‘Forced’ is never fair: What labor arbitration teaches us about arbitration done right—and wrong
As of September 2017, more than 60 million American workers were subject to predispute arbitration “agreements” with their employers. This means that in exchange for the right to get or keep their job, they are forced to agree that if a dispute comes up in the future involving their employment, they won’t bring that dispute in court but will instead take it to a private arbitrator—usually in secret proceedings conducted behind closed doors, under terms dictated by the employer.
The percentage of workers whose employers require them to give up the right to go to court in exchange for their jobs has increased dramatically over the past 25 years, from just 2 percent in 1992 to over 55 percent in 2017. And that figure is climbing even higher in the wake of the Supreme Court’s 5-4 opinion in 2018 in Epic Systems Corp. v. Lewis, which said that employers can impose arbitration contracts on their workers even when one of the terms of the contract is that workers must bring their disputes one at a time and may not join forces with their colleagues to pursue claims collectively. A new report from EPI and the Center for Popular Democracy projects that by 2024, over 80 percent of private-sector, nonunionized workers will be subject to forced arbitration regimes that ban class or collective actions.
Despite its growing prevalence, many American workers still don’t know what arbitration is and don’t realize what rights they’re giving up when they sign the document (or click the button on a computer screen) saying they will resolve future disputes in this manner. But for the 14.7 million workers who belonged to a union in 2018, arbitration may not be such a foreign concept, because arbitration has been a fixture in most unionized workplaces for decades.
‘Schools are no longer just institutions of learning—we are the primary hub of care outside the family’
My colleague Elaine Weiss launched her new book Broader, Bolder, Better on the challenges facing teachers around the country at an EPI event this week by emphasizing the need for policymakers and researchers to listen to educators themselves rather than imposing their biases on the pros.
Truly moving remarks from guest of honor Joy Kirk, a middle-school teacher from Fredrick County, Va., made quite clear why that’s a sound strategy.
Kirk described the transition she has witnessed in the role of teachers and schools as anchors in the community over her 24 years of teaching, which began in urban Philadelphia before she moved to a more rural setting.
“Schools are no longer just institutions of learning. We are the primary hub of care outside the family,” she said, a stark reality considering the deeply under-resourced state of so many of the country’s schools.
“And for some of our students, we are their only safe place, because if you’re suffering violence at home, if you’re suffering upheaval, if your parents are constantly moving because they can’t hold a steady job—for whatever that reason is—your one safe place is your teacher’s classroom,” she said.
Weiss’s book is the culmination of years of research into how schools can proactively help to counter some of the social strains in various communities, by promoting innovative and targeted approaches to solve every day problems.
“Our book is grounded in community voice and celebrates teacher activism,” Weiss explains in a blog post. “It calls out the consequences of structural racism and urges community leaders to translate their daily witnessing of the impacts of poverty into partnerships with the schools that are on the front lines of combating it. It thanks the local and community leaders who are already walking this walk and asks all of us to find ways to further support them.”
A progressive strategy for addressing the next recession must include a deliberate, strategic focus on states and localities
No one can say with any certainty when the next recession will come, yet it’s clear that progressive advocates and policymakers should begin preparing now so they are ready to confront the challenges—and opportunities—a downturn presents.
As advocates, we should mobilize around two key strategies to respond to the next recession. The first strategy is to build demand at the state and local level for a large federal stimulus package that includes significant, lasting aid to the states. We should campaign actively against the notion advanced by the right wing and even moderate Democrats that there isn’t enough “fiscal space” to bail out workers and their communities during a recession. (Saying there’s not enough fiscal space is econ-speak for pretending the federal government doesn’t have the ability to run a deficit to support important programs in times of crisis).
The second strategy—which I will focus on here—is to ensure the progressive community has a strategic plan to mobilize communities and progressive state policymakers to develop a state-specific program for addressing the next recession. Governors and state legislators play an enormous role during a recession, and the policy and political choices they make in preparation for, during, and after a recession help determine how well communities weather a slump, and how quickly their state bounces back once the recession is officially over.
Ohio’s economy no longer fully recovers after recessions
I can’t tell you when or whether a recession is coming. But I can tell you what it means for a place like Ohio when one arrives and what Ohio needs from policymakers, state and federal, to be ready and to recover. After a generation of underinvestment in families, communities and sustainability, the upcoming downturn is a crucial moment to fix the economy by addressing gaping societal needs.
Four points are clear for Ohio and other places. First, recessions are much harder on some economies than on others—this goes for states, like Ohio, that are hit harder, and for communities, like manufacturing communities, poor rural communities, and much of the black community. Second, recessions start earlier and end later in America than in the financial press, in terms of pain they visit on people. In Ohio, we no longer fully recover from recessions, so each new downturn leaves permanent setback. Third, states have insufficient capacity to take on the challenges of a recession. Federal action is essential to get the recovery we need. Finally, recessions are not only economic challenges cured the instant unemployment creeps downward or some jobs come back. In fact, recessions cause long-term damage—to savings and earnings, yes—but also to children’s development, family stability, and long-term physical and psychological well-being.
Job loss and unemployment
First and most importantly, a recession means large scale job losses. This is often particularly severe in manufacturing states like Ohio. As many as 30 million Americans lost jobs during the Great Recession. In Ohio, we actually had not recovered jobs lost in the early 2000s recession by the time the Great Recession hit in 2007. More than 415,000 more jobs were slashed by February 2010 and the 2018 data revisions showed we again haven’t fully recovered—we need 16,300 jobs to reach pre-recession employment levels (reflecting population growth).
Broader, Bolder, Better: We’ve come a long way
When the Broader, Bolder Approach to Education (BBA) was launched over ten years ago, EPI—Lawrence Mishel and Richard Rothstein, in particular—hoped it would have a major positive impact on the education policy field, but we could not have predicted how big that impact would turn out to be.
Over that decade, BBA became an anchor for the growing chorus of voices pointing to poverty’s impacts on teachers’ ability to do their jobs well and students’ capacity to learn effectively. We stood with teachers, principals, and school district leaders to push for policies that alleviated those impacts. We collaborated with leading scholars to produce seminal reports that revealed the major flaws of policy strategies that rely heavily on student test scores to make decisions. And we used the results of those reports to arm student and parent organizers with evidence to defend their schools from threatened closures and to advocate, instead, for their conversion in New York City, Newark, Chicago, and Philadelphia, to full-service community schools.
We have lifted up the voices of teachers, in those reports and elsewhere. In a series of blog posts, we collaborated with dedicated educators from across the country to document the impact of student and community poverty in their classrooms every day. We wrote about the shame hungry high school students feel and their teachers’ anger and frustration at their lack the resources to help. We illuminated the consequences of structural racism in the Mississippi Delta, where African American students still rely on leftover books and supplies that wealthier white students and the schools serving them literally dumped. We shined a spotlight on innovative strategies principals are employing in rural Appalachia to compensate for their students’ extreme social and economic isolation, like Skype mentoring and field trips that provide their first visit to a city, college, or prospective future job.
There’s no economic constraint on the fiscal space available to fight the next recession
The next recession has not begun—and might not even be all that close at hand—but events where people are talking about the Next Recession have definitely started.
The event we co-sponsored last month on the next recession and essays from the panelists can be seen here. It’s worth checking out. A highlight was the keynote by Christina Romer, who served as the first chief economist for the Obama administration as it was taking office in the face of the Great Recession. Romer established a reputation as a firm advocate for fighting the recession with aggressive and sustained fiscal stimulus. In retrospect, her recommendations were clearly right, and if politics had let them win the day, tens of millions of Americans would have suffered far less in the past decade.
A conventional wisdom has emerged in recent years that an aggressive and sustained fiscal stimulus won’t be possible during the next recession. This argument is that the U.S. lacks the “fiscal space” needed to undertake this type of fiscal stimulus because its debt-to-GDP ratio is too high. During the first panel, a number of panelists and I made the case that this conventional wisdom is wrong; there is nothing to stop policymakers from undertaking needed fiscal stimulus during the next recession – except their own potential errors in judgment (this argument was also a theme of a paper I wrote for the event).
During her speech, Professor Romer made an argument that may have surprised some; she pointed to recent work she had done showing evidence that, in the past, high debt-to-GDP ratios really were associated with less-aggressive fiscal stimulus following financial crises. She pointed to this evidence for why she advocates reining in the growth of public debt as a key strategy for preparing for the next recession. She singled out the 2017 tax cut as a key example of what not to do when preparing for the next recession.
Trump and Kushner’s ‘merit-based’ immigration plan fails to propose the smart reforms needed to modernize and improve U.S. labor migration
One of the elements in the Jared Kushner immigration plan detailed by in Donald Trump’s speech on Thursday in the White House Rose Garden would change the proportion of green cards to vastly increase the share issued in the employment-based (EB) preference categories.
“Green cards,” as they’re commonly referred to, are immigrant visas that confer lawful permanent resident status on foreign citizens and allow new immigrants to remain in the United States permanently and obtain citizenship after five years. Trump has proposed to change the EB share of the total 1.1 million green cards issued every year from 12 percent to 57 percent and claims it would make the system more “merit-based.” This would be achieved by reducing the numbers of visas allocated based on family ties (66 percent in 2017) and the Diversity Visa lottery (4.6 percent in 2017) and increasing the EB category, and the EB visas would be renamed “Build America Visas” and prioritize advanced education and skills, and rank potential immigrants according to a new points system. Trump also noted that “we’d like to see if we can go higher” than 57 percent.
In reality, although only 12 percent of current green cards are allocated for new immigrants arriving with jobs or skills, many of the new green card holders coming to the United States through other categories are also well-educated, including in the family and diversity preferences. And within the EB categories, very few migrants are able to come to the United States as permanent immigrants with a path to citizenship if they work in lower-wage, lesser-skilled occupations. The EB third preference caps the number of “unskilled” workers at 10,000 per year, however that cap has been temporarily reduced to 5,000 since 2002, and only approximately half of that reduced cap has been used in the past five years. In other words, the system is already dominated by immigrants with skills and degrees and quite exclusionary towards those without them. We should rethink the system rather than double-down on it.
As some commentators and Democratic legislators have noted, the Trump/Kushner proposal is probably “dead on arrival” and unlikely to translate into legislation that can pass the House and Senate, in part because it lacks a proposal for legalizing the 11 million unauthorized immigrants or the subset of them that are protected by DACA and TPS. Nevertheless, it is worth examining because Trump is using the broadly-outlined plan devised by his son-in-law as a platform to unite the Republican party on immigration and show that they are “for” something on immigration, and not just against every conceivable type of immigration.
Zero Weeks plus Ellen Bravo on the importance of paid family and medical leave
The Economic Policy Institute had the distinct pleasure this week of hosting a showing of Ky Dickens’ new film, Zero Weeks, with a special Q&A with renowned paid leave advocate, Ellen Bravo.
The film gives the audience a glimpse into the lives of several workers and their families as they struggle to balance their own health needs and that of their families without the ability to take time off from work. A lifelong activist and leading expert on work-family issues, Ellen offered up her wide breadth and depth of her experiences and expertise following the film, sharing the long fight across the country to improve workers ability to earn paid time off to care for themselves and their families in times of need.
In 1993, the United States passed the Family and Medical Leave Act (FMLA), which allows eligible employees to take up to 12 weeks of unpaid, job-protected leave within a calendar year for a serious health condition, the birth of a child or to care for a newly born, adopted, or foster child, or to care for an immediate family member with a serious health condition. While it’s important to celebrate that important milestone, federal action stopped 26 years ago.
Furthermore, because eligibility for FMLA is limited based on size of firm, work hours, and tenure at job, the FMLA only provides access to unpaid leave to an estimated 56 percent of the workforce. But the largest loophole in the FMLA is that it is unpaid, so many workers who would want to take advantage of it to care for themselves or a family member, simply cannot afford to.
Workers have to make difficult choices between their careers and their caregiving responsibilities precisely when they need their paychecks the most, such as following the birth of a child or when they or a loved one falls ill. This lack of choice can often lead workers to not take any leave or cut their leave short; about 45% of FMLA-eligible workers did not take leave because they could not afford unpaid leave and among workers who took time off for caregiving responsibilities, about one-third of leave-takers cut their time off short due to lost wages.
Fighting inequality is key to preparing for the next recession
The failure to make a serious dent in high levels of economic inequality in recent years will make responding effectively to the next inevitable recession more difficult, both economically and politically.
Rising income and wealth inequality, combined with financial deregulation and the expanding financialization of the U.S. economy, led to the credit boom and crash that substantially deepened the resulting economic crisis in 2008. Fiscal stimulus during the Great Recession prevented the economy from collapsing completely but was still insufficient and phased out too soon. What’s more, instead of taking lessons from our experiences a decade ago and strengthening our recession-fighting tools, recent policies passed by Congress have focused on cutting taxes, reduced the perceived space we have to increase spending in a downturn and exacerbated income and wealth disparities in the United States.
First, let’s zoom out. Recessions aren’t just one-offs. They are part of the economic cycle. Aggregate demand in the economy expands and contracts over time and recessions occur during prolonged contractions, which are more likely when economic inequality distorts consumption and savings. Inequality also affects the time it takes to recover from recessions because it subverts our institutions and makes our political system ineffective. Lifting the economy out of a downturn requires decisive government action to boost spending and aggregate demand, which often runs counter to the primary interests of those with economic and political power. As entrenched interests continually hamstring the government’s capacity to respond to a recession, policymakers should act now to prepare for the next one by addressing inequality in the United States.
The Great Recession, education, race, and homeownership
The Great Recession was associated with a dramatic reduction in the wealth of millions of Americans, particularly wealth in the form of home equity. The net worth of the typical household plunged by 40 percent, or about $50,000, as a result of the worst economic downturn since the Great Depression.1 Of course, these detrimental effects were not felt equally by all groups. Relative to white wealth, black wealth was hit especially hard by the Great Recession. Blacks saw their median net worth fall precipitously compared with whites (that is, in percentage terms, not in absolute terms).2 Between 2005 and 2009, the median net worth of black households dropped by 53 percent, while white household net worth dropped by 17 percent.3
Yet whether we look at the racial wealth gap before or after the Great Recession, the disparity between blacks and whites is persistent. According to the U.S. Census Bureau’s Survey of Income and Program Participation, in 2005 blacks had relative holdings of nine cents on the dollar compared with whites—this fell to just five cents in 2009 and inched up to six cents in 2011. In this sense, the Great Recession did not wipe out black wealth but decimated the very modest bit of wealth accumulated by blacks. While the economy continues to recover, and while some point to recent increases in the homeownership rate, we are alarmed by evidence that black college graduates may be falling even further behind in this new paradigm.4
First, we find that long-standing racial disparities in homeownership have worsened in the post-recession recovery. Second, we find that the Great Recession left black college graduates facing enhanced barriers in the housing market. While a bachelor’s degree is often framed as a reliable stepping stone on the path to economic security, our findings add to a growing literature that challenges that accepted wisdom. Research by Hamilton et al. finds that black households headed by a college graduate have less wealth than white households headed by someone who dropped out of high school.5
In particular, we use the Blinder-Oaxaca decomposition technique to demonstrate that the demographic and socioeconomic characteristics of college-educated blacks are explaining less and less of the racial difference in homeownership rates, in turn suggesting that structural barriers (including the criteria by which homes are financed), discrimination in lending and housing markets, and initial wealth itself are playing an increased and racially uneven role in the manner in which college-educated Americans are acquiring new homes.6