Today’s News & Commentary — February 14, 2017

Happy Valentine’s Day!  Those celebrating should be careful not to run affront of labor and employment law.  The Richmond Times-Dispatch notes that “when a gift is received unexpectedly from a co-worker on Valentine’s Day of all days, it raises the creep level to litigation status.”  Their special correspondent advises readers to keep their celebrations out of the workplace.

Donald Trump’s selection for Secretary of Labor, Andrew Puzder, continues to face difficulties with his nomination.  According to CNN, four Republican senators – “Susan Collins of Maine, Lisa Murkowski of Alaska, Tim Scott of South Carolina and Johnny Isakson of Georgia” – are withholding support for Puzder pending his confirmation hearings.  Republican leaders will lobby the four senators, but if they cannot be swayed Trump may replace Puzder.

After a long campaign, a little over 3,000 Boeing workers in Charleston will finally vote tomorrow on unionization.  The New York Times reports that the election represents a key test of the strength of organized labor in the early days of Trump’s presidency.  Boeing was enticed to open the plant in South Carolina in large part because of reduced labor costs relative to their operations in the Seattle area, partly driven by the lack of unionization.

In other news, graduate students at colleges and universities continue to mount union organization campaigns.  Organizers and students continue to make their case at Duke University and the University of Maryland, for example.

Today’s News & Commentary — January 17, 2017

Donald Trump’s nominee for Labor Secretary, Andrew Puzer, may be having second thoughts about taking the job following intense criticism of his nomination.  CNN reports that Puzder “has voiced second thoughts in recent days, because of a relentless barrage of criticism from Democrats, labor unions and other liberal groups, a business ally and GOP sources tell CNN.”  Puzder is apparently discouraged by the required paperwork and attacks on him by Democrats, organized labor and worker advocates.  At the earliest, Puzder’s confirmation hearing would be next month.  In response to the report, Puzder tweeted that he looks forward to his hearing.

Meanwhile, Trump’s plans to increase American jobs through increased American production of goods continues to generate significant skepticism.  With respect to production of iPhones, according to technology site BGR, “if iPhone factories came to the US, you can be sure that robots would be the only ones getting more jobs.”  Any increased American production would reflect that the “relative cost of skilled labor in the US and China is such that it’s cheaper to build a robot than it is to hire one US worker to replace one Chinese worker in the supply chain.”

Education increasingly defines the ability of Americans to succeed economically.  The Associated Press notes that “Americans with no more than a high school diploma have fallen so far behind college graduates in their economic lives that the earnings gap between college grads and everyone else has reached its widest point on record.”  College-educated workers have disproportionally benefited from new jobs and wage increases following the 2008-09 Great Recession, and are far more in demand by employers.  The education gap is most significant for white men, but is true across the board, and developing the skills of non-college-educated workers is critical.

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Today’s News & Commentary — January 11, 2017

In case you missed it, the New York Times has full video and text coverage of President Obama’s farewell speech. In his speech, President Obama praised worker organization as part of “our nation’s call to citizenship,” called for “a new social compact” that, inter alia, “give[s] workers the power to unionize for better wages,” and warned that “[i]f every economic issue is framed as a struggle between a hardworking white middle class and an undeserving minority, then workers of all shades are going to be left fighting for scraps while the wealthy withdraw further into their private enclaves.”

Also at the New York TimesNoam Scheiber covers two new studies on raising the minimum wage.  The first study found, consistent with the growing body of work on minimum wage, that increasing wages does not contribute to a decline in hiring.  However, the study also showed that when employers were forced to pay more in wages, they hired more productive workers, so that the overall amount amount of money employers spent on each job did not change substantially.  If this pattern were to apply across the economy — and the study’s author, as well as other economists, note that there are many reasons it might not — a higher minimum wage could result in low-skilled workers losing their jobs to higher-skilled workers.  The second study suggested that some employers may go out of business in response to a rising minimum wage.  The study, which examined restaurants in the San Francisco area, found that many poorly rated restaurants went out of business after a minimum-wage increase took effect.  Highly rated restaurants, by contrast, appeared “to be largely unaffected,” and overall there was “no substantial rise in restaurant closings after a minimum-wage increase.”

Politico and CNBC report that Andy Puzder’s confirmation hearing for Secretary of Labor may be delayed until February.  Puzder was originally scheduled to testify before the Senate Committee on Health, Education, Labor and Pensions on January 17, but the hearing will now be moved and may not take place until after Betsy DeVos’ hearing, which has also been delayed.

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Today’s News & Commentary — November 30, 2016

On Tuesday, the SEIU-backed Fight for $15 movement staged a nationwide “day of disruption” to demand, according to the New York Times and Politico, a $15-an-hour minimum wage, the right to form a union, and health benefits for low-wage workers.  The protests mark the four-year anniversary of Fight for $15, and thousands of workers across multiple cities took the streets.  The protests included retail workers, Uber drivers, fast food employees, and workers at hospitals and airports.

Donald Trump has chosen Elaine Chao, former secretary of labor under President George W. Bush, to serve as secretary of transportation.  The New York Times observes that she is “likely to be one of the more essential players” in the new administration, given that Mr. Trump has stated that infrastructure redevelopment will be a top priority of his first 100 days in office.

In October, the NLRB resolved an action against Bridgewater Associates, and the New York Times has now obtained a document about the agreement.  It is so heavily redacted, however, that it is “unclear what, if any, changes were made to Bridgewater’s employee rules and practices.”  This past summer, the NLRB challenged certain confidentiality provisions in the contracts that Bridgewater requires each of its full-time employees to sign.  The NLRB action was initiated after a former Bridgewater employee filed a sexual harassment complaint.  However, after Bridgewater and representatives of the former employee came to a private nonboard agreement, the NLRB withdrew its complaint.

In international news, BBC News reports that the introduction of a National Living Wage in the UK has not affected employment.  The Low Pay Commission, the body that monitors low pay for the government, stated that it has found “no clear evidence” of changes in employment or hours since the the introduction of a higher minimum wage in April.  In addition, it found that employment has continued to rise even in sectors “most obviously affected, such as cleaning, hotels, horticulture and retail.”  BBC News notes that although various economists and think tanks had warned that raising the minimum wage would hurt employment, the Low Pay Commision’s findings “contradict” those warnings.


Today’s News & Commentary— May 16, 2016

The Massachusetts Teachers Association has dedicated over $9 million to combat the ballot initiative that would lift the current cap on charter schools throughout the Commonwealth, reports The Boston Globe.  Over 1,600 of the union’s registered delegates voted to earmark the funds over the weekend at an annual meeting held at Boston’s Hynes Convention Center.  They also used the time to reelect Barbara Madeloni to another two-year term as president.  Madeloni says that the money will be used to catalyze a grass-roots movement that will “reclaim public education from corporate interests.”  Yet whether there is the momentum for that movement remains unclear.   According to a recent Globe poll, more than fifty percent of likely voters said they would support lifting the charter schools cap, while thirty-three percent said they were opposed and sixteen percent undecided.

The New York Times featured Secretary of Labor Thomas Perez and his call for “conscious capitalism” in an article over the weekend.  The Times caught up with Secretary Perez while he was in New York City promoting companies, like Union Square Hospitality Group and Managed by Q, that are raising wages, increasing employees perks, and embracing other socially-responsive policies, all without government direction.  Secretary Perez told the Times that the key to improving working conditions for America’s workforce is to convince more companies in the business community that it is actually in their self-interest to help their employees. “It’s not a zero-sum world where you either take care of your workers or you take care of your shareholders,” he told the Times.  “You can do good and do well, too.”

An Uber passenger-turned-driver describes her disillusionment with the company, and with ride-sharing more generally, in an Op-Ed for the Los Angeles Times.  Enticed by stories of drivers making $4,000 to $6,000 a month playing cabbie, Sandra Vahtel joined the Uber ranks when she found herself short on cash.  But for Vahtel that promised payday never came.  On one of her first days on the job she grossed just $11 an hour before gas, insurance, and income tax.  Yet the take home pay was not the only problem for Vahtel. Because Uber threatens to deactivate drivers’ accounts if their rating falls below 4.6 stars, Vahtel found herself under constant stress as disgruntled passengers docked her for behavior that was unintended or simply out of her control.   She laments, now, for having patronized ride-sharing services at the expense of traditional full-time taxis. “I’ll join the half of rideshare drivers who quit within a year and go back to being a passenger — one who no longer complains about an $18 fare to get across town.”



McDonald’s Earnings Report and the Need for Dialogue

As we covered in our inaugural Fast Food News, the Wall Street Journal editorial page focuses today on McDonald’s new earnings report. That report shows a 30% decline in quarterly profits and a 5% drop in revenue. And while the declines seem attributable largely to rising beef, cheese, and pork prices, Businessweek includes minimum-wage increases in states like Minnesota, California and Michigan as part of the cause for the earnings drop. The Journal, for its part, takes the weak earnings as a clear indication that further wage increases will only lead to further earnings losses, and, ultimately, to job losses.

An earnings report like this one provides more clear evidence – if we needed any – that McDonald’s and the fast food campaign need to begin talking to each other. Businessweek stories and WSJ editorials are not a substitute for actual dialogue between workers who are demanding significant wage increases and employers who would have to pay for them. Part of the benefit of such dialogue would be an honest exchange of information. What is the actual cause of the earnings decline? What forced McDonald’s to raise its food prices by 3%? Could the workers credibly offer increased productivity in exchange for wage increases, as efficiency-wage theory predicts? If wages went up across the fast food industry, might demand increase enough to keep pace with price increases?

As outsiders, workers and their campaign are compromised in their ability to assess the causes of McDonald’s price hikes and earnings losses. It is difficult for them to assess the likelihood of mechanization and job cuts. And, with all due respect, the workers are not likely to take the Wall Street Journal at its word.

But, if brought to the table and presented with McDonald’s own data, the workers would be able to responsibly adjust – if necessary – their demands. Continue reading