Dolly Avila, a state employee who must put off her planned retirement. (Photo: Bill Raden)
Call it the tale of two pension crises. In June, the Los Angeles Times’ business pages looked at the looming retirement savings disaster caused by the nearly 40-year transition from traditional employer-sponsored defined-benefit pensions to individual 401(k) plans — a sea change in retirement insecurity, it noted, that “has been a failure for all but the wealthiest Americans.”
In mid-September, however, the paper’s news section turned its withering gaze on what many argue remains the one bright spot on California’s otherwise catastrophic retirement landscape — the state’s public-sector pensions. “Costing the state billions” … “civil servants retire in style,” clucked the headlines. The piece, by investigative reporter Jack Dolan, characterized state and local pensions — which, according to the California Public Employees Retirement System (CalPERS), averaged $2,627 a month for 2014-15 retirees — as offering “retirement security normally reserved for the wealthy.”
Long a target of right-wing think tanks and hedge-fund managers, the retirement security of unionized state, county and municipal employees is typically seen by conservatives as the Achilles heel of labor’s political clout in Sacramento.
“The retirement conversation that’s going on is a little bit schizophrenic,” retirement researcher Nari Rhee reflected in a phone call with Capital & Main. “In the private sector, we now have a conversation saying, ‘People have been relying on 401(k)s and it’s not enough. It’s too much risk. People aren’t saving enough. These individual plans just aren’t working very well.’ On the public [pension] side of debates, ‘These pensions are too expensive, we should do what the private sector does and put everybody on 401(k)s.’”
Rhee manages the Retirement Security Program at the Institute for Research on Labor and Employment/Center for Labor Research and Education at the University of California, Berkeley and co-wrote a key study on the U.S. private-sector retirement savings crisis. She said that the real irony of the public pension debate is that it comes at a time when nearly 40 million working-age households (or 45 percent) do not own any 401(k)s or Individual Retirement Accounts (IRAs), and the average working household has virtually no retirement savings.
The Dolan article implicates a 1999 law, Senate Bill 400, passed during the pension-surplus years of the decade-long dot-com boom. That law, a bête noire of public pension critics, ratified collective bargaining agreements that, among other things, boosted pensions for California Highway Patrol and state firefighters in lieu of wage hikes. CHP got a one percent bump that calculated pension benefits at three percent rather than two percent of salary times the number of years worked, but kept the retirement age at 50. Firefighters went from 2.5 percent to three percent, retiring at 55-years-old. The September L.A. Times piece darkly hinted that CalPERS ignored actuarial warnings because of the “considerable influence” of unions. Governor Jerry Brown’s 2012 Pension Reform agreement subsequently eliminated the three percent formulas for all workers going forward and raised the retirement age to 57.
(An October 7 follow-up piece in the L.A. Times pension series, which looked at then-Governor Pete Wilson’s 1991 attempt to loot CalPERS, concluded that organized labor emerged from the fight with “considerable influence over the 13-member board.” The series is a collaboration between the Times, CALmatters and Capital Public Radio.)
As anyone fluent in the actuarial thicket of state budgets and rates of returns knows, crunching investment numbers can be a very elastic thing. According to CalPERS, eligible police officers and firefighters comprise approximately three percent of the system’s total retiree population, and SB 400 represents roughly 18 percent of this year’s $5.4 billion pensions contribution by the state, with 77 percent accounting for recessionary investment losses. To put this in perspective, since 1999, state spending other than salaries and pensions has soared from $19 billion to $136.1 billion, a 715 percent increase. If salaries and pensions had grown at that same rate, those costs today would be $42.8 billion rather than the actual $34.6 billion. So rather than “costing the state billions,” as the Dolan piece proclaimed, public servant salaries and pensions — including those created by SB 400 — could just as easily be said to have been a bargain over the long-term for California, saving taxpayers $7.2 billion.
The really important September pension story, ignored in Dolan’s attack, was arguably the creation of California Secure Choice. Senate Bill 1234, which was responsible for the new state-run retirement program and which was authored by Senate President Pro Tem Kevin de León (D-Los Angeles), will take effect January 1. When the program launches (sometime in 2018, officials estimate), it will enroll as many as seven million private-sector California workers in companies that do not offer their own retirement savings plans. It was signed into law by Governor Brown September 29.
“I think it’s fair to say Secure Choice is the most significant advancement since the establishment of Social Security,” California State Treasurer John Chiang told Capital & Main.
Chiang, who chairs the Secure Choice Board, noted that the new program is not a defined-benefits pension that guarantees a lifetime income stream or a specific rate of return. Rather, it involves IRAs that will be subject to the current $5,500 annual IRA contribution limits. Nevertheless, he added, the plans could be enough of a supplement to Social Security to keep the state’s lowest-wage earners off of state public assistance when they can no longer work.
“A worker who begins making mandatory contributions to a Secure Choice early in their 20s,” he said, “could accumulate enough assets so that they could draw a stream of income that could replace about 20 to 25 percent of their preretirement income. Social Security for the Secure Choice target population generally replaces about one-third of preretirement income. This means that Secure Choice, combined with Social Security, could provide a worker with more than half of their preretirement income during retirement years, which is significantly more than many California retirees have today.”
Chiang added that while three percent of wages will be automatically deducted from employee wages and deposited into a Secure Choice account, workers can opt out of the plan or change their contribution levels at any time.
The week following his public pension hit, Dolan made explicit the piece’s implicit argument while on local right-wing talk radio. Trading indignant public-pension potshots with conservative morning drive host Doug McIntyre on the McIntyre in the Morning program, the investigative reporter criticized unions for not redressing the lower benefits standard established for new hires under Brown’s 2012 reform bill: “Why not give yourself a haircut and spare the younger people?” Dolan opined.
In public pension circles, a “haircut” is generally understood as moving public employees out of defined benefits plans and into 401(k)-styled, high-fees retirement savings accounts, where the employer puts in a matching contribution, and then shift the costs — and risks — of managing it to the employee. Replacing defined benefits pensions with 401(k)s was the stated purpose behind at least three failed pension-cutting ballot measures floated by former San Jose mayor Chuck Reed and his allies in 2012, 2014 and again last year.
CalPERS headquarters, Sacramento. (Photo by Coolcaesar)
“If you’re not giving employees the value of a defined benefits pension, you should expect there to be pressure on salaries to go up to compensate for that,” Rhee observed. “The reason to go into public sector jobs is in part because of the security of benefits. The other way in which there’s going to be costs that [pension critics] aren’t thinking about is if you don’t provide meaningful retirement income security, then there actually is going to be increased pressure on [social services] budgets down the line by people who don’t have enough retirement income when they retire.”
Dolly Avila’s first haircut came in 1989 when the demands of school-age children and uncertainty over providing for her retirement persuaded the Los Angeles resident to trade in her private-sector job as a seasonal tax accountant for a lower-salaried position with the California Franchise Tax Board. (Avila is a shop steward with Service Employees International Union, Local 1000, a financial supporter of Capital & Main.)
“It was more regular hours,” she said. “If I had gone to another accounting firm, you don’t have regular hours, especially during tax season. And they didn’t have any kind of retirement at my other employers. That’s the primary selling point. As state workers, we earn much less than we can earn in the private sector.”
One senior auditor that left her department last year to take a job at a small CPA firm, she claimed, almost doubled his annual state salary of roughly $80,000 to $150,000 a year. The starting annual salary for an associate tax auditor at the California Franchise Tax Board is $64,408, according to Glassdoor.
Avila’s next haircut came in 2009, when during the bleakest depths of the Great Recession, then-Governor Arnold Schwarzenegger ordered state workers to take three days of unpaid furlough each month. It added up to a 15 percent pay cut for that year.
“When the furloughs first started,” she recalled, “I had a little bit of savings. Because of the furloughs, I had to go through my savings, then I had to max out my credit cards and right now I have no savings. The only asset I really have is my retirement. So it’s really important, because that’s how I’m going to live after I retire.”
Less senior coworker friends, she claimed, filed for bankruptcy during the recession and had their cars repossessed, while one “very good friend” lost her house. Avila, who had planned to retire this year, has had to put it off to rebuild her lost savings.
In spite of the pain, California’s public employees emerged in far better shape than their private-sector peers. The crash wiped out trillions of dollars in “defined contribution” 401(k) and IRA accounts (or about 31 percent of their peak, 2007 value), and while the market has since rebounded, recent evidence suggests that those nearing retirement age during the meltdown have been less likely to have fully recovered.
The bitterest irony for all American workers economically kneecapped by the 2007 global financial crisis is that they are footing the still-ongoing, $16.8 trillion-dollar bailout bill that rescued the banks ultimately responsible for the California public pension system’s shortfalls that Dolan and the L.A. Times blame on CalPERS and union greed.
Last year, CalPERS announced that it was introducing a more conservative “Risk Mitigation Policy” that would immunize the system from the volatility of capital markets. And in its September meeting, the board discussed gradually lowering the “discount rate” of 7.5 percent — a rate of return based on historic, long-term stock market performances — after admitting that its recent investment returns were lagging behind its funding obligations.
CalPERS board member Richard Costigan, an Arnold Schwarzenegger-appointed State Personnel Board representative and a member of the CalPERS Finance and Administration Committee, took exception to the Dolan attack in an op-ed he co-authored with fellow investment committee members Dana Hollinger and Bill Slaton. The editorial, which Costigan said was first offered to — and refused by — the L.A. Times, points out that what gets lost in public-pension debates “is what’s ultimately at stake: The financial future of millions of Americans.”
(In an email, L.A. Times op-ed page editor Juliet Lapidos declined to confirm or deny the receipt of Costigan’s submission.)
Costigan explained to Capital & Main that, unlike the 1990s and 2000s, when pension contributions by state and local governments had dropped as low as 1.7 percent of direct general spending (it was 5.1 percent in 2013), and abundant fund surpluses made boosts in worker retirement benefits appear more attractive than raising stagnant wages, board members today would not weigh in on another SB 400-type law, other than affirming a broader support for the defined benefit pension.
“What we tried to put in the [op-ed] is that we [on the CalPERS board] haven’t been sleeping, we have been paying attention,” Costigan said. “This is not the board of a decade ago or 15 years ago. The other thing I point out: If we can’t pay our benefits with the system struggling, that means that the entire state is struggling, and we all have bigger issues than whether someone’s got a [defined-benefit] plan. And that’s why I think [that] at the end of the day, our economy is too diversified [to completely fail], we will weather the ups and downs, and I think, long-term, the system is trying to make the right moves.”
‘Skeleton Crew’ Is a Play With a Moral Spine
Set in a Detroit automobile outfitting plant, Dominique Morisseau’s drama grabs you from the start in its focus on blue-collar men and women, and their struggle against odds for dignity and self-respect.
Working-class men and women of color are rarely front and center in today’s media and, likewise, are presented all too occasionally on the American stage. So it’s buoying to see that trend bucked in playwright Dominique Morisseau’s percipient and well-crafted drama, Skeleton Crew. The play is the final installment in her Detroit Project Trilogy; the first, Paradise Blue, is set in the 1940s amidst displacement caused by urban renewal and gentrification, while the second, Detroit ’67, transpires on the eve of the 1967 Detroit riots sparked by a police action.
Directed by Patricia McGregor at Los Angeles’ Geffen Playhouse, Skeleton Crew is a play with a moral spine. It takes place in 2008, when the shrinking U.S. auto industry is being further downsized. Morisseau’s engaging quartet of characters — Faye (Caroline Stefanie Clay), Dez (Armari Cheatom), Shanita (Kelly McCreary) and Reggie (DB Woodside) – are employed at an automobile outfitting plant. Faye, Dez and Shanita are workers on the line while Reggie (who has a wife and kids, and has pulled himself together after a troubled youth) is their supervisor.
The first three customarily mingle in their break room (designer Rachel Myers’ impressively cluttered, dingy and detailed set), trading the sort of familiar barbs and genuine concern for each other common among longtime co-workers. They also face off on philosophy: Upper-middle-aged Faye and the younger, pregnant Shanita take pride in their labor, while Dez, though a good worker, is a malcontent scornful of management and firm in the belief that everyone needs to watch out for himself. He’s a thorn in Reggie’s side, for while Reggie wants to be supportive of his workers, he must act at the behest of higher management. For his part, Dez resents Reggie’s authority, and a palpable unease exists between them.
Besides this male matchup, we’re made privy to Dez’s attraction to Shanita, who mostly turns away his advances, but every now and then displays a hint of interest. Most poignant is Reggie’s regard and affection for the lesbian Faye, which has roots in his boyhood when she loved, and lived, with his now-deceased mom.
These people’s various predicaments intensify when rumors spread of the plant’s shutdown — a disaster for all, but a particular calamity for the already near-broke Faye who, one year short of retirement, would lose her pension. The crisis forces each of these people to make a choice.
A sound piece of social realism, Skeleton Crew grabs you from the start in its focus on blue-collar men and women, and their struggle against odds for dignity and self-respect. Morisseau not only furnishes these characters a platform for their travails, she endows them with strong values, big hearts and the opportunity to choose between right and wrong.
Unfortunately, the performance I attended did not soar. Many exchanges lacked a fresh edge. The actors certainly had their characters down, but too often they appeared to be coasting on technique. (This seemed particularly true of Clay, who performed the role to great accolades in Washington, DC in 2017, also under McGregor’s direction). Additionally, some of the stage movement was not entirely fluid; in confrontations, actors sometimes would just stand and face each other in an artificial way. And Cheatom’s interpretation of Dez struck me as a bit overly churlish and depressive: I needed more glimpses of the intelligence and edge that would secretly attract the strong, self-directed Shanita.
The most compelling moments belong to Woodside, well-cast as a man trying his best in difficult circumstances to do the right thing.
Gil Cates Theater at the Geffen Playhouse, 10886 Le Conte Ave., Westwood Village; Tues.-Fri., 8 p.m.; Sat., 3 & 8 p.m. Sun., 2 & 7 p.m.; through July 8. (310) 208-5454 or www.geffenplayhouse.org
Upending the Nation’s Financial Giants With Beneficial State Bank’s Kat Taylor
On the latest episode of “The Bottom Line” podcast, CEO Kat Taylor lays out her strategy for proving that a bank can be profitable, pay its employees well, and pursue an agenda of economic justice and planetary health.
Before the financial crisis in 2007, the nation’s largest banks reported returns on equity of more than 20%. Even today, in a less frothy time, Wells Fargo maintains a target of between 12% and 15%. But Beneficial State Bank will never surpass 10% when it comes to this closely watched metric—and that’s all by design.
“I don’t think there is another bank who has an upper end on their range of return on equity,” Kat Taylor, Beneficial’s CEO and co-founder (along with her husband, Tom Steyer, the hedge fund billionaire and political activist) told me on the latest episode of my podcast, The Bottom Line. If you’re seeking to maximize profits for your shareholders, she notes, “you’re going to be happy to make as much as you can.
“We disagree with that principally for two reasons,” Taylor adds, explaining that if Beneficial’s return exceeds 10%, “we’re likely either overcharging our customers or underpaying our colleagues”—and that “would be in defiance of our mission.”
Not that Beneficial is cavalier about being financially sustainable. It is aiming for a return on equity of at least 6%—a mark that the bank has reached before and is diligently pushing to hit again as it digests its merger this year with Albina Community Bank. Because of the transaction, Beneficial now has more than 250 employees at 17 locations throughout California, Oregon, and Washington. It boasts about $1 billion in assets.
Of course, that’s miniscule compared with the behemoths of the banking industry, like JPMorgan Chase and Bank of America, each with assets topping $2 trillion.
But Taylor believes that at its current size, or perhaps a bit bigger, Beneficial can help upend the sector by demonstrating that a bank can “thrive competitively,” loan money in a way that boosts “economic justice” and is restorative to the planet, and still pay its workers 150% of a living wage (as calculated by MIT).
“We need to sort of part the waves so that others can follow us,” Taylor says.
Indeed, her theory of change is that as some of the large regional banks see Beneficial’s plan succeeding, they will realize that pursuing a similar path will enable them to attract two increasingly important groups: socially conscious consumers as well as talented employees who “will not take a job in opposition to their values if they can at all avoid it.”
“All of those large regional banks compete with the biggest banks in the system,” Taylor notes, and they may well be compelled to “take up our behaviors and . . . our commitments solely for the purpose of winning what I call the market share wars.”
Taylor grew up with banking in her blood. Her grandfather was the president of Crocker National Bank in San Francisco, and after getting her JD/MBA at Stanford she found her way to Wells Fargo’s credit training program.
But she left Wells after 18 months, going on to raise four children and becoming deeply involved in a number of nonprofits, many of them centered on civil rights—a lifelong passion. Decades passed.
Then in 2004, George W. Bush won the White House, and Taylor and Steyer decided that they would do all they could “to exert progressive values in an unprogressive time.” Among the ideas suggested to them, Taylor says, was to launch a “next-gen banking organization.” They found the notion compelling because banks are “so central to everyone’s life.” OneCalifornia Bank, Beneficial’s predecessor, was chartered in 2007.
Despite her family history and her stint at Wells, Taylor stresses that she was soon plunging into a foreign world.
“I really had very little training to go into banking,” Taylor says. “But sometimes I think that’s a good thing, to have one person in the leadership of an organization who does not think that past is prologue, who does not think this is the way we’ve always done banking so this is the way we’ll always do it going forward.”
You can listen to my entire interview with Taylor here, along with Megan Kamerick reporting on why front-line bank jobs are generally so miserable and Karan Chopra exploring the need for employers and educators to build new bridges in an era of lifelong learning.
The Real Costs of Living in California
A new report from United Ways of California shows that 1 in 3 working families struggle to make ends meet.
These seem to be boom times for Americans, as monthly statistics from the U.S. Labor Department tout a fast-rising economy and dwindling unemployment since the final years of the Obama administration. What those numbers fail to measure is the real cost of making ends meet, and how far out of reach that remains for many working households that continue to struggle.
The reality in California is that one in three households are falling short, according to Struggling to Stay Afloat: The Real Cost Measure in California 2018, a new report from the nonprofit United Ways of California. The study sought to document the actual costs of a “a bare-bones decent standard of living,” says Peter Manzo, president of the nonpartisan advocacy group, and include the real-world impact of housing costs, transportation, education and other immovable factors.
The report is downloadable from the United Ways website, which also has interactive features where each county is examined in detail. In an interview with Capital & Main this week, Manzo explained the report’s findings.
Captial & Main: What inspired this study?
Peter Manzo: The federal poverty level doesn’t really take into account the cost of living in California. It also doesn’t tell you where we would like families to be. It doesn’t show you what is doing OK and how far most households are from it. Everyone knows it can be expensive to live in California, but this adds more detail.
How did you determine what the real costs were?
The real cost measure we used is a basic needs budget: housing, food, transportation, health care, childcare, taxes and 10 percent of the total for miscellaneous – things like your mobile phone bill. The interesting thing about the real cost measure is that the household budget varies by composition. So if you have two adults working full-time minimum-wage jobs, the household budget was different from the same two adults with an infant. The cost structure changes significantly by adding family members.
It looks like different parts of the state are affected differently.
Obviously, coastal areas are more expensive to live in than inland areas in terms of housing. Even so, there are high numbers of households struggling to meet the cost of a decent standard of living in those lower-cost areas. It’s interesting to contrast much of the Bay Area with L.A. County, which has a much higher rate of struggling households: 38 percent of households in L.A. County struggle vs. the composite number across those Bay Area counties, which is about 25 percent. It’s very expensive to live in Santa Clara County, but there are more households that are earning above what they need.
If you look at Fresno County, that’s a very different situation.
On our website, you can look at neighborhood level data. You can look at it by neighborhood, which is real important. With Fresno, you have a high rate of need. And if you look at West Fresno, which sadly is pretty well known for having a very high unemployment rate and a lot of struggling families, it looks worse than other parts of Fresno.
In the Bay Area there is more opportunity, while in Fresno County the opportunities are less and people are struggling at a higher rate than other parts of the state.
Yes. It’s very tough in a lot of place in the Central Valley and the Inland Empire. There are struggling households in just about every part of the state. Every ethnic and racial group struggles. No one’s immune to it.
The Bay Area has been going through a difficult boom period where a lot of people moved in and housing costs went up. L.A. seems to be in the middle of that too. How do those kinds of changes affect people’s ability to keep up?
HUD fair market rent, which is a proxy for actual rents, increased almost 45 percent in the last three years in Alameda County. That’s a steep jump. The Bay Area cost ripple is still going on. L.A. County has rising rents. Our offices are in Downtown L.A., and you can’t turn around without bumping into a crane. In the last three years, there has been an incredible boom in construction. And it seems to be mostly high-market condos that aren’t very affordable and aren’t that well occupied. My sense is that people are buying them for a second home. Obviously we need more housing units, but they need to be affordable. What we want to point out in our study is that we need to do more for renters. There are many more people living in apartments whose rents may go up than would be housed by new construction. Maintaining affordability is key.
How does education play into it?
We see a correlation between a higher level of education and a lower rate of struggle. Households led by college graduates, only 15 percent of those households struggle, compared to 78 percent for households led by somebody who doesn’t have a high school diploma.
How do children in a household affect the ability to keep up?
That’s one of our big findings. A household with kids really changes the budget of what a decent standard of living looks like. Some people would quarrel with us about this, but we feel children should have access to quality pre-school and childcare. We know most kids don’t actually get access to that, but we think they should, and that’s included in our budget. We find that 6 in 10 households with a child under 6 are struggling – especially when they’re led by a single mother.
It looks like in many parts of the state, transportation is also a big cost, approaching the level that people pay for housing.
Our assumption is that families need a car. We talk to people who do studies back east, and often the assumption there is that low-income households are using public transportation. But even in the Bay Area, most people need a car. It’s like a lifeline, to drive around and get to work. It’s a little like Grapes of Wrath: You need to be able to move. Our costs are based on reported expenditures from the Bureau of Labor Statistics. If we had a high functioning public transportation system down here, that would help a lot of people.
These are overwhelmingly working households: 9 in 10 of them have a working adult, and in 80 percent of them the household is working full-time. Oftentimes, when people talk about poverty, they just know what the poverty level is – but it doesn’t really tell you what they’re contending with, and the trade-offs they’re having to make. And there’s often an assumption that poor people are lazy and if they just get a job, things would be better. Our point is that these are overwhelmingly working families. They have jobs and they’re still not earning enough for a decent standard of living.
LISTEN: Why Deloitte Believes That More and More Companies Are Becoming Socially Responsible
On the latest episode of “The Bottom Line” podcast, Deloitte Consulting’s Erica Volini explains what’s behind what the firm calls “the rise of the social enterprise.”
If companies often seem to stumble as pressure mounts on them to respond to major societal challenges, Deloitte’s Erica Volini isn’t surprised.
For executives to figure out what “they’re going to speak out on, and how they’re going to make decisions, and how they’re going to manage the impact of those decisions across all the various stakeholders is very new for a lot of organizations,” Volini, the U.S. Human Capital leader for Deloitte Consulting, told me on the latest episode of my podcast, The Bottom Line.
But just because this is new, Volini adds, it doesn’t mean that it isn’t real—and quickly gaining momentum. “We’re at the beginning of a trend here,” she says.
Volini and her Deloitte colleagues recently documented what they call “the rise of the social enterprise,” pointing to several factors that are pushing corporations to be mindful not just of how they’re performing financially, but also how they’re treating their employees and their customers and affecting their communities and society at large.
First, companies are eager to attract millennial talent and consumer dollars, and this generation is “actively questioning the core premises of corporate behavior and the economic and social principles that guide it.” Second, according to the Deloitte analysis, “businesses are being expected to fill a widening leadership vacuum in society” as government institutions falter. And third, the pace of technological change is accelerating, and many people are looking for business “to channel this force for the broader good.”
Of course, all of this can sound a little naïve at time when more than 40% of American families can’t afford a basic monthly budget, even though the vast majority of them are working households; trust in business is itself at a low ebb; and tech companies are under fire for “creating problems instead of solving them,” in the words of the New York Times.
What’s more, for all of Deloitte’s talk about companies becoming increasingly attuned to their “stakeholder network,” most corporations continue to act as though one constituency matters far more than all of the others: their shareholders.
Despite all of this, Volini is confident that more and more companies are, in fact, starting to consider a range of issues “beyond financial results” to a degree that they haven’t over the past 40 years. “I have faith,” she says.
One example she cites is Dick’s Sporting Goods, which took a stand on gun sales after the Parkland, Fla., school massacre. Another is Nordstrom, which has filled its new men’s store in New York with high-tech features but has also seized on “an opportunity to reskill the workforce” and “create net new jobs that haven’t existed before,” Volini says.
Volini suggests that other companies will show themselves to be similarly responsible as they learn to become better listeners.
They need to be “vested in what’s happening in the external environment,” Volini says. “That, in and of itself, is a huge shift because many companies operate within their own four walls.”
Another area ripe for improvement is breaking down silos across the corporation. Without constant collaboration among the chief financial officer, the chief marketing officer, the chief human resources officer, the chief information officer, and others, Volini says, it’s impossible for a business to gain the kind of holistic view that is required for it to truly understand its place in society.
“The CFO should have the voice of the investor community,” she says. “The CMO should have the voice of the consumer community. The CHRO should have the voice of the employee community. The CIO should be thinking about how do I take all these voices using analytics and pull them together to be able to drive insights.”
Yet 73% of the 11,000 business and HR executives surveyed by Deloitte said that their C-suite leaders rarely, if ever, work together on projects or strategic initiatives. Says Volini: “That was the most shocking aspect of the report.”
You can listen to my entire interview with Volini here, along with Marty Goldensohn reporting on BlackRock CEO Larry Fink’s call for companies to show how they’re making a “positive contribution to society” and Natalie Foster examining how the retail industry is being decimated by avarice, not just Amazon.
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.
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.
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.
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.
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.”
Growing Pains: Guest Farm Workers Face Exploitation, Dangerous Conditions – Part 1
Many migrant workers in California on H-2A temporary agricultural visas are forced to contend with unsafe working conditions, wage theft and other labor law violations.
Tomato grower Harry Singh had an idea for speeding up the harvest in the fields he rents at the Camp Pendleton Marine Base near San Diego. His foreman told Serafín Rincón, 61, to pick beside two imported contract workers in their 20s. In the summer heat, Rincón was told to run. He could hardly keep up.
Rincón had come to work with his friends Santiago Bautista and Rufino Zafra. They were all longtime farm workers in the area. Bautista had been working in San Diego since 2003, and Zafra since 1975. All day they had to listen to shouting and insults from their boss when they fell behind. “Stupid donkey, you’re old now,” he shouted at them. “You can’t make it anymore!”
The three even started trying to hold it when they had to go to the bathroom, after being yelled at for going too often. Not that using those bathrooms was a pleasant experience. The toilet paper ran out so often they started bringing their own from home. Zafra would even wipe down the filthy port-a-potty with paper towels. The drinking water tasted like “hot soup,” Bautista said. He had a heart attack at work, but still the foreman wouldn’t let him stop working. A medical examiner said later the attack was caused by his working conditions.
Finally Rincón was fired, and the three sued Harry Singh’s company, West Coast Tomato, over the abuse.
Migrant farm worker Santiago Bautista had a heart attack at work, but his foreman wouldn’t let him stop working.
Singh was one of the first growers to bring H-2A temporary agricultural workers to California. These young, mostly male workers are recruited in other countries, mainly Mexico. They’re given visas that allow them to work in the U.S. but tie them to the employer that recruits them. “Many of the younger workers whom our plaintiffs had to keep pace with were H-2As,” explained Jennifer Bonilla of California Rural Legal Assistance. She introduced expert testimony of Dr. Kenneth Silver, who tied the speedup to the production requirements given the younger H-2A workers.
The U.S. Department of Labor allows growers to put production quotas into the contracts under which workers are recruited to come to the U.S., and to fire workers for not meeting them. If H-2A workers get fired before the end of their contract, they lose its guaranteed weeks of work and pay. They also become immediately deportable. The grower doesn’t even have to pay their transportation to the border, much less to the town they came from.
That gives a grower a lot of leverage to get workers to work at an inhuman pace. And because the H-2A workers can be forced into it, workers who are living in the U.S., and laboring at the same job, get pressured into it as well. Humiliation, firings and even heart attacks are the result.
The Impact of the Explosive Growth of H-2A
This is just one impact on farm workers in California of the explosive growth of the H-2A guest visa program. Like everything connected to the state’s agriculture, it’s big business. California farm sales reached $46 billion in 2016 – an enormous production of food that has little to do with agribusiness’ oft-declared goal of “feeding the nation.” Almost half of what’s grown here leaves the country, in exports worth $20 billion.
Employing at peak season almost three quarters of a million people (719,000 in 2017 in California alone), this enormous industry needs workers. The growth of a captive, low-wage and vulnerable workforce at its heart has a profound effect, not just here, but across the nation.
Growers applied to the U.S. Department of Labor for certification to bring 44,619 H-2A workers into U.S. fields in 2004. Last year the number certified had grown to 200,049 — an increase of over 450 percent in little over a decade. California growers brought in 3,089 H-2A workers in 2012. In 2017 that had mushroomed to 15,232 — a 500 percent increase in just five years.
California growers brought in 15,232 H-2A workers in 2017 — a 500 percent increase in just five years.
The impact of guest workers will grow even more severe if Congress passes a bill (H.R. 4760, “Securing America’s Future Act”) that would not only put H-2A on steroids, but would do away with what little (mostly unenforced) protections currently exist for farm workers, both resident and recruited. Farmworker Justice, an advocacy group for farm workers in Washington D.C., calls the bill a “virulently anti-immigrant and anti-worker piece of legislation.” And four cabinet secretaries in the Trump administration have already promised growers to make the H-2A program more grower-friendly.
Growers claim that because of increased border enforcement, the number of available farm workers is falling, although the industry employed virtually the same number, 724,000, 20 years ago. “There is a severe ag labor shortage, and it’s only going to get worse,” wrote Tom Nassif, president of the Western Growers Association, on the WGA webpage. “Changing demographics and stringent regulatory barriers are causing the flow of workers crossing the border to dramatically slow down.” The Department of Labor estimates that about half of U.S. farm workers are undocumented, and in California the percentage is higher.
Unemployment in California’s farm worker towns, however, is always much higher than in urban areas. In April, for instance, the unemployment rate in Imperial County was 14.4 percent, in Merced County 8.7 percent, and Monterey County 6.7 percent. (In Los Angeles it was 4.1 percent and San Francisco 2.1 percent.) Yet according to Nassif, “Increased pay and overtime benefits aren’t going to attract any additional workers to the field. Those extra workers don’t exist.”
In reality, farm wages have been falling since the late 1970s, when the United Farm Workers was at its peak strength, and the base labor rate in union contracts was twice the minimum wage. Even non-union employers had to compete for workers by paying union wages. Today the average wage of California farm workers is just above the minimum wage — $11.68/hour by one estimate. The H-2A program, critics charge, allows growers to keep wages low, giving them an alternative to raising pay to attract labor.
Another CRLA case against Harry Singh dramatized the way West Coast Tomato could pit H-2A workers against local laborers to reinforce low wages and unsafe working conditions. The suit, Espinoza et al. v. West Coast Tomato Growers, accused the company of evading two legal requirements — that it hire local residents before recruiting H-2A workers, and that it pay local workers at least as much as it pays the imported laborers. CRLA’s plaintiffs included Elisa Valerio, Guillermina Bermudez and Felix Gomez, experienced local farm workers employed in the West Coast Tomato packing shed.
Once tomatoes are picked, they’re brought into a hot cavernous building where they’re sorted on high-speed conveyor belts. The three workers described intense pressure to maintain a very fast work pace, much like what Rincón experienced in the fields.
Both local and H-2A workers did the same work. West Coast Tomato, however, called the H-2A workers “packers” and the resident workers “sorters.” Its application to the Department of Labor claimed it couldn’t find local “packers” and therefore needed to fill jobs in the shed with H-2A workers. West Coast would hire only local workers as “sorters.”
Then the company paid sorters less than the H-2A wage. This rate, called the Adverse Effect Wage Rate (AEWR), is set every year by California’s Employment Development Department. In 2014 it was $11.01/hour. The three workers, however, were paid the minimum wage — $8/hour until July 2014, and $9/hour afterwards — because they were “sorters” and not “packers.”
Both the older local workers and younger H-2A contract laborers had to meet high production quotas. If the line stopped, the three plaintiffs said, the company docked their pay until it began again (a violation of state law). And when it was running they couldn’t even leave to use the bathroom. Valerio, Bermudez and Gomez couldn’t keep up and were fired in August 2014.
U.S. District Court Judge Thomas Whelan rejected West Coast’s classification scheme, saying it allowed the company “to hire H-2A workers as ‘tomato packers’ without a legitimate shortage of qualified Americans and pay them more per hour than its American equivalent ‘tomato sorters.'”
CRLA Litigation Director Cynthia Rice charged, “It’s good that we can win these cases and get justice for some workers, but it’s a small number compared to the total number of H-2A and affected resident workers in the California workforce.”
Read part 2 of the story: Migrant workers housed like sardines, and the use of immigration enforcement to expand the H-2A visa program.
‘Janus’ and Its Supreme Court Enablers
The stacking of the U.S. Supreme Court with anti-union justices has allowed the right-to-work movement to circumvent, and undercut, pro-union state policies.
In the fall of 2015, the Federalist Society, a conservative legal organization with a libertarian bent, held its annual lawyers convention at the Mayflower Hotel in Washington, DC. The three-day event included a panel that reviewed the past decade of the John Roberts court, and featured Michael Carvin, a high-powered attorney with Jones Day, who in recent years has taken the fight against labor unions to the Supreme Court.
Carvin began his remarks, curiously, by downplaying the chief justice. “The real consequential thing that happened 10 years ago, frankly, was not John Roberts replacing Chief Justice Rehnquist,” he told the crowd. Instead, he argued, the dramatic shift had been the replacement of Sandra Day O’Connor by Samuel Alito.
There was a lot that Carvin and Alito had in common. Both were members of the Federalist Society—Alito had joined in 1983, a year after it was founded; Carvin has served as the chairman of the Society’s Civil Rights Practice Group. The men also had worked together at the Justice Department during the Reagan administration. In 2006, when George W. Bush nominated Alito to the Supreme Court, it was Carvin who repeatedly stood up for his former colleague’s far-right views. Carvin even went so far as to defend him when the Wall Street Journal revealed that Alito, when applying for the Reagan position, had written that he disagreed with the Supreme Court decision that had established the “one person, one vote” doctrine as the framework for American elections.
At the Mayflower Hotel, Carvin argued that Alito represented “some baby steps toward the return of law.” Just two months later, Carvin was in front of Alito and the eight other justices, arguing a case, Friedrichs v. California Teachers Association, that sought to strip public sector unions from “fair share” fees they collected to represent workers who declined to join the union. (By law, a union must represent all workers in a bargaining unit, whether or not they choose to join. It was a far-reaching case that could cripple the power of unions, and would represent the crowning achievement of a conservative movement that had been decades in the making. Disclosure: The California Teachers Association is a financial supporter of this website.)
In a unanimous 2009 decision, the court reaffirmed a 1977 case, Abood v. the Detroit Board of Education, which had ruled that unions could charge such fees. But the ascent of Alito had helped shift the court in a vehemently anti-union direction, and it was widely expected to rule against the unions in Friedrichs. Then Antonin Scalia suddenly died, and the court deadlocked, four-to-four. The reprieve was only temporary, however. In February, the Supreme Court heard a similar case, Janus v. AFSCME Council 31, and with its newest addition, Neil Gorsuch, the court is poised to reverse a precedent that has endured for more than 40 years.
“Here we have the Supreme Court setting an agenda, and very openly—blatantly, you might say—setting out to achieve it,” says Linda Greenhouse, who covered the Supreme Court for the New York Times for three decades, and now teaches at Yale Law School. “It’s a real unusual tale.”
The Supreme Court’s transformation into an anti-union institution runs directly through Alito, a 68-year-old from New Jersey who graduated from Yale Law School. He worked as assistant to the solicitor general in the Reagan administration, landing the post in August 1981, the same month Reagan broke the air traffic controllers’ strike. Two years later, he would join the Federalist Society, which was co-founded by another Yale law student, Steven Calabresi, who would eventually clerk for the group’s first faculty adviser, Antonin Scalia.
Members of the Federalist Society believed that “activist jurisprudence” posed a serious threat to democracy, as then-Attorney General Edmund Meese III told the group in a fiery 1985 speech. Conservative ideologues found a home in the Reagan administration; aside from Alito, Federalist Society members in the administration included the future Chief Justice Roberts and Clarence Thomas.
Alongside its rhetoric against big government, society members have consistently attacked labor unions. One Federalist Society newsletter from 1996 complained about the “increased radicalism of Big Labor officials,” and called the requirement that workers pay fees to cover collective bargaining costs a “tyranny of the minority.”
There is little to indicate that Alito doesn’t share such views. He was nominated to the Third Circuit Court of Appeals in 1990 and held the position for 15 years. At the Third Circuit, Alito consistently ruled against working people and unions. In one case, in a minority dissent, he argued that a group of reporters weren’t covered by the overtime compensation requirements of the Fair Labor Standards Act. In another, he reversed a National Labor Relations Board ruling that a company had violated the law because it had refused to rehire an employee who engaged in union activities. (Alito did admit, however, that there was solid evidence the company had threatened union activists with firings and plant closures.)
On the Supreme Court, Alito has made it clear that he relishes the chance to overthrow Abood. In a 2014 decision in Harris v. Quinn that further eroded the right of public sector unions to charge “fair share fees,” he wrote in a majority opinion that the Abood decision rested on “questionable foundations,” all but inviting a new challenge.
Justice Anthony Kennedy has joined Alito in his anti-union crusade. In 1999, Bill Moyers interviewed Kennedy who spoke about the importance of neutrality on PBS’ Frontline. “Our system presumes that there are certain principles that are more important than the temper of the times,” he told Moyers. “And you must have a judge who is detached, who is independent, who is fair…That’s the meaning of neutrality.”
Those are not the attributes Kennedy has demonstrated on the bench when the topic has turned to public sector unions.
Union attorney David Frederick argued during Janus that the current arrangement allows for unions to truly represent all workers, and that the state and the union had an interest in a stable partnership—essentially echoing the “labor peace” logic that was cited in Abood. Kennedy jumped at this notion, and went into a rant.
“It can be a partner with you in advocating for a greater size workforce, against privatization, against merit promotion, against—first teacher tenure, for higher wages, for massive government, for increasing bonded indebtedness, for increasing taxes? That’s—that’s the interest the state has?”
Frederick had said no such thing, but the exchange illustrated Kennedy’s lack of detachment on the issue of public sector unions. Later in the oral argument, Kennedy returned to a political talking point. “I’m asking you whether or not in your view, if you do not prevail in this case, the unions will have less political influence; yes or no?” After Frederick acknowledged that they would have less influence, Kennedy retorted, “Isn’t that the end of this case?”
“It is not the end of the case, Your Honor, because that is not the question,” Frederick replied. It was clear that Kennedy was not only thinking about the constitutionality of the case, but its political consequences—that he was caught up in the “temper of the time,” exactly as he had once counseled against.
Before the confirmation of Neil Gorsuch, the Federalist Society had been instrumental in securing the nominations of two justices, Roberts and Alito. Roberts, during his confirmation hearings, had emphasized his respect for precedent, noting that reversing earlier rulings was a “jolt to the legal system” and that it was “not enough that you may think the prior decision was wrongly decided.” Instead, he testified that it depended on considerations like whether the ruling had “proven to be unworkable.” In 20 states, plus Washington, DC, laws allow for collective bargaining agreements that compel employees who decline to join unions to pay agency fees. The other “right to work” states do not compel employees to do so. Both arrangements have proven workable.
During the Janus argument, Gorsuch remained silent, but on the Tenth Circuit he amassed a significant history of anti-worker rulings. In a minority dissent in Compass Environmental v. OSHRC (2011), he argued against a $5,500 fine placed on a mining-construction company after an employee who hadn’t received proper safety training was killed. In another minority dissent, he ruled against the Labor Department, which had determined that a driver was unlawfully fired after he had detached his truck from his broken-down trailer and driven away, fearing that he could freeze to death had he remained. And in May, he wrote the majority opinion for Epic Systems v. Lewis, which effectively allows employers to force workers to sign away their rights to class action lawsuits for wage and hour claims.
With that sort of history, it appears all but certain that Gorsuch will side with Alito. Indeed, last September, just hours before the Supreme Court announced it would hear Janus v. AFSCME, Gorsuch gave a speech at Trump International Hotel in DC, at a “Defending Freedom” luncheon hosted by the Fund for American Studies. One fund supporter, the Bradley Foundation, also sponsored that evening’s gala to celebrate the Fund’s 50th anniversary. The Bradley Foundation is a conservative group that “supports organizations and projects that reduce the size and power of public sector unions.” It helped fund the Janus case, along with other recent anti-union litigation the Supreme Court has heard.
“He spoke in front of a group at a hotel, and the group is supported by the same folks who are party to a lawsuit he will be hearing,” says Gabe Roth, executive director of Fix the Court, which pushes for greater Supreme Court openness and was critical of Gorsuch’s decision to speak at the luncheon.
Organizations like the Bradley Foundation, State Policy Network and Illinois Policy Institute have been waging anti-union campaigns at the state level, where they have had some notable successes in moving legislatures and governors to adopt right-to-work laws. But there are still many states, like California and New York, whose voters and politicians have resisted this trend. However, stacking the Supreme Court with anti-union justices has allowed the movement to circumvent, and undercut, pro-union state policies.
“They’re going to do what they can to use the First Amendment to cut the legs out from under unions in the public sector,” concludes Greenhouse. “It seems to me it puts the court in a very vulnerable position of looking like a lot of politicians in robes that are doing what politicians can’t.”
Copyright Capital & Main
Living Homeless in California: The Hard Work of Finding Work
Only about one percent of Los Angeles County’s homeless are able to have full-time jobs, says a report prepared by the Economic Roundtable.
The single most common reason given by people for becoming homeless is that they lost their job and its income.
Arthur Nolan’s home is the inside of a camper shell attached to a 30-year-old Ford pickup. For the past five years — the total amount of time Nolan has regularly bedded down for a night’s rest inside a vehicle parked somewhere in Los Angeles — he has also held a full-time job as an auto mechanic repairing European cars in Silver Lake.
A pale and bespectacled son of the San Fernando Valley in his early 30s, Nolan sleeps at about a dozen low-profile locations.
“The spots that I choose, I make sure that there is no one to offend,” he says. “When I pull up at sundown, it’s straight to sleep. I’m up way before sunrise, about 4:30.”
Though he has reliable employment, Nolan does not have a fixed address. Unlike most homeless people, though, he chooses to live in his vehicle, having left behind a life of long commutes and high rents to become a curbside nomad. He says that with the considerable savings from his job, he will leave Los Angeles in a few years to buy a house, likely in Las Vegas or Colorado.
Nolan is in the extreme minority of Los Angeles’ homeless who manage to hold down a full-time job without a permanent address. Of the roughly 55,000 counted homeless in Los Angeles County, only about one percent are able to have full-time jobs, according to a report prepared by the Economic Roundtable using data from the Los Angeles Homeless Services Authority.
Although two-thirds of Los Angeles’ homeless report that they actively seek work or income in some way, only about seven percent work for an employer with any regularity, with three percent working part time, three percent holding down temporary jobs and one percent working full time. Most of the remaining are sorted into three categories: looking for work (23 percent), not looking for work (34 percent) or earning money in some other informal way, like recycling bottles and cans (35 percent). The single most common reason given by people for becoming homeless — affecting 40 percent of Los Angeles County’s homeless population — is that they lost their job and its income.
Whether or not somebody recovers from homelessness has a lot to do with how quickly they can access a reliable income.
The second most common reason — affecting about 19 percent of L.A.’s homeless — are family conflicts. This was the case with 19-year-old Leslie Rodriguez, who became homeless in 2017 after she had a fight with her mother about staying out late, and, Rodriguez says, she was forced out of her family’s Pacoima home. Rodriguez spent a few weeks bouncing from friend to friend, and some time on the street. She stopped going to school, lost her part-time job, and, within a month, ended up living inside a drug-infested “trap house” in the Northeast San Fernando Valley with a boyfriend and some others. When the landlord began evicting them, a cousin in Boyle Heights offered to take Leslie in. She wanted to finish high school, get back on her feet and move forward with her life.
“I didn’t like asking for help,” she says. “I’m one of those people who likes to do it on their own because I always feel like I have to return the favor. But I needed a huge amount of help.”
Rodriguez got clean and began searching for work without having to worry about where she was going to sleep. One of the challenges she faced while looking for a job was the fact that the employers she reached weren’t interested in hiring someone for part-time work. Until she explained her situation to her teachers, who understood and helped her find flexible options to earn her high school diploma, she thought she would have to sacrifice her education to make ends meet.
Now that Rodriguez has regular work at a Silver Lake juice bar and a flexible class schedule, her biggest challenge is transportation. She wants to save enough to buy a car because commuting between her job, where she lives and where she takes classes is time consuming, and she spends more money than she’d like on Uber rides. Though she wants to move out of her current living situation, she knows Southern California’s exorbitant housing costs mean that leaving it may also mean leaving the state.
One riverbed dweller says he first became homeless in the mid 2000s, when a lost job sent him into a cycle of drug and alcohol abuse.
“I’m hoping to find a place, but I’m not 100 percent sure I’m going to stay here in L.A. It is pretty pricey here. I think going a little bit further, starting fresh in a new place would help a lot—a new me,” she says. “It will probably be far — like Texas far.”
Not everybody recovers from a stint in a trap house like Rodriguez has. (She believes some of the people she lived with just a few months ago wound up living in an encampment in a wash near Hansen Dam). For her, the pivotal factor that helped her avoid that fate was having somebody like her cousin that she could ask for help.
Whether or not somebody recovers from homelessness has a lot to do with how quickly they can access a reliable income. For the newly homeless, especially those with a recent work history, this means searching the job market for on-the-book employment while juggling the challenge of finding a safe place to sleep. If steady income is not secured, people typically begin looking for money in other informal ways, such as recycling or participating in the bicycle black market.
About one half of Los Angeles’ homeless have lived outdoors for more than a year.
Which is where the hustle comes in. All homeless, regardless of whether they live inside or outdoors, have to work exceptionally hard to survive. But for someone who’s acclimated to life on the street — about one half of Los Angeles’ homeless have lived outdoors for more than a year — engaging with a complicated and seemingly glacial government bureaucracy can be a non-starter.
Edgar, who didn’t want to give his last name for this story, is one who hustles on the margins. Now in his 50s, Edgar has been homeless for several years and makes his home in the bed of the Los Angeles River, near Atwater Village. On most mornings he wakes with the light and starts his day with some bread and canned meat he purchases at a nearby Vons supermarket.
Edgar earns money chiefly through recycling. He does this with his most important possession — a worn but mechanically perfect hardtail mountain bike, outfitted with loops and hooks where he can attach bags to fill with recyclable bottles and cans. On most days he patrols the river-adjacent neighborhoods, relying upon an extensive mental map of known locations where he can find recyclables in a timely manner.
“It helps to have amenable relationships,” he says, referring to a restaurant and to friendly trash collectors who, he adds, give him access to their recyclables, which cuts down on time spent gleaning a few bottles from bins scattered across a wide geographic area. In a good week, Edgar says he can earn up to $60 from recycling, most of which gets spent on food he shares with other river residents in exchange for assurance that they’ll watch his possessions when he’s away.
Edgar says he suffers from a moderate case of paranoid schizophrenia. Knowledgeable about his disease, Edgar says he makes it a priority to take care of himself. Part of the reason he lives along the river is that it’s one of the few places he’s found, in his years of homelessness, where he can get a good night’s sleep, which is crucial to managing his illness.
“If I’m trying to sleep off a street somewhere, getting woken up every few minutes every time someone with no muffler drives by, it gets hard to keep track of things,” he says. “I can’t do that. I can’t get stressed out because that’s when things sort of stop making sense.”
Edgar says he first became homeless in the mid 2000s, when a lost job sent him into a cycle of drug and alcohol abuse, amplifying his mental illness. He eventually got medical help through a pro bono mental health clinic he still visits. Though he says he’s worked more than few jobs in his time, balancing the expectations of an employer with the needs of his illness was always difficult to manage.
“Here I have space and quiet,” says Edgar. “I live peacefully and take care of myself. I have what I need, and the people here look out for each other. It’s not like that on the street.”
Copyright Capital & Main
Living Homeless in California: The Road Back to Housing Often Starts With a Job
For homeless workers, earning a paycheck can take second place to finding a safe place to sleep at night.
Daily life for homeless individuals is a precarious balance of competing priorities.
For someone struggling with housing insecurity, or attempting to recover from time spent living on the street, access to regular work is a “difference maker,” says Molly Moen, vice president of development and communications for Chrysalis, a homeless employment-focused nonprofit. “It allows you to stay in the apartment that you’re getting, to move your life forward,” she adds.
For 30 years Chrysalis’ programs have transitioned about 58,000 homeless people into apartments and jobs. The group supports would-be workers with professional coaching and résumé preparation services, by connecting them to partners who can provide employment and housing, and by taking care of more basic needs like clean clothes and access to hygiene products.
Moen says that daily life for homeless individuals is a precarious balance of competing priorities, and that getting a paycheck can fall off the bottom of that list if other needs aren’t met — like finding a safe place to sleep at night and having somewhere to wash clothes for the next day of work.
“When you’re at work, your employer expects work to be 100 percent of your focus,” she says. “But if work becomes something that’s distracting you from taking care of your survival, even though you know that you need to work, it can be really hard to maintain it.”
Even an understanding employer will eventually reach a point where they have to let a distracted worker go. For someone — housed or unhoused — who’s struggling to build security, job loss can predicate a downward spiral.
Homeless job seekers in Los Angeles benefit from a broad patchwork of nonprofit, and government-funded organizations and agencies.
“If you get fired because you were trying to deal with a crisis in your life, that can also be incredibly disheartening,” says Moen. “It makes you feel like, ‘Oh my gosh, I won’t be able to succeed next time because I can’t stop these crises from happening.’ It can be a huge snowball.”
That snowball’s velocity and consistency vary from person to person. For a person who sleeps on cardboard beneath the Hollywood Freeway, the snowball’s trajectory can be very different than one for someone who has a job but lost a reliable place to fall asleep each night, thereby stressing their ability to focus only on their work.
The personal decision to seek help is a crucial moment in the transition from homelessness to stable living. Once a person has made that choice, they enter the radar of the broad patchwork of nonprofit, and government-funded organizations and agencies that try to match homeless individuals with employment, housing and medical care, and try to support them through the process towards stability.
Although Los Angeles has had a large network of charity oriented organizations for decades, what’s changed in the past two years is an influx of public money earmarked specifically to mitigate homelessness. In March of 2017, L.A. County voters overwhelmingly approved Measure H, a quarter-cent sales tax increase intended to raise about $3.5 billion for homeless services over the next 10 years.
Four dozen cities in L.A. County have agreed to develop their own municipal-level homeless plans with targetable goals.
Figuring out how to effectively use the new money, says grant writer and homeless consultant Abby Arnold, who’s currently helping the City of West Hollywood formulate its homeless plan, is a work-in-progress.
Arnold says about 45 or so cities in L.A. County have signed on with the county to develop their own municipal-level homeless plans with targetable goals. But the process has been bumpy as local jurisdictions begin realizing they may have to take actions, like erecting temporary shelters, that are politically unpopular.
“People,” Arnold continues, “show up at meetings and say, ‘If we do any kind of services, if someone hands out even one sandwich, then thousands of homeless will come, and we’ll end up like Santa Monica or Venice.’ Hearing that kind of rhetoric makes me crazy.”
Even L.A. County’s Coordinated Entry System has an arduous application process that can present a barrier to the homeless who have decided they want help.
At the center of Los Angeles County’s efforts to house the homeless is the Coordinated Entry System (CES), a comprehensive “no wrong door system” intended to stitch together the county’s maze-like network of offices and agencies into a single mechanism. When elected officials talk about connecting homeless individuals to employment, mental health and housing services, they mean doing it through the CES.
However, like any assistance program tied to public money, the CES has an arduous application process that, itself, can present a barrier to the homeless who have decided they want help.
“It’s a really daunting process,” says Arnold. “You have to decide if you want to fill out all of these forms, and have your photograph taken and put into a database that can be accessed by anyone working at any homeless organization, or any police agency that had a relationship with the county. If you’re the least bit paranoid, that’s not happening.”
Working people through this byzantine administrative system falls back to the patchwork of public, private and nonprofit workers who dedicate themselves to serving the homeless every day. Different organizations have different strategies, but the ultimate goal is to build consistency, and give people time to, as one San Diego provider recently told Capital & Main, “get their head on their shoulders.”
Without a safe and reliable living situation, this is virtually impossible. If, for example, identifying documents crucial for accessing public services get lost in an encampment sweep, the bureaucratic exercise to get new copies can quickly morph into a multi-day ordeal that makes it that much harder to move forward.
Copyright Capital & Main
Study: Government Needs to Boost Child and Home Health Care Funding
Daycare and home care-giving “are a public good and need to be treated as a public good,” says Ken Jacobs, chair of UC Berkeley’s Center for Labor Research and Education.
Recent campaigns to raise the minimum wage have put into sharp relief what university researchers are calling a “care conundrum.” The workers who care for us at the beginning and end of our lives are paid far too little, but raising their wages can increase the already high cost of care for families who can ill afford it.
That’s because the child care and home health care markets are “too heavily private,” according to a study released today by research centers at the University of California, Berkeley and the University of Wisconsin, Madison.
The answer to the conundrum, the study says, is not to leave child care providers and home health aides—the vast majority of whom are women and people of color– in poverty. The typical “care” worker in the U.S. earns only $10.29 per hour and hasn’t seen much of a raise in 10 years. Rather, the public sector must do more to support the two industries, says Ken Jacobs, chair of the UC Berkeley Center for Labor Research and Education. “Those care services are a public good and need to be treated as a public good,” he said.
“Child care organizations all supported the minimum wage increases. They understand that low wages are unsustainable. In long-term [elder] care, we have a growing shortage of people to do those jobs because the wages are so low,” Jacobs said.
Jacobs said he teamed up with researchers from UC Berkeley’s Center for the Study of Child Care Employment and UW’s COWS think tank to gain a better understanding of two industries that were impacted by increases in the minimum wage that are underway in more than 30 states and local jurisdictions across the country.
Since November 2012, when fast-food workers went on strike and launched the “Fight for 15” campaign to raise the wages of low-wage workers, more than 17 million employees across the country have benefited from minimum-wage increases, according to the National Employment Law Project.
Restaurant and retail employers have been able to pass on modest price increases to consumers, according to research cited by the study. But home care and early child care industries are more constrained because families have difficulty shouldering any increases to the already high cost of care in what is a labor-intensive business.
Jacobs says the solution will ultimately lie with increased funding at the federal and state level, but the study also highlights local efforts to address the funding gaps in child care and home health care, including Measure A, a proposition on the June 5 ballot in Alameda County, and the expansion of pre-kindergarten in New York City.
Increased funding has the potential to improve the livelihood of early child care providers and those on the front lines of elder care. It also can lead to better outcomes for children and the elderly on the receiving end of services, says Jacobs. “We know that in child care and in long-term [elder] care, continuity matters,” he said.
Copyright Capital & Main
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