Monthly Archives: June 2013

The Supreme Court Overstates Racial Progress

There is a common thread in both of the Court’s last two decisions: an appeal to illusory racial progress.

In Fisher v. University of Texas Kennedy argues that it may be time to replace race-based affirmative action with another system, “Strict scrutiny imposes on the university the ultimate burden of demonstrating, before turning to racial classifications, that available, workable race-neutral alternatives do not suffice.” While I would certainly prefer class-based affirmative action to nothing, I will below outline why race-based affirmative action is still necessary.

Yesterday’s decision about the Voting Rights Act (Shelby County v. Holder), aside from proving that Conservatives are perfectly willing to “legislate from the bench,” also appeals to imaginary progress. Roberts writes, “[Since 1965], largely because of the Voting Rights Act, voting tests were abolished, disparities in voter registration and turnout due to race were erased, and African-Americans attained political office in record numbers.”

So has America progressed enough that we can throw off Affirmative Action and Section 4 of the Voting Rights Act (which will, if Thomas is to be believed, lead to Section 5 being struck down as well)? Or are we, as Ginsburg argues, “throwing away your umbrella in a rainstorm because you are not getting wet.”

Let’s look at the evidence. The wealth gap between whites and blacks has grown, in fact, it has tripled. The study by Thomas Shapiro, Tatjana Meshede and Sam Orso find that a college education is a huge driver of that gap. A study by Martha J. Bailey finds that the college entry gap between the rich and poor has widened drastically over the past 40 years, driven largely by inequality.

African Americans still deal with the legacy of racism and oppression. Many blacks alive today can remember redlining, and lack of a home is still a major driver of black poverty. Just two weeks ago, the HUD discovered a subtle racial bias in housing opportunity. There’s a disparity in arrests for benign drugs and another in sentencing, especially for the death penalty.

The average inheritance of a black baby boomer is $8,000 while the average inheritance of a white baby boomer is $65,000. Elementary and high schools are still highly segregatedand schools with high minority populations are underfunded. In these circumstances, affirmative action is not an unfair boost, it is rather an equalizer.

What about all the African-Americans in public office? The truth is, African-Americans aren’t flourishing in public office. There are only two African-American senators (and there has only ever been one black senator in the south, and he was appointed, not elected). There is currently only one black governor and there have been few in the last 100 years. Much of President Obama’s cabinet is conspicuously white and male. The truth is that blacks are drastically underrepresented in the political sphere. There have only been 13 black CEOs of a Fortune 500 company. Ever. Another study finds that a mere 14 percent of college presidents are minority.

Further, the very voting restrictions the VRA aims to prevent still exist. In a particularly audacious move following the decision, Texas moved forward with a new voter identification law which had already been blocked and announced that its redistricting maps would no longer need federal approval. That would be a disaster, because Texas was one of many Southern states that used redistricting to keep Republican seats, even in times of waning influence. Other Southern states are already moving forward various methods (no Sunday voting, no early voting and voter ID laws) to keep poor people and minorities away from the polls.

“Our country has changed,” wrote Chief Justice John G. Roberts Jr. Evidence abounds that this is simply not true.

This piece first appeared on Huffington Post.


ALEC-Laffer Ranks Are About Ideology, Not Economic Policy

The American Legislative Exchange Council (ALEC) released its 2013 Rich State, Poor State rankings report in May. The report ranks states by “economic outlook,” but by the report’s standards a positive economic outlook  is narrowly defined by the extremity of regional anti-worker laws and regulations. ALEC’s metrics are more concerned with ideology than economic growth, prioritizing twisted value judgments over facts.

ALEC’s selective reasoning is blatantly obvious in its ranking of Mississippi as the state with tenth strongest economic outlook, largely because of low taxes, low minimum wage, and weak unions. ALEC’s rosy outlook on Mississippi is in stark contrast with this description of Mississippi from The Economist:

Mississippi spends less per student on education than all but four other states. It has a law that directs extra funds to schools in poor counties, but has not complied with it, [David Jordan, a state senator from Greenwood] complains, shortchanging the neediest spots by a billion dollars over the past four years. In all the states of the region and at the federal level, [Christopher Masingill, joint head of the development agency Delta Regional Authority] concedes, budgets for education and development have been getting skimpier.

The Mississippi Delta is in a particularly bad position, The Economist further reports: “The entire county has ten private businesses (other than farms), employing just 99 people. Like the region as a whole, it suffers from low rates of education and high rates of obesity and diabetes.”

ALEC’s ranking bears little resemblance to reality.  A recent report by Peter Fisher finds that ALEC, “fails to predict job creation, GDP growth, state and local revenue growth, or rising personal incomes.”

Another example of the report’s failure is the fact that this year’s BEA numbers show the economies of Washington, Oregon, California and Utah growing at about the same rate.  Why  does ALEC rank Utah as number one, while Washington is 36, Oregon is 44, and California is 47? The only reason for these rankings is a  bias against progressive economic policy. Utah is bolstered by its anti-unionism, low workers compensation payments, low minimum wage, and regressive tax system. The other states, although growing just as quickly, are held back in the ALEC report by their liberal policies.

The purpose of these rankings is to push the ugly legislative agenda of ALEC, which gives a state like Wisconsin, with disturbingly low growth rates but shown a penchant of anti-unionism, a gold star while more union-friendly states get hit with low marks. ALEC assumes that taxes drive wealthy people out of state, decreasing tax revenues. That’s false. Lower taxes will bring in more revenues? That’s false. Estate taxes reduce growth? That’s false.

The worst thing about the rankings isn’t the blatant partisanship masquerading as rigorous analysis.  State governments take these rankings seriously, and change policy accordingly. When Peter Fisher analyzed how states that followed ALEC’s prescriptions performed, he found the states were more likely to see a decline in median family income and an increase in poverty. The purpose of ALEC’s rankings is not to promote growth, but to give conservative legislators’ intellectual credibility. Look, they have white papers too!

ALEC’s lobbying goes practically unopposed in some states because the American labor movement is a shell of its former self. The Organization for Economic Cooperation and Development (OECD) data for 2008 (the most recent year for which all countries are available) shows that the unionization rate for America is far below average. This means that in America we have two parties beholden to corporate interests and no counterbalance. Is it any wonder that Larry Bartels found in 2005 that politicians respond almost exclusively to the preferences of wealthy voters and ignore the needs of poor voters?  There should be no surprise that lower unionization rates correlate with higher levels of inequality.  But if the union movement in America remains suppressed by powerful corporations, it’s hard to imagine anything other than ALEC-style legislation winning the day.

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Increase the Minimum Wage

Massachusetts is debating a bill that would increase the minimum wage from $8 to $11 by 2015,and then peg future increases to inflation.The increase would be a boon to low-income workers and help reinvigorate a stagnant economy.

Critics of minimum wage increases point to the neoliberal consensus (“textbook economics”): if you increase the price of something (in this case labor) demand for that product goes down and you get less employment. In a state of equilibrium and perfect competition, this analysis is absolutely correct, the problem is, the world isn’t a textbook. Anyone who has ever worked a minimum wage job knows that markets are not as fluid as economists assume. Let’s look at a few “real world” situations.

The most famous study on the minimum wage comes from economists David Card and Alan Krueger, currently chairman of the Council of Economic Advisers. They compared employment at fast food chains in New Jersey and Pennsylvania before and after New Jersey raised its minimum wage from $4.25 to $5.05 an hour. They also compared employment in fast food chains with relatively high wages before the change. Their finding directly contradicts standard assumptions: “Contrary to the central prediction of the textbook model of the minimum wage … we find no evidence that the rise in New Jersey’s minimum wage reduced employment at fast-food restaurants in the state.”

Paul Krugman, Nobel Laureate and New York Times columnist, writes that the study has “stood up very well to repeated challenges.”

Why was the conventional wisdom wrong? First, it may not be: there is some evidence that increasing the minimum wage will increase unemployment, but only slightly. But the biggest reason is that labor markets aren’t as fluid as textbooks report them to be. Wages should rise naturally as employers compete for workers, but often there isn’t much competition; the “reserve army of unskilled labor” artificially pushes down on wages. Now, there is certainly a point where the minimum wage will start to really press hard on unemployment, but international comparisons (and the experience of other U.S. states) indicate that it’s probably not $9.75.

Even if increasing the minimum wage did slightly increase unemployment, it may still be worth the cost: if the gains accruing to those who keep their jobs are greater than the losses to the few who lose them, then we’ve reached a Pareto efficiency, and the best way to go forward is to implement the policy and compensate those who lose (i.e. slight extension of jobless benefits and a worker retraining program).

The advantages to a higher minimum wage are two-fold. First, it decreases inequality by giving the working poor a leg up. In my state of Connecticut, a recent minimum wage hiked helped pull 250,000 workers from poverty. Keeping the minimum wage adjusted to inflation will help those workers stay above the poverty line in the future.

Second, it can stimulate demand and get the economy moving again. When a worker takes home another $10 a day, they can use that money to buy more food, toys and clothes, or they can use it to pay down debts. If they buy consumer goods that will lead to more employment for people who make and distribute food, toys and clothes, who then in turn spend more money (this is known as the “multiplier effect”). This increases employment and tax revenues. If they spend down their debts, that means future consumption can be higher and they are more financially secure. Aplurality of economists recently polled agree that even given the risks, raising the minimum wage is a good idea. It’s worth noting that the guardian of the neoliberal consensus, the Economist, has shifted toward favouring minimum wage hikes, noting that the experience of most developed countries empirically debunk the argument of free-market dogmatists. It’s a win-win-win policy.

This article also appeared on Policymic and a similar piece appeared in The Moderate Voice.

A similar version of this article appeared in The Day.

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Newest Strike Against Walmart Battles Years of Blatant Disregard for Workers

Walmart has a long history of evading the law, abusing its workers, and suppressing strikes through illegal means. This week, OUR Walmart (Organization United for Respect) is beginning the first sustained strike against Walmart, and it’s about time. News of the strike arrives just as Walmart is facing public scrutiny for dumping toxic sludge into California’s sanitary sewers.

Walmart has also been in the news over the last several years for rampant sex discrimination. In 2011, the Supreme Court ruled 5-4 in favor of Walmart in Dukes v. Walmart, a class action suit filed by Betty Dukes on behalf of one million female employees of Walmart. The court ruled that the employees of Walmart who had been harmed were “too diverse” a group. In May of 2012, 1,975 women filed complaints with the Equal Employment Opportunity Commission. In fact, one woman from every Walmart region in the country filed a complaint, all alleging pay discrimination. Lawyers hope that these diverse regional suits will be upheld by the Supreme Court.

Barbara Ehrenreich, who spent three months undercover working in Walmart, wrote an essay about the experience for Inequality Matters titled “Earth to Wal Mars,” which she later adapated  for the New York Times. She writes that Walmart puts strong pressure on employees not to unionize, requiring them to attend anti-union lectures where they are warned, “a pro-union vote is likely to lead to a company decision to shut down the factory.” A House Committee on Education and the Workforce report found:

In the last few years, well over 100 unfair labor practice charges have been lodged against Walmart throughout the country… Walmart’s labor law violations range from illegally firing workers who attempt to organize a union to unlawful surveillance, threats, and intimidation of employees who dare to speak out.

And Walmart follows through on its threats. When orkers who cut and packaged meat in Walmart in February 2000 voted to join the United Food and Commercial Workers union, many of their fellow workers nationwide  decided follow suit and vote for unionization. Walmart responded by announcing a decision shift to using pre-packaged meat in the store. The employees had to wait three years before a court ordered Walmart into discussion with the union, a decision that was still in the appeals process in 2006. Walmart stalled, so the employees brought another complaint to the National Labor Board, accusing Walmart of illegal retaliation. The board ruled again in 2009 that Walmart would have to talk to the union. Both sides sat down in early 2009, but to this day no agreement has been reached.

Mother Jones reports that, “In 10 separate cases, the National Labor Relations Board has ruled that Wal-Mart repeatedly broke the law by interrogating workers, confiscating union literature, and firing union supporters.” In one particularity brutal instance in 1997, Walmart fired four union supporters, “one of whom was beaten by the plant’s police on the day of the 1997 election.” The workers were eventually reinstated—15 years later. In another case, a Walmart store on the verge of unionizing was shut down. Apparently, Walmart would rather close a store than run a unionized shop.

Walmart has also demonstrated a cycle of abuse via unpaid wages. Earlier this year, Walmart had to pay $1.1 million to 845 workers for unpaid wages. Ehrenreich writes ofworkers that were asked to work overtime without compensation, and in 2001 Wal-Mart was ordered to compensate 69,000 workers in Colorado for $50 million in unpaid wages. In 2008, Walmart paid a settlement fee of $54.25 million to workers in Minnesota, then had to settle another lawsuit that spanned the country to the tune of $352 million. The settlement covered 63 separate cases in 42 states. Last year, the Department of Labor ordered Walmart to pay another settlement fee of $4.8 million to 4,500 employees.

Among the meagre compensations alllotted to Walmart employees are health benefits. When Ehrenreich infiltrated Walmart, employees had to pay between $228 -$472 a month to opt into their health plan, which does not cover dependents. Fewer than half of the company’s employees are covered for health. The 2004 House reportfound that between 41 and 46 percent of workers receive health benefits, which is significantly less than the national average of 66 percent. Workers who are covered pay 42 percent of the cost, compared with the 16 percent national average.

Many Walmart employees struggle to pay bills, and an internal document released last year revealed a hideous compensation plan. The document reveals the policy for raises:

“Low-level workers typically start near minimum wage, and have the potential to earn raises of 20 to 40 cents an hour through incremental promotions. Flawless performance merits a 60 cent raise per year under the policy, regardless of how much time an employee has worked for the company …”

Because Walmart workers are so poorly compensated, they are encouraged to apply for food stamps and other welfare benefits at orientation. The effect is to shift costs from businesses to taxpayers. According to the House report: “one 200-person Walmart store may result in a cost to federal taxpayers of $420,750 per year – about $2,103 per employee.”

Walmart settled a lawsuit in 2005 for $11 million for hiring and exploiting undocumented workers.

As if on some sort of perverse mission to violate every U.S. labor law in existence, Walmart has also been fined for using child labor, paid $6 million for discrimination against handicapped people, and threatened workers who file OSHA complaints telling them any fines would be taken from their paychecks.

Overseas, Walmart has come under fire for multiple incidents of child labor use, and continues to decline to compensate victims of the tragedy that occurred in their Bangladesh factories earlier this year.

Given the company’s history, it is not altogether surprising that since OUR Walmart’s inception, Walmart has worked to crush the budding movement. A recent report from American Rights at Work found that as workers have increased their protests and demands—with notable actions like the Black Friday Strike last year—Walmart has retaliated aggressively. The continually disguise their acts of retaliation as routine enforcement of company policy and threaten to fire workers who speak out. OUR Walmart is the most recent attempt to stand up to the corporate bully. OUR Walmart maintains a petition that you can sign, but the most important show of solidarity is to avoid shopping at Walmart and encourage others to join in the boycott. Walmart is trying to ignore the strike, calling it a “publicity stunt,” but if it starts to hurt their bottom line, they’ll probably reconsider.

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