should naturally grow as the population grows. To keep up with population growth over this period, public sector employment should have increased by around 680,000.
Budget Debates Matter: The Difference in GOP and Democratic Levels of Discretionary Spending for 2014 Translates into Nearly 1 Million Jobs
Americans probably have a vague sense (and dread) that Washington will once again be preoccupied with budget issues this fall. Debates over the budget get airy and general very quickly, so it’s useful to focus on some key, specific issues that actually matter. One of these real issues—one that matters a lot for the pace of economic recovery—is the level of discretionary spending that will be agreed to in the “continuing resolution” for fiscal year 2014.
The current fiscal year ends September 30, so some arrangement to fund the federal government after this date must be arranged. But because prospects for agreeing on any substantive change to spending priorities is so dim, the assumption is that a “continuing resolution” will be passed that simply funds the government at levels currently called for under law.
But even this budget auto-pilot approach will not be uncontroversial, and the major sticking point regards discretionary spending levels for 2014.
What Should You Be Earning?
In honor of Labor Day, we made a little tool—based on our project inequality.is—that shows how much you would be making if wages had kept pace with productivity, a key indicator of an economy working for all.
Economic inequality is a real and growing problem in America. Since the 1979, workers are working more, making more goods, and not reaping the rewards of their increased productivity. Instead, CEOs and executives—the top 1% of earners—now take home 20% of the nation’s income.
But it doesn’t have to be like this. Growing inequality isn’t an inevitability—it was created. It’s the result of intentional policy decisions on taxes, trade, labor, and financial regulation. But that’s the good news: if inequality is not inevitable, then it can be fixed.
Take a look, and share with your friends. And remember that American workers should be earning more than we are. To do something about it, visit inequality.is.
[epi-wagecalculator]
Economy Boosting Jobs
Last week, Dylan Matthews wrote that, “You can always rely on the Economic Policy Institute for really depressing charts about just how far behind the U.S. middle class is falling.” In an attempt to show our positive side, here’s a new video, from our friends at the Topos Partnership, that explains the economy in terms everyone can understand.
The video makes the case that helping low wage workers helps everyone, and it does it without depressing charts or regression analyses. Given that today’s weak labor market is due to a severe demand shortage, raising wages at the bottom and middle can indeed boost economy-wide demand. When the economy is closer to full-employment, raising wages at the bottom and middle may not necessarily lead to higher GDP, but increasing the minimum wage and strengthening labor standards creates a floor that raises living standards for everyone. That, to us, is the very definition of a better-working economy.
EPI Family Budgets: Why More Tools Are Better Than One
NPR’s Planet Money had a good story this week about problems with the official measure of poverty, noting the general consensus among academics, researchers, and policy analysts alike that the federal poverty line has some fundamental flaws.
For one, the poverty line doesn’t take into account geographic differences—ignoring the widely varying regional prices for necessities like rent and child care. In New York City for example, where Marion Matthews, the single mom in the NPR story lives, rent and child care for a one-adult-one-child family can cost $2,544 per month, but only costs $923 per month in Simpson County, Mississippi.
Furthermore, the federal poverty line is calculated using a method that is obsolete given recent and historical trends in the U.S. economy. The current methodology was designed in 1963, and it basically set the poverty line at three times the cost of a basic food budget. Since then, the line has been only updated to account for overall inflation. Thus, for example, it doesn’t accurately reflect the increasing share of family budgets going towards housing and health care and the decreasing share going to food.
Besides these problems in calculating the right threshold for poverty, the current methodology does not account for resources that help raise living standards, such as food stamps and tax credits.
Broken Promises and Continuing Worker Abuses as Apple and its Suppliers Miss Deadline
On February 13, 2012, Apple announced that it would be relying on inspections by the Fair Labor Association as a path to ending labor rights abuses in its supply chain, leading to front page coverage in the New York Times. Six weeks later the FLA released a report documenting a range of serious labor rights violations at three Foxconn factories making Apple products, most of them previously reported by independent investigators whose findings Apple had largely ignored. Apple, Foxconn and the FLA pledged that these violations would be addressed through reforms to be implemented by July 2013.
That deadline has now passed, strangely unremarked upon by Apple and its chosen labor rights monitor, and Apple has not made good on its commitments. It is clear from interim verification reports by the FLA and from independent assessments that progress in Apple’s supply chain has fallen far short of the sweeping change promised early last year, particularly in the areas of unpaid compensation, inadequate wages, illegal overtime, violations of workers’ rights to freedom of association, and the scope of the reform efforts within Apple’s full (and massive) supply chain. The FLA’s August 2012 and May 2013 interim reports claimed great strides, but included concrete findings that often belied this positive spin (as we discussed here and here).
The FLA reports helped obscure a number of disturbing realities.
The Unfinished March Toward a Decent Minimum Wage
It was fifty years ago the March on Washington for Jobs and Freedom took place. The demand for a higher minimum wage was part of a package of demands seeking economic justice for workers through government intervention in the labor market. At that time, the wage floor was $1.15 and marchers were demanding a raise to $2.00. Today, that 50 year old demand would be worth about $13.39 when adjusted for price changes.
“To Work with Dignity” with my co-author Steven Pitts is the first in a series titled “The Unfinished March” that the Economic Policy Institute is releasing to review the demands, analyze the progress made, and determine the unfinished steps necessary to fully achieve each of the goals of the 1963 March.
Labor Department Should Crack Down on Illegal Unpaid Internships
Juliet Lapidos had a nice editorial in The New York Times on Saturday that took on the issue of unpaid internships—based on the recent news about Sheryl Sandberg’s Lean In foundation using Facebook to find a “part-time, unpaid” intern “with editorial and social chops” as well as “Web skills.” Lapidos reports that the ensuing uproar made the foundation reconsider and promise to pay the rather skilled employee they were looking for. Given that an estimated two-thirds of unpaid interns are women, and given that unpaid internships on average lead to much poorer employment prospects than do paid internships (fewer job offers and much lower salary offers), Lean In’s attempt to exploit this sketchy alternative to paid employment was embarrassing. The way to help young women get ahead is to pay them for their work, for their “editorial chops” and for their web skills, not to exploit them.
Lapidos made an important point about what’s needed to change the culture that makes this exploitation seem OK. A recent spate of lawsuits has brought the law to the attention of many employers for the first time, and it is dawning on some of them that there is a risk to cheating young workers out of the minimum wage. But interns looking for references for their resumes are unlikely to sue, and most cases–even if meritorious–don’t involve enough back pay to be worth a private lawyer’s time. What’s needed is energetic enforcement by the U.S. Department of Labor and the various state departments of labor. Very little effort would be required to make a difference. If investigators scanned Craigslist they could find plenty of cases to prosecute, and with appropriate publicity and media attention it wouldn’t take long for employers to catch on and clean up their act.
As Lapidos put it, “proper enforcement of labor law shouldn’t depend on exploited interns’ willingness to suffer through courtroom ordeals.” That’s what we pay government lawyers for.
Fifty Years Later: How Far Have We Marched?
The March on Washington fifty years ago was the first of many marches I would make: for civil rights; against one war, then another; against poverty; for women’s rights; for gun control; for the environment; and now back to celebrate the first.
They merge a bit in my memory. I’m not totally sure who all was with me at which event. I definitely remember sweltering in a suit and tie to help bring a white middle-class look to that first March for Jobs and Freedom.
I was inspired by King’s speech. But I was also inspired by practically everyone who spoke that day. To my young earnest policy wonk mind others seemed to be more on the specific agenda message than he was. Certainly I had no sense that his speech would be so historic. Nor that the March would be.
I was a volunteer foot soldier in Dr. King’s army: registering black voters in Virginia, picketing against discrimination in housing and hiring practices, helping get white faces to meetings and rallies. In 1965, I joined the march from Selma to Montgomery Alabama, where unlike the earlier Washington march, real fear walked with us.
This activism didn’t come naturally. I came from a family of white working poor—mostly indifferent to the oppression of the “Negroes.” We had our own problems paying the rent and putting food on the table. And, at least subconsciously, we were vaguely aware that the subjugation of black people kept us from joining them at the absolute bottom of the economic ladder.