Last week, the Associated Press (AP) reported on a proposed settlement agreement for $65.5 million between a dozen former au pairs from Colombia, Australia, Germany, South Africa, and Mexico who were brave enough to bring a lawsuit against the companies that recruited them to work the United States. Thanks to the former au pairs and the tireless efforts of the smart lawyers at Towards Justice, a nonprofit organization in Denver, nearly 100,000 young migrant workers (mostly women) will finally receive some portion of the wages they should have been paid while working in the United States providing low-cost child care to Americans.

The migrant au pairs doing this work as in-home caretakers were employed in the United States through the U.S. State Department’s Au Pair program, one of 15 programs in State’s J-1 visa Exchange Visitor Program. Each year about 20,000 au pairs are hired by American families, assisted by J-1 “sponsors,” which can be either for-profit companies or nonprofit organizations that act as labor recruiters for families looking to hire foreign au pairs, and to which the State Department has mostly outsourced the management and oversight of the J-1 visa program. The sponsors make money by charging the au pairs to participate in the program, as well as by charging fees to families in order to connect them to au pairs. According to the AP, in the lawsuit the au pairs claimed that the:

15 companies authorized to bring au pairs to the United States colluded to keep their wages low, ignoring overtime and state minimum wage laws and treating the federal minimum wage for au pairs as a maximum amount they can earn. In some cases, the lawsuit said, families pushed the limits of their duties, requiring au pairs to do things like feed backyard chickens, help families move and do gardening, and not allowing them to eat with the family.

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On January 1, 2019, 19 states will raise their minimum wages, lifting pay for 5.2 million workers across the country.1 The increases, which range from a $0.05 inflation adjustment in Alaska to a $2.00 per hour increase in New York City, will give affected workers approximately $5.3 billion in increased wages over the course of 2019. Affected workers who work year-round will see their annual pay go up between $90 and $1,300, on average, depending on the size of the minimum wage change in their state.

The map below describes the impacts of each state increase, which are also summarized in Table 1. Note that these estimates do not account for changes in local minimum wages.2 There are 24 cities and counties with higher local minimum wages taking effect on January 1, all of which can be found in EPI’s Minimum Wage Tracker. They also do not include any “indirectly affected workers” already making more than the new minimum wage who receive raises as employers adjust their overall pay scales.

Increases in eight states are the result of automatic adjustments for inflation. In Alaska, Florida, Minnesota, Montana, New Jersey, Ohio, South Dakota, and Vermont, the minimum wage is adjusted each year to reflect changes in prices over the preceding year—thereby ensuring that the minimum wage supports the same level of spending year after year.

In five states—California, Delaware, Massachusetts, New York, and Rhode Island—the increases reflect new minimum wage levels set by state legislatures. Several of these increases, such as those in California, Massachusetts, and New York, are intermediate steps as these states gradually raise their minimum wages to $15 per hour. In 2017, congressional Democrats proposed raising the federal minimum wage to $15 by 2024, which would lift pay for an estimated 41 million U.S. workers, but the bill was never allowed to come to a vote. Lawmakers in Congress have not raised the federal minimum wage since 2007, and since the last federal increase took effect, the purchasing power of the federal minimum wage has declined by over 12 percent.

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A shorter version of this post appeared in the Detroit News on 12/2/2018: GM Cutbacks a result of overvalued dollar.

Last month, General Motors announced plant closures in the U.S. that could lead to roughly 14,700 layoffs by the end of 2019. The shutdowns will have the biggest impact in industrial states like Ohio and Michigan, where key plants in Detroit-Hamtramck, Lordstown, and Warren are being closed. But the closures also have wider implications for American industry—and not just the machine shops and fabricators that produce rubber, steel, and glass components for auto assembly. America’s manufacturers are all struggling with the same issue—an overvalued dollar that puts them at risk from rising trade deficits. And it all derives from flawed Trump administration economic policies.

Trump’s tax cuts and increased government spending for defense and nondefense needs are widening the U.S. budget deficit, which will top $1 trillion in 2020 (5 percent of GDP). On top of that, Trump’s tariffs on China have backfired. China has reduced the value of the yuan 10 percent this year, and its trade surplus with the United States has increased 10 percent over the same period last year—even faster than the overall U.S. goods trade deficit, which is up 9.4 percent in the same period. The IMF projects that the overall U.S. current account deficit (the broadest measure of trade in goods, services and income) will nearly double over the next four years.

As a result of the rising dollar and increasing current account deficit, the U.S. goods trade deficit will increase to between $1.2 trillion and $2 trillion by 2020, an increase of $400 billion to $1.2 trillion above the $807 billion U.S. goods trade deficit in 2017, as shown below. This will directly eliminate between 2.5 and 7.5 million U.S. jobs, mostly in manufacturing (because 85 percent of U.S. goods trade consists of manufactured products). The collapse in output, especially in the capital intensive manufacturing sector, will decimate investment—and taken together, both will result in large additional job losses as income and spending collapse, resulting in a steep recession if nothing is done to reduce the over-valued dollar. The dollar must fall by at least 25 to 30 percent (on a real, trade-weighted basis) to rebalance U.S. trade and avert the coming trade tsunami that’s baked into the economy as a result of the rising trade deficit.

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The obscure Congressional budget rule known as PAYGO (“pay as you go”) has burst into the news lately. A PAYGO rule means that any tax cut or spending increase passed into law needs to be offset in the same spending cycle with tax increases or spending cuts elsewhere in the budget. Incoming House Speaker Nancy Pelosi has indicated that the House of Representatives will abide by PAYGO in the next Congress, and this decision has sparked much controversy.

Many Washington insiders assert forcefully that committing to PAYGO rules in the House for the next Congress is good politics. The argument is that it assuages fears of politicians who believe they must make public commitments to lower deficits to avoid being punished by voters who care deeply about this issue. If voters do indeed have strong preferences for reducing deficits, then policymakers—even those who want to use fiscal policy to reduce inequality by expanding public spending and investment—must first commit to PAYGO to convince these voters that budget measures can both reduce inequality and be fiscally “responsible.”

The strength of evidence supporting this political claim is debatable. What’s less debatable is that PAYGO really has hindered progressive policymaking in the not-so-recent past. For example, it was commitments to adhere to PAYGO that led to the Affordable Care Act (ACA) having underpowered subsidies for purchasing insurance and, even more importantly, having a long lag in implementation; the law passed in January 2010 yet the exchanges with subsidies only were up and running by 2014. This implementation lag meant that the ACA’s benefits were not as sunk into Americans’ economic lives by the time a hostile Republican Congress and administration began launching attacks on it following the 2016 elections. It is a real testament to how much better the ACA made life for Americans that it has been stubbornly resistant to these attacks. But it would have been helpful to have a couple more years to have it running smoothly, but that didn’t happen largely because the ACA’s architects wanted to meet PAYGO rules over the 10-year budget window.

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Newly available data from the Bureau of Labor Statistics’ Employer Costs for Employee Compensation data allows an update of the trends of worker bonuses through September 2018, to gauge the impact of the GOP’s Tax Cuts and Jobs Act of 2017. The tax cutters claimed that their bill would raise the wages of rank-and-file workers, with congressional Republicans and members of the Trump administration promising raises of many thousands of dollars within ten years. The Trump administration’s chair of the Council of Economic Advisers argued in April that we were already seeing the positive wage impact of the tax cuts:

A flurry of corporate announcements provide further evidence of tax reform’s positive impact on wages. As of April 8, nearly 500 American employers have announced bonuses or pay increases, affecting more than 5.5 million American workers.

Following the bill’s passage, a number of corporations made conveniently-timed announcements that their workers would be getting raises or bonuses (some of which were in the works well before the tax cuts passed). But as Josh Bivens and Hunter Blair have shown there are many reasons to be skeptical of the claim that the TCJA, particularly corporate tax cuts, will produce significant wage gains.

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The federal Break Time for Nursing Mothers provision of the Fair Labor Standards Act (FLSA) requires employers to provide reasonable unpaid break time, as needed, for an employee to express breast milk for her nursing child for one year after the child’s birth.  Further, employers are required to provide a place for the employee to express milk—other than a bathroom—that is shielded from view and free from intrusion from coworkers and the public. These requirements were signed into law in 2010 as part of the Affordable Care Act and were a landmark step toward securing pumping accommodations for countless nursing mothers in the workplace.

These provisions were designed to prevent harmful outcomes that can occur without basic workplace accommodations for expressing breast milk, such as negative health consequences, the inability to breastfeed, and economic harm including job loss (documented in the upcoming report Exposed: Discrimination Against Breastfeeding Workers from the Center for WorkLife Law). However, the law has several significant problems that leave nursing mothers at risk. One key issue is that due to where these provisions are placed in the FLSA—in the section that requires employers to pay overtime compensation if an employee works more than 40 hours in a week—all those workers who are exempt (i.e. excluded) from the overtime protections of the FLSA are also exempt from the break time protections for nursing mothers. These exemptions affect roughly one out of every four working women of childbearing age (between the ages of 16 and 44).  There are a total of 37.8 million working women of childbearing age in the United States, and more than 9 million of them are excluded from the Break Time for Nursing Mothers protections.  That includes more than 1 million black women, 976,000 Hispanic women, 825,000 Asian women, more than 6 million white women, and 185,000 women of other races.  The below table shows further breakdowns by state and industry.

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Last term, the Supreme Court dealt a significant blow to the fundamental right of workers in this country to join together to address workplace disputes. In Epic Systems v. Lewis, the Court, by a 5-4 majority, held that an employer may lawfully require its employees to agree, as a condition of employment, to resolve all workplace disputes on an individual basis in arbitration. Siding with employers and the Trump administration, the Court’s decision paves the way for the majority of workers in this country to be forced to sign away their right to pursue workplace disputes on a collective or class basis. Available data suggests that, unless Congress acts, more than 80 percent of workplaces will subject their workers to mandatory arbitration with class and collective action waivers within six years.

Mandatory arbitration clauses rob workers of their right to take their employer to court for all types of employment-related claims, forcing workers into a process that overwhelmingly favors employers. Class and collective action waivers go one step further, forcing workers to manage this process alone, even though these issues are rarely confined to one single worker.

Workers depend on collective and class actions to enforce many workplace rights. Employment class actions have helped to combat race and sex discrimination and are fundamental to the enforcement of wage and hour standards. Without the ability to aggregate claims, it is very difficult, if not impossible, for workers to find legal representation in these matters. This is particularly true for low-wage workers, whose cases are unlikely to involve large enough awards to attract attorneys to invest time in the case. Class and collective action suits allow workers to pool their claims, making it possible for an attorney to earn enough to make the case worth pursuing.

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