Category Archives: Business

Dear Councilman Grosso: Please Be Our Ally and Support 77

Dear Councilman Grosso,

We’ve met before. I worked at a bar in Chinatown that you used to frequent. We only spoke a few times, but I remember feeling proud to have you as our guest because you had a reputation for being an ally – an advocate for women and for the LGBTQ community. I’m writing to you today to ask you to be an ally to vulnerable workers in Washington, D.C. by supporting Initiative 77, which will raise the wages of tipped employees and help stabilize a flawed system.

The restaurant industry in Washington has afforded me many opportunities as both a bartender and manager. I have a deep respect for my service industry peers, and when my colleagues came out against 77, I voted “no” alongside them. In retrospect, the pressure in the industry was substantial to oppose, and then to repeal. Yet when the voters of D.C. popularly supported 77, I began to realize that our conversation about the initiative had been imbalanced. We had not heard from bartenders who supported 77 and, perhaps most importantly, we had not heard from many of the most vulnerable members of our industry.

In support of these vulnerable workers, I testified against the repeal of 77 after most of the Council had left for the night, dashing from work after last call at 1:00 a.m. and returning to close the bar after my testimony. While I waited my turn, I heard the fears of my colleagues who work in some of the city’s most renowned restaurants. They testified that 77 would catalyze the decline of our vibrant restaurant industry. Many fears reminded me of those I heard when other voices lobbied against paid sick days. Meanwhile, so many whose fears are realized on a daily basis went unheard that night. Once more, I will try to speak for them, as one of them.

I have felt the volatility of subsisting on tips. At that Chinatown bar, our staff sometimes missed a week’s income when bad weather drove everyone away. More recently, while pursuing my graduate degree, I worked daylight hours, which cut my income to a fraction of what it had been. While I earned meager tips off a handful of guests, I meticulously cleaned and prepped the bar for the busy night ahead. The system allowed my hard work to go unpaid.

I believe that Initiative 77 is a step toward professionalizing this industry and giving all tipped workers the stability and respect that they deserve. This is a bill meant to help the most vulnerable in our industry. It is for women who smile through degrading treatment because we need a tip. It is for underpaid immigrants who toil tirelessly to keep things running, often doing double the work for half the pay. It is for the welfare of our residents who are not chosen to work in the city’s highest-grossing restaurants.

I have seen enormous, unjustified disparities in pay. As a manager, I’ve seen the books. I’ve seen what restaurants spend on turnover, and I’ve witnessed the revenue lost from an undervalued and sometimes uninspired workforce. I also know that rising expenses are absorbed through small increases in food and beverage prices. The industry will shift to accommodate a higher base wage.

The Council has repeatedly asked these vulnerable workers to show themselves. It has asked why they have not spoken more loudly. Councilman Grosso, as an ally, I believe you know better. These groups are more dependent on good relationships with management and staff than they are on any city law. And they already voted once. I am asking you to stand for them. I am asking you do what’s right.

Supporting 77 is a way for you to stand for the rights of all tipped workers across our city. With your support of 77, you’re not choosing between restaurants and workers; you’re choosing to create a more just and equitable system for all.

Aubrey DeBoer

Aubrey DeBoer is a bartender and restaurant manager in Washington, DC with nearly 10 years of industry experience. She has been a Ward 5 resident for the past eight years.

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Filed under Business, Gender Issues, Labor, Poverty and the Justice System

Listen to Tipped Workers

Minimum wage expert Dave Cooper said on a recent podcast episode that the DC Council’s September 17 hearing on DC’s Initiative 77 was “probably the craziest city council hearing/state-level policy hearing I’ve ever been to, and I’ve testified in a bunch of different places.” DC Council Chairman Phil Mendelson was, as Cooper noted, hostile to anyone speaking in favor of upholding the initiative and raising wages for tipped workers. Observe Mendelson interrogate Sophia Miyoshi, for example, a five-year veteran of DC’s tipped-wage workforce who helped run the “Yes on 77” campaign. As the video below shows, Mendelson looked her up on social media and used the fact that she had recently moved and hadn’t updated her Facebook and LinkedIn pages to try to discredit her testimony.

Miyoshi’s voice is an important one, especially given the “No on 77” campaign’s constant refrain that we should #ListenToTippedWorkers. It is true that a number of servers and bartenders have spoken out against receiving a raise. But in addition to their arguments’ inconsistency with the facts, these workers comprise an unrepresentative subset of employees in DC’s tipped industries. For one thing, a full 27 percent of DC’s tipped workforce labors outside of the restaurant industry. Nathan Luecking, a high school social worker in Ward 8, testified that the tipped jobs most commonly available to the parents of students he works with are not in “the higher-end restaurants uptown,” but as “hairdressers, nail technicians, parking lot attendants, and food delivery drivers.” He noted how one student’s parent, who works as a hairdresser, “does well on tips when folks have money to spend, like back to school or after tax refund season. However, for the rest of the year, she struggles to make predictable income, and some months she can’t pay her rent or utilities on time.”

For another, most of the servers and bartenders who comprise 40 percent of DC’s tipped workforce have different experiences than the people wearing “No on 77” pins. “Many of those who oppose Initiative 77 have been in the restaurant industry for 15 to 20 years and have been treated well by their bosses,” former DC tipped worker David Sexton, who also testified on September 17, pointed out to me after the hearing. “It’s great that the system has worked out for them, but for the majority of tipped workers it has not.”

Because of fears of employer retaliation, the voices of this lower-wage majority of tipped workers have been underrepresented in DC’s debate. Even when employees and bosses have a strong relationship, employees rightfully worry about taking public political stances their bosses might not like. Will it affect their shift schedule or their next request for time off? Will they be less likely to get a raise or a promotion? The safer route, if you’re struggling to make ends meet and don’t want to rock the boat, is to stay quiet. When bosses invite campaigns into their workplaces to spread misinformation and employees feel overt pressure to take certain stances – as multiple witnesses testified they did – is it any wonder more haven’t spoken out? Thea Bryan, one of the brave tipped workers who has been vocal in her support of Initiative 77, was fired shortly after giving a speech on the issue.

For those interested in hearing them, however, we now have ample documentation of these workers’ voices. Well over a dozen people who have spent time working in tipped jobs in DC courageously stepped up and testified publicly at the hearing.

“Many former tipped workers might have stayed in the restaurant industry if not for the hostility, wage theft, and abuse they faced, which is in no small part a result of the failed subminimum wage model,” Sexton told me. These are some of their and current tipped workers’ stories, in their own words.

Eric Harris Bernstein

“I have been a bartender most of my adult life. I have bartended in five cities, including for two years right here in DC, where I made a base wage of around $3 per hour. Now that I am pursuing my graduate education in the Bay Area, I have returned to bartending in order to support myself. In my current position, like all tipped workers in California, I make the full minimum wage – in my case, $13.23 per hour. I make that in addition to tips, which hover between 17 and 22 percent of sales.

I told this to a friend who bartends in the Penn Quarter and he was shocked. He had assumed, based on the National Restaurant Association’s talking points, that tipping had disappeared in California. That is the degree to which NRA scare tactics have defined and misdirected this debate. I am here to correct the record.

I am here to tell you that this additional base pay will make an enormous difference in the lives of your constituents, as it has in my own. It will lift families out of poverty, as it has in other fair wage cities and states. And it will improve the restaurant industry, as it has in booming fair wage restaurant towns like Seattle and Portland.

I’d also like to correct the record on another matter. A number of councilmembers have stated that current law guarantees DC’s tipped workers the full hourly minimum wage. It does not. Under current law, if a DC restaurant worker earns $300 in tips on Friday, but earns no tips on Monday, they are earning just $3.89 for each hour they worked that day. The balance between the tipped minimum wage and the full minimum wage is not made up by the restaurant but is pulled out of the $300 already in that worker’s pockets.

In other words, the current system pulls tipped workers down towards the minimum instead of building them up beyond it…Restaurant workers have a right to a reasonable base pay that does not eat into their tips. No other industry is exempt from this obligation.”

Thea Bryan

I have been bartending on and off for many years…Most recently I have been working at a well-established restaurant in Ward 3 called Arucola. On a recent Saturday night when it was pouring down rain I made S27. Not because no one was tipping but because it was dead due to the torrential downpour outside. Tell me, do any of you get paid less because the weather is bad? $3.89 is not a fair wage and it doesn’t make up for times when business is slow, like January, February, August, when it’s raining, when it’s snowing. Workers deserve a fair hourly wage to help offset the slow times…

There has been a lot of conversation as to why more tipped workers aren’t speaking out in favor of this initiative. I can give you my personal experience, which is the endless harassment I have received. There has been a concerted effort to find out where I work. Per the threats people want to come in and not tip me or get me fired. I have felt the wrath of other coworkers, with whom I generally have had great working relationships, only to hear them make false claims about Initiative 77 being a push to stop tipping. This is untrue. The misinformation on this has been ubiquitous and unyielding. Interesting that the same coworkers fighting against this were just weeks later complaining about not being able to make ends meet with their tips. Fearmongering of the loss of livelihood has caused many to engage in vitriolic rhetoric against anyone who is perceived as a threat.”

Woong Chang

“I’ve been living here in DC since 2009 and I’m a current tipped worker in Ward 5. I’m here today not only as a restaurant worker but also as a deeply concerned citizen, to urge the city council to respect the will of the voters and vote no on this preposterous bill named “Tipped Wage Workers Fairness Amendment Act of 2018”…

Quite frankly, I could sit here and tell you all the stories, statistics, and data, both anecdotal and scientific, but…you’ve heard them all, we’ve been having this conversation since 2012. This personally is my third time testifying on behalf of raising the tipped minimum wage here in DC.

So instead, here’s something you haven’t heard much. In fact, this is why I’m fighting for the elimination of the tipped minimum wage. My dream, ever since I started in the restaurant industry, has been to see the day that my industry is ‘professionalized’…This is what I love to do and this is what I am passionate about.

Chantal Coudoux

“I am a DC native who grew up in Ward 6, moved to Ward 4 and then returned to Ward 6…I have been a part of the restaurant industry here and in California for over a decade…

As the daughter of a refugee, I prioritize the folks who work support staff roles…and do not make 60k or 80k a year in this industry; the folks who came to DC not because of the trendy restaurant scene but because of other global forces; the folks who if they lose their jobs, cannot just bounce to the next one; the folks who make restaurants run but who aren’t up front and center; the folk who might not speak English as their first language; the folk who like my father cannot vote in the U.S. because of immigration status or incarceration. These are the folks who are overwhelmingly victims of wage theft, who will not bring up to an employer that they did not receive minimum wage because this would cost them shifts or their job entirely.

To be clear, I am not one of those people. I was born with skin color privilege, the “right” nationality and the “correct” native language. But these folks are my blood and chosen family. I say all this not because they need me to “save them” or their tips or to speak for them, but in solidarity with workers whose voices were never heard in the conversation. I talked with these folks; I listened when they told me it did not matter if they spoke up or they were too scared to given the racist administration we are facing or they did not trust in the council to not overturn the initiative. Yes, industry people were split but the electorate heard these lost voices. You apparently did not, just as you are choosing to ignore voices of the electorate.”

Aubrey DeBoer

“I voted ‘No’ on Initiative 77. However, I am here today to defend it. Since the election, I have come to read and understand both sides of the issue, and I believe that many of the arguments against it were false. Furthermore, I believe the fundamental duty of a modern democracy is to respect the voice of the people. Implementing 77 is an opportunity for us Washingtonians to do just that.

For 8 years, I have worked as a professional in the service industry…

Often, our livelihoods as service workers are jeopardized by the uncertainty of what we might make that night. The minimum wage wouldn’t erase this uncertainty, which restaurant workers broadly acknowledge, but it would be a step in the right direction. Now, our tenuous tips put us in precarious situations. We are at the mercy of unpredictable generosity of guests, which subjects us to toleration of all kinds of bad behavior.

When the #metoo movement began to swell online, I laughed away the thought of posting my own experiences. Why would I? Harassment is nearly a daily issue. Tipsy guests misread my friendliness as an invitation for advances. But I just need their money. Men take advantage of a crowded room to grab me. And I just need their money. People yell insults about my intelligence or my body. And I still need their money. This is my income. Guaranteeing a stable base wage would be a step towards professionaIizing this industry and giving restaurant workers Iike me the respect that we deserve.”

Ann Eveleth

“I live in Petworth and I am a registered voter in Ward 4. I am also currently employed as a restaurant server, and I have worked in the industry for more than 15 years spread across my working life, including nearly 6 years here in the District. The proposal to overturn the will of the majority of voters who supported Initiative 77 not only threatens the benefits I expected to gain as a restaurant worker by having my industry (finally!) upgraded to 21st century labour standards, but also directly threatens to flush my own vote in favour of the initiative down the toilet, along with those of the other 47,229 voters who will be retroactively disenfranchised by such a move, especially in wards whose demographics are most representative of the most vulnerable workers in the District…

I began my first restaurant job as a high school student in downriver Detroit in the 1980s. The so-called ‘tipped minimum wage’ then , in the 1980s, was about $1.85/hr federally. Today, in 2018, more than 30 years later, it still sits at $2.13 an hour. That’s basically an increase of one penny a year over three decades – it’s practically a world record in wage suppression and it’s only been sustained due to the unbending resistance by the powerful lobbying group known as the ‘other NRA,’ the National Restaurant Association…

I have a great deal of sympathy for the genuine fears of some of my coworkers in the industry, but I submit that these fears are based on projections based on NRA propaganda in this post-truth climate, and not based on facts.”

Abdul Fofana

“I’ve been working in the hospitality/service industry for 11 years…I’m currently the lead server-slash-banquet captain at Dirty Habit DC…

I am a strong supporter of Initiative 77. I support the initiative for several reasons, but most importantly because restaurants must now make staffing decisions that both benefit the restaurant as well as its employees. Washington DC’s restaurant market is highly competitive with new restaurants constantly opening. Business owners often find themselves scrambling to fully staff their restaurant with qualified and talented individuals. Due to the oversaturation of restaurants, managers and owners are instead hiring less-experienced staff. This results in overstaffing in order to accommodate the lack of experience. Restaurants do not currently take into consideration overstaffing because of how low the wages are for their front-of-the-house staff…

With Initiative 77, the wage increases will be a benefit to guests, employees, and business. Managers can now construct hiring and floor plans with the goal of hiring talented, experienced employees…With the greater talent, less tipped employees can cover the floor…With greater talent, guests enjoy the dining experience without preventable hiccups in service. With greater talent, employees are happy with their wages, empowered to push farther in their hospitality careers, and refer others to work in such a beautiful field. Initiative 77 is a win for everybody involved in the hospitality industry.”

Matthew Hanson

“I am a Ward 7 resident, a former tipped worker, and the Director of DC Working Families. I am here today to testify in support of one fair minimum wage and against the proposed legislation to repeal it.

When voters go to the polls, we expect our decisions at the ballot box to be respected. When Republicans in Congress have attempted to interfere in our local decisions, we have stood up against their efforts, regardless of where we stood on the issue, because we understand it’s important to respect the democratic process.

For many of us, this isn’t just about defending a fair and equitable raise for tipped workers, it’s about defending our decision at the ballot box. One that voters took very seriously.”

Pearl Rose Hood

“I have worked as a tipped worker for nine years at a variety of establishments…From my very first job, and through the years, I have been distraught by the income instability and by employers’ lack of empathy in following regulations put in place to protect workers’ well-being. I experienced wage theft at Woodberry Kitchen, owned and operated by Spike Gjerde, where we tipped out a portion back into the house, so back into the pockets of its millionaire owners…

I have worked as a bartender, server and as support staff; as a busser and food-runner. I can say that support staff, who also depend primarily on tips, are typically paid much less. Support staff are often immigrants, people working more than one job, supporting many others. I don’t believe they are being fairly represented today.

I have been pressured to vote no on 77. My most recent employer required us to hand out “vote no” cards with every customer’s check. I received numerous emails detailing how to email my councilmembers and testify against Prop 77. I know of an industry colleague who was fired from her position in southwest [DC] because she would not solicit customers to vote no.

I believe there is misinformation and fearmongering from the part of employers and restaurateurs. Tipped workers, especially the lowest-earning ones, are scared for their livelihoods to a degree that keeps them from feeling able to speak up.”

Dia King

“I have been a valet driver for 4-and-a-half years. I’ve lived and worked in DC most of my life and I currently live in Ward 7.

When I first started working as a valet, I was paid $7 an hour plus tips. Now, 4-and-a-half years later, I still have not gotten a raise. Even though I have asked many times, they typically make up excuses like saying it’s not in the budget, and even one time they simply refused. Yet at the same time I have witnessed multiple increases in valet rates, and as I also noticed, when the valet rates went up, my tips went down.

I enjoy working at the hotel and all of the relationships that I have built. I have met so many amazing people, guests, co-workers and even celebrities. I have stayed at my job because I like it, but as a professional, I feel undervalued.

When working, I am required to “post up,” which means stand up straight, don’t lean for hours, have a smile on my face, greet every guest who comes to the hotel, and I’ll get 100% on my shop score if I add ‘I’ll be happy to.’

How can I be happy to make our guests happy if my company won’t take care of me? I live in a city where the cost of living is constantly going up. Rent, food and transportation continues to increase while my wage stays the same. If our guests can afford $50+ for parking then my company can afford a livable wage for me.”

Sophia Miyoshi

“I have worked in the restaurant industry primarily as a tipped worker for seven years, and throughout this time I learned that working in this industry is hard work that requires physical, mental, and emotional labor. I also learned that it is one in which abuses, biases, and harassment can run rampant. On top of the intensity of the work we also have to endure sexual harassment from customers, coworkers, and even bosses, racial discrimination in hiring and promotional practices, immigration threats, wage theft, and general daily abuses.

Because of what I experienced and witnessed working in restaurants, and all that was tolerated and normalized, I wanted to do what I could to improve the industry that I hold so close to me. I became a member at the Restaurant Opportunities Center and eventually left the industry to be brought on as a community and worker organizer, which is my role today.

I am here in support of Initiative 77…

Restaurant work is a profession, and therefore, in the restaurant industry, we should be treated as professionals. Working in the restaurant industry has been highly devalued and many people do not see or treat these jobs as a career. It is not possible for our industry to be truly professionalized when we are being paid $3 to $5 an hour. Professionalism starts with professional wages.”

Nteboheng Maya Mokuena

I am a Ward 5 resident and I am here to testify in support of Initiative 77.

Not only am I climate and racial justice organizer, but I am a former tipped employee. While some bartenders and waitresses may earn more than $15/hour with tips, that is not the case for many tipped workers in DC. I know specifically when I worked in different cafes that there would be nights when I would take home $2 in cash after splitting it with my fellow employees. My income insecurity as a tipped employee meant not only living paycheck to paycheck, but that in order to earn more tips, I did need to endure more sexual harassment, I needed to wear more makeup, and I needed to take on more shifts while maintaining my status as a full-time student at American University…

It’s important for workers to not have to depend upon the graciousness or harassment of customers to receive living wages — that is the responsibility of the government and our employers.”

Trupti Patel

I happen to be a bartender…Last week my “sister” suffered an emotional breakdown at work. She was at her breaking point to be at work on a day/shift where all of us (2 bartenders and 6 servers) were on the floor for at least 3 hours with no patrons due to bad weather. The indifference displayed by the management to all staff that was in clear economic anxiety was the straw that broke the camel’s back. To hear ‘it’s just one bad day, it’ll pick up later on in the week’ is not a comforting response when you’re living on an economically precarious shift to shift pay cycle…I’d learn later on that she had become homeless due to the economic instability of being a tipped service industry worker and that all of her belongings were to be auctioned off that day. She was counting on coming to work and being able to earn an income that day, but when your income potential is put at the mercy of unpredictable factors such as weather, unfair scheduling, and whims of generosity from strangers it’s in reality economic roulette each shift.”

David Sexton

“I am a Ward 4 Resident. I was a tipped worker in D.C. for 2 years. I left last fall in part because of the unsustainability of the work.

I am here to testify in support of the full implementation of Initiative 77. As a former tipped employee in the District of Columbia, I found that the current wage system is volatile and hostile to workers. The subminimum wage of $3.89 per hour is little more than a tax buffer, meaning tips are the only way for servers to make ends meet. When the cost of labor is subsidized by customers, pay becomes unpredictable and can change every period. Anything from weather, illness, or a customer’s mood could impact my tips. A bad night or week meant working more shifts the next, leading to irregular schedules and unpredictable results. This lack of a safety net often led to difficult decisions. Without a fair wage, I felt compelled to go to work sick because I was afraid to lose the money. As a Type 1 Diabetic, I often worked through episodes of high and low blood sugar when I should have taken a break or gone home because I knew that I could not miss that opportunity to make money.

Under a tipped wage system, many workers also make less than minimum wage whenever they work outside of a service period. For example, at one tipped job that I held last year, up to a quarter of my shifts were spent opening and closing the restaurant before and after service. Because there were no customers during this period, my colleagues and I earned less than $4 an hour for our hard work. This drags down the average wage, forcing us to borrow from our ‘good shifts’ to offset paltry earnings. It’s an unequal system that requires workers to maintain the owner’s property and get little in return. It’s an unfair, two-tiered wage system that no white-collar employee would accept. Tipped workers deserve the same…

The movement to repeal Initiative 77 has been bankrolled by the National Restaurant Association, management consultants, and is backed by people like Mark Meadows in the House Freedom Caucus. When powerful interests publicly claim the initiative is unaffordable and spend hundreds of thousands dollars pitching to progressive voters, I have to wonder if they care about the many or the few.”

Chandrasekaran Shanmugam

I live in Maryland and work in DC. I [have been] working in [the] hospitality industry for 15 years in various positions.

I would like to bring the following to your attention in support of Initiative 77…

People voted for Initiative 77 in the same ballot that many of you were selected to represent us.

Your victory and the Initiative 77 victory are each side of the same coin. You cannot take one and ignore the other…

It is simple math that $15 per hour with tips will give more earnings than $3.89 with tips. In the states where one fair wage is implemented workers get tips in addition to the one fair wage.”

Griffin Tanner

“I’ve lived in DC for 6 years and I am a Ward 1 resident. I worked in the restaurant industry in DC for 3 years first as a runner and later as a bartender. However, this past June, after the election, I transitioned out of the industry. I believe this is significant. I am speaking here today because I am no longer at risk from unfavorable treatment from an employer and there’s several people still in the industry who support 77 but don’t feel comfortable speaking out against it in the face of “Save Our Tips” posters. So I’m here today to uplift those voices…

My own experiences working in the service industry show why initiative 77 would be a positive change for service workers.

When initially hired as a bartender, I earned $7 an hour plus tips, but about half a year into the job, our employer suddenly lowered the base wage to $3 an hour. That’s over a 50% decrease in base wage because our tips were quote unquote “high enough.” This dramatically lowered my expected earnings and affected my financial planning and security. About half of our staff quit. I considered leaving but was in in the middle of pursuing a degree and not in a position to search for a new job, so I had to rearrange my finances and cut back on spending to deal with the decrease in earnings.

Now, the company was not wrong for doing this because it was completely within their legal right. However, workers should not be subjected to this kind of unpredictability in earnings, whether it’s from changes to their base wage or from other characteristics in the industry such as inconsistencies in tippings throughout the year. With I-77, a stable base wage would prevent such unpredictability.”

Venorica Tucker

I am a 70-year-old African-American woman who has raised my children by myself (I have three sons). I was born and raised in Washington, DC and have worked in DC as a tipped worker all my life. I now live in Prince George’s County. I work very near here, at two very prominent places, providing food service and receiving a tip…

I discovered ROC and I supported many of the programs that they initiated, programs like ban the box, paid sick days, and their advocacy against sexual harassment in the workplace. I have been working to help them realize one fair wage and Initiative 77. So I was very happy on election night when I saw that we in fact had won when we were told we probably wouldn’t.

And when I hear you, Mr. Chairman, make the comment that you’ve heard the people, you’ve heard the workers, and the workers are all opposed to this – I’m a worker, 70 years old, working in this industry…For you to say that we’re saying ‘we don’t want this,’ that’s not the truth…

You’ve met with these people, not with us, the people who are for Initiative 77, but you’ve met with the people opposed to Initiative 77, and you’ve coached them, you’ve told them what to come here and say, and I am so disappointed in this kind of action.”

(Tucker’s allegations are accurate and confirmed by reporting in The Washington Post.)

If Phil Mendelson and his colleagues on the DC Council (particularly Kenyan McDuffie, Trayon White, Anita Bonds, Jack Evans, Vince Gray, and Brandon Todd) were truly interested in listening to tipped workers, these stories would give them pause. If they were truly interested in the facts, they’d take a closer look at the evidence a plethora of researchers, clergy, businesspeople, women’s rights advocates, civil rights lawyers, worker advocates, public officials, and other DC residents also presented to them at the hearing, and on many other occasions. And if they were truly interested in representing the people of DC – rather than the wealthy business executives who have donated to their campaigns – they wouldn’t be trying to repeal what their constituents voted for.

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Hold Up, Bernie! Stopping BEZOS Requires a Different Approach.

Amazon’s CEO, Jeff Bezos may be the wealthiest person in the history of the world: as of September 6, his net worth is $168 billion. At the same time, his company’s employment practices are terrible. At Amazon fulfillment centers (the warehouses in which they prepare orders for delivery), wages are low, conditions are grueling, and attempts to unionize are squelched at every turn. If Bezos made, say, $10 billion over the past year instead of the $84 billion he actually made during that 12-month time period – if he was unbelievably, ridiculously rich rather than record-breakingly rich – he could have given each of his employees worldwide (not just the warehouse employees) a $130,000 bonus.

That’s the backdrop for the Stop BEZOS Act, a bill Bernie Sanders just introduced in the Senate. Like a similar bill introduced in the House of Representatives by Ro Khanna last summer, the Stop BEZOS Act (which stands for “Stop Bad Employers by Zeroing Out Subsidies Act”) would make large employers – defined as those with 500 or more employees – pay taxes equivalent to the amount of federal money spent on their workers’ public benefits. That is, the Sanders and Khanna bills would penalize employers whose employees’ incomes are low enough to qualify for SNAP (food stamps), free or reduced-price school meals, rental assistance, and health coverage through Medicaid.

Unfortunately, these bills reinforce dangerous stereotypes about public assistance, are likely to do more harm than good, and should be opposed. There are much better ways to fight back against the corporate greed and low wages Sanders and Khanna rightly condemn.

To understand why the approach in and messaging around these bills is so damaging, consider the tweet and embedded video clip below from Fox News host Tucker Carlson.

On the one hand, it’s great to see a Fox News host calling out the underpayment of workers by insanely rich people. But note the way Carlson talks about this problem. Amazon “employees are so poor, you’re paying their welfare benefits.” Bezos is “offloading his payroll costs onto taxpayers.” This language is designed not just to get people angry about Bezos – it’s set up to pit “taxpayers” and “you” – Carlson’s viewers – against people who struggle to make ends meet and receive public assistance. One possible response to this message is “you’re right – Bezos should be paying his workers more!” Another, especially given the programming typical from Fox, could very well be “Why the hell am I, a taxpayer, paying for welfare benefits for other people? Let’s cut them!”

Though Sanders and Khanna are two of the most reliably power-balancing members of Congress and mean well, their language is alarmingly similar to Carlson’s. Sanders pitched his bill with the promise that “the taxpayers of this country would no longer be subsidizing the wealthiest people in this country who are paying their workers inadequate wages.” Khanna said “taxpayers shouldn’t be responsible for paying the expenses of workers employed by multibillion-dollar companies.” Sanders and Khanna are clearly blaming rich people, not people who are struggling to get by, but they’re still creating a distinction between “taxpayers” and the workers who receive public assistance.

This distinction is a false one. Workers receiving public assistance are themselves taxpayers. Their overall taxes are lower than those of richer people, largely because we have a moderately progressive federal income tax. But when it comes to federal payroll taxes and state and local taxes, such as sales taxes, they actually pay a higher percentage of their incomes than rich people do.

Another problem with Sanders’s and Khanna’s framing is that public benefit payments that help struggling workers make ends meet are not “subsidizing the wealthiest people in this country,” as Sanders claims they are. Amazon pays workers poorly because they can, not because food stamps, rental assistance, and Medicaid are working overtime to keep working families and vulnerable adults afloat. Does anyone really think that, were these programs to be cut, Amazon would start paying their workers enough to live on? The company’s concern is their profits, not keeping their workers out of poverty.

Moreover, the level of public assistance in this country is far too low. According to data from the Congressional Budget Office, for instance, the average household in the second income quintile (the 20th to 40th percentile) made $30,600 a year in market income in 2014, which isn’t too far off the median income of an Amazon worker today. This average household receives $6,200 in “means-tested transfers,” which include the programs the Sanders and Khanna bills deal with, and after Social Security, Medicare, a few other programs, and taxes are factored in, this average household takes home $44,500 annually. That’s still $6,500 lower than the budget a one-parent, one-child household would need to “attain a modest yet adequate standard of living” in Fort Wayne, Indiana, a city with a lower cost of living than most other places in the country. In a more expensive area and/or for a bigger family, it’s not even close to what the household would need. This bill erroneously suggests that Amazon’s workers would be fine without public assistance if Amazon were to raise wages, but the reality is that higher wages would be unlikely to obviate the need for families to have additional support.

Public benefits are an excellent use of our tax dollars. Not only do they help people meet their basic needs in the short run, they carry long-run benefits for kids as well. And since a lot of people living in poverty are unable or not expected to work, public assistance would be needed even in an economy in which all companies treated their workers fairly. We should be expanding public benefits – as both Sanders and Khanna surely agree – not lending credence to the arguments of people who seek to demonize them.

Beyond the bad messaging, the Sanders and Khanna bills, if enacted, would likely cause immediate problems. As my former colleagues at the Center on Budget and Policy Priorities Bob Greenstein, Sharon Parrott, and Chye-Ching Huang explain:

The bill would create powerful incentives for employers to minimize the number of workers they hire who likely qualify for Medicaid, SNAP, and the like — that is, workers in low-income families — and instead hire or retain people less likely to qualify for these benefits…

The bill includes a provision barring an employer from asking job applicants about their benefit receipt. But an employer does not need information about whether a job applicant is receiving benefits to take steps that limit the hiring of workers likely to receive benefits…That’s because information about a worker’s family and health often emerges in job interviews and even more so after an individual is employed. Some employers also get information about dependents for the purpose of administering various benefits or withholding the proper amount of taxes from paychecks…

Moreover, prospective employers that couldn’t secure such family-related information directly could look for other indicators of whether an individual’s household income is likely low and whether the worker and his or her family likely qualify for benefits — including, in particular, a worker’s race, gender, and neighborhood

Finally, some employers may pressure employees not to sign up for programs for which they qualify to reduce the tax penalty on the employer. Even without such pressure, some workers may decide that receiving benefits that their families need has become too risky…[T]he bill’s tax penalties would likely influence employer decisions on which employees to let go when they trim their workforces to cut costs, such as during recessions…The chilling effect could be substantial…

In addition, the legislation would likely lead to substantial corporate lobbying efforts to restrict eligibility and cut benefit levels for core low-income assistance programs, because doing so would reduce companies’ tax bills — effectively making a cut in Medicaid, SNAP, school meals, or rental subsidies akin to a direct corporate tax cut.

The good news, as Greenstein, Parrott, and Huang note, is that there are much better ways to achieve what Sanders and Khanna are trying to achieve. Some of the most direct ways to raise worker wages are to mandate higher minimum wages, break up huge companies like Amazon through antitrust legislation, and, perhaps most importantly, strengthen labor law to make it easier for workers to form unions. We should also raise the corporate tax rate and actually “Stop Bad Employers by Zeroing Out Subsidies,” which would mean closing federal corporate tax loopholes and pressuring cities and states to stop giving away huge “economic development incentives” (read: tax breaks) to large corporations like Amazon, which has thus far received over $1 billion in state and local subsidies and paid a whopping total of zero dollars – that’s right: zero – in federal taxes in 2017.

Sanders and Khanna already support these alternative ideas, and I applaud them for the way they’ve consistently championed worker rights and sought to hold large corporations accountable. I encourage them to double down on those efforts while reconsidering both this bill and their rhetoric about public assistance. That would probably lead to less enthusiasm from Tucker Carlson, but it would help people living paycheck to paycheck a whole lot more.

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Ramming Morality Into Our Economic System the John Ruskin Way

Tom Block, an artist and author of five published books, believes art is a vehicle for human rights activism; he connects 13th-century ideals of “legislative prophecy” with the present, looking for a moral center in politics, the economy, and social interactions.  In this post, Block (who you can follow on Twitter at @tomblock06 and learn more about at http://www.tomblock.com/) draws lessons from a 150-year-old book about the problems with and how to improve America’s economic system.

THOMAS

Tom Block

Let’s forget about Trump for a moment.

After all, as fun and exciting and different as his presidency is proving to be, he will not – in the end – change the course of human events.  Even less so, of the economic pressures that aggrieve and threaten to crush us.  Where Trump is a pimple on the butt of American history, our ongoing economic anarchy is a blistering, cancerous abscess affecting the fate of all of people.

I picked up a book the other day which threw the greed, inequality, lawlessness, and inhumanity of our Western capitalist system into stark relief.  And given that this series of essays was written more than 150 years ago, at the infancy of the Industrial Revolution, I found it both prescient and deeply disturbing.

It diagnosed the creeping illness of the economic system of mid-19th century England, which so closely parallels our own, in 21st-century America.  The only difference being that the ability for “economical science” (as the author called it) to wreak havoc on society and individuals has grown exponentially, keeping time with our frantic technological progress.

More than that, however, the slim pamphlet provides a potential palliative for this social illness.

I’m talking about an 1860 series of four essays, “Unto this Last,” by writer and philosopher John Ruskin.  Ruskin set out to show how economic health concerns far more than the acquisition of “all useful and agreeable objects which possess exchangeable value” (Ruskin quoting John Stuart Mill).  He laid out quite clearly that true economical well-being involves evaluating the totality of society, not just the amount of gold distributed among the fewest number of people (as seemed to define – and continues to delineate – the true state of “wealthy” nations).  In his view, “just or economical exchange…is simply [that wherein there is] advantage on both sides [and] whatever advantage there is on either side…should be thoroughly known to all concerned. All attempt at concealment implies some practice of the opposite.”  He also chafed at the idea that people with different interests (for instance, labor versus capital, or client versus producer, etc.) must “necessarily regard each other with hostility, and use violence or cunning to obtain the advantage.”

Obviously, this kind of transparency and fairness runs directly contrary to what is considered “sound” business practice.  As many current chairmen of publicly held corporations would surely note, their obligation is to their shareholders, not to consumers, to the health of the environment or nation, or even their own workers.  Isn’t the idea of having an economic exchange which is of “advantage on both sides” not only absurd, but antithetical to good business practice?

It’s a zero sum game, man!  There are winners and losers in life – and we want to be on the side of the winners!

This dynamic of greed and self-justification stretches back to the beginnings of capitalism, often dated by historians to fourteenth-century England.  As Ruskin argued, those in power “never professed, nor profess, to take advantages of a general nature into consideration.”  Instead, they believe they are simply experts at “the science of getting rich…Every man of business knows by experience how money is made, and how it is lost,” they’d argue.

Ruskin has an easy reply to this line of reasoning – one that all progressives should keep handy when arguing economic theory with the smarmy and self-certain advocates of economic anarchy (“deregulate the banks!” “deregulate the corporations!” “eviscerate environmental protections!” “never, ever raise the minimum wage!,” etc.):

The circulation of wealth in a nation resembles that of the blood in the natural body. There is one quickness of the current which comes of cheerful emotion or wholesome exercise; and another which comes of shame or of fever. There is a flush of the body which is full of warmth and life; and another which will pass into putrefaction.

As diseased local determination of the blood involves depression of the general health of the system, all morbid local action of riches will be found ultimately to involve a weakening of the resources of the body politic.

And so it is: as the inequality of wealth accretes (as it certainly has since the presidency of Ronald Reagan, he whose name graces an airport, a federal building and perhaps, some day, the dime), the health of the nation, as well as the environment upon which the nation sits and depends, weakens.  And so too, if we can judge by the growing anti-science, anti-truth legions collecting in our public square, does the mental acumen of the polis.

So what is one to do?

One of the hallmarks of my belief in activist social theories is that they be applicable, and lead to quantifiable, positive social change.  We must move beyond simply expressing opposition to current political and social energies, to devising specific manners of combatting them.  We must develop, as Hannah Arendt called them, “clumsy theories” – theories which can actually be implemented.

Ruskin’s ideas show a way forward in the realm of the 21st-century global economy.  And although I believe he would support a universal basic income, universal health care and access to housing for all, he states no such thing, and certainly is no proponent of communism or socialism.

I feel it is his acceptance of capitalism as the economic structure which makes his ideas more powerful.  He is not going against what most people in our society (and certainly the older monied class, though not always today’s youth) accept as the “best” way for the economy to work.  Rather, he is tweaking, infiltrating and massaging it to make it work for a far greater portion of the population.  And in the best of cases, for the entire society.

Ruskin reconsidered the manner in which we think about the most basic aspects of a healthy society.  For instance, he noted: “The vital question, for individual and for nation, is, never ‘how much do they make?’ but ‘to what purpose do they spend?’”  Today, 21st-century “educated consumers” – all of those purchasing organic and fair-trade goods, buying local and at farmer’s markets, examining labels to make certain they weren’t made in far-away sweatshops, staying away from Walmart, Target and other multi-national corporations while paying a little bit extra to support the locally owned store or individual market – are living by Ruskin’s code.

Doing so does cost a little bit more, and given that reality and many workers’ low pay, we also need to think in terms of another movement gathering steam, one that Ruskin would heartily endorse: the Fight for $15.  For Ruskin made it very clear that the price of labor should not be set by the anarchy of the marketplace and desperation of the worker.  A fair and living wage should be paid to all, he argued:

The abstract idea, then, of just or due wages, as respects the laborer, is that they will consist in a sum of money which will at any time procure for him at least as much labor as he has given, rather more than less. And this equity or justice of payment is, observe, wholly independent of any reference to the number of men who are willing to do the work.

This idea of “procuring at least as much labor as he has given” translates into an equitable exchange in which workers are paid what they’re truly worth, not what business owners say they are.  We definitely see this idea in force now, as over the past couple of years, the ideal of a $15/hour minimum wage has been gathering steam.  Low-wage earners in many cities and states can now take home pay more in line with their time expenditure, and thus have greater purchasing power.

Finally, we need to follow Ruskin’s lead and center honesty in our economic thinking.  Currently, the idea of “honesty” in commerce runs contrary to our economic model.  Our economy is built on lying to consumers, usually obliquely through advertising messaging, but sometimes through overbilling, frank misstating of a product’s benefits, and outright fraud, such as Wells Fargo Bank’s practice of opening expensive bank accounts without informing people of their fees.  But it doesn’t have to be that way; as Ruskin said:

The acquisition of [true] wealth is finally possible only under certain moral conditions of society, of which quite the first was a belief in the existence and even, for practical purposes, in the attainability of honesty…There is no Wealth but Life. Life, including all its powers of love, of joy, and of admiration. That country is the richest which nourishes the greatest number of noble and happy human beings; that man is richest who, having perfected the functions of his own life to the utmost, has also the widest helpful influence, both personal, and by means of his possessions, over the lives of others.

Ruskin’s ideas are hardly revolutionary.  He does not advocate for the cessation of wealth accrual, or the destruction of the capitalist system.  He only advocates for ramming a moral lodestar into the center of the system.  There would still be labor and capital – but capital would treat labor with humanity, kindness, fairness and honesty.  Money could still be won, but it would no longer be the “god” it has risen to in our pagan economic system; it would be simply a byproduct of hard work and good ideas, not malfeasance, cleverness and trickery.  And when gobs of money were won, the “winner” would treat all the laborers in their orbit with fairness and honesty, as well as do their best to protect the values of respect, health and morality.

Unto this Last thus holds much wisdom for today’s progressive economic and social thinker.  The kind of tweaks, infiltrations, and moral compass Ruskin proposes – if advocated by enough people through specific legislative, legal and economic proposals – might actually begin to create the kind of practical utopia he envisioned.  Many such ideas – a universal basic income, access to higher education for all, health care as a human right, etc. – are already percolating in our society.  In some cases, like a living wage, social pressure has driven legislative action and these ideas are actually beginning to be implemented through legislation.

Now we just need more of that!

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Bigotry and Disenfranchisement: Making Sense of Trump Supporters’ Motivations

Like many other people, Jesse Soza has spent a lot of time thinking about what might have motivated Donald Trump’s supporters to vote for him. Soza, a former classroom teacher, discusses the complementary nature of bigotry-based and economic explanations in this post.

soza_jesse

Jesse Soza

“We must learn to regard people less in the light of what they do or omit to do, and more in the light of what they suffer.” – Dietrich Boenhoeffer

In the past couple of weeks, the American public has been flooded with a variety of attempts at rationalizing Donald Trump’s unlikely victory over Hillary Clinton. What has struck me is that in almost every piece that I have read, explanations tend to fall into one of two categories. On one side, explanations revolve around the extreme racism, sexism, homophobia, anti-Semitism, and Islamophobia that Trump was able to bring out of his supporters. On the other side, various pieces point to Trump’s ability to speak to a large population of Americans who are experiencing high levels of social, political, and/or economic disenfranchisement.

As each side continues to attempt to validate its case as a way to legitimize or delegitimize Trump’s victory, it has become clear that rational discussion between these groups has reached an impasse. Due to the incredible amounts of emotion tied to this issue, it is not a surprise to see each side making its argument with little to no consideration of the middle ground. The fact that each side has dug in behind its respective strawman argument means that the critical dialogue necessary to begin repairs to American society is unlikely to occur. Such dialogue can only begin when each side is willing to believe that there is some validation in the other’s stance.

With that in mind, the following is my attempt to validate both explanations for how America has reached this point, and to explain how they’re connected. Others, typically in the Bernie Sanders wing of the Democratic Party, have made similar points about the links between bigotry and a political and economic system that has left millions of Americans behind.  But as I believe a failure to call out bigotry is the most glaring problem in this debate, my focus will be on the undeniable role it has played in this election.

A Historical Commonality

Throughout the course of history, racism, homophobia, sexism, xenophobia, etc. and social, economic, and/or political disenfranchisement have been inexorably linked. Over and over again, we see that humans find scapegoats when times get tough, and those scapegoats have often been vulnerable groups within a population. Think about what happened to the Jews in Nazi Germany, the Tutsis in Rwanda, or the Armenians in the Ottoman Empire. Acts of violence towards these groups provided perpetrators with a sense of regaining control and power where there had previously been none or the belief of losing it. Such acts did not actually improve the situation of the disenfranchised, but given their relative lack of persecution, some may have felt better off. The fact that this cause-effect relationship between social hardship and the targeting of vulnerable groups is so prevalent throughout history necessitates a critical examination of current events in America to see if there are similarities. (Spoiler Alert: There are.)

If social and mainstream media’s statement of economically and politically disenfranchised groups is true (which it undeniably is), we must acknowledge what that means at a deeper level: If conservative America considers themselves disenfranchised, they almost assuredly harbor deep anger, resentment and frustration. Whether this anger stems from economic difficulties, political disenfranchisement, or a more deep-seated resentment of the move away from conservative White values (likely a combination of all three for most Trump supporters), it is now clear that there was a powder keg of emotional turmoil hidden within conservative America.

I will admit, at the beginning of this election, that I, like many others, was woefully unaware of the degree to which people were angry with the system. Did I see frustration? Yes. But did I truly know that so many Americans had such deep feelings of alienation? No. The results of the election have shown that the magnitude of anger and frustration residing within many Americans was significantly higher than many of us predicted. How did so many people miss it?

I think such large numbers of people failed to predict the level of anger residing in conservative America because, until recently, that anger had no guided direction. Without a unified bearing, such feelings were hidden behind a veil of superficial civility and tolerance. Sure, we’d see random acts of violence and injustice from hyper-racist groups or individuals, but never did we believe that America’s problems with race, religion, sexual orientation and gender would become a national crisis. Shame on us. We became numb to the signs, and thus somewhat indifferent, to the potential for something much bigger and far more dangerous as a result of what was seeded within our nation. Because we failed to fully realize how strongly conservative America believed that they were losing their nation economically, politically, and socially, no major attempts were made to address the ticking time bomb of anger and resentment that stayed more or less under the radar as these Americans waited for someone who might empathize with their plight and give them direction.

Enter Donald Trump

One of the most common criticisms of Trump is that he never really explained how he was going to actually do anything he was promising. But I now believe that appealing to logic in terms of political action was never what he intended to do. Where I used to chalk up his lack of logic to incompetence, I now have to believe that it was his game plan. Trump’s talent resided in his ability to elicit emotional responses. Early on, he recognized the anger and frustration that was bubbling in the hearts of many Americans (both Democrats and Republicans) and knew that if he could tap into that, he’d get all the support he needed. The question was how he would do it.

Through his speeches, actions and promises, he stoked the emotional fires of those who felt they had been pushed aside by the economy, government and the rest of American society. In doing this, Trump knew that he could win the hearts of his constituency. He provided the age-old answer to “who/what is to blame,” thus giving all their anger and resentment direction and solidifying his status as “the answer.”

That, by itself, wouldn’t have necessarily been a bad thing, as almost all strong leaders find some way to tap into the passion of their people and give that passion direction. However, in a reprehensible move, Trump, like so many despots of the past, chose to use fearmongering as the way to achieve this end. He successfully created and fostered the notion that there were enemies among us, implying that if we were to defeat these enemies, America would be great again. Trump’s 21st-century answer to America’s plight was to dehumanize Mexicans, Muslims, Black people, LGBTQ individuals, Jews, and women, painting immigrants in particular as the source of our woes. Historically speaking, when humans are labeled as impediments to progress, the corresponding social response sets a very dangerous precedent. It is frightening to think about what America is already flirting with, especially considering that Trump and his values have not yet officially taken office.

Trump’s bigotry and lust for power have played a primary role in stoking the anger and resentment that has been brewing in conservative America. Furthermore, he knowingly chose to funnel that anger towards vulnerable people. For that, Trump must be held accountable. We must acknowledge that the surge in overt bigotry America is currently experiencing is a direct effect of how Trump chose to run his campaign. Instead of calling for unity and working together as we overhaul a system that has disenfranchised many Americans (regardless of party affiliation), Trump chose to create and lead a modern day witch hunt. And like so many people in the past, a significant portion of downtrodden, resentful and angry Americans have attached themselves to a charismatic leader who is selling the idea that ultra-nationalistic bigotry will be the answer to their anguish.

Yes, Donald Trump spoke to the groups of people who felt that the economy and government weren’t on their side. Yes, he did unexpectedly well because his message was one of reforming a broken system. But we must remember how he framed his message of change. The change he promised was undeniably tied to racism, sexism, homophobia and xenophobia, those hateful –isms (and –obias) that have acted as foundations of this country since it was established. He stoked the fires of bigotry and anger without regard for the consequences of his actions simply because he knew that it would draw people to him. For too many Americans, he galvanized the idea that there are people within this country who deserve ire and intolerance. His campaign has not only emboldened individuals to practice injustice towards others, it has legitimized such behavior as a patriotic means of “making America great again.”

Donald Trump is dangerous. While I doubt he’ll be able to do even half of what he promised (though you should take that with a grain of salt, as I had similar doubts about him becoming president), the real danger lies in his capability to foster feelings of hatred and bigotry within a distressed conservative America while disguising such acts as patriotic. As a leader, he will continue to divide the American people and feed into the false notion that acts of injustice and dehumanization will lead to a better, more recognizable home for disenfranchised Americans. Due to his position, charisma and the fact that so many Americans are desperately looking for an answer to their perceived troubles, people will believe him.

Donald Trump has, without question, made it to the White House by painting both our fellow Americans and fellow human beings as what is wrong with America. In doing so, he has effectively made them targets for discrimination, oppression and dehumanization. Furthermore, the nature of his campaign has played a primary role in giving tacit approval for Americans to oppress each other.

Moving Forward

We must acknowledge the reality that Donald Trump has and will continue to encourage acts of injustice. To deny that or mask it with a neutral stance would be ignorance at its worst. Whether we see new discriminatory policies or other citizens who have bought into Trump’s misguided message that bigotry is the right course for America, we must get outraged and intervene. We cannot stand idly by if the rights and humanity of others are in jeopardy.

We also have an obligation to try to understand why so many people voted for Trump. Though the common idea that such a decision was made not because of racism, sexism, or other forms of bigotry but in spite of them may strain credulity for some of us, we must consider that possibility and the possibility that, even in cases in which an –ism was the primary driver of a Trump vote, that -ism is deeply connected to a system that isn’t working. We can continue to straw man our respective arguments by oversimplifying answers or we, as a unified American society, can try to reach out in an attempt to acknowledge and appreciate the deep-seated pain and anguish that are currently feeding American anger and resentment.

The task before us is immense, possibly necessitating one of the largest social movements in American history. It is made more difficult by the fact that we have a charismatic individual coming into office who knows how to harness, incite and utilize social anger to his advantage. Still, acknowledging these things means we may have a fighting chance of pushing back against the tide. We know what the problem is: Anger stemming from pain. The solution: Love, compassion and understanding.

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The Sound Reasoning Behind a $15 Minimum Wage

The New York Times Editorial Board recently endorsed a $15 federal minimum wage.  A proposal at the federal level would phase in $15 an hour in small increments over a period of several years and would still, as the Times mentions, set a wage floor in 2020 below what most low-wage workers need to provide for their families.  Yet Slate’s Jordan Weissmann believes that “the argument in favor of a $15 federal minimum is…extremely weak,” and that the endorsement is “emblematic of a progressive movement that has fixated on a much higher minimum as the answer to the problem of low-wage work while refusing to grapple with the potential downsides.”

Weissmann supports a federal minimum wage above $10 an hour and possibly in the $12 an hour range; like Alan Krueger, one of the economists who authored some of the landmark research on the minimum wage, his argument against $15 surely comes from a good place.  His assertions are substantively wrong, however; proponents of a $15 federal minimum have grappled with the points he makes and have decided that the case for a $15 federal minimum is actually much stronger than Weissmann’s.

The crux of Weissmann’s argument is that, “if the government forces wages too high, businesses will eventually cut back on hiring.”  $15 would be “too high,” he argues, because it is higher than “historical and international norms.”

Weissmann is correct to note that a $15 minimum wage would affect a larger share of low-wage workers in Little Rock, Arkansas than in Seattle, Washington, where a minimum wage increase to $15 an hour is already being phased in.  He is also correct to note that the research literature on the minimum wage largely speaks to moderate increases in the minimum wage, not to what might happen if it were increased to $15 an hour.  Proponents of a $15 minimum wage know these facts; they just don’t agree that they’re disqualifying.

The thing is, opponents of the minimum wage have been claiming for years, based on flawed but standard economic theory, that the mere existence of a minimum wage will kill jobs.  A huge body of research over the past twenty years has shown that these arguments are wrong: most studies suggest that the minimum wage has negligible effects on employment, and while there are credible studies that find small negative employment effects, there are also alternative theories out there, and a few findings to back them up, about why a higher minimum wage could, in some cases, actually lead to more employment.  Not having research about what would happen at $15 does not mean that it would cost jobs – it just means that, if we go to that level, we can’t be certain that the minimum wage’s opponents will continue to be so wrong about its effects on the job market.

Whether you think $15 will pose an employment problem is thus a matter of conjecture.  Weissmann is entitled to his beliefs, but it’s worth highlighting that a) the proposed increase is phased in in increments, giving businesses time to adjust, b) corporate profits are near all-time highs (as is executive compensation), suggesting that most businesses that employ low-wage workers can easily absorb the labor costs (one recent analysis of the fast food industry even suggests that firms could absorb a $15 minimum wage without a reduction in profits), c) Weissmann’s arguments mirror those of the minimum-wage-increase naysayers who have repeatedly been wrong, d) Weissmann’s summary of the evidence from Puerto Rico is woefully incomplete; a more thorough look does not actually support his case, and e) even economists, who typically lean towards embracing standard but flawed supply-and-demand theory, have split opinions on what might happen under a gradually phased-in $15 federal minimum wage.*

The fact that a $15 federal minimum wage would affect more workers in Little Rock, Arkansas than in higher-wage states can also be viewed as an argument in favor of larger increases in the minimum wage – they provide more help to a larger number of low-wage workers who are struggling to get by!  As Weissmann himself acknowledges, it takes around $20 an hour for a single parent to raise a child even in states with the lowest costs of living.  He gives surprisingly short shrift to the huge risk in not raising the minimum wage high enough: that it will lock in insufficient income support for millions of low-wage workers who desperately need additional money.  The fact that the nationwide movement for $15 has been driven by the very workers who would be affected by the policy change suggests strongly that they view the definite downside posed by a lower minimum wage – less compensation for their hard work – as a whole lot scarier than the indefinite possibility that $15 might cause some reductions in employment.  The argument against $15 could theoretically be used to reject every bold new policy proposal that helps people; it’s really hard to make progress if you don’t push past historical and international norms every so often.

In addition, while I applaud Weissmann for his concern about low-wage workers being able to find jobs, advocating against higher wages for millions of people is an odd way to address this concern.  The minimum wage does not exist in a vacuum; it is one policy among many that can be used to help low-wage workers.  While Weissmann correctly notes that the Earned Income Tax Credit and minimum wage are complementary, he fails to consider whether direct job-creation programs and/or policy that addresses firms’ decision-making in response to minimum wage increases could complement the minimum wage as well.

So while Weissmann thinks the New York Times underweights the potential and unknowable risk of heretofore unseen levels of job loss, I believe (along with hundreds of economists) that he underweights the immediate, definite risk of keeping the minimum wage too low.  I encourage him to, at the very least, consider policy tools that can mitigate his concerns without depriving low-wage workers of much-needed income.

*Update (1/5/16): It’s also worth noting, as minimum wage expert Dave Cooper has reminded me, that “the fear of a negative impact on jobs is a bit too simplistic. The concern is that the higher minimum wage could reduce the total aggregate work hours among low-wage workers, but even if that occurred, those workers would still be better off if, even while working fewer hours, the higher hourly wage caused their annual earnings to rise.”

Correction (1/25/16): The original version of this post misspelled Weissmann’s name.

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Hillary Clinton’s Less than Stellar Record on Trade

In this post, Part 4 in a series on Democratic presidential candidate Hillary Clinton, Emilio da Costa describes Clinton’s record on international trade and business issues. Emilio, who holds a master’s degree in City and Regional Planning from Berkeley and a bachelor’s degree in Urban Studies from Stanford, can be contacted on Twitter or by email.

Emilio da Costa

Emilio da Costa

During her career in government, Hillary Clinton has routinely prioritized the interests of corporate profiteers while neglecting the rights of workers. Her support of so-called “free trade” agreements in particular illustrates where her priorities lie.

While in the Senate, for example, Clinton backed agreements with Chile, Singapore, and Oman despite their clear lack of labor protections. As David Sirota and Matthew Cunningham-Cook reported for the International Business Times:

At the time, the AFL-CIO said, “The labor provisions of the Chile and Singapore FTAs will not protect the core rights of workers, and represent a big step backwards.” The union federation also opposed the deal with Oman. Its president, John Sweeney, noted that “the State Department has identified Oman as a destination country for men and women who become victims of  trafficking and forced labor.”

In some cases, Clinton even directly worked against improved labor standards for workers in other countries. In a piece for The Nation, Dan Coughlin and Kim Ives utilize content from cables obtained by WikiLeaks to describe how Secretary Clinton’s State Department lobbied the Haitian president to help multinational clothing retailers undermine a minimum wage increase unanimously passed by the Haitian Parliament:

Contractors for Fruit of the Loom, Hanes and Levi’s worked in close concert with the US Embassy when they aggressively moved to block a minimum wage increase for Haitian assembly zone workers, the lowest-paid in the hemisphere, according to secret State Department cables.

The factory owners told the Haitian Parliament that they were willing to give workers a 9-cents-per-hour pay increase to 31 cents per hour to make T-shirts, bras and underwear for US clothing giants like Dockers and Nautica.

But the factory owners refused to pay 62 cents per hour, or $5 per day, as a measure unanimously passed by the Haitian Parliament in June 2009 would have mandated. And they had the vigorous backing of the US Agency for International Development and the US Embassy when they took that stand.

To resolve the impasse between the factory owners and Parliament, the State Department urged quick intervention by then Haitian President René Préval.

“A more visible and active engagement by Préval may be critical to resolving the issue of the minimum wage and its protest ‘spin-off’—or risk the political environment spiraling out of control,” argued US Ambassador Janet Sanderson in a June 10, 2009, cable back to Washington.

Two months later Préval negotiated a deal with Parliament to create a two-tiered minimum wage increase—one for the textile industry at about $3 per day and one for all other industrial and commercial sectors at about $5 per day.

Clinton’s record is very similar when it comes to the most recent “free trade” agreement – the Trans-Pacific Partnership (TPP). The TPP has been the subject of well-deserved scrutiny, and not just from “liberals” like the Economic Policy Institute’s Robert E. Scott, Senators Elizabeth Warren and Bernie Sanders, and former US Labor Secretaries F. Ray Marshall and Robert Reich. Former US Treasury Secretary Larry Summers, the economist famous for, among many things, his role in the deregulation of the US financial system, has also raised doubts about the merits of the agreement. Here’s Summers in a surprisingly populist op-ed for The Washington Post:

First, the era of agreements that achieve freer trade in the classic sense is essentially over. The world’s remaining tariff and quota barriers are small and, where present, less reflections of the triumph of protectionist interests and more a result of deep cultural values such as the Japanese attachment to rice farming… A reflexive presumption in favor of free trade should not be used to justify further agreements. Concerns that trade agreements may be a means to circumvent traditional procedures for taking up issues ranging from immigration to financial regulation must be taken seriously…

[The US economy] has supported the greatest economic progress in the history of the world in emerging markets and is working spectacularly well for capital and a cosmopolitan elite that moves easily around the world. But being pressed down everywhere are middle classes who lack the wherewithal to take advantage of new global markets and do not want to compete with low-cost foreign labor. Our challenge now is less to increase globalization than to make the globalization we have work for our citizens.

In that respect, the TPP doesn’t look good. Scott discusses how free trade has historically depressed US wages and why the lack of enforceable currency provisions in the agreement could lead to job losses. Reich and Marshall caution that its “patent provisions risk delaying or even preventing generic competition, thus keeping lifesaving medicine out of patients’ hands.” Warren details how the agreement’s Investor State Dispute Settlement (ISDS) provisions “would allow big multinationals to weaken labor and environmental rules” and why, despite the fact that the “TPP is being hailed as the strongest free trade agreement yet,” our terrible enforcement record when it comes to previous agreements (and the same empty promise being made over and over again) belies that claim.

What does all of that have to do with Clinton? As Sirota and Cunningham-Cook note, Clinton was a strong supporter of the TPP during negotiations:

In a 2012 speech in Australia, Clinton referred to TPP as “the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field. And when negotiated, this agreement will cover 40 percent of the world’s total trade and build in strong protections for workers and the environment.”

But that was just one speech, right? Wrong.

In a 2012 speech in Singapore, Clinton explicitly promoted the TPP as an initiative that “will lower barriers, raise standards, and drive long-term growth across the region.” She also used the collective “we” in describing the work being done on the pact, saying, “we are making progress toward finalizing a far-reaching new trade agreement called the Trans-Pacific Partnership.” She also said “we are offering to assist with capacity building, so that every country in ASEAN can eventually join.” The video of the key part of her speech can be seen here:

In fact, even CNN, which judging from the recent Democratic primary debate seems to unabashedly favor Clinton, published an article listing 45 times that Secretary Clinton pushed the very trade bill that she now claims to oppose.

Her flip-flop, as Sirota and Cunningham-Cook note, is typical:

Clinton has a history of abruptly changing positions on trade policy. When running for president in 2008, she criticized the North American Free Trade Agreement, despite reports that she supported it while her husband was president. Clinton also pledged to oppose a proposed free trade agreement with Colombia. Only two years later, as secretary of state, she backed that deal while her family’s foundation received money from a Colombian oil firm and its founder.

Though she has tried to justify her reversal this time around, her claims are unconvincing. As Tim Lee explained at Vox:

In the interview with PBS’s Judy Woodruff where she came out against the treaty, she cited two specific objections: It doesn’t have language dealing with currency manipulation, and it has provisions that favor big drug companies over patients.

These are totally plausible arguments for opposing the TPP. But they make no sense as reasons for Clinton to change her mind about the treaty.

Why not? Because, as Lee describes, the “pharmaceutical language in the TPP is better than expected” and “currency manipulation was never going to be part of the TPP.”  If Clinton was serious when she lauded the “gold standard” TPP for “free, transparent, fair trade” in 2012, she should be even more supportive of the deal now.  Instead, the minute that the TPP became widely unpopular, she changed her position, saying that it didn’t meet the “high bar” she had set for it.

I can only draw three logical conclusions from these remarkable contradictions:

  1. Clinton had not read the TPP prior to making her “gold standard” statement and was blindly supportive of it.
  2. She did read it, and she honestly believed what she said in 2012, but is now willing to falsely appear critical of it.
  3. She did read it, her statement in 2012 was a total lie, and now it’s in her interest to lie again and appear concerned.

Unfortunately, none of these conclusions give me any reassurance that it would be a good idea to entrust Clinton with more political power.

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What It Means to be Tough on Wall Street

I nearly spit out the hard apple cider I was drinking when I heard the following exchange during the first Democratic presidential debate:

Anderson Cooper: Senator Sanders wants to break up the big Wall Street banks. You don’t. You say charge the banks more, continue to monitor them. Why is your plan better?

Hillary Clinton: Well, my plan is more comprehensive. And frankly, it’s tougher…

Sure, Clinton’s plan has, as financial systems expert Mike Konczal notes, significantly more “footnotes and wonky details.”  If that’s what “more comprehensive” means, so be it.  But tougher?  More “characterized by severity or uncompromising determination,” as Merriam-Webster’s puts it?

To me, the best, most concise summary of the two candidates’ plans for Wall Street banks thus far comes from former US Labor Secretary and current Berkeley professor Rob Reich:

Bernie Sanders says break them up and resurrect the Glass-Steagall Act that once separated investment from commercial banking.

Hillary Clinton says charge them a bit more and oversee them more carefully.

Which of those options sounds tougher to you?

Konczal also highlights that Sanders, unlike Clinton, “wants to take on the power of the big banks.”  In addition, the two candidates’ approaches to curbing high-frequency trading “is a clear difference, with Sanders taking a more aggressive approach.”

Clinton didn’t possibly expect anyone to believe that she’d be tougher on Wall Street than Sanders, did she?

Imagine my surprise upon opening up a recent Paul Krugman article – expecting the excellent economic and political analysis he so often provides – and seeing that, in the candidates’ dispute “about whose plan was tougher,” he thought “Mrs. Clinton had the better case.”

Krugman points out, as does Konczal, that while Clinton has already laid out details on how she plans to conduct oversight of the “shadow” banking sector, Sanders hasn’t.  Krugman sees a specific plan in this area as more important than a commitment to break up the big banks.  This argument is fine to make, though it’s worth noting that Reich disagrees.

But the more important topic, Krugman argues, is tough-on-Wall-Street credibility.  And what’s baffling to me about his analysis is that he seems to think Clinton has it, a position completely at odds with the campaign finance data and Clinton’s record.

The crux of Krugman’s argument is that, while “there was a time when Wall Street and Democrats got on just fine…with the securities industry splitting its donations more or less evenly between the parties,” that time has passed.  He writes:

[I]f Wall Street’s attitude and its political giving are any indication, financiers themselves believe that any Democrat, Mrs. Clinton very much included, would be serious about policing their industry’s excesses. And that’s why they’re doing all they can to elect a Republican…

Financial tycoons loom large among the tiny group of wealthy families that is dominating campaign finance this election cycle — a group that overwhelmingly supports Republicans. Hedge funds used to give the majority of their contributions to Democrats, but since 2010 they have flipped almost totally to the G.O.P.

As I said, this lopsided giving is an indication that Wall Street insiders take Democratic pledges to crack down on bankers’ excesses seriously. And it also means that a victorious Democrat wouldn’t owe much to the financial industry…

Krugman is right about the overall trends.  A tiny group of wealthy families is contributing millions of dollars to 2016 presidential campaigns, most of it to Republicans, and the balance of hedge fund donations between the two parties has definitely shifted.  But those overall trends mask one crucial exception to the rule: Hillary Clinton.

The Center for Responsive Politics collects data on donations campaigns receive from individuals who work in the “Securities & Investment” industry, which is shown below.  While the organization recognizes that “not every contribution is made with the donor’s economic or professional interests in mind[, there is] a correlation between individuals’ contributions and their employers’ political interests.”  In addition, the “donors [they] know about, and especially those who contribute at the maximum levels, are more commonly top executives in their companies, not lower-level employees.”

Securities & Investment Chart - Updated

As the chart shows, Clinton actually leads all Republican candidates in contributions from this industry.  She has received over 40 times more money than Sanders has from individuals associated with Wall Street.  That’s lopsided giving all right, but it’s lopsided in a much different way than Krugman suggests.

Candidates receive considerably more financial support from Super PACs than from individual donations, but Clinton ranks among the Republicans in this category, too.  Jeb Bush, Ted Cruz, and Marco Rubio outpace her (Bush by a considerable margin), but her $20.3 million in Super PAC money is exactly $20.3 million more than Sanders has received.  While it’s not clear how much of any candidate’s Super PAC money comes from Wall Street, and while I suspect that Clinton Super PAC donors George Soros and S. Donald Sussman are more amenable to basic regulations than their fellow billionaire hedge fund managers who donate to Republicans, it seems plausible that a “victorious Democrat” – if that Democrat were Hillary Clinton – might, in fact, “owe much to the financial industry.”  And that’s before even considering donations to the Clinton foundation.

Super PAC Donations

Those donation profiles suggest that Sanders, despite not having a specific proposal on “shadow” banking yet, is far more likely than Clinton to fight for smart recommendations from folks like Konczal.

I find it especially hard to understand Krugman’s argument in the context of what Clinton touted as a tough-on-Wall-Street credential during the debate:

I represented Wall Street, as a senator from New York, and I went to Wall Street in December of 2007 — before the big crash that we had — and I basically said, “cut it out! Quit foreclosing on homes! Quit engaging in these kinds of speculative behaviors.”

I don’t know about you, but I don’t typically think representing a group of rich people and giving them a nonbinding but stern talking to qualifies as particularly tough.  History backs me up on this one – Clinton’s Wall Street lecture doesn’t seem to have worked out so well.

Paul Krugman is a great economist, I love his column, and I understand the point he’s trying to make: he thinks a Democrat in the White House – any Democrat – would be a hell of a lot better than any Republican.

But even if you agree on that point, don’t buy the idea that the practical difference between Clinton and Sanders is trivial.  It’s very large when it comes to Wall Street, where Sanders is tougher by any reasonable definition of the word.

Note (10/22/15): I updated this post with new data from the Center for Responsive Politics; the old graph, which appeared in the original version of this post, is shown below.  At that time (as the original version of the post noted), Sanders had “received so little from the Securities & Investment industry that the Center for Responsive Politics [didn’t] even report it.”

Securities & Investment Donations

Update (5/12/16): The Wall Street Journal reports that “Hillary Clinton is consolidating her support among Wall Street donors and other businesses ahead of a general-election battle with Donald Trump, winning more campaign contributions from financial-services executives in the most recent fundraising period than all other candidates combined.”  In addition, “some Wall Street donors have shifted their financial support from Republican candidates who dropped out of the race, such as former Florida Gov. Jeb Bush and Florida Sen. Marco Rubio, to Mrs. Clinton in recent months.”  The most recent data from the Center for Responsive Politics, shown below, includes both donations made directly to the campaigns and those made to candidates’ Super PACs.

Wall Street Donations 4-21-16.png

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Big Pharma: Don’t Hate the Player, Hate the Game

Martin Shkreli is a man I admire in an odd sort of way.

The recent controversy involving Mr. Shkreli and his price hike of the toxoplasmosis drug, Daraprim, seems to have caused misguided furor towards the 32-year-old CEO of Turing Pharmaceuticals. He may epitomize a major problem with the pharmaceutical industry but he is simply playing by the rules his pharmaceutical executive contemporaries and predecessors have helped set in place. Much like Donald Trump and his history of bankruptcies, he’d be foolish not to take advantage of every oversight weakness or loophole set up by a corrupt system that affords advantages to those who are shrewd enough and willing to exploit them. The public’s anger is directed at the man and not the system.

If Shkreli were to step down or be forced to resign, do people think that the next CEO of Turing Pharmaceuticals won’t be as zealous or brash in exploiting the system? People dislike him for the price hike, but loathe him for the way he defiantly acted in response. If I were a board member I would demand that my CEO rigorously investigate every pathway to make the company more profitable and therefore more financially stable, but I would also want them to exhibit a measure of temperance so as not to attract unwanted public spotlight. It seems as though people would be willing to forgive and forget a less brazen pharmaceutical executive. Every public dollar not claimed by Turing Pharmaceuticals is a dollar that will be spent elsewhere, or heaven forbid end up in the coffers of the competition.

As for the relationship to medical students, pharm and biotech industry sales reps are not seen or heard from during the first two years of our schooling. We are in the classroom and there is no official school-sanctioned time allotted to these groups unless specifically invited by a student organization. There are no events or talks sponsored by companies, and all faculty must divulge any real or perceived conflicts of interest when lecturing.

This changes in the clinical years (third and fourth year) when the students are out and about amongst the physicians, nurses, and patients in the hospitals and clinics. Students are left to their own devices and are sometimes in rooms with Big Pharma reps during presentations for a new product or during demonstrations of a new surgical device. The “good” reps will gravitate towards the students after they’ve made their pitch to the higher-ups and start chumming it up with those at the bottom of the totem pole and those with the least decision-making capacity.

My first encounter with a sales rep was right before entering the operating room (OR). Gowned in scrubs, all entrants into the OR look nearly identical and no hierarchy can be discerned readily, like it can be up on the patient floors. There doctors wear long white coats, nurses wear scrubs, and students wear short white coats paired with a look that can only be described as confident confusion. There the pecking order is clear. The OR is murkier—we’re all wearing blue scrubs so the nurses and students are dressed like the doctors are dressed like the students. The man approached me and asked if I was a student and we began chatting. I assumed this guy was of some import—he was tall, he spoke confidently, and he knew everyone’s name entering the OR. As the conversation shifted from what my first few days at the hospital were like, he started extolling the sophistication and ease of use of this new surgical device that would be employed for this particular operation. Then it hit me that this guy was just a salesman.

He knew who I was, right? Him selling me on his product would do absolutely nothing for his company’s bottom line and his quarterly sales wouldn’t see the slightest uptick whether or not he had ever spoken to me. He gave me his card and told me to be on the lookout for his company’s reps in all my future endeavors. Man, I thought, he was such a nice guy. As the weeks went on I encountered other reps while in the hospital. All of who were just as nice. What an endearing industry.

Drexel had done a superb job at shielding its first and second year students from the influences of third party companies. We had almost no exposure to the sales pitches coming out of the mouths of these charismatic salespeople. We were being released to the world as naïve students. Were these reps being nice for the sake of being nice? Of course that’s a possibility. What’s much more probable, however, is that they are all planting the seeds of merchandising as soon as they are able. I wouldn’t be advising any hospitals to buy any new surgical devices, nor would I be prescribing any meds for a few years, but when the time comes, I will already have that brand recognition stored somewhere in my brain.

As students we are never given formal training in how pharmaceutical companies operate and what we can expect to deal with for the rest of our careers, regardless of our specialty. We have a Business of Healthcare course that does a great job of outlining the history of US healthcare, how it came to be the way it is, and how insurance companies fit into the puzzle that is the US healthcare system. I once believed that it was a good thing that med school limited exposure to Big Pharma, and that this limited access to its students would offset some of the pernicious effects of physicians becoming beholden to a drug company. As our system is set up now, students or recent med school grads will be inundated with free luncheons, demonstrations, and gifts that are designed to both inform and persuade physicians and future physicians to prescribe certain medications. There seems to be real value in these demonstrations, as it is a way for those in healthcare to stay current with advances in research and technology.

The FDA and Big Pharma continue to battle about how much free speech the for-profit pharmaceutical companies can claim when marketing their drugs and devices. Students are not given much information regarding the politics of what is going on in Washington, D.C. It is important to learn about how our healthcare system works and to truly be advocates for our patients, doctors need to be versed in the discussions going on in the capital. Perhaps to steer clear of politics and controversy, medical schools opt to leave this discussion out altogether.

Or perhaps not; in order for physicians to best advocate for our patients and their health, we need to know the rules of the game. Med schools need to find the balance between creating competent, knowledgeable physicians who understand their field very well but that are also aware of all of the players in the game and what’s at stake. I’ve found that many of my colleagues find the political aspect of medicine tedious, boring, and too time consuming to delve into the intricacies of policy creation. It is this lack of knowledge or fundamental misunderstanding of the relationship between physicians, pharmaceuticals, and the government that makes doctors more susceptible to persuasion by the sales reps as conflicts of interest in the health practitioner field aren’t readily apparent.

The relationship between pharmaceutical and biotech companies with medical schools shouldn’t be adversarial, but when the goals of the healthcare provider and healthcare-related companies don’t coincide, the physician and the patients need to be made aware. Talks by prominent physicians that are on the payroll of drug companies need to be scrutinized. Papers applauding new breakthrough treatments need to be rigorously investigated because even peer-reviewed journals are not free from bias. There is no ideal time during the course of our education that this information would naturally fit, but it is vital and it should be taught early on so that when we are released into the hospitals we will have practice with critiquing sources and being mindful of current legislature concerning what parties are spending money and where they are spending it. If you set up a system that can be exploited you will attract those that are the best at this exploitation.

It is easy to set the ire and pent up aggravation at a wasteful system onto the figurehead with the likeness of a James Bond super-villian, but the release of the collective frustration still does not change the underlying current of how our healthcare system is run. If we’re not educating future doctors on how to effectively combat an (at best) unfair or (at worst) corrupt system, then who can we rely on to give patients a better handle on their own health?

As far as Mr. Shkreli is concerned, he’s just a example of what can happen when an arrogant, young, former hedge-fund manager gets his hands on a product that people need. He’s willing to be the face of a controversy and actually exemplify to the public how screwy the system is. Like Donald Trump proclaiming to donate heavily to both parties in order to personally benefit, Shkreli is opening our eyes to the nature of business side healthcare. Rather than being angry at why someone would do this, be angry at how someone could do this. Don’t hate the player, hate the game.

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It’s Not What Employers Are Doing, But What They Can Do, That Matters

A few days ago, Buzzfeed reported that Staples, the large office supply chain, had stepped up its enforcement of a cap on hours worked for part-time employees. Despite the company’s unconvincing claim* that the policy is longstanding, it appears that Staples implemented the 25-hour-per-week cap in January of 2014 “to skirt impending rules requiring companies to provide health insurance” to employees who work at least 30 hours a week.

Staples' original memo to store managers, as published by Buzzfeed.

Staples’ original memo to store managers, as published by Buzzfeed.

Staples’ decision will undoubtedly renew arguments that the Affordable Care Act’s (ACA’s) employer mandate – the provision that requires companies with more than 50 full-time workers to insure employees who work at least 30 hours each week – has led to harmful effects on work. These arguments, like parallel narratives about minimum wage laws and paid sick leave ordinances, are largely inaccurate, and advocates of evidence-based, power-balancing policy are absolutely right to debunk them.

However, we cede too much when, as is often the case, we default to a defensive stance. “Yes, the negative incentive is there, but the data show such effects to be small or non-existent” should not be the full scope of our response.

Instead, it’s imperative that we change the nature of these conversations. As Thomas Pynchon astutely observed: “If they can get you asking the wrong questions, they don’t have to worry about answers.”

Opponents of an employer mandate, minimum wage, and paid sick leave want people to focus on what employers will do in response to each policy’s enactment. The more relevant question, however, is about what employers can do.

First, it’s important to remember that businesses can deduct employer-provided benefits from their tax bills, and that the employer contribution to health benefits is widely viewed as coming out of worker salaries. Providing employees with health coverage, decent wages, and paid sick leave costs less money than a lot of people think, though it’s certainly more expensive than offering meager wages and no benefits.

More importantly, providing such benefits is the right thing to do. And it is undeniable that a typical business, when confronted with the prospect of labor cost increases, has numerous options. The business can explore ways to improve its productivity. It can raise its prices. It can reduce the salaries of affluent executives, or maybe make a little bit less in profits.**

In the most recent quarter for which financial information is available, August through October of 2014, Staples made $216 million in after-tax profits. Their CEO, Ronald Sargeant, made over $10 million in total compensation in 2013, while other top executives raked in well over $2 million apiece. Barack Obama didn’t have those numbers when he was asked about Staples’ policy a few days ago, but his suspicion “that [Staples] could well afford to treat their workers favorably and give them some basic financial security” was clearly right on the money. The ACA didn’t make Staples cut its employees’ part-time hours; instead, Staples management consciously chose to prioritize a fifth car or third house for a few wealthy individuals over its part-time workers’ ability to put food on the table. Other large companies, from Starbucks to McDonald’s to Walmart, make similar callous choices on a range of issues all the time.

There are two ways to address this problem. The main mechanism currently at our disposal is to loudly call such decision-making what it is – greedy and unethical – and vote with our dollars for companies that treat their workers fairly. Opponents of labor standards focus on what businesses will do rather than what they can do in part because we let them avoid moral reckoning. We won’t win everyone over, but we must not underestimate the power that moral authority has to shape behavior.

The second mechanism is policy that addresses firms’ decision-making. Some recent legislative proposals, in fact, like Congressman Chris Van Hollen’s CEO-Employee Fairness Act, have the potential to begin to wade into these sorts of waters. If we’re worried that companies will choose to lay people off in response to a minimum wage increase, for example, we could raise taxes on the executives of companies that make this choice.

No matter the policy outcomes, it’s essential that we ask the right questions in these debates. It’s worthwhile and important to document the evidence that policies like the employer mandate, minimum wage, and paid sick leave have minimal consequences on work. But it’s also essential to point out that any consequences these policies do have aren’t inevitable.

*As Buzzfeed’s original coverage explained, Staples claims that their part-time hours policy has been in effect for over ten years, and that the memo Buzzfeed obtained only “reiterated the policy.” Yet the memo contained phrases like, “Beginning with the week ending 1/4/2014,” and “Staples is implementing a policy.” A Staples spokesperson did not respond to follow-up questions about the memo’s language.

**It’s possible, though I’ve never seen a study to prove it, that some businesses actually can’t afford to adequately compensate their workers, that they’re barely squeaking by as is with low executive salaries, non-existent profits, and the highest level of productivity they can possibly attain. To the extent these businesses exist – and I’m skeptical that many of them do – it’s worth asking whether a business’s right to keep its doors open should trump its workers’ right to make enough to provide for their families. I don’t believe it should.

Note: A version of this post appeared in The Huffington Post on February 16.

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