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Growing Pains: Guest Farm Workers Face Exploitation, Dangerous Conditions – Part 2

The influx of migrant agricultural workers brought to the U.S. on temporary visas means increased competition for resident laborers – and less bargaining power.

David Bacon

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SANTA MARIA, CA - This trailer was listed as the housing for six workers by La Fuente Farming, Inc. All photos by David Bacon.

The H-2A temporary agricultural program allows employers to bring workers from other countries, mainly Mexico, for temporary farm labor in the U.S. The workers are given visas that allow them to work in the U.S. but tie them to the employer that recruits them. Part 1 of this story explored unsafe working conditions and the explosive growth of the program.

In 2013 a pair of recruiters showed up in the Mexican state of Michoacán, promising jobs in California with free housing and transportation. To get the jobs, however, recruits had to pay a deposit of $1,500 each into the bank account of labor contractor Jorge Vasquez.

Charging recruitment fees is a violation of federal H-2A regulations. Nevertheless, Jose Raul Gonzalez, Efrain Cruz, Ana Teresa Cruz and Rosaura Chavez paid the money and went to Tijuana to wait for their visas. There they were taken to a house where 12 recruits slept in each room. The workers had to wait six weeks before they finally crossed the border. Then their passports were taken away. Their recruiter, Vasquez’s nephew Diego, said they’d get them back only after they came up with an additional $1,500.

The four wound up in Santa Maria picking strawberries, housed in a two-bedroom residence with 14 to 16 other H-2A workers. Each paid $80 a week for housing and food — another legal violation. Vasquez told them they couldn’t leave the residence except to go to work, threatening them with deportation and saying he could hurt their families in Mexico. Every day they were dropped off at the fields at 4 a.m. and worked until 3 to 5 p.m. They picked 30 to 35 boxes of berries a day, at $1 per box, but their first week’s pay was only $200. They were paid in cash, with no pay records. At the AEWR wage at the time, they should have been paid $721.

The second week they weren’t paid at all. Instead, they were told their pay was going towards their $1,500 “debt.” When Chavez asked to leave, Diego told him that he had to continue working until the debt was paid. Finally one of them escaped. The other three worked for two more weeks. After each deposited $1,500 into Vasquez’s account, they were fired and thrown out of the house.

On May 17 Vasquez and two others were indicted by the Department of Justice and arrested for charging workers for visas and making false promises that the visas would last for three years. Since 2012 they have filed petitions for over 350 workers.

This complex at 1316/1318 Broadway in Santa Maria was listed as the housing for 160 workers by Big F Company, Inc. and Savino Farms. It was formerly senior housing, and the contractor built a wall around it, with a gate controlling who enters and leaves.

Bad housing conditions for H-2A workers are not unusual. Last October the city of Santa Maria filed suit against a local slumlord, Dario Pini, over extreme violations of health and housing codes in hundreds of apartments in eight complexes. One of them, the Laz-E-Daze Boardinghouses at 1300, 1308, 1318 and 1324 North Broadway, is used as housing for H-2A workers. There city inspectors cited Pini for “deteriorated concrete walkways, accumulated trash, abandoned inoperable vehicles, plumbing leaks, unpermitted construction work, bedbug infestation, cockroach infestation, lack of hot water, faulty and hazardous electrical systems and broken windows and missing window screens.”

Two H-2A labor contractors list 1318 North Broadway as company housing in their applications for certification by the Department of Labor. Big F Company says 80 workers live there, and Savino Farms has 60 more. Other certification forms list even more questionable housing. La Fuente Farming Inc. lists one small dwelling at 403 W. Creston St. as housing for 14 workers. A completely tumble-down derelict trailer next to a strawberry field at 1340 Prell St. is listed as housing for six workers, also by La Fuente Farming. There is no record that the Department of Labor or the Employment Development Department actually examined the housing employers said they were providing.

Meanwhile, Santa Maria rents are rising. According to California Rural Legal Assistance attorney Corrie Arellano, growers and contractors bring about 800 workers into the Santa Ynez Valley each year. “At first they filled up almost all the inexpensive motel rooms in town,” she said. “Now they’re renting out houses and apartments, and pushing up rents.” Francisco Lozano, a Mixtec farm worker and community activist, and longtime Santa Maria resident, says his rent for a two-bedroom apartment has gone from $1,000 to $1,300 in three years. Mixtecos are an indigenous population in Mexico, whose language and culture long pre-date European colonization. A large percentage of California farm workers today are migrants from Mixteco and other indigenous Mexican towns.

“Our Mixteco community is upset for two reasons,” he explained. “We struggled with the school district to get them to hire a Mixtec-speaking translator for our children, some of whom don’t speak Spanish. But the new H-2A workers are all single men who leave after the harvest is over, so they have no stake in the schools or our families. In addition, Mixteco farm workers used to organize short strikes at the beginning of every picking season to push up piece rates and wages. Now people are afraid that if we do that the growers will bring in H-2A workers. I think H-2A is a kind of modern slavery.”


Mixtec farm worker: “I think H-2A is a kind of modern slavery.”


Similar community concerns are reflected in a study of housing conditions in Salinas made by demographer Rick Mines, “The Social Impact of the H2A Program in the Salinas/Pajaro Valleys.”

“There is a growing competition between the new migrants (the H-2A) and the old (the settled Mexican families),” he says. “This competition affects the availability of housing as the older migrants face higher prices and increased crowding in the apartments where most live. But, more importantly perhaps, the older settled workers will be getting less work as their younger co-nationals (the H2A) replace them in the fields.” By one estimate, half of the strawberry workers in the Salinas-Watsonville area are H-2A workers.

Francisco Lozano, a Mixtec farm worker and community activist, with his wife at home in Santa Maria.

In Salinas two of California’s largest vegetable growers, Tanimura & Antle and the Nunes Company, are building new worker housing. These complexes are similar to those being rapidly constructed by growers in Washington State for their H-2A workers. While the Tanimura complex, with 800 beds, was made available to local residents, and the Nunes family says it may do the same with its 600 beds, both complexes eventually will likely become housing for H-2A workers. Tanimura already brings 800 H-2A workers into Yuma, Arizona, every year.

The regulation that originally required each employer to advertise jobs to local residents first, and allowed them to recruit H-2A workers only if there was no local labor available, has been drastically altered. Today labor contractors are allowed to apply for certifications, recruit workers and then move them from grower to grower, field to field. In effect, these contractors employ a flexible labor pool they place at the disposal of many growers. The assertion that they’ve tried to find local labor is just that — an unchecked assertion.

Last year Fresh Harvest Inc. was certified for 4,623 H-2A workers, and Elkhorn Packing Co. for 2,653. Fresh Harvest calls itself “one of the largest H-2A employers in the Western United States.” Its website has a special section where potential recruits in Mexico can register, with a schedule of recruitment events at offices in San Quintín, Baja California, and Zamora, Michoacán. Fresh Harvest manages the recruitment, certification and visa processing for growers, sets up housing, trains workers, files all government reports, and provides worker transportation. “We insist on taking an active role in the in-field/job site management of our employees,” the site claims. The company’s owner, Steve Scaroni, predicts that this year Fresh Harvest will bring over 7000 workers into California, Arizona, Nevada, Oregon and Colorado, housing them in motels, apartments and labor camps.

Elkhorn Packing’s website describes the company as “a leading custom harvester with operations in the Salinas Valley, Santa Maria, El Centro and Yuma regions.” With a contract labor force of thousands of H-2A workers dispersed that widely, it is unlikely that the individual growers whose fields it harvests have each determined separately that no local workers are available.

 

Using Immigration Enforcement to Expand H-2A

While growers’ use of the H-2A program has increased sharply, immigration raids in rural areas of California have increased as well, especially following the election of President Trump. The high visibility of the Border Patrol in farm worker towns was dramatized in March by the deaths of an immigrant couple in Delano, who crashed their van while fleeing in terror from immigration agents. Over the last six months the Department of Homeland Security has initiated document checks leading to the firing of hundreds of workers at several large San Joaquin Valley farms, including Pitman Family Farms and Poindexter Nut Company in Sanger, Bee Sweet Citrus in Fowler, and Fresh Select in Dinuba.

Grower concern about maintaining a stable workforce has been exacerbated by threats from the President to build more border walls, and to use the E-Verify database to identify undocumented workers for termination or deportation. WGA President Nassif, who belongs to Trump’s agricultural advisory board, argues that this increased immigration enforcement is restricting the number of immigrant workers. That complaint, in turn, provides a rationale for expanding the H-2A program, reducing its requirements, and even redrafting the contract labor scheme entirely.


Concern about maintaining a stable workforce has been exacerbated by the President’s threats to build more border walls.


Replacing undocumented workers with H-2A recruits is not a new idea. In 2010 immigration authorities went through the payroll records of one of Washington State’s largest apple growers, Gebbers Farms, and identified 550 people they said had no legal immigration status. After the company fired them, it was then encouraged to use the H-2A program. According to Gebbers manager Jon Wyss, “Our first year, we hired 300 workers from Jamaica and 750 workers from Mexico for a total 1,150 H-2A workers.” By 2017 Gebbers was bringing more than 2,000 H-2A workers, Wyss testified to the House Immigration Subcommittee.

That committee was considering a bill sponsored by Virginia Republican Congressman Bob Goodlatte, chair of the Judiciary Committee, called the Agricultural Guestworker Act. Goodlatte explained its goal: “A reliable, efficient, and fair program that provides American farmers access to a legal, stable supply of workers … [in] a new, flexible, and market-driven guest worker program.”

That bill would have provided employers with 450,000 workers yearly under a new H-2C visa at states’ minimum wages, or 115 percent [confirmed from actual text of act] of the federal minimum of $7.25/hour. Ten percent of workers’ wages would be withheld, and could be collected at the U.S. consulate only after returning to their home country. The proposal would have eliminated requirements that growers provide transportation and housing, and allowed them to employ guest workers year around, so long as they returned to the border every year to “touch back” before returning to their jobs.

Bars on the windows of the complex at 1316/1318 Broadway, listed as the housing for H-2A guest workers.

In January Goodlatte incorporated the guest worker bill into a larger immigration bill, the Securing America’s Future Act. It would eliminate family-based visas for parents, children, brothers and sisters of legal immigrants and citizens. Guest workers would be prohibited from bringing their families with them. All employers would have to use the E-Verify system to identify and fire all undocumented workers.

“The White House right now is fully committed to the Goodlatte bill and trying to pass [it] out of the House,” a spokesperson told the Washington Times in February. President Trump owns a Virginia vineyard that employs H-2A workers, and won strong support from rural agricultural areas of California increasingly dependent on guest worker labor. Some of the state’s most powerful Republican congressmen have roots in agribusiness, including Jeff Denham, Devin Nunes and David Valadao. The House Majority Leader, Kevin McCarthy, represents Bakersfield and Kern County.

The Western Growers Association declined to support the Goodlatte bill, saying its touch-back provision was unworkable and its 410,000 annual guestworker limit too low. However, H-2A contractors like the Washington Farm Labor Association (WAFLA) are optimistic. “We are very positive about the Trump administration. I was in D.C. in December and met with the transition team, and our industry lobbyists have followed up,” WAFLA head Dan Fazio told a meeting of growers not long after the election, the Seattle Times’ Hal Bernton reported. “I don’t think there is a person in this room who voted for President Trump who wouldn’t vote for him again tomorrow.”

The Trump administration isn’t simply waiting for Congress to decide on the Goodlatte bill. On May 24 the secretaries of Agriculture, Homeland Security, State and Labor issued an “H-2A Agricultural Worker Visa Modernization Joint Cabinet Statement” promising to change the program rules “in a way that is responsive to stakeholder concerns and that deepens our confidence in the program as a source of legal and verified labor for agriculture.” While the promise is unspecific, changed regulations could do away with guarantees of housing and transportation, AEWR wage rates, and protections for resident farm workers — all changes growers have advocated. The statement also says the administration “plans to incentivize farmers’ use of the E-Verify program.” Requiring growers to use E-Verify to identify undocumented employees and fire them could lead to hundreds of thousands of workers losing their jobs, given that about half the farm labor workforce of 2 million people have no legal immigration status.

United Farm Workers national vice president Armando Elenes, however, condemned the political agenda that combines increased immigration enforcement with rising use of the H-2A program. “There’s a huge explosion of H-2A in California,” he said. “ICE does audits and raids, and then growers demand changes that will make H2-A workers even cheaper, by eliminating wage requirements or the requirement that they provide housing. Reducing the available labor and the increased use of H2-A are definitely connected.”


 

Labor & Economy

Lights Out, Clean Green: How Janitors Are Boosting High-Rises’ Sustainability

A Los Angeles-based program—the only one like it for janitors in the country—has helped align janitorial staffs with the sustainability goals of office building owners.

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Casilda De Jesus at work. (Photo: Joanne Kim)

“Janitors can tell you down to the tenant – to the desk – who doesn’t care and just throws everything in the trash or contaminates the recycle bin.”


 

Janitors, who are often the unseen eyes and ears of the commercial office buildings they clean, are on the front lines of an innovative effort to turn their workplaces green.

Aida Cardenas, director of the Building Skills Partnership, a labor-management funded initiative, launched the Green Janitor Education Program in 2014 at a time when building owners were increasingly seeking Leadership in Energy and Environmental Design (LEED) certification for their properties. The widely-used LEED rating system lets owners put a green stamp of approval that indicates a building’s level of conformity to green operation and maintenance standards. “Janitors weren’t really part of that conversation,” even though the kinds of chemicals and equipment they used were important in determining whether a building received a certification, Cardenas said.

The program began in Los Angeles with a pilot of about 120 workers in seven buildings as a collaboration between the Service Employees International Union-United Service Workers West, the Building Owners and Management Association (BOMA) of Greater Los Angeles, the U.S. Green Building Council (which developed the LEED system) and the Building Skills Partnership. (Disclosure: Several SEIU locals are financial supporters of this website.) Since then, more than 1,000 janitors have graduated from the program and are working in 65 buildings across the state.


Casilda De Jesus now unplugs her TV, radio and other appliances when she’s not using them, knowing that as, “energy vampires,” they are still draining power.


Janitors participate in 30 hours of classroom training, which takes place during their shifts over a 15-week period. One focus of the training is the purpose of environmental sustainability efforts, which can sometimes make work harder for janitors who must contend with “thinner trash bags that rip” and cleaning chemicals that they may not view as effective, said Cardenas.

The program—the only one like it for janitors in the country—has helped align the janitorial staff with a building owner’s sustainability goals. For example, some janitors had resisted using green chemicals that did not tackle dirt as quickly as other products.

Casilda De Jesus, who graduated from the program in August, recalled co-workers sneaking Ajax to the worksite until they were discovered by supervisors. “Having a better understanding of green concepts” helps janitors buy into green practices, De Jesus said through an interpreter. The use of cleaning products that have a recognized environmental seal helps buildings receive points toward their LEED certification. De Jesus claims the switch to green cleaning detergents, made several years ago by her building, has alleviated her asthma symptoms.


Buildings that participated in the Green Janitors program used 5.6 percent less energy on average in 2016 than buildings that did not, one study found.


The janitors are “turning off the lights that people leave on,” according to Cardenas. “They’re sorting through bins to divert as much waste as they can. They’re reporting leaks and [they] understand the urgency because they’re conserving water.”

The training has contributed to energy savings, said a pro-bono study conducted by seedLA, an environmental consulting group. Buildings that participated in the Green Janitors program used 5.6 percent less energy on average in 2016 than buildings that did not, the study found. The authors attribute those savings to green building maintenance practices, as well as to physical changes to the building due to energy efficiency upgrades.

“Building a low carbon economy takes workers and an awful lot of those workers are blue collar workers. They are not just engineers and highly technical professionals,” points out Carol Zabin, director of the Green Economy Program, at the University of California, Berkeley Center for Labor Research and Education.

The Building Skills Partnership’s programs—which also include English as a Second Language and digital literacy classes – are paid for by a fund created through collective bargaining between the janitors’ union and janitorial firms that contract with building owners. Last year, the Green Janitors program received a $520,000 grant from a state training fund, administered by the California Workforce Development Board, intended for sectors of the economy that must undergo transformation to combat global warming.

De Jesus and other janitors have brought what they learned home about composting, energy and water conservation. De Jesus now unplugs her TV, radio and other appliances when she’s not using them, recognizing that as, “energy vampires,” they are still draining power. She urges her neighbors to report water leaks to their apartment manager.

De Jesus would like to see her office building’s tenants benefit from the kind of training the janitors received. “I think it’s really important that the tenants in the building go through this program, so that they are sharing the same practices,” De Jesus said.

“Janitors can tell you down to the tenant – to the desk – who doesn’t care and just throws everything in the trash or contaminates the recycle bin,” noted Cardenas.

Building managers do not typically authorize janitors to talk to office tenants about profligate energy use or subpar recycling habits. But last Earth Day, the Building Skills Partnership released a video – introduced by Mayor Eric Garcetti — that educated property managers and janitorial companies about the program. It includes janitors delivering gentle reminders about how to be better environmental stewards by using public transportation, bicycling and recycling.

Rising Realty Partners owns and manages the Garland Center, the West Seventh Street building where De Jesus works, as well as several other downtown L.A. buildings whose janitorial staff are participating in the Green Janitors program. The company opted into the program so as to invest in the staff that maintains its buildings while also contributing to “building wellness,” said Kayce Hawk, senior vice president of property services for the company. The janitors have only recently graduated from the program, but the reports from the building staff have all been positive, she added. “It’s empowering for them to get free continuing education that benefits them in their job and in their home life.”


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Labor & Economy

Randy Shaw on Los Angeles’ Lost Housing Generation

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What: Randy Shaw discusses his book, Generation Priced Out.
When/Where:  Skylight Books, Los Angeles; Saturday, Nov. 17, 5 p.m.


 

When I began writing my new book on the pricing out of the working and middle class from urban AmericaGeneration Priced Out: Who Gets to Live in the New Urban America — the first place I turned to after the Bay Area was Los Angeles. I grew up in Los Angeles. I try to closely follow its land-use politics but was shocked to see how even neighborhoods like Boyle Heights faced displacement and gentrification. I also learned that Venice, which I always thought of as a progressive bastion, was filled with homeowners opposed to affordable housing in their neighborhood. The deeper I looked, the more I found the reasons for Los Angeles’ worsening housing and homelessness crisis: The city was not effectively protecting tenants and its rent-controlled units, nor was it building enough new housing.

Generation Priced Out tells the stories of those on the front lines of the Los Angeles housing crisis. Mariachis facing eviction from Boyle Heights describe their struggle to stay in their homes, and I defend the “by all means necessary” tactics of tenant groups battling displacement. I describe the struggle by Venice Community Housing to build housing for the homeless on a parking lot, a plan vigorously resisted by homeowners. I discuss the enormous power of the city’s affluent homeowner groups, and how they aggressively stop the building of new apartments. I also assess how Mayor Eric Garcetti and other city officials have responded to the crisis and explain why they must do more.

I’ll be talking about my book and the L.A. housing crisis at Skylight Books, Saturday, November 17 at 5 p.m. I look forward to a great discussion and hope to see you there.

Randy Shaw is director of San Francisco’s Tenderloin Housing Clinic and the editor of BeyondChron.org. His prior books include The Activist’s Handbook: Winning Social Change in the 21st Century and The Tenderloin: Sex, Crime and Resistance in the Heart of San Francisco.


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Election 2018

Los Angeles’ Measure B Is a Moonshot Aimed at Creating a Public Bank

A baby step toward establishing municipal banking in America’s second-largest city would be a giant leap for this national movement.

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Photo by Jonathunder

A ballot measure in support of creating a public bank in Los Angeles could serve as a referendum on an idea that has gained traction in cities and states across the country since the 2008 financial crisis.

“To have a resounding ‘Yes’ vote from Los Angeles, which is one of the most powerful opinion centers of the world, would be tremendously historic,” says Trinity Tran, co-founder of Public Bank LA, an advocate for Measure B, which would amend the city charter to allow the city to establish a municipal bank.

But Measure B is a baby step in what promises to be a lengthy process to set up a municipal bank whose stated purpose is to provide the nation’s second-largest city with a socially responsible and cost-effective alternative to Wall Street banks.

More Ballot Measure Stories Here

The movement for public banks draws inspiration from the success of a 99-year-old public bank in the red state of North Dakota and from Germany’s network of over 400 regional public banks (or Sparkassen), which advocates say provided significant funds for the development of that country’s renewable energy sector.

Since the Great Recession, over 20 U.S. states have introduced bills to establish state-owned banks or to study their economic feasibility. New Jersey Democratic Governor Phil Murphy, a former Goldman Sachs executive, successfully campaigned for his current job on the promise of creating a state-owned bank. And California’s gubernatorial frontrunner Gavin Newsom has made the formation of a state bank that would fund infrastructure, student loans and housing part of his platform as well.

Pot profits for deposit? (Photo: Pandora Young)

A lack of resources is one motivation for city and state leaders’ interest in public banking, said Deborah Figart, a distinguished professor of economics at Stockton University in New Jersey.

After the Great Recession, “we really became much more aware of unmet infrastructure needs,” said Figart, who conducted an economic impact study for the proposed New Jersey bank. The American Society of Civil Engineers gives the U.S. a D+ grade for the state of its roads, bridges and other infrastructure — “practically a failing grade,” she noted. Meanwhile, local governments devote a significant portion of their budgets to paying interest on bonds that go to Wall Street banks and finance companies at a time when interest rates are on the rise.

In Los Angeles, the push for the bank emerged from grassroots activists who demanded that the city divest from San Francisco-based Wells Fargo, whose aggressive sales practices resulted in more than three million deposit and credit card accounts being opened without customers’ knowledge.

“We knew that it wasn’t really divesting if we were going to move our money to another predatory extractive bank,” said Tran. “So we introduced public banking early on in the campaign as a permanent solution to housing the city’s public finances.”

Last year, the city paid $1.1 billion in interest to bondholders, which in turn funds “wars and pipelines and private prisons,” said Tran, who would rather see tax money put to work to address city needs like housing and clean energy. Her banking advocacy began four years ago when she started meeting with fellow activists in Koreatown coffee shops. As of October 20, “Yes on B” supporters had raised $10,128 for the measure, according to the Los Angeles City Ethics Commission. No committee has been formed to oppose the measure.

There are critics, however. Rob Nichols, president and CEO of the American Bankers Association, writing in The Hill, fears that the public bank proposal would suffer from a “scattered business focus” and fall under “undue political influence” that would result in risky loans that would damage the public purse.

“It’s easy to make the banks the bad guy,” said Stuart Waldman, president of the Valley Industry and Commerce Association. But “it’s not easy to run a bank,” and a municipal bank would require significant start-up capital. “This is public money, so if they lose public money, if they realize that it doesn’t work, that hurts every person in L.A.”

The Los Angeles Times editorialized that the measure was one of “the most ill-conceived, half-baked ballot measures in years” and urged a no vote, in part, because the measure does not articulate a vision or plan for the bank.

But if the proposal on the ballot lacks detail, it’s because city officials have not wanted to invest in a business plan and feasibility study while the city is still prohibited by its charter from operating a bank, City Council President Herb Wesson told a news conference in October.

Wesson assured reporters that there was “no way on God’s green earth” the city would move to create a municipal bank without a subsequent citywide vote on a more detailed plan, and the ballot argument in favor of the measure that goes to every city voter says as much. For now, voters are only being asked to remove a legal hurdle in the charter that prevents the city from establishing a municipal financial institution.

Proponents of public banking regularly point to the Bank of North Dakota as a model. The Progressive-era institution was created in 1919 out of frustration with a banking system that was putting the squeeze on farmers. The bank was initially greeted with suspicion by a national press corps anxious about a Bolshevik incursion into the finance sector. But the bank, now very much part of the state’s business establishment, has seen record profits for 14 consecutive years. Because it steered clear of the volatile derivatives market, the Bank of North Dakota avoided the upheaval many financial institutions suffered when the housing market tanked in 2008.

“It’s partly because you have civil servants in charge rather than folks whose paychecks depend on how much money the bank makes in a quarter,” Sam Munger, director of external affairs for the State Innovation Exchange, told The American Prospect.

Considered a “banker’s bank” with a $4.9 billion loan portfolio that supports agriculture, business, homeownership and higher education, the Bank of North Dakota does not compete with other financial institutions.

“It’s not a bank for regular household customers, for car loans, credit cards and mortgages,” said Figart. “It is a bank for accepting public deposits and lending mostly to the public sector or public-private partnerships.”

Wesson has talked about L.A.’s municipal bank as a place where the cannabis industry could park its cash since pot is illegal under federal law. Such a move could restrict the bank’s ability to make federal wire transfers, but the L.A. activists who back the initiative see other uses for the bank.

“For our organization, it was never about cannabis; it was always about neighborhood issues,” says Gisele Mata, housing organizer of Alliance for Californians for Community Empowerment, a community-based non-profit that has been part of the coalition advocating the bank.

Public Bank LA leaders envision Los Angeles’s municipal bank playing a similar role to that of the Bank of North Dakota, but focusing on the city’s priorities. “It would start as a banker’s bank for the city, refinancing city debt and trying to consolidate the investment away from Wall Street and harmful extractive industries,” co-legislative director David Jette told KPCC-FM in October.

Public Bank LA, he added, also envisions the municipal bank “partnering with local credit unions and community banks” to fund housing, small businesses, low-interest student loans, renewable energy projects and, eventually, credit for the underbanked. The bank could also fund infrastructure projects more cheaply than commercial banks by avoiding the interest and fees that go to commercial banks, according to advocates.

Many hurdles remain before an L.A. bank could become operational. State and federal laws do not currently provide a regulatory framework for the formation of public banks, according to an August report by the city’s Chief Legislative Analyst’s office. The city must come up with a source of collateral for the bank and an oversight structure, and receive approval from the California Department of Business Oversight.

But a modern public bank can be made from scratch. In April, the Federal Reserve approved a public bank for American Samoa in the South Pacific, after the Bank of Hawaii abandoned the geographically remote U.S. Territory.

The North Dakota and American Samoan banks may be rare cases for now, but Figart believes that “in the next five years, there will be” more public banks, and “in the next 10 years, there certainly will be more.”


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Election 2018

Will Proposition 11 Mean Less Rest for Ambulance Crews?

Supporters describe Proposition 11 as necessary to ensure public safety, but EMT workers describe grueling 12-hour shifts in which crew members can often go eight hours without having a chance to stop for food.

Gabriel Thompson

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California’s Proposition 11, which seeks to rewrite California’s Labor Code as it relates to rest and meal breaks for private-sector ambulance employees, might appear to be a strange ballot measure, even for a state that has seen its share of odd propositions. It has no opponent listed on the state’s official voter guide, and the only backer of the proposition, American Medical Response, is a company headquartered in Colorado, which has spent $22 million to secure the bill’s passage. Prop. 11 seems like it must have an interesting backstory, and it does.

More Ballot Measure Stories Here

That story begins with a California Supreme Court ruling in 2016, Augustus v. ABM Security, which found that private security guards were required to be given uninterrupted rest breaks by their employer. Guards for ABM had been instructed to keep their pagers on during breaks and to respond to calls for assistance, a practice that the court ruled was in violation of state labor law.

Like security guards, the state’s private sector emergency medical technicians (EMTs) and paramedics are on call during breaks — and they have filed lawsuits against private companies, including American Medical Response, over the practice. According to the California Legislative Analyst, those suits, after Augustus, are likely to be successful. The analyst’s report estimates that to be in compliance with Augustus and offer uninterrupted breaks to their employees, companies would need to hire about 25 percent more ambulance crews, at a potential cost of more than $100 million per year. Then there’s the class action lawsuit against AMR, which is the largest private ambulance company in California. Prop. 11 seeks to nullify the lawsuit.

Prop. 11 comes after last year’s failure of Assembly Bill 263, which sought a solution to emergency workforce staffing. The bill, which was supported by the union that represents emergency medical services (EMS) workers, and opposed by AMR, would have created a carve-out in the labor code for private ambulance companies, allowing them to require workers to be on call during breaks and respond to emergencies that demand the use of sirens and emergency lights. “We wanted to create a policy that protects workers’ rights, allows a little bit of [time] to get meals, but still protects public safety,” said Jason Brollini, the president-executive director of United EMS Workers, a local of the American Federation of State, County and Municipal Employees. (Disclosure: AFSCME is a financial supporter of this website.)

What the proposed bill wouldn’t have done was shield AMR from previously filed lawsuits now before the court. “We weren’t willing, through the stroke of the pen, to take away the ability of workers to seek redress in court,” Brollini said.

Supporters describe Proposition 11 as necessary to ensure public safety and provide lifesaving assistance. “If Prop. 11 does not pass, first responders will not be able to keep their radios on during breaks, putting patient care at risk,” said Marie Brichetto, a Yes on Prop. 11 spokesperson. “Prop. 11 would simply continue the longstanding practice of paying private EMTs and paramedics to be on-call during breaks — just like other first responders, including police and fire.”

Brollini disputed the notion that response times will increase if Prop. 11 fails, noting that such times are mandated by contracts between private companies and the counties they serve. “There is not a provider in the state that is going to turn their radios off,” he said. “What we do need is some kind of relief.”

Although his union didn’t file paperwork in time for its opposition to Prop. 11 to be included in the state’s voter guide, Brollini says his own opposition is grounded in his 25-year career as an EMT worker, most of it spent working in an AMR ambulance. He described grueling 12-hour shifts in which workers can often go eight hours without having a chance to stop for food. Unlike police or firefighters, he said, they frequently don’t have stations at which to recuperate, exacerbating an already heavy workload.

In 2015, a survey published in the Journal of Emergency Medical Service found that first responders are 10 times more likely to attempt suicide than the general public. And a joint report in 2017 by the University of California, Berkeley and UCLA’s Labor Center reported that one-third of California’s EMTs and paramedics are low-wage workers, defined as earning less than $13.63 an hour, or two-thirds of the state median.

“We want to see our companies profitable,” Brollini said, “but we don’t want it to be at the expense of the worker’s mental and physical health.”


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Election 2018

Are Prop. 10’s Big-Money Foes Making California’s Housing Problem Worse?

Co-published by The American Prospect
Topping the list of corporate anti-rent control donors are some of the country’s largest landlords — many funded by Wall Street investment dollars — whose bottom lines could be negatively affected by Prop. 10’s passage.

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All photos by Jessica Goodheart.

A significant amount of No on Prop. 10’s $65 million war chest comes from large, publicly traded real estate investment trusts.


 

Co-published by The American Prospect

One of California’s most hotly contested ballot measures, Proposition 10, would repeal the 23-year-old Costa-Hawkins Rental Housing Act that restricts a city’s ability to apply rent control to post-1995 construction and exempts single-family homes from regulation. Proposition 10’s opponents claim it will worsen the state’s housing crisis, which has left teachers, blue-collar workers and retirees struggling to keep roofs over their heads. To that end, the No on Prop. 10 campaign has deployed an ensemble of small property owners, non-profit housing developers and veterans as spokespeople against the measure.

More Ballot Measure Stories Here

However, topping the list of No on Prop. 10’s big donors are some of the country’s largest landlords — many funded by Wall Street investment dollars — whose bottom lines could be negatively affected by Prop. 10’s passage. The No campaign’s $65 million war chest is more than two-and-a-half times as much as the $25 million raised by Prop. 10 supporters, according to the California Secretary of State’s office. A significant amount of the No funding comes from large, publicly traded real estate investment trusts like the ones highlighted on a recent tour held by tenant activists in downtown Los Angeles.


Despite their affordable housing message, some No on Prop. 10 donors have long records of opposing efforts to include affordable housing in their developments.


New York-based Blackstone Group heads the list of these donors, contributing $5.6 million to defeat the measure which, if passed, would let cities enact laws to stabilize rent increases on a broader range of buildings and limit how much a landlord could increase rents when a new tenant moves in. Invitation Homes Inc., the investment vehicle created by Blackstone in 2016, owns more than 80,000 single-family homes nationwide and kicked in almost $1.3 million.

Despite their affordable housing message, these and some other No on Prop. 10 donors have long records of opposing efforts to include affordable housing in their developments, or employ business models that critics claim exacerbate the housing crisis. Some focus on high-end rentals that tenant advocates say do little to address the affordability crisis plaguing California’s job-rich urban areas. Others have been criticized for raising rents on the properties they acquire in an effort to pump up hefty returns for investors.

Also Read “California Workers and Retirees Are Unwittingly Financing an Anti-Rent-Control Campaign”

Steven Maviglio, a spokesperson for the campaign to defeat Proposition 10, claims that real estate investment trusts (REITs), which earn money for their shareholders through rental income and property value increases, only account for a tiny percentage of the state’s residential rental market. “REITs own .004 percent of California’s rental housing,” he wrote in an email, a statistic he attributes to the California Apartment Association.

On an August call with investors, Invitation Homes CEO Fred Tuomi argued that increasing housing supply — as opposed to regulating rents — was the answer to the affordability crisis facing California, where more than half of renter households pay more than a third of their incomes toward housing. “We just need more supply when it’s needed and, most importantly, where it’s needed and [at] the price points that it’s needed,” Tuomi said.


Equity Residential CEO: “Regardless of [Proposition 10’s] outcome, we will continue to fight attempts at the local level to enact rent control.”


But increasing the supply is not part of the business model of Invitation Homes, which focuses on property management and acquisition. In the aftermath of the 2008 housing collapse, the company scooped up tens of thousands of foreclosed single-family homes, mainly near Sunbelt cities, crowding out mom and pop landlords, imposing steep rent increases on tenants, and skimping on maintenance in order to generate large returns for investors, according to a report released early this year by the Alliance of Californians for Community Empowerment (ACCE) and two other advocacy organizations, and a separate Reuters investigation published in July.

In a written statement to Capital & Main, Invitation Homes countered that its residents “give us high ratings for customer service” and “stay 50 percent longer compared to the apartment industry,” adding that the company invests $22,000 per home in renovations. (Maviglio said that No on Prop. 10’s other corporate donors had no comment for this story.)

On October 10 in downtown Los Angeles, about 60 housing activists, replete with colorful T-shirts and noisemakers, held a “tour of the housing tyrants” that included stops at luxury apartments they said were owned in whole or in part by Blackstone Group and Essex Property Trust — two companies that are helping to fund the effort to defeat the rent control measure. The marchers’ “The rent is too damn high” chant attracted the attention of office workers and drivers stuck in lunchtime traffic.

Sheri Eddings, who is 55, joined the battle for rent control in response to letters she received from Invitation Homes demanding $500 rent increases after her two-year leases expired, first in 2015 and then in 2017. Each time, Invitation Homes has been willing to negotiate with her to reduce the increase, she says. But she would like to be able to count on staying in the South Los Angeles County neighborhood where her grandchildren live. “I don’t know what’s going to happen in 2019,” she said at the tenant action.

One stop on the activists’ tour was Essex Property Trust’s owned Gas Company Lofts, which offers studios for about $2,000 per month and two-bedroom apartments for more than $3,500. To date, the San Mateo-based real estate investment trust has donated $4.8 million to defeat Proposition 10.

The vast majority of the company’s more than 60,000 apartment units are located in the Bay Area and Southern California. During an August 2 quarterly earnings call, Essex CEO Michael Schall told investors that the company would be “favoring market rents instead of favoring occupancy” for the next year, suggesting the company is choosing to leave units vacant in the hope of locking in higher rents.

Public policies, says ACCE’s Amy Schur, are only encouraging high-end housing where developers “can make the most money” instead of “ensuring that they contribute toward addressing housing needs of the state, which include housing that average working families can afford.” ACCE is part of the coalition advocating for passage of the ballot measure and was an organizer of the October 10 tour.

Another big Wall Street donor, Chicago-based Equity Residential, has so far invested more than $3.7 million to the No on Proposition 10 campaign. The REIT is focused on acquiring, managing—and, to a lesser extent, developing — housing in walkable urban markets favored by millennials, according to its filings with the Securities and Exchange Commission.

The company’s leadership has engaged in local and statewide rent control battles before. Equity Residential’s board chair is billionaire Sam Zell, whose heavily leveraged acquisition of the Tribune Co. was followed by bankruptcy and mass layoffs. His Equity LifeStyle Properties, another real estate investment trust (formerly Manufactured Home Communities), began to acquire mobile home parks across California more than two decades ago, and proceeded to bring costly legal actions against small cities that housed the parks in an effort to do away with local rent control laws. The leadership of its sister company, Equity Residential, apparently shares that combative spirit.

These Corporate Landlords Have Each Donated
More than $2 Million to Defeat Proposition 10

ContributionContribution
Blackstone Group*$5,575,497
Essex Property Trust$4,816,200
Michael K. Hayde, including Western National Group & Affiliated Entities$4,761,840
Equity Residential$3,724,900
AvalonBay Communities Inc.$3,006,100
Geoffrey H. Palmer, owner of G.H. Palmer and Associates$2,000,000

Source: California Secretary of State, downloaded October 22.

*Invitation Homes Inc., created by and partially owned by Blackstone Group, contributed another $1,286,250 to the effort to defeat Proposition 10.

“Regardless of the outcome [of Proposition 10], we will continue to fight attempts at the local level to enact rent control,” president and CEO David Neithercut told investors on a call this past July, during a discussion about Costa-Hawkins. About 45 percent of the company’s 79,000 apartments are located in California.

Interestingly, on that same call Neithercut proposed “inclusionary zoning” as part of an alternative “basket of solutions” to the state’s affordable housing crisis. Such zoning requires developers to set aside a certain number of units in their projects for low-income tenants.

Neithercut’s endorsement of inclusionary zoning might signal a shift for Equity Residential, which sought to wriggle out of a requirement that it keep a portion of a downtown San Francisco building’s units affordable five years ago. The company attempted to raise the rents on 33 low-income occupants of apartments on Geary Street, a move that would “almost certainly have forced many tenants from their homes,” had not the city of San Francisco sued, according to a statement issued at the time by city attorney Dennis Herrera, who settled with Equity for $95,000. (The company had reneged on an agreement with the city to keep a percentage of units affordable when the complex was built in exchange for tax-exempt bond financing for the project.)

Meanwhile, No on Prop. 10 donor Geoffrey Palmer’s hardball lawsuit against the city of Los Angeles resulted in a 2009 court ruling that for eight years discouraged cities from adopting inclusionary zoning laws. That prohibition ended with the so-called Palmer fix last year, a state bill that restored cities’ ability to require set-asides if they also offered developers alternative ways to comply with the law. (Palmer, who is well known in Southern California for his fortress-like apartment complexes with Italianate names like the Medici and the Lorenzo, is an avid Donald Trump supporter and has given $2 million to defeat Proposition 10.)

Perhaps it’s not surprising to find major landlords opposing Proposition 10. But will the ballot measure upend the housing market as they contend?

Anya Lawler, policy advocate for the Western Center on Law & Poverty, a Proposition 10 supporter, says rent control is an important tool for tenants but downplays any disruptive impact the repeal of Costa-Hawkins would immediately have in California. Proposition 10’s passage won’t guarantee the enactment of any local law, she says, nor will it be a cure-all for California’s housing woes, which have been decades in the making.

“Rent control ordinances need to be negotiated locally because every housing market is different, and communities have different needs,” says Lawler, who adds that stakeholders, including property owners, will need to be consulted. The idea that the repeal of the Costa-Hawkins law will lead to “draconian rent control policies” is not rooted in “political reality.”

Lawler’s sentiments are echoed by corporate housing executives, at least in their conversations with their own investors. Asked if his company would redline cities due to a rent control, Essex’s Schall stressed, during his August 2 call, that “rent control is only one factor” that the company considers when making investment decisions.

“We’re going to seek areas that have the best dynamic – the best supply-demand dynamic,” he said. “And right now we believe that’s in California, in the various markets that we’re in.”


Capital & Main’s contributors include groups supporting Proposition 10. This website is not funded by commercial entities that stand to profit from the outcome of the ballot initiative.

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Labor & Economy

Video: Rising Rents Force a Choice Between Eating or Shelter

According to the U.S. Department of Agriculture, 15 million American households experienced food insecurity at some point in 2017.

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Labor & Economy

Why Many Millennials Still Live at Home

For in-depth analysis of millennials’ economic dilemma, read Eric Pape’s latest “Priced Out” report.

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Infographic: Marco Amador

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Labor & Economy

Is Goldman Sachs’ New Fund Really Just Greenwashing Stocks?

Critics are questioning the motives behind a banking giant’s socially responsible investment strategy.

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Photo by Chris Hondros/Getty Images

Even as Goldman Sachs markets itself as a champion of social responsibility, it is helping CEOs block key environmental and social justice reforms proposed by their shareholders.


 

Co-published by The Guardian

When Goldman Sachs and billionaire Paul Tudor Jones announced a partnership three months ago to help socially conscious investors support “just business behavior,” they promised that their new index fund would generate solid returns for savers while directing their investment dollars towards truly humane companies.

“Capitalism should be a positive force for change,” said Jones in a press release announcing the fund, which is designed to track an index of socially responsible companies identified by his nonprofit JUST Capital. “Its future will be driven by a new definition of corporate success that is aligned with the values and priorities of the public.”


 Socially responsible investing (SRI) offers
Wall Street an image makeover in a time of growing public distrust in the financial system.


The partnership comes as pension funds, university endowments and other institutional investors increasingly seek to put their financial weight behind ethical and sustainable corporate behavior — and as Goldman Sachs tries to shed its reputation as a “vampire squid.” So far, the rebrand seems to be working: The JUST fund debuted in June to rave reviews from the financial press and ended its first day of trading with over $250 million in assets, making its launch one of the most successful in recent history.

However, a Capital & Main review of corporate documents shows that some of JUST’s largest investments are in fossil fuel firms that have been sued for suppressing global climate research, Wall Street behemoths fined for defrauding investors, a social media platform accused of helping rig elections and a tech industry giant criticized for paying its workers starvation wages.

Table Graphic: Chase Woodruff

Moreover, proxy voting records reveal that even as Goldman Sachs now markets itself as a champion of social responsibility, the firm has been using its existing stakes in many JUST fund companies to help CEOs block key environmental and social justice reforms proposed by their shareholders. Those initiatives range from gender pay gap and diversity initiatives to corporate governance reforms; from efforts to increase lobbying transparency to prohibitions on doing business with companies tied to genocide and other human rights violations.

Meanwhile, in the months before JUST fund’s launch, Goldman was slammed for blocking a human rights resolution at its own company — and one of Goldman’s key lobbying groups in Washington was working to shape Republican legislation that would make it far more difficult for shareholders to file environmental, human rights and other socially minded initiatives in the future.

“You shouldn’t be able to, with a straight face, invest in the Dakota Access Pipeline with your left hand, and with your right hand tell people that you’re doing responsible investing,” Lisa Lindsley, Capital Markets Advisor for the shareholder advocacy group SumOfUs, told Capital & Main. “The compartmentalization is very hypocritical.”

Through a spokesperson, Goldman Sachs declined to comment on the process by which its equity funds vote on shareholder proposals, and how that process may differ with the JUST fund — which, as a newly launched fund, has not yet participated in proxy voting for any of the companies in which it holds stock.

“Ethically Motivated Versus a More Greenwashing Approach”

Goldman’s new fund spotlights socially responsible investing (SRI) — a financial strategy that represents Wall Street’s more affirmative answer to negative or exclusionary “screening” tactics like divestment from fossil fuel producers and tobacco firms.

While a recent directive by the Trump administration has been viewed by some experts as an effort to limit SRI strategies, the market for such investments remains strong. According to the Forum for Sustainable and Responsible Investment, U.S.-based assets managed using SRI strategies more than doubled to $8.7 trillion between 2012 and 2016, and now account for more than one in five dollars under professional management in the country.


Goldman’s hostility toward many SRI initiatives is illustrated by its votes on resolutions at the companies now in its JUST fund.


The rise in SRI investment comes amid questions about whether corporate boards are adequately evaluating environmental and social justice concerns when they look at their company’s long-term financial prospects. PwC’s 2017 survey of corporate officials found “that directors are clearly out of step with investor priorities in some critical areas” and the report added that “one of these areas is environmental issues.”

High-profile initiatives like the JUST fund are a chance for the industry to tout its eagerness, as Goldman Sachs executive Timothy O’Neill put it in a press release, to “[allow] investment to flow toward a more sustainable and equitable future, while seeking to generate attractive returns for investors.”

The trend has given Wall Street an opportunity for an image makeover in a time of growing public distrust in the financial system: According to a Gallup poll conducted last month, fewer than half of Americans under 30 report having a positive view of capitalism, a 12-point drop in just the past two years.

For some activists and investors, though, the rapid expansion of the market for SRI-branded financial products has raised concerns about greenwashing — the practice by which companies market themselves as socially or environmentally responsible without actually adopting business practices that meet those goals.

“Putting the word ‘ethical’ or ‘sustainable’ in the name of a fund does not make it so,” said a report by British investment advisory firm Castlefield, whose recent reports documented how some environmental funds include investments in fossil fuel firms. “It is increasingly important to differentiate between those funds genuinely responding to customer demand for a sustainable approach and those which use terms like ethical, Socially Responsible Investment or stewardship in their name but include companies such as British American Tobacco or Shell in their key holdings.”

Goldman’s Record on Socially Responsible Investing

Amid surging interest in SRI funds, Goldman’s JUST U.S. Large Cap Equity ETF aims to convince investors that the company is serious about injecting a spirit of ethics and morality into its financial strategies. To that end, the fund says it directs money only into companies that are ranked highly by JUST Capital.

The 426 companies featured in the JUST index were selected on the basis of their performance across seven different criteria, including labor practices, customer service and environmental impacts. Goldman itself ranks in the top tenth of the JUST rankings, despite the company being attacked for supporting the fossil fuel industry and also being fined $5 billion in 2016 by the Department of Justice for “serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail.”

Whether Goldman’s new JUST fund represents a step in a larger shift towards socially responsible investment remains to be seen. Baruch College’s Jared Peifer says that one way to judge a firm’s commitment to social responsibility is to watch how it deals with resolutions brought by shareholders, whereby investors attempt to force management to adopt socially responsible policies.

“There is variance to the degree that SRI funds are ethically motivated versus a more greenwashing approach,” Peifer told Capital & Main. “Is the fund dialoguing with management? Issuing shareholder proxy votes, voting on others? If so, that seems like a more ethically motivated fund to me, because they are exerting additional effort many other funds do not bother with.”

In recent years, Goldman executives have been fighting off SRI resolutions at their own company, including initiatives that have asked management to more transparently disclose their political lobbying and create a human rights committee to review the company’s policies regarding doing business with governments engaged in censorship and repression. Only three months before Goldman announced the JUST fund, Goldman successfully pressed the Securities and Exchange Commission to bless its move to block shareholders from voting on a resolution asking the company to honor indigenous peoples’ rights.

“The company’s extraordinary no action request shows the notable lengths that the Company is willing to go, and to stretch credulity, in order to prevent its directors from shouldering fiduciary obligations on indigenous and human rights,” wrote shareholder proponents at the time.

Last year, Goldman was lauded by Share Action, an SRI activist group, for switching its position and using its holdings to support a series of climate-change-related shareholder initiatives. In its proxy voting guidelines, Goldman says it will generally vote for proposals asking companies to report on “policies, initiatives and oversight mechanisms related to environmental sustainability, or how the company may be impacted by climate change.”

However, those guidelines do not make the same commitment when it comes to initiatives requiring companies to actually reduce their carbon emissions. The guidelines also say the company will generally vote against “proposals requesting increased disclosure of a company’s policies with respect to political contributions.” The company further says it will vote to remove representatives of employees or organized labor from a company’s board if they are overseeing company audits or executive compensation, and if there is no legal requirement for them to be in that position.

Goldman Votes Against Resolutions at JUST Fund Companies

Goldman’s hostility toward many SRI initiatives is illustrated by its votes on resolutions at the companies now in its JUST fund.

For example, there is Chevron Corporation, which ranks as the JUST fund’s 17th-largest holding as it faces accusations that it is trying to intimidate environmentalists and avoid cleaning up pollution in the Amazon rainforest.

In May, the oil giant’s shareholders were asked to vote on a slate of seven proposals, including a requirement for the company’s board to nominate a director with environmental experience; the preparation of a report on transitioning to a low-carbon business model; increased transparency relating to lobbying activities; and stronger prohibitions on Chevron’s interests overseas from doing business with governments that are complicit in genocide or crimes against humanity.

As shareholders in Chevron, 14 different Goldman Sachs Asset Management (GSAM) funds voted on these proposals. The majority of funds voted in support of just one, a request for the company to prepare a report on its efforts to minimize methane emissions. In every other case, the funds unanimously or overwhelmingly opposed the proposals.

Proxy-voting records from dozens of shareholder meetings reviewed by Capital & Main show a similar pattern. In rare cases, Goldman funds did vote in favor of some shareholder reforms, including the preparation of a report on the gender pay gap at Facebook and Google. At several pharmaceutical companies, including AbbVie, Amgen and Eli Lilly, Goldman funds supported increased accountability for executives regarding high drug prices.

Such votes, however, were few and far between. Of the 10 companies that make up the largest share of Goldman’s JUST fund, eight considered shareholder-proposed reforms that were overwhelmingly opposed by Goldman-managed funds at their most recent annual meetings. The proposals included prohibitions on offshore tax avoidance schemes, increased transparency on lobbying activities and requirements that companies appoint an independent board chair — a governance model that advocates say leads to more responsible corporate behavior. The remaining two companies, Microsoft and Visa, did not consider any shareholder proposals.

At JPMorgan, the recipient of JUST’s fourth-largest investment, Goldman funds voted unanimously against a requirement for the company to release a report on its investments in PetroChina, a firm that activists accuse of helping to fund crimes against humanity due to its ongoing business relationships with oppressive regimes in Syria and Sudan. Goldman made that move despite its own proxy voting guidelines saying the company would “generally vote for proposals requesting a report on company or company supplier labor and/or human rights standards and policies, or on the impact of its operations on society.”

Eighteen of the 19 Goldman funds with shares in JPMorgan also voted against an effort to prohibit the accelerated vesting of awards for executives who enter government service, a practice often criticized for fueling the revolving door between Wall Street and financial regulators.

A shareholder proposal to the board of pharmaceutical manufacturer Johnson & Johnson, expressing concern that the company’s compensation practices “may insulate senior executives from legal risks” relating to the opioids crisis, recommended that opioid-related litigation costs be factored into executive pay. All 16 Goldman funds with stock in Johnson & Johnson voted to defeat the proposal.

Goldman asserts that its fund is designed to invest in firms that rank well in JUST Capital’s ratings. But even that assertion is not what it seems.

Because the index features companies ranked in the top half of their respective industries, it includes dozens of firms in sectors like energy and financial services that score poorly overall. For example, the fund invests in both National Oilwell Varco, a drilling equipment firm, and Entergy, a Louisiana utility, despite the fact that the companies rank 626th and 676th, respectively, among the 875 companies evaluated by JUST Capital.

“Every industry is represented at approximately the same weight as [in] the Russell 1000,” said JUST Capital’s Hernando Cortina, referring to the best-known index fund tracking the largest publicly traded companies. Cortina added that the JUST fund is designed to feature responsible companies “while providing diversified equity exposure to every industry.”

Lisa Lindsley of SumOfUs said the situation spotlights how socially responsible investing is seen on Wall Street not as a values-based cause, but as yet another way to trick investors into believing that the investment industry has reformed itself a decade after the financial crisis.

“The reason they’re going into this is that there’s money there. It’s all driven by greed,” she said. “It’s pretty easy to do some greenwashing and call yourself a responsible investment manager.”

As Goldman now markets its JUST fund, it remains unclear whether the company will change its proxy voting or its posture towards shareholder resolutions in general. Those resolutions, though, could be more rare, if congressional Republicans pass their legislation that would make it more difficult for shareholder resolutions to qualify for a vote. Federal records show that the American Bankers Association — which lists Goldman Sachs as a member — has been lobbying on that bill, which critics say could undermine the SRI movement.

“Shareholder proposals play an important role in ensuring that owners get a say in how their companies are run, and in setting the broader agenda across the market,” wrote Dimitri Zagoroff of the shareholder advisory firm Glass Lewis. “Making it harder for shareholder proposals to be resubmitted from year to year would make it that much harder for proponents to refine their ideas and build a coalition of support. This often takes several years, both to generate interest in the underlying topic, and to convince other shareholders that the specific proposal offers the appropriate means of addressing the topic.”


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Medi-Cal Home-Delivers a New Prescription: Healthy Meals

California’s Medically Tailored Meals pilot program could lead the medical industry, and especially insurers, to include nutrition as part of overall health care.

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One study showed that patients who received three medically tailored meals per day had a
50 percent lower rate of hospitalization.


A $6 million Medi-Cal pilot program launched in April may demonstrate what many in the health care field have reported anecdotally: That tailored nutrition can improve health for chronically ill patients and lower medical costs. The three-year Medically Tailored Meals (MTM) pilot provides free curated, low-sodium meals brought through in-home visits for 1,000 patients who suffer from congestive heart failure — a group with some of the highest rates of hospital readmissions.

Meals will be delivered by registered dietitians from six California nonprofits in the Food is Medicine Coalition: Project Angel Food (Los Angeles County) Project Open Hand (San Francisco), Ceres Community Project (Sonoma County), Mama’s Kitchen (San Diego), Food For Thought (North Bay Area) and Health Trust (San Jose). The funding was included in Senate Bill 97, a budget bill approved in June 2017 by the California Senate.

The program is already showing results, according to Richard Ayoub, CEO of Project Angel Food. Ayoub points to three out of four clients who have avoided a hospital stay during the pilot’s first 30 days. In a YouTube video, one of Project Angel Food’s pilot study patients, Candice, explains how she’s already enjoying better health through three daily prepared meals.

“For years,” Ayoub says, “we’ve known that what we do here helps people live longer and happier, and now we’re seeing results that are quantitative. We can see health care systems saying, If it was good for congestive heart failure maybe it will be good for renal disease, maybe it will help keep people off dialysis.”

The Medi-Cal pilot is modeled off a small 2013 study led by Philadelphia-based nonprofit MANNA (Metropolitan Area Neighborhood Nutrition Alliance). That study showed that patients who received three medically tailored meals per day had a 50 percent lower rate of hospitalization and 37 percent shorter stays for those who went to the hospital, compared to a control group. On average, patients had a 31 percent reduction in health care costs, which equaled $13,000 per month per patient.

Sue Daugherty, MANNA’s CEO, said four companies that administer Medicaid in southeastern Pennsylvania have signed contracts with MANNA to deliver specially tailored meals for selected patients with diabetes and cancer, and she’s hoping that the California study will lead her state’s Medicaid agency to include medically tailored meals as part of treatment.

“The big barrier is getting folks to realize we’re not talking about just food,” Daugherty said. “When people hear ‘food’ they start shutting down and thinking ‘entitlement,’ and forever. What we’re doing is something that a health care provider will prescribe.”

Daugherty added that food is often an afterthought among medical providers, and that when a diet is prescribed, little thought is given to how patients will access that food and pay for it. With the exception of the four Pennsylvania providers, food is not included in any medical plans.

Richard Seidman, M.D., chief medical officer of L.A. Care Health Plan, one of the public agencies that administers Medicaid insurance in L.A. County, said he hopes that if the pilot program is as successful as the MANNA study suggests, California lawmakers will expand it.

“With nearly 13 million people receiving Medi-Cal benefits, it’s not a giant leap to suggest that food insecurity is a barrier to good health for many, not just those with chronic conditions,” Seidman wrote in an email.

Seidman and other supporters say if the pilot is as successful as they expect, it could lead the medical industry, and especially insurers, to include nutrition as part of overall health care.


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Los Angeles’ Burdened Renters

For more information, read Jessica Goodheart’s story on squeezed Los Angeles tenants, “The Rent’s Getting Too Damn High!”


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