Institute for Policy Studies

Chuck Collins: A guide to the coming tax heist

-- Bundesarchiv, Bild 102-12762 / CC-BY-SA 3.0

-- Bundesarchiv, Bild 102-12762 / CC-BY-SA 3.0

 

Via OtherWords.org

For 40 years, tax cutters in Congress have told us, “we have a tax cut for you.” And each time, they count on us to suspend all judgment.

In exchange, we’ve gotten staggering inequality, collapsing public infrastructure, a fraying safety net, and exploding deficits. Meanwhile, a small segment of the richest one tenth of 1 percent have become fabulously wealthy at the expense of everyone else.

Ready for more?

Now, Trump and congressional Republicans have rolled out a tax plan that the independent Tax Policy Center estimates will give 80 percent of the benefits to the richest 1 percent of taxpayers.

The good news is the majority aren’t falling for it this time around. Recent polls indicatethat over 62 percent of the public oppose additional tax cuts for the wealthy and 65 percent are against additional tax cuts to large corporations.

Here’s the independent thinker’s guide to the tax debate for people who aspire to be guided by facts, not magical thinking. When you hear congressional leaders utter these claims, take a closer look.

“Corporate tax cuts create jobs.”

You’ll hear that the U.S. has the “highest corporate taxes in the world.” While the legal rate is 35 percent, the effective rate — the percentage of income actually paid — is closer to 15 percent, thanks to loopholes and other deductions.

The Wall Street corporations pulling out their big lobbying guns have a lot of experience with lowering their tax bills this way, but they don’t use the extra cash to create jobs.

The evidence, as my Institute for Policy Studies colleague Sarah Anderson found, is that they more often buy back their stock, give their CEOs  massive bonuses, pay their shareholders a bigger dividend, all the while continuing to lay off workers.

“Bringing back offshore profits will create jobs.”

Enormously profitable corporations such as Apple, Pfizer and General Electric have an estimated $2.64 trillion in taxable income stashed offshore. Republicans like to say that if we give them a tax amnesty, they’ll bring this money home and create jobs.

Any parent understands the folly of rewarding bad behavior. Yet that’s what we’re being asked to do.

When Congress passed a “repatriation tax holiday” in 2004, these same companies gave raises to their CEOs, raised dividends, bought back their stock, and — you guessed it — laid off workers. The biggest 15 corporations that got the amnesty brought back $150 billion while cutting their U.S. workforces by 21,000 between 2004 and 2007.

For decades now, those big corporations have made middle class taxpayers and small businesses pick up the slack for funding care for veterans, public infrastructure, cyber security, and hurricane mop-ups. Let’s not give them another tax break for their trouble.

“Tax cuts pay for themselves.”

Members of Congress who consider themselves hard-nosed deficit hawks when it comes to helping hurricane victims or increasing college aid for middle class families are quick to suspend basic principles of math when it comes to tax cuts for the rich.

The long discredited theory of “trickledown economics” — the idea that tax cuts for the 1 percent will create sufficient economic growth to pay for themselves — is rising up like zombies at Halloween. As the economist Ha Joon Chang observed, “Once you realize that trickle-down economics does not work, you will see the excessive tax cuts for the rich as what they are — a simple upward redistribution of income.”

“Abolishing the estate tax will help ordinary people.”

This is the biggest whopper of them all. The estate tax is only paid by families with wealth starting at $11 million and individuals with $5.5 million and up. There is no credible economic argument that this will have any positive impact on the economy, but it would be a huge boon for billionaire families like the Trumps.

This tax cut plan is an unprecedented money grab. Whether the heist happens, is entirely up to the rest of us.

Chuck Collins directs the Program on Inequality at the Institute for Policy Studies and co-edits Inequality.org. 

 

Josh Hoxie: Tax cuts for the rich only help the rich

 

Via OtherWords.org

Soon you’re going to hear a lot about taxes.

You’ll see images of families flashing across your TV screen while a soothing narrator assures you that the tax plan being debated in Washington really is good for you. The newspapers you read, the social media apps you scroll through, the websites you frequent, and the snippets of radio you catch will all feature ads talking about it.

That’s what a marketing blitz looks like, and there’s one coming for the Trump tax plan. It will be well-produced, well-orchestrated, and completely devoid of facts.

President Trump started his sales pitch for his tax-cutting agenda in Missouri in August, where the assembled audience was treated to a fact-free sermon on the virtues of his plan. Gone were any specifics of what’s in it, or who gets what.

Looking at Trump’s tax plan from the campaign, as well as what the Republican majority in the House of Representatives have proposed, we can see the basic outlines of what’s coming.

Corporations will see their nominal tax rates drop from 35 percent to 20 or even 15 percent. Individual rates will go down — possibly for everyone, but definitely and most strikingly for the very wealthy. Overall tax revenue will tank, potentially by as much as $10 trillion over 10 years.

What does all this look like in the real world?

On the corporate side, we know for sure that lower corporate taxes do not create jobs.

In the ads to come, maybe you’ll see a guy in a hard hat claim that corporate tax cuts will put him back to work. He’s lying.

A recent Institute for Policy Studies report looks at 92 profitable companies that already pay an effective 20 percent tax rate, thanks to loopholes. On average they’ve cut jobs, even as the rest of the private sector saw a 6 percent jobs increase.

On the individual side, half of the proposed cuts will go to millionaires, according to the Institute on Taxation and Economic Policy. Less than 5 percent go to families with household incomes below $45,000.

This is probably the biggest wealth grab in American history by the wealthy, for the wealthy. Selling it as a middle-class tax cut, regardless of the images in the ads you see, is just old-fashioned lying.

And finally there’s the revenue. Trump claims his tax cuts will pay for themselves with increased economic growth. That theory’s been debunked many times over and yet remains stubbornly in play.

So what happens when trillions of dollars of tax revenue get slashed?

Congress currently bans itself from passing bills that increase the deficit in one of their better acronyms — Pay As You Go (PAYGO). That means the tax cuts Trump proposes will have to come out of public programs.

No matter how much hype you hear, you’d better believe those cuts are gonna hurt. From food assistance like the Women, Infant, and Children (WIC) program to Head Start, and from clean water protections to unemployment insurance — it’s all on the line.

It’s hard to keep an eye on the truth when savvy marketing campaigns are hell-bent on deflecting your attention away from it. Don’t buy it. The Trump tax-cut plan is disastrous for working families and for anyone who cares about a fair and just economy.

Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies. 

Janet Redman: Enacting TPP would be a perilous bet

via OtherWords.org

From her home in Berks County, Pa., Karen Feridun is helping stage a growing citizen pushback against the expansion of natural-gas extraction. But a far-reaching global deal recently signed halfway around the world may make her job much harder.

Feridun got involved in this fight over concerns that fracking waste laden with toxic chemicals that could end up in the sewage sludge that some Pennsylvania towns spread on local farm fields.

Figuring her best bet for keeping the state’s water, food, and communities safe was putting a stop to fracking, Feridun founded Berks Gas Truth. The group is now part of a statewide coalition calling for a halt to fracking in Pennsylvania.

The campaign got a boost when the Pennsylvania Supreme Court, after hearing a case brought by the Delaware Riverkeeper Network, ruled that local governments have the right to protect the public trust. The court also found that oil and gas companies must abide by municipal zoning and planning laws.

The decision was celebrated as a huge victory for local control. But, Feridun told me, “the Trans-Pacific Partnership could turn over the apple cart entirely.”

The day after we spoke, U.S. Trade Rep. Michael Frohman joined top officials from eleven other Pacific Rim nations in a New Zealand casino to sign the Trans-Pacific Partnership (TPP) — a sweeping “free trade” agreement aimed at opening national borders to the flow of goods, services, and finance.

The location couldn’t have been more symbolic. By entering into this deal, the Obama administration is playing roulette with America’s future.

The White House hopes to win greater access to raw materials, cheap labor, and burgeoning consumer markets in Asia for U.S. companies. What do we stand to lose? Nothing less than the ability to set rules and regulations that protect our families’ health, our jobs, and our environment.

The provision at the heart of this wager is something called an “investor-state” clause. It would let companies based in TPP partner countries sue governments over laws or regulations that curtail their profit-making potential.

It’s a risky bet. Here’s the White House’s simplistic calculus: The U.S. government has never lost an investor-state case.

The more we win, it seems, the bigger our next gamble. The TPP would be the largest free- trade agreement in history, covering about 40 percent of the global economy and giving additional countries the option to “dock” to the treaty later. It also adds thousands of companies that could potentially sue the United States in trade court.

Back in Berks County, the demand from newly opened overseas markets for U.S. gas may increase local pressure to frack. The TPP’s investor-state provisions would let foreign-owned gas companies challenge any statewide limits on the practice standing in their way.

If this sounds unlikely, look no further than our neighbors to the north. U.S. oil and gas company Lone Pine Resources is suing Canada using a similar clause in the North American Free Trade Agreement (NAFTA) when Quebec passed a moratorium to halt fracking under the St. Lawrence River.

Now, TransCanada — the Canadian company behind the hugely unpopular Keystone XL pipeline — is bringing a $15 billion claim against the United States for denying permits to build it. That’s exactly the kind of legal action that makes people like Karen Feridun fighting oil and gas projects nervous.

Even if Washington wins the TransCanada suit under NAFTA, the fear of spending millions of dollars fending off litigation under the much larger TPP could have a chilling effect on future efforts to keep oil, gas, and coal in the ground.

Luckily, as Feridun and her neighbors know, Congress hasn’t approved the Trans-Pacific Partnership yet. If lawmakers care about protecting good jobs, clean skies, safe water, and a stable climate in this hotly contested election year, they’d be wise not to gamble against the public interest.

Janet Redman directs the Climate Policy Program at the Institute for Policy Studies. 

Roster of bloviators is too pale and male

Anna Quindlen relayed an eye-opening and hair-raising experience to her readers in 1990. “A newspaper editor said to me not long ago, with no hint of self-consciousness, ‘I’d love to run your column, but we already run Ellen Goodman,’” the New York Times columnist wrote. “Not only was there a quota; there was a quota of one.”

A quarter of a century later, many newspapers still have far to go. On a recent slow news day, white men wrote every bylined commentary in the The Washington Post’s op-ed pages.

Even the most well-meaning white men can’t speak for the rest of us.

Granted,  The Post  regularly features the analyses of Eugene Robinson, an African-American man, and Fareed Zakaria, an immigrant born in India. It also runs Kathleen Parker and other white women. Several of the paper’s Metro and Business section columnists are people of color, including at least two black women.

But that pale and male lineup that caught my eye was no blip.

While The Post does distribute columns written by Esther Cepeda and Ruben Navarrette, it doesn’t publish work by either of them or any other people of Latin American descent in its own pages. Given that the 54 million Latinos living in the United States compose our largest minority, can’t Washington’s dominant news source find room for the opinions expressed by a single person from this community?

Detailed research on byline balance is clear if infrequent. A 2012 Op-Ed Project study found that male opinion-page writers still outnumber female writers four-to-one.

This leaves most op-ed sections more testosterone-laced than the subset of Donald Trump’s Twitter followers who cheer when he disses Megyn Kelly.

In addition to this quantity problem, there are quality concerns. The Op-Ed Project found that a disproportionate share of women’s commentaries address “pink” things such as gender, food, and family, versus economics, politics, national security, and other hard-news topics.

The mainstream media’s even more muffled when it comes to amplifying voices from communities of color. The last time the media watchdog group Fairness and Accuracy In Reporting (FAIR) did the bean-counting, whites wrote up to 94 percent of the opinion pieces that ran in the three most prominent newspapers.

And like The Washington Post, The New York Times still doesn’t publish a single Latino columnist.

How does OtherWords, the editorial service I run, measure up?

Some background: William A. Collins founded Minuteman Media in 1998 as a bulwark against the growing dominance of conservatives in the nation’s opinion pages. When this avuncular former Norwalk, Conn., mayor handed me the reins of his editorial service six years ago, most of the folks writing the commentaries we distributed were pale and male.

By 2012, women were writing a quarter of the pieces that this editorial service, by then renamed, got published in newspapers. That was better but not good enough. Today, partly because of my column, women pen half of our work.

Achieving gender equality makes our scrappy outfit stand out. But people of color wrote only 5 percent of our commentaries in the first half of this year, in line with the media’s overall lack of diversity.

Working within the confines of a shoestring budget, OtherWords brings under-exposed yet bold voices to the kitchen tables of the good people from Union, South Carolina to Gardena, California — and hundreds of towns in between. Now that we’re less male, can we get less pale? We can and we must.

Because byline inequality matters.

Emily Schwartz Greco is the managing editor of OtherWords (OtherWords.org),  a non-profit national editorial service run by the Institute for Policy Studies. 

Ethan Miller: The Millennials' financial-literacy crisis

Summer is a time of endings and beginnings. For most of the about  1.8 million people who just graduated from college, this season marks the end of at least 17 years of formal education and the launch of their careers.

My career started a little sooner than that. 

My first real job was as a student organizer during my senior year at American University, in Washington. Right before I graduated two years ago, when I filed my tax return, I was surprised to learn that I owed an extra $1,200 on the less than $13,000 I earned.

Why did I owe the  Internal Revenue Service so much? Because my employer misclassified me as an independent contractor, I owed self-employment taxes in addition to regular income taxes. And, because I had no idea I needed to pay these taxes every quarter, I owed a large lump sum that Tax Day.

It was a big wakeup call. As a 21-year-old soon-to-be college graduate majoring in economics, I was financially illiterate. Neither in college nor at  top-ranked Wootton High School, in Rockville, Md., did I learn how to manage my money beyond making sure I could budget for the basics.

When I talk to my friends about those tax troubles, I find that their grasp of personal finance is just as poor or worse. While we might feel ready to start our careers after graduation, we’re woefully unprepared to look out for ourselves in the economy.

And we aren’t alone. A recent Financial Industry Regulatory Authority (FINRA) study showed that less than a quarter of millennials could correctly answer at least four out of five questions on a basic financial literacy quiz.

As the lackluster recovery from the Great Recession lumbers forward, personal finance matters more than ever. Some 53 million Americans — one in three working people — are freelancers. And according to software company Intuit, 40 percent of the workforce will be freelancing or working as an independent contractor by 2020. That’s a pleasant way of saying they lack job stability.

In the so-called gig economy, juggling multiple part-time or temporary jobs to make ends meet is commonplace. Unless they qualify for health care subsidies, people working in this sector pay for medical insurance completely out of pocket. If they manage to save for retirement, they have to do it alone.

Many millennials are learning the rules of the game as we’re playing it. But we’re actually a lot like our elders. The FINRA study showed significant rates of financial illiteracy among Boomers and Gen Xers as well.

The difference is that our generation faces a job market that’s nothing like the one our parents faced. Combined with the $1.2 trillion of student-loan debt currently owed, that means we need more financial smarts if we’re going to thrive in today’s precarious economy.

More public K-12 school systems across the country need to follow the example of states like Virginia by prioritizing students’ financial literacy and requiring a course in personal finance regardless of whether they’re college-bound or not. Everyone needs to know enough of the basics to fend for themselves.

Of course, if our nation’s employers took the high road and paid fair wages, provided health care and retirement benefits, and gave regular, reliable schedules, we wouldn’t have to rely so much on our own wits to get by. But if our bosses won’t look out for us, we have to look out for ourselves.

Many Millennials are struggling to pay our bills now, much less build a solid future. Just as I’ve had to educate myself financially, my entire generation needs to get up to speed on how the economy works (or doesn’t), so we can join together to make it more sustainable for everyone.

Ethan Miller (Ethan99@gmail.com), is a labor-rights activist  and a New Economy Maryland Fellow with the Institute for Policy Studies.  This originated at OtherWords.org.

Sam Pizzigati: Uber-rich favor speculation over helping poor

Ultra-wealthy financiers have hoarded far more cash than they can responsibly invest.

Lots of folks in America today really need more money.

Our kids, for starters. We ought to be investing in their futures, not stuffing them in overcrowded classrooms or forcing them to graduate from college with tens of thousands of dollars in debt.

And plenty of working people need more money, too. Wages for average Americans, after you take inflation into account, have sunk below what workers were making four decades ago.

I could go on.

But not everyone’s feeling the pinch. Take Stewart Butterfield, the CEO of Slack — a tech start-up whose corporate messaging app just might, some experts believe, one day replace email.

The year-old Slack, in other words, may prove to be quite a big deal. Or the company might crash, as so many start-ups inevitably do. But that risk hasn’t stopped the heavyweights of American high finance from rushing to invest in Butterfield’s fledgling operation.

By this past March, those investments had jacked up Slack’s market value to a stunning $1 billion. Then, in April, investors injected an additional $160 million for a mere 5 percent stake in Butterfield’s company. That brought the start-up’s total market value to just about $3 billion.

The strangest part of all this? Butterfield’s company didn’t ask for that latest $160 million — and doesn’t need it either.

“Eventually,” he added, “we will find a use for it, at least I hope we do.”“We don’t have an immediate use for that money,” Butterfield openly acknowledged in a recent interview.

Wait, this story gets stranger still.

What’s happening with Slack turns out to be happening all across America’s economic cutting edge. The nation’s high-finance chiefs — the exceedingly deep pockets who run hedge funds and the like — are dumping cash into start-ups at a dizzying pace.

Back in the old days — say, six years ago — hot start-ups would raise a pile of cash from investors, digest that money into their ongoing operations, then come back a year or so later and ask investors for more. Another year would typically pass before a third round of financing.

This wait-and-see financing has gone by the boards. Since early 2013, The New York Times reports, more than 20 tech start-ups have swallowed three rounds of financing in less than 18 months. One of these, the anonymous messaging start-up Yik Yak, completed three rounds in just seven months.

What’s going on here? In a word: inequality.

The “winners” in America’s contemporary economy are now holding phenomenally more money than they can prudently invest. So they’re not making rational investments. They’re speculating, racing to place mammoth bets on start-ups that may become the “next big thing.”

Slack CEO Butterfield seems a bit bemused, but not bothered. Yes, he candidly admits, we have in America right now “a lot of investors who have a lot of money.”

“But,” he adds, “it’s not like if they hadn’t given the money to us, they would have given to a homeless person instead.”

That’s true, of course. The super-rich now awash with cash aren’t choosing between bankrolling start-ups and making sure that kids in poor neighborhoods get three squares a day. They’re choosing between speculative options they think will make them even richer.

Well, the rest of us need to choose, too.

We can continue to accept an economy where fabulously rich people dump fabulously huge sums on people and enterprises who don’t need the money. Or we can try to forge a new and different economy — where investments actually make sense.

Sam Pizzigati, an Institute for Policy Studies associate fellow, edits the inequality monthly Too Much. His latest book is The Rich Don’t Always Win. This piece originated at  OtherWords.org

Karen Dolan: Criminalizing being poor

Here’s something you might not know about , Mo. In this city of 21,000 people, 16,000 have outstanding arrest warrants. In fact, in 2013 alone, authorities issued 9,000 warrants for over 32,000 offenses.

That’s one-and-a-half offenses for every resident of Ferguson in just one year.

Most of the warrants are for minor offenses such as traffic or parking violations. And they’re part of a structural pattern of abuse, according to a recent Department of Justice investigation.

The damning report found that the city prioritized aggressive revenue collection over public safety. It documented unconstitutional policing, violations of due process, and racial bias against the majority black population.

One woman’s story illustrates what’s happening to more and more people as municipal revenues become the focus of police departments all over the country.

It began with a parking ticket back in 2007, which saddled a low-income black woman with a $151 fine and extra fees. In economic distress and frequently homeless, she was unable to pay. So she was hit with new fines and fees — and eventually an arrest warrant that landed her in jail.

By 2010, she’d paid the court $550 for the single parking violation, but more penalties had accrued. She attempted to make payments of $25 and $50, but the court rejected those partial installments.

Even after being jailed and paying hundreds of dollars above the original fine, she still owes the court $541 — all because she lacked the money to pay the initial fees.

This woman’s story is repeating itself in town after town.

A 2014 NPR investigation found people who wound up in jail after coming up short on fines for a range of minor offenses — such as catching a fish out of season in Ionia, Michigan, shoplifting a $2 can of beer in Augusta, Georgia, or hanging out in an abandoned building in Grand Rapids.

It’s even worse for the homeless. A majority of cities now prohibit sitting or lying down in public, and nearly a quarter make it a crime to ask for food or money.

I’ve co-authored a report at the Institute for Policy Studies called “The Poor Get Prison,” which examines the growing phenomenon of local communities “criminalizing poverty.” That means targeting, arresting, and downright bilking people for misdemeanor offenses, debt, and lack of resources.

We find that as state and local budgets were squeezed following the 2008 recession, local authorities all over the country levied more fines and fees on those people least able to pay — and aggressively pursued them.

Even after their debt is paid, these can people face discrimination in employment, housing, and social services because of the jail time they racked up when they were unable to pay.

Fines aren’t the only way the courts are shaking down poor people. The report details another increasingly lucrative revenue raiser for both local and federal coffers: civil asset forfeiture. This is the odious practice of seizing cash and property from people not charged with any crime and who can’t afford legal defense.

Not even kids are safe. From pre-school on, poor and black children are often considered criminals.

Police presence in schools has been increasing since the 1990s. Combined with the rise of “Zero Tolerance” policies, children in low-income schools are prosecuted as criminals for everything from brawling on the basketball court to doodling on a desk. In Austin, Texas, a 12-year-old ended up in court for putting on perfume.

When a community issues arrest warrants for more offenses than it has residents, something’s deeply wrong. A democratic society that purports “freedom and justice for all” can’t coexist with one that profiles and criminalizes poor people and communities of color.

Karen Dolan is a senior fellow at the Institute for Policy Studies and co-author of the report “The Poor Get Prison: The Alarming Spread of the Criminalization of Poverty.” IPS-dc.org.report . Distributed by

Eleanor Schwartz Greco: Inhofe and other capital weather wimps

  cherry

Coming up next in Washington.

What’s wrong with Washington?

I’m not talking about goofy political antics, like James Inhofe’s latest bid to disprove climate change.

In case you missed it, the chairman of the Senate’s Environment and Public Works Committee gave a mind-numbing speech a few weeks ago in which he muttered about February’s “unseasonal” weather, ice ages, polar bears, and terrorism.

At the start of the Oklahoma Republican’s 22-minute ramble, he slipped a snowball from a Ziploc bag and tossed it from his Senate floor perch. Mashing together weather and climate, Inhofe said the Earth can’t possibly be getting any warmer if it still snows in our nation’s capital.

Even Fox News Radio taunted the nation’s most prominent climate denier about this stunt, quoting from one of his books and running the headline “James Inhofe: There Is No Global Warming Because God.”

Money, actually, powers this delusion. Fat contributions from oil, gas, coal, and utility companies explain why politicians like Inhofe are still ignoring the overwhelmingconsensus among scientists that makes addressing climate change a top priority.

What I don’t get is why the 6 million people who make their homes in the District of Columbia and its suburbs cower whenever winter does its thing. No lobby fuels that.

Entire school systems in the nation’s seventh-biggest metropolitan region may open late or close altogether because of botched snow forecasts followed by slushy streets. The Metro system slows down and trains can’t service all stations when rail lines ice over. Garbage piles up and accidents clog the roads when it snows.

After living here for nearly 20 years, I’m never surprised when temperatures dip below the freezing point between November and March. Or when snowflakes flutter from the sky. I realize that snowdrifts bury cars and skim the bottoms of stop signs once every five years or so.

That’s why the whimpers irk me as much as the area’s systemic failure to hack winter weather. On crowded elevators, I struggle not to blurt “This isn’t Florida: Bundle up or shut up” at complainers who won’t wear a hat, a scarf, gloves, or a good pair of boots.

If they would just stop whining, these folks might take advantage of the freedom cold bouts bestow upon you to sleep in, cradle a good book, or cook up a storm.

I live in Arlington, Va. It’s the nation’s most-educated county, but lately my second-grader and third-grader haven’t spent much time with their teachers. During the first week of March, the local authorities shut schools on a snowy Monday, whittling a three-day week to just two days of instruction.

You see, the school system had already canceled all Thursday and Friday classes to give the parents of kids in elementary school time to meet with teachers. When it snowed again, Arlington Public Schools locked us out, too.

My family made the most of winter’s final blast by heading to Davis, W.Va., for two days. We cross-country skied, slid down North America’s longest sled run, and stomped around in the sparkling snow.

Spring snuck into town before we returned.

The cherry blossoms will bloom soon. All that pink will cheer up Washington’s wimps for a while. Then they’ll start fretting about the summer heat.

Emily Schwartz Greco is the managing editor of OtherWords.com, a non-profit national editorial service run by the Institute for Policy Studies. 

Marjorie E. Wood: Port strike mirrors organized labor's early days

Port truckers in California walked off the job in November to protest their dismal working conditions. Required to lease trucks while paying insurance and maintenance costs, drivers often earn less than minimum wage.The strike came just days after big box retailers, manufacturers, and other supply chain stakeholders sent President Obama a letter warning that labor disputes could cause “a full shutdown of every West coast port.”Spearheaded by the National Retail Federation — whose members include large corporate retailers  such as WalMart — the letter stated that a shutdown would be “catastrophic,” costing the economy up to $2 billion a day. Over a hundred business associations who signed the letter requested “immediate action” by the federal government to prevent such losses. Though a shutdown did not happen, tensions remain as port truckers, dockworkers, and other workers step up their demands to be treated fairly during the peak holiday season.

This isn’t the first time in our nation’s history that a transportation strike has made big business anxious. In 1877, when thousands of railroad workers went on strike in a dozen American cities, businessmen pleaded with then-President Rutherford B. Hayes to intervene.

Businessmen had reason to worry. At the height of the 1877 strikes, more than half the freight on the nation’s railways stopped running.

Circumstances leading to the railroad strikes were not unlike our own today. Unregulated economic growth after the Civil War concentrated wealth in a few hands. Labor conditions deteriorated as big business sought ever greater profits. The first Gilded Age was born.

Then, as now, transportation workers held the strongest hand in demanding higher wages and better conditions. Unlike other workers, they could disrupt business as usual everywhere.

The railroad strikes showed how powerful workers could be when they united. Workers across all industries responded in solidarity when business and government tried to put down the railroad strikes.

After 1877, labor unions grew and more strikes ensued. Ultimately, this led to passage of the Fair Labor Standards Act, the bedrock of modern employment rights.

Over a hundred years later, port truck drivers are denied the very same employment rights that workers in the first Gilded Age fought so hard to achieve. In the last year, port truckers have gone on multiple strikes protesting their misclassified status as “independent contractors.” Nearly 70 percent of port truckers are denied protections and benefits due to misclassification, according to the National Employment Law Project

Port trucking was a secure, middle-class occupation until Congress first deregulated the trucking industry in 1980. Now, most port truckers lack basic labor rights, such as workers’ compensation, overtime pay, and even a guaranteed minimum wage.

Port truckers aren’t the only workers in this boat. They’re also an essential link in a supply chain that ends with low-wage retail workers at Walmart. If port truckers wage a protracted strike, it could reverberate throughout the entire national economy.

While their plight hasn’t commanded the widespread attention that the 19th century rail strikes did back then, port workers just might be the key to restoring basic labor rights for all Americans.

Marjorie E. Wood, a columnist for OtherWords.org, where this piece originated, is a senior economic-policy associate at the Institute for Policy Studies (IPS-dc.org) and the managing editor of Inequality.org.

 

Sam Pizzigati: Let holiday heart go out to the Uber-greedy

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Peace on Earth, good will toward men. We honor these noble values every holiday season — and some people actually work to advance them all year long.Other folks, by contrast, mock these values. They spend their days chasing after ever grander stashes of personal treasure.

These greedy souls love the shadows. So a few years back, the inequality weekly I edit for the Institute for Policy Studies began publishing an annual list of America’s top ten greediest. I’ve just introduced this year’s list, bringing tales of plutocrats young and old.

The oldest character on it: the 79-year-old Wall Street mover and shaker Ken Langone.

Langone began making headlines right at the start of 2014 with his advice for Pope Francis. The pontiff, he told New York’s archbishop, should cool it on the inequality front. Papal broadsides against “the powerful feeding upon the powerless,” Langone complained, could leave America’s wealthy “incapable of feeling compassion for the poor.”

Langone himself has always been a generous sort — at least for his friends. As a New York Stock Exchange director, he greased the skids for a $190-million exit package for his buddy, NYSE president Richard Grasso, in 2003

Langone has been a bit less generous to the powerless. As a director at Yum! Brands, the home of Taco Bell and KFC, he cheered on company efforts to oppose hikes in the minimum wage. As he likes to tell regulators: “Leave us alone and let us hire people.”

Home Depot, the retail giant Langone’s financing helped propel to big-box dominance, shows what happens when you leave corporations alone. Big-box giants, notes the research group Good Jobs First, don’t create jobs. They “grow mostly at the expense of existing competitors,” many of them local businesses.

Big-box giants, on the other hand, do create massive concentrations of personal wealth. Forbes now estimates Langone’s net worth at $2.6 billion.

Among the youngest of America’s 2014 top ten greediest: the 38-year-old Travis Kalanick, the CEO and cofounder of Uber, a taxi-like service that lets travelers hail cars through a mobile phone app.

Last January, Uber was running cars in just 60 cities. Now it’s spread to 250 cities — in 50 countries. That growth has propelled Uber’s worth to $40 billion — more than long-established transportation heavyweights like Hertz and United Continental.

Not bad for a company, the AP notes, “that didn’t exist five years ago.” And Kalanick himself, Forbes estimates, is ending the year worth a cool $3 billion.

How has Uber soared so quickly? The company is pumping up profits, critics charge, by taking short cuts like not running adequate background checks on drivers. Officials in Los Angeles and San Francisco have just filed suit against Uber on driver- safety checks, and governments from Spain to India have also taken legal action against the company.

Other critics include customers like Leah Kappen of Indianapolis. She took an Uber ride downtown to the Dec. 6 Big Ten football championship game. That ride cost her $30. The 18-minute trip home after the game cost her $450. This past Halloween, an 18-mile ride home ran New Yorker Elliott Asbury $539.

Uber’s “surge pricing” — a policy that ties rates to the supposed market demands of the moment — generated these outsized fees. But anyone upset by $500 cab fare, says Kalanick, needs to start “getting used to dynamic pricing in transportation.”

Uber drivers are complaining, too. One of Uber’s competitors, Lyft, gives all the extra profit from “surge pricing” to its drivers. Uber takes a 20 percent cut. Why not, The Wall Street Journal asked Kalanick, follow suit?

“We are a business,” he replied.

So much for good will.

Emily Schwartz Greco/William A. Collins: Good news for public is bad news for Wall St.

  NORWALK, Conn.

For the first time since 1997, the U.S. economy just added at least 200,000 jobs per month for six months running. GDP grew at a 4 percent annual clip between April and June. The percentage of Americans who describe the economy as “good” has climbed to the highest level of President  Obama’s presidency.

Who wouldn’t rejoice over these happy milestones on the bumpy road to a real recovery?

Wall Street. On July 31, within hours of the release of a bunch of sunny indicators, stocks sank more than they had on any day since early February. The decline wiped out all gains the S&P 500 stock index had racked up over the month.

Global instability contributed to the sharp drop, but so did investors’ fretting over indications that workers are finally getting higher wages and more benefits.

And why exactly does Wall Street tank on news portending economic gains for most Americans? Don’t people with extra money in their pockets boost the economy when they spend more freely? Isn’t it something worth celebrating?

Not in an economy that caters to the rich.

You see, there are practical implications of the chasm between rich and poor for the conduct of commerce. For several years, retailers have increasingly doted on the affluent, the most alluring segment of the $10 trillion consumer spending market.

Consider how U.S. households differ. The richest 20 percent of Americans now pocket more than half of the nation’s income. The typical income for this kind of family tops $150,000, triple the norm for all of us. Together, these “high-value customers” (to borrow a phrase from LuxuryDaily.com) account for about 40 percent of all U.S. spending.

And the cost of real luxury has gotten a divorce from reality. A quilted Chanel handbag can set you back $4,900. An ultra-thin Piaget Altiplano watch could siphon 95 grand from your wallet.

There’s still some money made from selling cheap stuff to the poor and working class. That’s why the four biggest U.S. retailers are big-box behemoths Wal-Mart, Costco, and Target, along with the Kroger supermarket chain. Even the very bottom of the food chain, the people whose households eke by on $30,000 or less a year, account for a stagnant yet sizable $1 trillion bare-bones consumption market.

For them, dollar stores can be a bigger draw than the big boxes. They’re in a bind and so are the companies relying on their purchases.

“Customers are under pressure,” Dollar Tree Chief Executive Bob Sasser told The Wall Street Journal. “Unfortunately, that’s one reason why the space continues to grow.”

In a telling sign of today’s increasingly unequal times, Dollar Tree is merging with Family Dollar Stores. The No. 2 and No. 3 companies in this cut-throat market want to team up to compete with their No. 1 competitor, Dollar General. Together, they’ll fend off bids by Wal-Mart and its ilk to gobble up some of their territory with new smaller-box establishments.

Clearly, times are tough for retailers opting to sell stuff to the rest of us. But they’ve got it figured out for the most part and Wall Street worships predictability.

Think of all the economic models and assumptions that would be shattered if the drive toward wealth concentration were to take a detour toward shared prosperity.

Of course, financial experts won’t say these things out loud. Instead, they’ll mutter about inflation and freak out over signs that labor markets are growing tighter. Are those really big concerns in light of this protracted war on consumers?

If you would like to know more about how and why the rich are getting so much richer while the poor become steadily poorer (and you enjoy very long reads), check out Thomas Piketty’s 700-page masterpiece. In his wildly successful book Capital in the Twenty-first Century, the French economist has finally organized and footnoted every lost battle in this tale of class warfare.

Winning the debate, of course, isn’t enough. Until more U.S. political and business leaders decide they’ve had enough, this nation will become less of a democracy governed by the people and more of a plutocracy ruled by the rich.

Emily Schwartz Greco is the managing editor of OtherWords, a non-profit national editorial service run by the Institute for Policy Studies. OtherWords columnist William A. Collins is a former  Connecticut state representative and a former mayor of Norwalk, Conn. This piece originated at OtherWords.org.