Today’s News & Commentary — February 22, 2017

The influx of refugees into upstate New York has helped revitalize previously-suffering communities.  As the New York Times reports, “[t]he impact has been both low-budget and high-tech”: refugees have provided local businesses with inexpensive, willing labor; foreign-born students have enrolled — paying tuition and fees — at upstate schools; and street-level entrepreneurs have opened new shops.  Somewhat ironically, the cities’ struggles made them popular locations to settle refugees.  Because people left, housing prices dropped, and refugees came in and were willing “to put in the sweat equity that a lot of people weren’t anymore.”  That, in turn, “put properties back on the tax rolls.”

The Wall Street Journal also weighs in on the benefits that refugees bring to the economy. In addition to providing a key source of labor, many refugees “bring a resilience and level of expertise that makes them well-suited for learning on the job.”  According to a study from the Migration Policy Institute, roughly 28% of the refugees over the age of 25 who settle in the U.S. arrive with at least a bachelor’s degree.  The Wall Street Journal notes that skills from abroad may not always translate, and some employers have found that refugees need help with translation services, resume writing, American-style management techniques, and tips for navigating their new lives.  Despite potential training challenges, however, refugees can provide companies with  “a strong competitive advantage,” enabling them to better understand, for example, the needs of clients in key markets across Asia, Africa, and the Middle East.

Chief Judge Patricia Elaine Campbell-Smith of the U.S. Court of Federal Claims recently held that the government had violated the FLSA by failing to examine whether it was required to pay employees who continued to work during the partial government shutdown in 2013.  That those workers were later paid for their time was irrelevant. The Washington Post explains that the decision entitles workers to minimum wage pay for the hours they worked between October 1 and October 5, 2013.  Judge Campbell-Smith ordered the government and the plaintiffs to calculate amounts due and report back by April 7.

The New York Times editorial board posits that blaming robots for job loss, “while not as dangerous as protectionism and xenophobia, is also a distraction from real problems and real solutions.”  The Times points out that if automation were rapidly accelerating, labor productivity and capital investment would be increasing as well.  But the data shows the opposite: in the 2000s, labor productivity and capital investment decelerated.  The problem lies instead with “politicians, who have failed for decades to support policies that let workers share the wealth from technology-led growth.”

Weekend News & Commentary — February 4-5, 2017

The weekend started with some good news, with an above-expectations jobs report released Friday.  January saw 227,000 new jobs and modest wage growth; average hourly wages were up 3 cents at $26.  President Trump has already claimed credit for the strong numbers, predicting that job growth will “continue, big league,” under his administration.
 
Meanwhile, federal workers who want to express dissent against that same administration are turning to incognito forms of communication to do so, POLITICO reports.  In order to avoid rules covering workplace communications, EPA employees — fearing that the President’s incoming appointees will undermine existing policies — are now using an encrypted messaging app to talk strategy.  Similarly, Labor Department employees are using their private email accounts to circulate a letter asking senators to oppose Andrew Puzder’s nomination for Labor Secretary.
 
Speaking of which, the nominee — still facing delays in his confirmation process — continues to attract criticism.  The New York Times investigates Puzder’s early career as a lawyer, when he represented business owners and battled labor regulators in the courtroom.  In one of his biggest cases, Puzder defended his boss (a famous mob lawyer and casino owner) against allegations of squandering $25 million from union workers’ pension funds.
 
Puzder’s opposition to raising the minimum wage has also drawn fire, as the “Fight for $15” and related movements continue to build momentum.  Without a doubt, the importance of a “living wage” has become a central tenet of workers’ activism.  But where does it come from?  JSTOR Daily takes a step back from the debate, pointing out that workers’ acceptance of wage labor — a system that was still decried in the nineteenth century as “wage slavery” — is of relatively recent vintage.  Meanwhile, some commentators are of the view that minimum-wage hikes won’t be enough, in an age of automation, to secure the livelihoods of workers.  Writing for Jacobin, Mark Paul, William Darity Jr., and Darrick Hamilton argue instead for a federal job guarantee that would ensure employment for all.

Today’s News & Commentary — January 25, 2017

When we talk about disappearing jobs, we often think of men.  But as the New York Times notes, women are also part of the trend.  In the United States, the “share of prime-age women bringing home a paycheck rose at the end of World War II” and continued increasing during the 1970s and 1980s before it peaked in 1999 at 77 percent.  In the early 2000s, however, women’s participation in the labor force began decreasing — making the United States one of the only major countries in the Organization for Economic Cooperation and Development not to have a rising rate of female workforce participation.  During the recession, that rate plunged further, and it has failed to bounce back.  In 2015, only 73.7 percent of women between the ages of 25 and 54 were in the work force.

Although Trump met with several union leaders on Monday, the gathering was limited to representatives of the construction and building trades unions.  Public sector and service industry unions — some of the most powerful supporters of Democrats in recent elections — were not invited.  As Newsweek explains, the meeting may be “a sign of how Trump may seek to split organized labor as president.”  Still, the excluded unions, such as the SEIU, aren’t backing down.  SEIU President Mary Kay Henry told Newsweek that although Trump poses challenges to her union, the threats are “not existential,” and the SEIU is preparing to fight for the same blue-collar workers Trump managed to win over.

Taxpayers get stuck with the cost of supporting workers in the fast food industry. That’s the thesis of a recent Los Angeles Times article articulating why Andy Puzder as Secretary of Labor gives major cause for concern.  The National Employment Law Project (NELP) estimates that Puzder’s CKE Restaurants, which owns the Carl’s Jr. and Hardee’s brands, collects a taxpayer-funded subsidy of about $247 million a year.  According to NELP, that’s what it takes to “offset poverty wages and keep [CKE’s] low-wage front-line workers and their families from economic disaster.”  The issue is particularly salient because Puzder opposes an increase in the minimum wage, but evidence exists that even modest minimum wage increases “help to cut the need of low-wage workers for assistance from Medicaid and other programs.”

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 — January 9, 2017

The Wall Street Journal reports that car manufacturers are feeling political pressure from the incoming administration to invest in plants within the United States, keeping jobs from going abroad. Fiat Chrysler announced yesterday that it will invest $1 billion to create jobs in existing plants, instead of seeking plants in Mexico. This follows the pattern of announcements set by Ford and Toyota this past week, right before the biggest auto show in Detroit. General Motors, however, just announced it would not move its highly profitable Mexico production facilities despite President-elect Trump’s criticism.

Teachers unions have come out strongly against proposed Secretary of Education, Betsy DeVos, according to the Washington Post. The National Education Association has launched a campaign for its members to contact Congress and urge against DeVos. The American Federation of Teachers is expected to criticize the DeVos pick today too. Both unions worry about DeVos’ stated efforts to privatize public schools, which may adversely affect students and teacher preparation programs.

A column in the Washington Post questions whether Trump will continue the Obama administration’s efforts to diversify national security workers. The likely answer? Probably not. Creating a national security apparatus that better reflects the American population is “a national security imperative,” according to current National Security Adviser Susan Rice.

The Venezuelan government raised minimum wage levels 50%—the fifth raise in the last year, according to CNN Money. These drastic measures are in response to the country’s massive inflation, which is “expected to surge to 1,660% this year and 2,880% next year.”

Pleading Minimum Wage Violations against Uber

A federal district judge has denied Uber’s motion for judgment on the pleadings in an important wage and hour case brought by UberBlack drivers (Razak v. Uber Technologies, Inc.).  The order, from October, contains important rulings on what Uber drivers have to plead on the “employee” question to survive such a motion, and on what it takes for drivers to plead a minimum wage claim in Uber litigation.

With respect to employee status, the judge found that the drivers’ complaint contains allegations that make it “plausible” that they are employees, and not independent contractors, under the Fair Labor Standards Act.  Here’s the key part of the order:

[W]ith respect to the degree of control exercised by Defendants (factor one), Plaintiffs allege, inter alia, that Defendants “control the number of fares each driver receives,” “have authority to suspend or terminate a driver’s access to the App,” “are not permitted to ask for gratuity,” and “are subject to suspension or termination if they receive an unfavorable customer rating[.]” (Compl. ¶ 91). As to whether the services Plaintiffs rendered require a special skill (factor four), Plaintiffs allege that, in order to serve as Drivers, “drivers must undergo PPA training, testing, examination, a criminal background check and driving history check.” (Id. ¶ 51). As to the importance of Plaintiffs’ services to the Defendants’ business (factor six), Plaintiffs aver that Defendants’ business is to “provide on-demand car services to the general public,” and that Plaintiffs are “drivers that perform on-demand transportation services for defendants.” (Id. ¶ 1, 24). Plaintiffs also specifically allege that they are “dependent upon the business to which they render service.” (See, e.g., id. ¶157 (“Plaintiffs and Class members are financially dependent on the fare provided to them by Defendants.”))

 

And, as the judge concludes, “[c]ourts in this district have found that plaintiffs had adequately pled the existence of an employer-employee relationship based on far less detailed complaints.”  (The court also concludes that the drivers sufficiently alleged an employer-employee relationship under Pennsylvania state law, ruling that “Plaintiffs’ Complaint sufficiently alleges facts to demonstrate that Defendants exercised a high degree of control over the way Plaintiffs’ work was conducted.”)  Given that the drivers here have essentially alleged the basics of the Uber business model, the order has broad implications for Uber drivers nationally.

Two, the judge finds that the drivers have adequately alleged that Uber violated their minimum wage rights.   Continue reading

Today’s News & Commentary — December 29, 2016

One of the nation’s largest labor unions is preparing to respond to Trump with less.  Writing for Bloomberg Businessweek, Josh Eidelson reports that an internal memo shows the Service Employees International Union (SEIU) is planning a 30 percent budget cut over the next year.  The memo cites fear that a Republican-controlled federal government will enact policies that impede collective bargaining.  The SEIU represents 2 million workers nationally and has been spearheading the Fight for $15 movement.

Trump’s chosen Secretary of Labor similarly inspires concern that the federal government will be hostile to workers outside of the collective bargaining relationship.  Accoring to Mother Jones, a review of old interviews shows that Andy Puzder has previously complained on the record about overtime rules and protective regulations, calling workers “overprotected” and questioning the need for mandatory breaks.

Workers in New York State can at least have confidence in their state government.  The National Law Review reports that the New York State Department of Labor has amended minimum wage regulations to increase the salary basis threshold for executive and administrative employees, irrespective of the status of a similar planned increase of the federal threshold.  The new thresholds in New York depend on employer size and whether the employer is located in greater New York City .

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