By Doug Porter
A new gilded age is upon us, a hundred and forty years or so after the last one. The rich are getting richer. The poor are getting poorer. From the pulpits of the prosperous we’re told the pursuit of the all-mighty dollar is the path of righteousness, even if that path is paved with the misery of the masses.
The mantra for the millennial era is that just a few less regulations and a lot less taxes will set us free, despite all the accrued evidence to the contrary. Whatever criticisms have been leveled at economist Thomas Piketty, nobody has yet to challenge the two centuries of data that prove his point that unfettered capitalism benefits the only very few.
Here were are on Labor Day, the sop set aside to acknowledge the efforts of hard working people, and there is scant acknowledgement in too much of the media that the struggle for economic justice continues. Somehow we’re supposed to to forget history about the excesses of unfettered capitalism and brave souls that stood up against all odds to challenge those seeking to establish an oligarchy.
Meet the Press and affiliated bastions of policy wonkery couldn’t be bothered to interview a labor leader, a struggling fast food worker or a teacher on “Labor Day” weekend. In fact, the only labor leader who’s been a topic of discussion on any Sunday talk show this year was Ronald Reagan, whose role as the leader of Screen Actors Guild came up in a history pop quiz segment.
UT-San Diego ran an editorial telling us not to be fearful about robots taking jobs. And a business-backed think tank in Washington is actually protesting the very existence of the holiday by staging a “work-in” for their staff.
Today I want to make the case that what we call Labor Day needs to be more than a commemoration that’s barely acknowledged (and even mocked). Unfair, unethical and just plain illegal practices by big business have created circumstances that should compel a profound response. The “Two by Four” headline?…eh, you’re reading this, aren’t you?
Widespread Wage Theft Scams
Where the media is reporting on labor issues, the news confirms our worst fears about the bad actors in big business. And, as you’ll see below, these bad actors are hardly the exception.
Today’s New York Times reports on efforts by workers through the courts to seek redress and hold employers accountable for violating the law. The story starts out by presenting the case of a worker for a WalMart supplier who never got paid overtime, despite working 70 hours a week and stretches of up to 90 days in a row.
The lawsuit is part of a flood of recent cases — brought in California and across the nation — that accuse employers of violating minimum wage and overtime laws, erasing work hours and wrongfully taking employees’ tips. Worker advocates call these practices “wage theft,” insisting it has become far too prevalent.
Some federal and state officials agree. They assert that more companies are violating wage laws than ever before, pointing to the record number of enforcement actions they have pursued. They complain that more employers — perhaps motivated by fierce competition or a desire for higher profits — are flouting wage laws.
The Grey Market Scam in Construction
Today’s Los Angeles Times reports on the 400% increase in off-the-books employment in the construction industry in recent decades.
Construction businesses in the state employ roughly 895,000 workers, according to a report by downtown Los Angeles research group Economic Roundtable that was released Sunday. In 2011, 143,900 of those workers labored unofficially.
Some 39,800 workers were misclassified by employers as independent contractors, despite not owning their own tools or setting their own schedules. An additional 104,100 workers weren’t recorded at all.
The only people benefiting from the surge in grey market employment are the companies cheating the system. Workers have no overtime, no backup in case of injury and no social security or unemployment benefits accrued. Again, from the LA Times:
California lost out on $473 million in 2011 because of informal construction work, according to the study. The state was stiffed on $264 million in workers’ compensation payments, $146 million in disability dues and $64 million in unemployment insurance.
But informal workers also miss out, according to the report. For every dollar earned by a formal employee, an unreported one gets 52 cents and an incorrectly categorized one gets 62 cents.
Across the board, that’s a wage gap of $1.2 billion, researchers said. Households led by such workers are three times more likely to live in poverty than those supported by an officially recognized construction employee.
If there was ever any question as to why organized labor supports Project Labor Agreements (which don’t, by the way, compel union-only employment), this study makes the case.
Wage Theft on A Massive Scale
Whole industries have created business models wherein the legal responsibilities associated with employers and the rights of employees are obscured by clever legalese.
McDonald’s and other franchise fast food companies have long operated with a model that left individual operators with no choice other than to exploit (both legally and otherwise) their employees. A recent National Labor Relations Board (NLRB) ruling is challenging that framework.
And there’s also a class action lawsuit underway. From the Christian Science Monitor:
Thursday, McDonald’s workers in California, Michigan, and New York filed class-action lawsuits against the hamburger chain and some of its franchisees in those states, alleging that the company is using certain tactics to “steal” worker wages. Among them: forcing employees to work off the clock, taking hours off their timecards, and refusing to pay overtime.
“We’ve uncovered several unlawful schemes, but they all share a common purpose – to drive labor costs down by stealing wages from McDonald’s workers,” Michael Rubin of Altshuler Berzon LLP, the attorney who filed the California suits, said in a press statement announcing the suits. “These McDonald’s workers have courageously stepped forward to shine a light on these illegal practices, and already we’ve begun to hear from several co-workers with similar wage theft claims.”
The Independent Contractor Scam
The other side of that coin is where a company simply decrees its workforce to be independent contractors.
On Wednesday, the Ninth Circuit Court of Appeals ruled that 2,300 individuals working for FedEx Ground in California and Oregon had been misclassified as independent contractors instead of employees. That means that FedEx may have to pay up millions of dollars for the costs of branded trucks, uniforms and scanners, as well as wages, overtime compensation and penalties.
The crux of the argument is that FedEx exercises so much control over drivers – their appearance standards, what they are delivering, when and how – that to classify drivers as anything but employees is a money-saving scam by FedEx. The lawsuit claimed that by framing drivers as contractors, FedEx was able to have workers complete the same work as employees at UPS or the U.S. Postal Service for less pay and no benefits.
“FedEx Ground built its business on the backs of individuals it labelled as independent contractors, promising them the entrepreneurial American Dream,” Beth A. Ross, the attorney at Leonard Carder who represented the Californian drivers, said in a statement. “However, as Judge Trott said in his concurring opinion, not all that glitters is gold.”
How Big is This Problem?
The article in today’s New York Times about wage theft quotes Julie Su, the California state labor commissioner, on just how widespread this problem is:
“My agency has found more wages being stolen from workers in California than any time in history,” she said. “This has spread to multiple industries across many sectors. It’s affected not just minimum-wage workers, but also middle-class workers.”
A dozen plus states, plus assorted cities (including our own) are trying to raise the minimum wage.
Corporate-minded forces are fiercely fighting back. Here in San Diego they’re trying to sidestep a city council approved increase in the minimum wage by circulating petitions to call for a referendum on the issue. (What has the effect of suspending the ordinance for 18 months, regardless of outcome)
The canvassers for this so-called small business coalition (which is funded and led by big corporate entities) seemingly disappeared over this past weekend. This could mean two things: either they’ve already gathered the needed signatures… Or they’ve had to change stategies due to public opposition. The company being used for this drive brags on its web site about going door-to-door in the “right” neighborhoods in previous campaigns.
A National Day of Action
City Council President Todd Gloria and the crew of local labor leaders are rocking the house at the annual labor day breakfast as I’m typing this.
“This is the law in the city of San Diego.” – @ToddGloria says regarding the minimum wage raise and earned sick days pic.twitter.com/4sJouPSCUB
— SDFreePress.org (@SDFreePressorg) September 1, 2014
A few words here about the role of organized labor seem appropriate…
Inevitably when I write about labor issues, somebody writes in about how their mother got run over by a union goon, or words to that effect.
To that I say:
Whether you like or don’t like labor unions should not be the point. If you are working for a paycheck they are just about the only friends in the world you have right now. Nobody else is actually doing the hard work about the economic inequality endemic to our times. Nobody.
This coming Thursday, September 4th is being billed as Fast Food Workers National Day of Action. The Interfaith Center for Worker Justice of San Diego County has put out the call for people to “pray with our feet.” A significant demonstration is planned for that morning…and I’ll have all the details here tomorrow.
To this day, children are taught that America is a meritocratic society that rewards people if they just work hard enough. Therefore, people believe that their lack of success is completely their own fault, instead of being aided by policies that tend to favor the “Haves,” and exclude the “Have-Nots.”
Include this with the American tendency to not want to label themselves as “Lower Class,” or “Poor,” despite a report last year that said almost 75% of Americans live paycheck-to-paycheck, and you have the makings of a working and middle class that feels they’re on the cusp of great fortune, even as their situation becomes more perilous as time goes on.
It’s tough for most people. Multiple jobs, multiple kids, and multiple obligations don’t make taking to the streets an attractive option. And I’m certainly not advocating another Occupy-type response to the current reality. At some point, a choice will have to be made.
Standing up for a increased minimum wage and a better life for fast food workers seems like a good place to start.
On This Day:1903 – Some 30,000 women from 26 trades marched in Chicago’s Labor Day parade. 1971 – Danny Murtaugh (Pittsburgh Pirates) gave his lineup card to the umpire with the names of nine black baseball players on it. This was a first for Major League Baseball. 1995 – Cleveland’s Rock and Roll Hall of Fame and Museum was opened with a seven-hour concert with dozens of stars.
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John Lawrence says
The Raise Up San Diego campaign to challenge the signature gatherers is a historic event no matter whether they manage to stop them or not. It shows that finally people are willing to challenge the power structure that has set up a referendum process that allows the rich to get anything they want on the ballot and then advertise heavily to get the outcome they prefer. We should not and finally did not take this sitting down.
Brent Beltran says
Todd Gloria gave a rousing speech at the SD Labor Council’s Labor Day Breakfast. I was impressed by his enthusiasm for standing up for minimum wage earners.
bob dorn says
Hey, Doug, I know you and other Raiser Uppers have been encouraging people to call Raise Up when they see paid gatherers offering their refererendum petitions, but the site at the the upper right of the SDFP does not reveal who to call.
Doug Porter says
There is a big ‘ole button at the top of the page you land on right underneath the logo for Raise Up San Diego that says in all caps: REPORT A SIGNATURE GATHERER. I told them a picture of a kitty was needed.
Brenda Nelson says
I do not think raising minimum wage will help, in the end they just raise prices rather than lower profits so the minimum wage worker and everyone on a fixed income still suffers and no gains are made.
If you want to improve things we MUST have a maximum wage, CEO’s should not make millions, they should not get bonuses for cutting expenses (such as cutting the hours of a minimum wage worker to save the company money).
Doug Porter says
Statistics from San Francisco, Santa Fe, San Jose and other cities say that prices rise very little.
Here’s a quote from an article that appeared in Seattle when they were considering the $15 per hour wage:
Ten years ago, San Francisco raised its minimum wage from $6.75 to $8.50 an hour, a 26 percent increase. Since then, it has gone up at regular intervals to its current $10.74 an hour, the highest big-city starting wage in the country.
The city has slapped other mandates on businesses, including paid sick leave and a requirement to provide health-care coverage or pay into a pool for uninsured residents.
What have the effects been on employment?
Almost none, according to economists at the University of California, Berkeley, who have studied San Francisco, eight other cities that raised their minimum wages in the past decade, and 21 states with higher base pay than the federal minimum.
Businesses absorbed the costs through lower turnover, small price increases at restaurants, which have a high concentration of low-wage workers, and higher worker productivity, the researchers found.
Jamie Edmonds says
Agreed that raising the minimum wage will not help, but neither will capping the maximum wage. The problem lies in the “wage” equation itself. If you want to improve things you/we need to get rid of the corrupt and outdated monetary system to begin with. Only then will we be able to travel together on this spaceship earth like civilized beings. We need to apply the scientific method to addressing these social concerns and use our big brains (and our abundant technology) to better meet the needs of all of humanity. Learn more at the zeitgeist movement dot com.