Public Immorality

Robert Reich is always worth listening to whether about economics or trade or work, usually all three at the same time.  In recent blog posts he’s gone after the disappearance of public morality in great corporations, an absolute necessity, he says:

An economy depends fundamentally on public morality; some shared standards about what sorts of activities are impermissible because they so fundamentally violate trust that they threaten to undermine the social fabric.

He’s written about it twice in recent weeks, following on earlier posts about The Outrageous Ascent of CEO Pay and Corporate Welfare in California

 

 

At a time many Republican presidential candidates and state legislators are furiously focusing on private morality – what people do in their bedrooms, contraception, abortion, gay marriage – America is experiencing a far more significant crisis in public morality.

CEOs of large corporations now earn 300 times the wages of average workers. Insider trading is endemic on Wall Street, where hedge-fund and private-equity moguls are taking home hundreds of millions.

A handful of extraordinarily wealthy people are investing unprecedented sums in the upcoming election, seeking to rig the economy for their benefit even more than it’s already rigged.

Yet the wages of average working people continue to languish as jobs are off-shored or off-loaded onto “independent contractors.”

All this is in sharp contrast to the first three decades after World War II.

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And if you didn’t see him in Inequality for All, here is a trailer.  Available out there in internet land

 

 

Inequality Rules

Eduardo Porter in the NY Times business section, always interesting to read, reminds us that inequality is not simply a minimum wage issue.  Citing Joseph Stiglitz’s latest book, “The Great Divide” (W.W. Norton & Company), he writes:

It includes the steady tightening of intellectual property rights and the rise of finance, with its lavish rewards for activities of dubious social value. It includes the furious consolidation of industry, which has reduced competition across the economy.

Professor Stiglitz is particularly incensed by the Obama administration’s attempt to include investment pacts in trade agreements it is negotiating with Asia and Europe, which would allow multinationals to sue governments for compensation if regulation hurts their profits.

Another commentator, Shi-Ling Hsu at the Florida State University College of Law, that that a huge piece of the inequality puzzle is being missed:

 the role of law in distributing wealth.” Subsidies, tax treatment, legal protection and other mechanisms conspire to aid the wealthy while often serving to damp economic gains.

Grandfathering existing businesses to protect them from new regulation is a classic way to protect profits, shielding incumbent businesses and deterring new entrants that would face costlier regulations. Granting water rights to whoever first uses the water amounts to another gift to business that can entail large social costs. (In California, for example.)

Read it all.  Good thought points

Unions Recognized in US Outsourcing Plants in Bangladesh

In one of the principle countries of the world where low, low, low wages improve the bottom line for first world companies, finally a small counter-balance to autocratic corporate rule gets a foot hold.

VF, which makes North Face and Nautica, and PVH, the parent of Calvin Klein and Tommy Hilfiger, as well as Gap, El Corte Ingles and other companies, had cut off or threatened to cut off orders from the company, the Azim Group, last year over the incidents at two of its factories in Chittagong.

But now, after weeks of negotiations, these companies have agreed to resume business with Azim because it has promised to recognize and bargain with the unions at the two factories where the violence occurred.

Azim, industry and labor officials said, has also agreed to stop efforts to oust a labor union, to pay the medical bills of a badly beaten union leader ]Mira Boashak] and to allow several union officials to return to work with full back pay.

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And speaking of unions, Lawrence Mishel argues that lowering taxes on the working poor is not the solution to the problem of working and being poor: raising wages is, and encouraging the organizations that can bring that about – unions.

“What has hurt workers’ paychecks is not what the government takes out, but what their employers no longer put in — a dynamic that tax cuts cannot eliminate.

Between 1979 and 2014, while the gross domestic product grew 150 percent and productivity grew 75 percent, the inflation-adjusted hourly wage of the median worker rose just 5.6 percent — less than 0.2 percent a year. And since 2002, the bottom 80 percent of wage earners, including both male and female college graduates, have actually seen their wages stagnate or fall.

Protecting and expanding workers’ right to unionize and bargain collectively is also essential; the erosion of collective bargaining is the single largest factor suppressing wage growth for middle-wage workers over the last few decades. And we need to modernize our New Deal-era labor standards to include earned sick leave and paid family leave so workers can balance work and family.

Finally, stronger laws and enforcement to deter and remedy wage theft and the illegal treatment of employees as independent contractors could put tens of billions of dollars into workers’ pockets.

Contrary to conventional wisdom, wage stagnation is not a result of forces beyond our control. It is a result of a policy regime that has undercut the individual and collective bargaining power of most workers. Because wage stagnation was caused by policy, it can be reversed by policy, too.

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Good News for those Who Work for a Living

Two bits of good news for the laboring classes today:

The shell game in which employers push off responsibilities for workers onto subcontractors or franchisees may be over

The general counsel of the National Labor Relations Board ruled on Tuesday that McDonald’s could be held jointly liable for labor and wage violations by its franchise operators — a decision that, if upheld, would disrupt longtime practices in the fast-food industry and ease the way for unionizing nationwide.

The ruling comes after the labor board’s legal team investigated myriad complaints that fast-food workers brought in the last 20 months, accusing McDonald’s and its franchisees of unfair labor practices.

Richard F. Griffin Jr., the labor board’s general counsel, said he found merit in 43 of the 181 claims, accusing McDonald’s restaurants of illegally firing, threatening or otherwise penalizing workers for their pro-labor activities.

In those cases, Mr. Griffin said he would include McDonald’s as a joint employer, a classification that could hold the company responsible for actions taken at thousands of its restaurants.  NY Times: Greenhouse

The awarding of government contracts to those who can’t get their houses in order may be coming to an end.

President Obama is expected to sign an executive order on Thursday that could make it harder for companies that violate wage, labor and anti-discrimination laws to win federal contracts, administration officials said on Wednesday.

Under the order, Mr. Obama will require federal contractors to disclose any labor violations that their companies committed over the previous three years, with government procurement officials then being advised to steer clear of those with repeated and egregious violations.

“The president’s view is that taxpayer dollars should not reward corporations that break the law,” …

NY Times: Shear and Greenhouse

 

The Supreme Court: Arming Goliath

While the activist judges on the Supreme court give more and bigger weapons to the powers that rule the land (You’re a corporation AND a person so you get the most favorable treatment for each and are protected from the liabilities) it is also busy stealing David’s stones.

On Monday a 5-to-4 majority of the Supreme Court fired its own salvo in the war on unions. Though its decision in Harris v. Quinn was narrow, saying that, in some cases, unions could not collect fees from one particular class of public employees who did not want to join, its language suggests that this may be the court’s first step toward nationalizing the “right to work” gospel by embedding it in constitutional law.

…[As it has been ] workers can’t be forced to join a union or contribute to its political and ideological activities, but they can be required to pay for the cost of the union’s collective bargaining and contract-administration activities.

The majority in Harris saw things differently. Making workers pay anything to a union they oppose is in tension with their First Amendment rights — “something of an anomaly,” in the words of the majority. But the real anomaly lies in according dissenters a right to refuse to pay for the union’s services — services that cost money to deliver, and that put money in the pockets of all employees.

Once selected by a majority of workers in a bargaining unit, a union becomes the exclusive representative, with a duty to fairly represent all of them. That is the bedrock of our public and private sector labor laws.

Unless everyone is required to pay for those services, individual workers can easily become “free riders,” taking the benefits of collective representation without paying their fair share of the costs.

NY Times: Estlund and Forbath

Republicans: Soft Heads, Hard Hearts

Krugman — on the unconscionable Republican filibuster to block aid to the long-term unemployed.

If you follow debates over unemployment, it’s striking how hard it is to find anyone on the Republican side even hinting at sympathy for the long-term jobless. Being unemployed is always presented as a choice, as something that only happens to losers who don’t really want to work. Indeed, one often gets the sense that contempt for the unemployed comes first, that the supposed justifications for tough policies are after-the-fact rationalizations.

The result is that millions of Americans have in effect been written off — rejected by potential employers, abandoned by politicians whose fuzzy-mindedness is matched only by the hardness of their hearts.

Union Busters Swarming in Tennessee

Unlike most companies that confront unionization efforts, Volkswagen [in Chattanooga, Tennessee]  — facing a drive by the United Automobile Workers — has not mounted a vigorous campaign to beat back the union; instead VW officials have hinted they might even prefer having a union.

But then there are the outside anti union forces

A business-backed group put up a billboard declaring, “Auto Unions Ate Detroit. Next Meal: Chattanooga,” while a prominent anti-union group, the National Right to Work Committee, has brought legal challenges against the U.A.W.’s effort, asserting that VW officials improperly pressured workers to back a union.

In addition, Grover Norquist, the anti-tax crusader, has set up a group, the Center for Worker Freedom, that has fought the U.A.W. on several fronts, partly to prevent the election of labor’s Democratic allies who might increase government spending.

… Chattanooga’s business community grew alarmed last September when the U.A.W. asked VW for union recognition, saying a majority of the plant’s 1,600 assembly workers had signed cards seeking union representation.

The business community reacted with further dismay when several Volkswagen officials from Germany visited the plant and hinted that it would be good to have a labor union because that would help establish a German-style works council. Such councils, comprising managers and representatives of white-collar and blue-collar workers, seek to foster collaboration within a factory as they forge policies on plant rules, work hours, vacations and other matters.

Michael Cantrell, 56, an assembly line worker, said it would be great to have a works council because it would give the workers more of a voice and help VW by fostering a smoother-running plant.

“It gives them a great competitive advantage if they do this,” said Mr. Cantrell, who has an M.B.A. and ran a tax preparation company before joining Volkswagen. “They have this standardized across the world. We feel we’re not as competitive if we don’t have this collaboration. This would be a paradigm shift.”

NY Times: Greenhouse

Cambodia: Garment Workers End Strike

The latest strike by Cambodian garment workers has ended with most workers going back to work after two weeks, and violent responses by police killed three during demonstrations. NY Times

It is only the latest in a string of protests by the severely underpaid workers.

The Garment Manufacturers Association in Cambodia (GMAC) recorded 131 strikes last year, not counting December, when the recent national garment strike was declared. In 2011, the factory association logged 34 strikes for the entire year.

Although apparel manufacturing heavy weights such as Adidas, Levi Strauss and Puma have signed an open latter calling for negotiations to create a wage-review mechanism it is unclear if and how it will be answered.

 

Cambodian Workers on Strike

 Cambodia garment workers throw stones at riot police during a strike near a factory on the Stung Meanchey complex on the outskirts of Phnom Penh on Jan. 3, 2014. At least three people were killed when police opened fire to break up a protest by striking garment workers demanding a doubling of the minimum wage, police and human rights workers said. Cambodia garment workers throw stones at riot police during a strike near a factory on the Stung Meanchey complex on the outskirts of Phnom Penh on Jan. 3, 2014. At least three people were killed when police opened fire to break up a protest by striking garment workers demanding a doubling of the minimum wage, police and human rights workers said. (Heng Smith/Associated Press)


Cambodia garment workers throw stones at riot police during a strike near a factory on the Stung Meanchey complex on the outskirts of Phnom Penh on Jan. 3, 2014. At least three people were killed when police opened fire to break up a protest by striking garment workers demanding a doubling of the minimum wage, police and human rights workers said. (Heng Smith/Associated Press)

American “Squeeze the Workers” Spreads to Europe

This cannot be good news, at any level…

In 2008, 1.9 million Portuguese workers in the private sector were covered by collective bargaining agreements. Last year, the number was down to 300,000.

Spain has eased restrictions on collective layoffs and unfair dismissal, and softened limits on extending temporary work, allowing workers to be kept on fixed-term contracts for up to four years. Ireland and Portugal have frozen the minimum wage, while Greece has cut it by nearly a fourth. This is what is known in Europe as “internal devaluation.”

Spain Unemployment

While most of the debate over Europe’s response to the financial crisis has focused on the budget austerity enveloping the Continent, the comparatively unheralded erosion of worker protection is likely to have at least as big and lasting an impact on Europe’s social contract.

“It has a disastrous effect on social cohesion and a tremendous effect on inequality,” argued Jean-Paul Fitoussi, an economics professor at the Institut d’Études Politiques de Paris. “Well-being has fallen all across Europe. One symptom is the rise of extremist political parties.”

UPDATE:

On Monday, Ikea started taking applications for 400 jobs at the new megastore  near Valencia store, due to open next summer.

The company wasn’t prepared for what came next.

Within 48 hours, more than 20,000 people had applied online for those 400 jobs. The volume crashed Ikea’s computer servers in Spain.

“We had an avalanche of applicants!” Ikea spokesman Rodrigo Sanchez told NPR in a phone interview. “With that quantity, our servers just didn’t have the capacity. They collapsed. After 48 hours, we had to temporarily close the job application process. We’re working on a solution, to reopen the as soon as possible.”

That initial volume alone gives applicants a 1-in-50 chance of landing the job — three times more difficult than getting into Harvard last year.

And to complement  Porter’s reporting, Jared Bernstein helps out on the minimum wage policy debate.

I can’t open the paper these days without stumbling onto something about the minimum wage, which I take to be a good thing as it’s a simple, popular way to help address the problem of very low-wage work in America.  It’s not a complete solution; it’s not the only solution — it is, in fact, a relatively small-bore policy that sets an important labor standard: the government will compensate for the severe lack of bargaining clout among our lowest-wage workers by setting a floor below which we won’t allow their wages to fall.