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Report: IRS Enforcement Could Reap Billions in Unpaid Revenue

Audits of the wealthy and corporations have steeply declined at the same time the agency has begun withholding tax refunds for low-income recipients of the Earned Income Tax Credit.

David Sirota

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IRS headquarters, Washington, DC. (Photo: Joshua Doubek)

Congressional analysts say that for every $2 spent on tax enforcement, the government could expect to reclaim more than $5 in unpaid taxes.


The federal government could raise more than $1 trillion in new revenue by beefing up tax enforcement and by cracking down on carbon emissions, according to congressional budget analysts. Those two moves alone could help finance progressive lawmakers’ Green New Deal, or they could cover the lion’s share of the cost of the massive infrastructure investment package proposed by President Donald Trump.

The data was included in a new report by the Congressional Budget Office released Thursday.

The study found that if lawmakers reversed recent budget cuts to the Internal Revenue Service, the agency could recover tens of billions of dollars in revenue that is owed to the government — but that is not being paid. If the agency’s budget were increased by $20 billion over the next 10 years, the CBO says auditors would be able to reclaim more than $55 billion that could be used to shore up federal programs or reduce the deficit. Put another way, the analysts said that for every $2 spent on tax enforcement, the government could expect to reclaim more than $5 in unpaid taxes.

“Many taxpayers who are not compliant under the current tax system would pay the taxes they owe” if the enforcement budget is increased, the CBO said.

A recent ProPublica investigation found that as lawmakers have slashed the IRS enforcement budget in recent years, the agency has had far fewer resources with which to scrutinize the tax returns of corporations and high-income individuals. In all, the news organization estimated the IRS has not collected $95 billion in taxes that it may have otherwise collected, had Congress given it its previous level of enforcement resources.

Audits of the wealthy and corporations have steeply declined at the same time the agency has begun withholding tax refunds for recipients of the Earned Income Tax Credit. The decreased scrutiny of the wealthy and tougher posture toward the poor has occurred even though CBO notes that “the amounts collected from audits of higher-income taxpayers are, on average, much larger than collections from audits of taxpayers with lower income.”

A 2015 Inspector General report urged the IRS to focus more of its limited enforcement resources on high-income filers.

“It appears that the IRS is spending most of its audit resources on auditing tax returns with potentially lower productivity,” the report concluded.

The CBO noted that stronger enforcement would not necessarily halt tax cheating over the long haul.

“Taxpayers would gradually become aware of some of the changes in the IRS’s enforcement techniques associated with the initiatives,” the analysts wrote. “In response, they would shift to other, less detectible forms of tax evasion.”

In a separate part of the report, the CBO says a $25 per metric ton tax on carbon emissions would raise roughly $1.1 trillion over the next 10 years. That calculation factors in both the possible costs of the tax from potentially reduced economic activity and higher fossil fuel prices, as well as positive economic effects of the tax. In the first year alone, such a tax would raise $66 billion — or more than the budget of the entire U.S. Department of Education over the same time period.

“To simplify implementation, as well as to provide incentives to deploy technologies that capture emissions generated in the production of electricity, the tax could be levied on oil producers, natural gas refiners (for sales outside the electricity sector), and electricity generators,” CBO analysts wrote. “A well-designed tax that covered most energy-related emissions would be expected to reduce emissions.”

In October, ExxonMobil announced that it will spend $1 million to support an advocacy group that is pushing for a carbon tax.


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Can Airbnb Be Regulated?

Co-published by Fast Company
As cities struggle to rein in the short-term rental service, a detente in San Francisco may show the way.

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Airbnb's San Francisco headquarters. (Photo: Dllu)

Co-published by Fast Company

From Barcelona to Santa Monica, cities alarmed by the proliferation of short-term rental homes have attempted to rein in Airbnb and its competitors with regulations. They have taxed them. They have limited them to certain neighborhoods or building types. They have banned them altogether. In December, after three years of debate, Los Angeles capped the number of days hosts could rent out their homes at 120.

But do these rules work? One test of the effectiveness of cities’ regulatory efforts is their impact on Airbnb’s growth. Two years ago, UBS, the Swiss investment bank, analyzed data from 127 cities and attributed slowing growth in listings at Airbnb to the emergence of local regulations. A November survey of travelers by Morgan Stanley lists their concerns about home sharing’s legality as one of several factors explaining the company’s plateauing growth. That said, Airbnb, which has a $30 billion valuation and is planning an initial public offering as early as this year, is still experiencing user growth in the double digits.


There are myriad ways for Airbnb hosts to elude cities’ regulatory efforts.


The success of cities that have been able to regulate tech-enabled tourism owes to the powerful coalitions that have mobilized to challenge these data-driven platforms and to the fact that they are beginning to fight with their own digital weaponry.

One major challenge is simply finding and monitoring illegal rentals. Traditional code enforcement methods — door knocking and taking photos — have been supplanted with “web scrapes” and other high-tech approaches. Without these tools, “it’s like bringing a knife to gun fight,” says Ulrik Binzer, a former Airbnb host from Marin County who now runs San Francisco-based Host Compliance, a company that helps cities develop and enforce short-term rental regulation. “There are just too many of them.”

In addition, a “city has to be able to go to a platform that ignores its law and hold it accountable,” says Dale Carson, a hotel industry lobbyist and co-founder of Share Better San Francisco, a coalition of sometime adversaries — tenants, apartment owners, hotels and hotel workers — who advocate for regulations of the behemoth Airbnb and other home-sharing platforms. (Disclosure: Share Better New York is a financial supporter of this website.)

In a landmark 2016 case, a U.S. District Court upheld San Francisco’s ability to hold Airbnb liable when hosts operate illegal rentals. Airbnb can now face fines if it charges a booking fee for units that are not legally registered with the city.


San Francisco shed about half of its short-term rental listings after its rules were updated in 2017.


But there are still myriad ways for hosts to elude cities’ regulatory efforts, including setting up fake host names and shell companies, or registering on multiple platforms. The hardest violators to root out, according to some researchers, are hosts who run de facto hotels and take permanent housing off the market. “The biggest problem are the commercial short-term rentals” since “the risk might be worth it to stay operating,” says Shirley Nieuwland, a doctoral candidate at Erasmus University in the Netherlands who co-authored a study on cities’ attempts to regulate Airbnb.

*   *   *

San Francisco has been held up as a regulatory success story, in part because it shed about half of its short-term rental listings after its rules were updated in 2017.

City Attorney Dennis Herrera notably secured $2.25 million in penalties from property owners Darren and Valerie Lee, who, after being caught once in 2014, returned to illegally renting out 14 other apartments on Airbnb until being caught again last year. (Only permanent San Francisco residents may let their homes as a short-term rental — and for not more than 90 days in a year.)

More tellingly, what was once an adversarial relationship characterized by battles at the ballot box and legal sparring between the city and Airbnb is now a cooperative one. “I think we have a system in place that is very effective,” says Kevin Guy, director of San Francisco’s Office of Short-Term Rental. “We have a regular cadence of email communications back and forth” between the various platforms and the city.

Airbnb spokesman Christopher Nulty says that regulations help bring stability to the platform. “We think that to be regulated is to be recognized,” says Nulty. Over the last five years, Airbnb has worked with “hundreds and hundreds of governments globally” to establish tax and regulatory partnerships, he adds.

Dale Carson credits a legal settlement between San Francisco and Airbnb for the new spirit of cooperation — after Airbnb and its competitor HomeAway/VRBO challenged a 2016 law requiring hosts to register with the city.

Even after the enforcement battles, Airbnb officials are sanguine about its prospects in its hometown. Revenue from bookings in the city have remained steady since the tougher enforcement regime was put in place. Meanwhile, the company has seen a 44 percent annual growth in guest arrivals in the five counties surrounding San Francisco. But what has watchdogs on alert is the sizable growth in listings of units that can rent for 30 days or more, according to the San Francisco Chronicle. Unlike other short-term rental hosts, the owners of such units are not required to be permanent residents.

And a study by McGill University researchers raises questions about the law’s effectiveness, claiming it merely purged Airbnb of hosts who rarely rented their homes and had “relatively little impact” on those hosts renting out multiple units or a single home with great frequency. “This suggests that few if any Airbnb listings in San Francisco have been returned to the long-term rental market,” according to the report, which was published in January.

*   *   *

Meanwhile, New York City remains a legal battleground for Airbnb. Typical New Yorkers saw their rents rise by $384 in a three-year period – and by more than $700 in some Manhattan neighborhoods, according to another McGill University study, published last year. While San Francisco allows its residents to rent their homes for months at a time when they leave town, New York City’s stricter law bans short-term rentals in most buildings unless the home sharer is present.


Data activist: “Airbnb is constantly suing cities or threatening to sue them.”


That has not stopped short-term rentals in Airbnb’s largest domestic market from proliferating. Last month, the New York Times recounted an elaborate scheme undertaken by local real estate brokers who allegedly raked in more than $20 million from thousands of illegal rentals.

There were more than 56,000 active daily Airbnb listings in New York City last year, according to the 2019 McGill University study, which also estimated that 68 percent of host revenue came from illegal reservations.

Airbnb has fought back hard against the city’s tough regulatory regime. After New York passed a law that required platforms to provide regulators with hosts’ names and addresses, Airbnb sued, arguing the city had violated Fourth Amendment protections from unreasonable search and seizure. In January, a U.S. District Court judge in Manhattan placed an injunction on the law. The city has since subpoenaed Airbnb for data on 20,000 listings that regulators believe may be in violation of local laws.

“Airbnb is constantly suing cities or threatening to sue them, and so there’s a lot of hesitancy from cities” to regulate them, said Murray Cox, a New York-based data activist who runs a website called Inside Airbnb.

Airbnb’s Nulty counters that the number of lawsuits that Airbnb has brought is small relative to the 88,000 cities where the platform operates, and objects to New York’s desire to have “unfettered access” to host data “without due process.”

At least one host is not impressed by cities’ regulatory efforts. Gene Dexter owns seven short-term rental properties in Thailand and in cities across the U.S., from Los Angeles to New Orleans, and manages rentals for clients. He takes great pride in carefully designing each of his units with items from his travels. He said that tougher regulations in a city would not be a major factor in his deciding where to operate. “They are kind of a cool challenge for me,” says Dexter. “With the tech, I could easily play the game to the point where — catch me if you can.”


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Would Oregon’s Anti-Price Gouging Rental Law Work in California?

Although California’s leading politicians favor rent-cap legislation, none is on the horizon.

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Photo: Larry Buhl

Only four states, including California, have laws allowing cities to enact rent control. Most prohibit it.


Oregon is on track to be the first state with mandatory rent controls, as Senate Bill 608 (SB 608), which would cap yearly rental increases at seven percent plus inflation, and provide a “just cause” eviction policy, passed in the legislature’s House on Tuesday, having won earlier approval in the state Senate. Gov. Kate Brown has promised to sign it.

In California, a state with an arguably more dramatic housing affordability crisis, big city mayors are looking at Oregon’s bill as a way of preventing dramatic rental price increases, though statewide legislation is nowhere to be seen as yet. Los Angeles Mayor Eric Garcetti, Oakland Mayor Libby Schaaf, and state Sen. Scott Wiener (D-San Francisco) have all publicly endorsed the idea of a statewide rent cap, which some call an anti-price gouging law. In November Mayor Schaaf told an audience at a forum on housing and homelessness, “When there’s a fire, you pass an anti-rent gouging ordinance. The state has a fire. It’s called the housing crisis.”

California Gov. Gavin Newsom said at his State of the State address last month that he would sign “a good package on rent stability this year” — if lawmakers send him one.

However, it’s looking unlikely that either chamber in Sacramento will be sending him such a bill soon. Housing advocate Wiener, who has proposed Senate Bill 50 to incentivize denser development near transit centers, favors price-gouging legislation as a short-term solution to rapid rent increases. But his office told Capital & Main that he would not be introducing a cap measure in this legislative session and was unaware of any state lawmaker planning to do so.


No large California municipalities are seriously considering a price cap except for the S.F. Bay Area.


No large California municipalities are seriously considering a price cap except for the San Francisco Bay Area. There, in December, the Metropolitan Transportation Commission’s Committee to House the Bay Area (CASA) released a CASA Compact, which floated the idea of capping annual rent increases at a maximum of five percent plus inflation.

Rent-gouging laws would give some protection to renters in cities where no rent control laws exist, according to David Garcia, policy director for the Terner Center for Housing Innovation at the University of California, Berkeley. In a 2018 brief, the Terner Center argued for a statewide cap of five percent, plus the regional Consumer Price Index (CPI), to protect tenants against egregious rent increases.


Estimate: A rent cap in California would provide anti-gouging security to nearly five million units falling outside current rent control protections.


“Our proposal is a baseline protection for apartments and cities not covered by rent control, and it can be built off existing state law that prevents price gouging after a disaster,” Garcia says.

The Terner Center brief estimates that a rent cap in California would provide anti-gouging security to nearly five million units falling outside current rent control protections. That includes renters in cities without rent control, those renting single-family homes, or those renting in cities with rent control but in units not covered by rent control due to the Costa-Hawkins Rental Housing Act, a California law that has restricted local rent control ordinances for more than two decades.

*   *   *

Efforts to curb property owners’ ability to raise rents remain controversial, and academic research suggests that rent control helps current tenants in the short run, while decreasing affordability in the long term. Only four states have laws allowing cities to enact rent control — including California — and most states prohibit it. The majority of rent control laws put limits on when and how a landlord can evict a tenant.


California Budget & Policy Center: More than half the state’s renter households paid more than 30% of their income on rent, a level considered ‘rent burdened.’


Not surprisingly, rent control and rent caps are not popular with landlords and building owners.

“So-called price-gouging laws are only used to get politicians elected, but they don’t solve the housing crisis,” said Dan Faller, president of the California Apartment Owners Association. “Demand causes the affordability problem, not the industry, partially because of the time and red tape it takes to build new housing.”

*   *   *

In Oregon, however, not only have tenant advocates strongly supported SB 608, not all property owner groups have opposed it, a sign that similar anti-gouging legislation could gain traction in California.

Anti-gouging or rent cap laws are being considered as an alternative to the repeal of Costa-Hawkins. Despite endorsements from several prominent politicians, including Mayor Garcetti, one ballot initiative that would have repealed Costa-Hawkins, Proposition 10, went down to defeat last November. Though the fight over repeal of Costa-Hawkins may have passed, the rental housing crisis has not, and discussions about alleviating the pressures on low- to moderate-income renters continue.

In 2017, according to the California Budget & Policy Center, more than half of renter households in California paid more than 30 percent of their income on rent, a level considered “rent burdened” by the U.S. Department of Housing and Urban Development. Worse, more than a quarter of California renter households paid more than half of their incomes on rent, which is considered severely housing cost burdened.

Neither tenant nor building advocates believe rent caps or rent control are a long-term answer to the housing crisis. The consensus on both sides of the affordability debate is that more construction must be done, and faster, but meeting that goal involves several challenges, according to Garcia.

“Long term, what’s needed is to remove red tape in the [building] approval process, and revise zoning to allow construction that’s not just high-rises or single-family homes,” Garcia says.

Zoning revisions, however, are usually tackled by counties and municipalities. Yet, according to Garcia, the state can preempt some zoning, “but there hasn’t been the political will to do so yet.”


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California Legislation Aims to Clarify Who Is an Employee

Co-published by the American Prospect
Parsing who is a company employee and who is an independent contractor is no mere academic exercise: Contractors typically lack the workplace benefits and security enjoyed by traditional employees.

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A new bill introduced in Sacramento could have consequences for workers across the U.S.


Co-published by the American Prospect

In 2018 California’s Supreme Court issued a unanimous decision in Dynamex Operations West, Inc. v. Superior Court, siding with the drivers of a delivery company that had converted its workers from company employees to independent contractors who typically lack the job security and workplace benefits of traditional employees. The court’s groundbreaking decision established an “ABC test” that would classify a worker as an independent contractor only if that worker is:

A) free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.

B) performs work outside the usual course of the hiring entity’s business.

C) customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

A new California Assembly bill introduced by Lorena Gonzalez (D-San Diego) would codify the same ABC test to determine who’s “independent” and who’s an employee. If passed into state law, Assembly Bill 5 could have consequences for workers across the U.S.

*   *   *

The bill as introduced contains intent language and, according to Steve Smith, communications director for the California Labor Federation, one of the bill’s supporters, will include more specific language next month as labor and other stakeholders attempt to shape the legislation.

“There will be conversations about exceptions for some industries, such as insurance agents or freelance journalists,” Smith told Capital & Main. “Labor isn’t saying there is no place for contractors, but the fact is that there are hundreds of thousands of workers who are misclassified right now, even when applying the previous standard of Borello.”

The California Supreme Court’s 1989 ruling in S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations created what’s commonly known as the Borello Test. It considers whether an employer has a “right to control” how services are performed, along with other factors, including the skill required in the particular occupation, and the place where the work is performed. The court said each case must be decided on its own particular facts, a determination that labor and employer advocates say make Borello murky and confusing. The issue, these advocates say, is whether to use a worker-friendly standard like Dynamex, or some other measure.

While Dynamex simplifies the factors used in Borello to re-classify workers in many occupations, both labor and business groups admit that employers are so far ignoring the Dynamex decision, claiming that it only pertains to the Dynamex company itself. Meanwhile, that decision’s backers are looking to AB 5 to make it impossible for businesses to ignore Dynamex.

*   *   *

Ken Jacobs, chair of the Labor Center at the University of California, Berkeley, says he expects AB 5 to pass in some form once different constituencies add their input.

Photo: Joanne Kim

“The question is to what degree does Dynamex apply to segments of certain industries,” Jacobs said. “For example, for real estate agents, it might not be the correct test.”

The pro-business California Chamber of Commerce had denounced the Dynamex decision as potentially “detrimental to millions of California workers” and that the ABC test jeopardizes Californians’ “flexible work arrangement.” However, Becky Warren, a spokesperson for the I’m Independent Coalition, a project of the Chamber, said that the Chamber is not opposing AB 5 — at least not right now. “We hope the legislature takes action this year to modernize our labor laws while improving workplace conditions for Californians,” Warren said.

A 2017 study from Jacobs’ Labor Center showed that 8.5 percent of California’s workforce is “unincorporated self-employed,” which includes freelancers and independent contractors — but not temp workers, part-time workers or full-time workers with side gigs.

Uber driver Edward Escobar, founder of the Alliance for Independent Workers, collaborated with Gonzalez’s office to craft AB 5 and said the bill would be a game-changer for the full-time ridesharing drivers and other gig workers that his advocacy group represents.

“Only about 20 percent of drivers are full time, but they’re all considered disposable by these tech companies,” Escobar said, referring to such California on-demand service firms like Uber, Lyft, Instacart and DoorDash. He said he expects a big pushback from these as AB 5 progresses through the legislature. Independent workers at these companies have long complained about low wages and lack of employee protections and benefits. Instacart, for one, has come under fire for allegations of “stealing” workers’ tips.

*   *   *

AB 5 has competition, however. Assembly Bill 71, introduced by Melissa Melendez (R-Lake Elsinore), claims that a worker’s status should be based on the multifactor Borello Test and not the new ABC standard.

In a press release announcing her legislation, Melendez said, “Without clear legislative action, the Dynamex case could unravel gig and tech economies and threaten the traditional business models of realtors, teachers, beauticians, truck drivers, construction trades and countless other professions.”

Jacobs added that it is difficult to determine how many Californians would be affected by AB 5 if it passes, because it’s already a challenge to determine how many are now misclassified by the current standard. Ironically, the very act of incorrectly classifying workers skews the statistics.

“Though,” Jacobs added, “we do know that there is widespread misclassification now in certain industries, like trucking, construction and janitorial services.”

Smith believes AB 71 will go nowhere in a legislature dominated by Democrats. As for AB 5, Smith said labor is carefully watching whether some tech-friendly Democrats will support that industry over workers.


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No Apologies: Bill de Blasio on Economic Inequality, 2020 and the Amazon Deal

“We must nominate a solid progressive,” says New York’s mayor about the Democrats’ next presidential candidate. “That’s the only way we can change the country. It’s also the only way we can win.”

David Sirota

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Bill de Blasio and family. (Photo: Flickr)

What can municipal leaders do about economic inequality? New York Mayor Bill de Blasio says they can do a lot — and he argues that the Big Apple is proof. He also contends that in the upcoming 2020 presidential election, Democrats must boldly confront the issue and reject centrist candidates like his predecessor Michael Bloomberg, who de Blasio says represent the interests of the wealthy.

De Blasio was elected to the city’s top office after he made economic inequality the central issue in his campaign. During his 2013 run, he said New York had “become a tale of two cities, a place where City Hall has too often catered to the interests of the elite rather than the needs of everyday New Yorkers.” The facts underscored his assertion: the New York City area is one of America’s most economically unequal locales — a place that has both the world’s largest number of billionaires and a 19 percent poverty rate.

As mayor, de Blasio has backed a universal health care initiative, rent stabilization laws, affordable housing programs and wage increases for municipal workers.

In recent weeks he has faced criticism for supporting the now-defunct deal to bring Amazon’s second headquarters to New York. Deal critics claimed that the deal would have needlessly enriched a wealthy corporation whose business model has been laying waste to small local businesses.

Capital & Main reporter David Sirota caught up with de Blasio to discuss his record, the Amazon deal and the next presidential election. What follows is an edited excerpt of the conversation.


What can municipal leaders do at the local level to address economic inequality?

When I ran in 2013, I talked about economic inequality. I talked about a tale of two cities, and the constant refrain I heard from a lot of pundits and journalists was: That’s not something that can be addressed locally — that can only be handled on a federal level, maybe a state level. [But] I argued that we had extraordinary tools…to really have an impact in the here and now…

At the local level, we increased the minimum wage to $15 an hour for public workers and nonprofit workers that got public support through their nonprofits. We did a paid parental leave…Pre-K for all — [whose] average expense for a family [is] $10,000 to $15,000 a year per child, if you had to pay for the same kind of time for your kid during the day in a private setting…We’re providing afterschool as a universal guarantee for all middle school kids…With guaranteed health care, we’re ensuring that 600,000 New Yorkers who have no health insurance will have either very low cost health insurance on a sliding scale or it will be refi’ed for free if they can’t afford it.

All of this puts money back in people’s pockets [and] I think that question in every locality in America is, how far can you go? How far can you go to addressing income inequality because it really adds up….We don’t have the tools to tax the wealthy in the way we should at the local level, but we do have the ability to redistribute. We do have the ability in a powerful way to raise the floor.

Where have you had to make the biggest compromises?

Everything dealing with the state government has been a practicing compromise. I said, “I think the fair way to go about funding Pre-K would have been a millionaire’s tax.” We couldn’t get it. We had to figure out a different funding formula to get enough money to get it up and running nonetheless.

We found a huge challenge also [with] the state government on how to handle the problem of our subways. So far we’ve ended up with bits and pieces of agreement and some forward motion, but not enough.

Here we are in the center of global capitalism and in a place where there’s some very powerful interests that don’t share my philosophy, but I have not felt held back in the scheme of things that much, and I attribute it to having strong political support on the ground. I attribute it to the fact that there’s a real belief in a progressive vision. There’s a real energy behind the notion of addressing these core issues, and honestly, the folks who tried to stand in our way have not had a lot of success in the bigger scheme of things.

The Amazon HQ2 deal that you supported has generated a lot of criticism from those who argued that it was a taxpayer giveaway to a big corporation. What is your response to that criticism?

The vast majority of the incentives in place were state law incentive programs available to any companies that met certain criteria. They have been on the books for a long time and Amazon tapped into them the way any company could have.

I respect the variety of voices that have been raised against the deal. I really do. But I want to say there’s really not been a discussion previous to this deal about these kind of programs that have existed for a long time. Some of the folks who are very strongly criticizing this deal had previously voted for these very same incentive programs. I think there needs to be a bigger examination of what’s going on here…

The state had one piece of the subsidy plan that they tailor-made [for] Amazon. The city would not do that…Under my administration we will not make a tailor-made incentive plan for any company. Whether it’s about coming here or staying here, we just won’t do it. We’ve made that clear. I think that’s a race to the bottom. Amazon wanted us to give them specific incentives, we wouldn’t do it…

Then the obvious pragmatic question: Was I going to let 25,000 to 40,000 jobs go because a lot of us have differences with Amazon as a company? Was that a reason to let those jobs go to Virginia or to Dallas, Texas or someplace else, when they could have a very positive impact for New Yorkers in terms of their lives and their employment, but also on the revenue base that we have?

This [was] going to bring in a huge amount of revenue to help us with the things that we focus on as a progressive city. With affordable housing and with initiatives to get people jobs and all sorts of other things we do. All of those pieces went into the equation for me.

After years of divided control, the New York legislature has full Democratic majorities in both houses, and the governor of New York is a Democrat. What do you want to see from this Democratic state government in the upcoming year?

So they’ve already passed major new gun safety legislation. They’ve passed the New York version of the Dream Act. They’ve passed reproductive rights legislation and fundamental election reforms. Things that we never could have gotten in this state for decades, like early voting, same-day registration. A huge number of things are happening already.

I think going forward we have to fix our subways and I think a billionaire’s tax is the best way to do it…We need to strengthen our rent regulations. I know our colleagues out in California tried to get a referendum passed and it didn’t succeed, but in this state we have created strong rent laws at least for New York City, but we need to make them a lot stronger given the cost of living here.

We [need] a school system with mayoral control [and] a vacancy tax. This is something that stops landlords from withholding their properties from small business…We need to eliminate cash bail. We need to have the legislation to speed up the trial process so we can reduce the number of people incarcerated.

You are not ruling out a presidential bid in 2020. What do you think needs to be front and center in those Democratic primaries?

My basic message is [that] this is a progressive moment, we must nominate a solid progressive. That’s the only way we can change the country, but it’s also the only way we can win. I am very clear that nominating a centrist would just set us back and I’ve said publicly that centrists need not apply in 2020 in the Democratic Party.

The only thing I think that would cause us to lose in this moment, where we should be poised for great victory, is if the American people can’t really tell the Democratic Party apart from the Republican Party, and that’s been the case in way too many elections. But we have a chance here to be uncompromising and to be clear. And it starts with addressing income inequality.

It has to be abundantly clear that we are comfortable calling for higher taxes on the wealthy, that we’re comfortable acknowledging that this is a very wealthy country. There’s plenty of money, it’s just in the wrong hands, and we have to be open about that.

We have to be a clear and blunt and progressive populism. The word “populist” to me should never be applied to the right wing like they have a trademark on it, and it’s a negative. When I think of populism, I think of progressive economic populism that has existed for many, many decades, which is progressives saying we’re on the side of the people and we are willing to take on the elites of the status quo.

But that begins with real simple litmus-test ideas. Are you willing to greatly increase taxes on the wealthy or not? If you’re willing to do it, you’re a solid progressive. You’re going to have a really energetic audience out there. You’re going to show the difference between our party and the other party…

I think this party should stand for Medicare for All [and] should be absolutely unapologetic about it…You’re paying way too much in all sorts of ways right now for your health care. A Medicare for All system would be more fair, more consistent, more universal.

If we’re talking that language, we’re going to move people and we’re going to redefine what the Democratic Party is, and I think it can turn into a party that wins consistently. But if we don’t speak that language, it’s not going to surprise me if we once again struggle in places like the industrial Midwest or Florida, and so I want to see the party come to a real consensus around this…

I want to see that whatever we do in the end, it’s clear that we both have a sharp, strong ideology that we’re comfortable [with] and that we actually have an idea how to make it happen. Because if people perceive it as [being] long on theory, short on reality, that will also alienate working people who are depending on us to get it done, so we have to show this is the kind of thing that can actually happen in real life.

Your immediate predecessor, billionaire Michael Bloomberg, is considering running in the Democratic primary. What do you think of his potential candidacy?

There were things I agreed with Michael Bloomberg on as mayor and there were very clearly things I disagreed [with], but as a candidate for president, let’s begin at the beginning. This party is not nominating a billionaire, nor should we nominate a billionaire.

Billionaires in this country got there in large measure through very favorable government policies that helped them every step along the way, starting with favorable tax policies. The folks in the one percent have benefited from exactly what’s wrong. And that’s not who I’m turning to to fix the problem.

Also, Michael Bloomberg’s been abundantly clear. He is a free marketeer. He doesn’t want to see a strong government disrupting what’s wrong with the free enterprise system, and to stand up for everyday people. That’s just not who he is.

This guy is part of that one percent establishment that created the problem. Lord knows this is not the person we turn to, if we’re trying to establish a progressive, consistent, uncompromising, strong Democratic Party…

If Bloomberg or Howard Schultz were nominated, it would once again say to the American people, “You can’t depend on the Democratic Party to be on your side,” and it would confirm to people it’s the party of the elites, not the party of working people.


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Madeline’s Amazing Cool Room: A Silver Lake Eviction Tale

Taylor Equities’ purchase of a 36-unit building was followed by renter complaints of harassment and disruptive construction. Then came the eviction notices.

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All photos by Jessica Goodheart

An estimated 30,000 eviction cases are filed in court each year against Los Angeles city residents, with nearly a million cases filed nationally in 2016.


It was the last evening that 7-year-old Madeline Peffer would spend in the only home she had ever known. She indulged a reporter with a tour of her now-empty bedroom — a converted closet that had fit a canopy bed, dresser and table, and that had recently been the happy scene of fort-making with a friend.

The walls were colored with chalk, a form of art therapy that her parents had allowed in the wake of their impending eviction from this apartment in Silver Lake, the trendy Los Angeles neighborhood that has become increasingly out of reach as a home for the artists and musicians who have given the area its luster.

Exuberantly drawn hearts and stars, and the proclamation “Madeline’s Amazing Cool Room,” said as much about the wrenching nature of the proceedings as the signs that tenant activists would carry in a street protest later that evening.


White households have lower eviction rates than African-American households, regardless of education, according to a survey from Apartment List.


Los Angeles-based Taylor Equities’ purchase of the 36-unit building last March was followed by renter complaints of harassment and disruptive construction, and the departure of tenants, a dozen of whom had their leases terminated by the new owner “without cause.”

“There were so many workers onsite,” said Melinda Peffer, Madeline’s mother. “They would block you from getting out of your unit, block you from getting down your stairs, block your car from getting out. Many tenants who became tired of break-ins and of “coming to a place that was dangerous, loud and filthy” left of their own accord, she added. She estimates that fewer than 10 of the original residents are left.

In May a dozen tenants, including the Peffer family, received a 90-day “notice to vacate” their apartments. Because the Waverly apartments are not covered by the city’s rent control ordinance, the tenants can be evicted without cause in what is called a no-fault eviction.

What happened at 2965 Waverly Drive is hardly unheard of in a city known for low wages, high rents, and housing and homeless crises that have left thousands in the street. An estimated 30,000 eviction cases are filed in court each year against Los Angeles city residents, with nearly a million cases filed nationally in 2016.

Perhaps what makes the Peffer family’s story different from those of many families who face an eviction is that Madeline’s parents are professionals. They are also white and native to the U.S. (White households have lower eviction rates than African American households, regardless of education, according to a survey from Apartment List.) The Peffer family also made the choice to fight their removal from their home in court.


Activist Lawyer: “You can live somewhere for 15 years or 50 years and your old or new landlord can decide that they want to evict you and that’s it.”


Noah Grynberg is a partner at the Los Angeles Center for Community Law and Action in Boyle Heights, a mostly Latino, heavily immigrant neighborhood that has faced its own gentrification battles. Grynberg’s clients, some of L.A.’s poorest residents, are asked by his group to pay for their eviction defense by participating in tenant organizing, including by engaging in collective bargaining with landlords.

He believes the housing crisis will be tackled more quickly if families who have choices, like the Peffers, battle for tenants’ rights. “Unfortunately, people take notice more often.”

*   *   *

In an email to Capital & Main, Steven Taylor, 2965 Waverly’s new landlord, rejected tenant-rights activists’ charges that he harasses residents or that his business practices are contributing to the housing crisis. Taylor Equities, he wrote, has invested “hundreds of thousands of dollars” in the Waverly Drive apartments, installing security cameras, replacing windows, adding laundry facilities and updating plumbing. “Unfortunately, it’s just not possible to do that kind of work without some disruption.” Taylor Equities owns at least a dozen apartment buildings in Los Angeles.

2965 Waverly Drive, Silver Lake

Taylor has come under fire before, from Los Angeles City Councilman David Ryu, who alleged that Taylor intimidated Los Feliz tenants living in another of his company’s buildings. Taylor is known for acquiring properties, making upgrades and then seeking out higher-paying renters. Taylor’s “whole M.O. is to displace low-income families to try to bring in wealthier tenants to pay his higher rents,” said Coalition for Economic Survival’s Larry Gross, adding that he has organized tenants at more than five of Taylor’s buildings.

The solution to the housing crisis “is not forbidding landlords from fixing up dilapidated properties,” wrote Taylor, who said that tenants at some of his properties include “low-income families, veterans and individuals at risk for homelessness.”


The Peffers had lived for 17 years in their apartment, which is practically a stone’s throw from their daughter’s elementary school.


A fixed-up 950-square-foot, two-bedroom apartment in the Waverly Drive building — about the size of the Peffers’—advertised for $3,450 per month in early February on Apartments.com. The Peffers had paid $1,500 per month before they left and were prepared to accommodate a modest rent increase.

Last April a group of tenants emailed Taylor, introducing themselves as the Waverly Tenants Association, and set off a flurry of internal communications at Taylor Equities. Company director Rick Shugarman assured Taylor in an email, “We have the experience to work our way through this.” Taylor wrote back, “Shit,” adding, “maybe 60 day [sic] notice to quit is better now since 2 bedroom conversion will be public knowledge soon.”

*   *   *

The Peffers had lived for 17 years in their apartment, which is practically a stone’s throw from Ivanhoe Elementary School, which Madeline attends. Melinda Peffer appreciated being close to the school because her daughter suffers from osteogenesis imperfecta, a congenital condition that predisposes her to breaking bones.

Madeline has watched her mother emerge as a leader in the building’s tenant union that formed last spring, as she hosted weekly meetings in the living room of their apartment. She said, “I’m glad that she’s doing it, but it’s also sad because she’s spending all her time doing it and she gets into these arguments with my Dad because she’s too stressed.”


Harassment and “cash for keys” arrangements, in which landlords buy tenants out of their leases, are a major source of displacement in the city.


She has told only one friend from school about the eviction, a friend whom she knows can keep a secret. “Everybody is going to say it’s not true because it’s never happened to them,” said Madeline, as she ate popcorn from a cup.

Grynberg describes the no-fault eviction procedure that the Peffers faced as “one of the most expedited legal processes that we have in California.” In early December, Grynberg attempted unsuccessfully to use Taylor’s email exchange with Shugarman as evidence that the company had retaliated against the Peffers for their participation in a tenants union. But their case failed to persuade a jury.

“You can live somewhere for 15 years or 50 years, which is the case for some of my clients, and your old or new landlord can decide that they want to evict you and that’s it,” said Grynberg.


The Peffers may be more privileged than some of the city’s embattled tenants, but their ordeal—and their decision to become tenant activists—has taken a toll.


Overall, Los Angeles County has a lower eviction rate than the rest of the country, according to Princeton’s Eviction Lab. But that is no reason to celebrate, said Gross, who added that harassment and “cash for keys” arrangements, in which landlords buy tenants out of their leases, are a major source of displacement in the city.

Melinda Peffer has been moved by the stories of other tenants she’s met through her participation in the Los Angeles Tenants Union, an all-volunteer organization that formed in 2015 and now has eight chapters citywide. Their members have organized rent strikes and protested noisily outside landlords’ homes — including Taylor’s last November. She spoke of families who face steep rent increases in rodent- and cockroach-infested apartments “without any options whatsoever.”

The Peffer family may be more privileged than some of the city’s embattled tenants. Melinda works as a public relations consultant. Years of paying affordable rent at the Waverly Drive apartments allowed her husband Michael, a drummer, to go back to school and receive training to be a physician’s assistant. But their ordeal—and their decision to become tenant activists—has taken a toll.

On a recent cold and rainy Thursday, Melinda Peffer wore a long coat, a plaid scarf, and low-heeled boots and looked polished enough to dash off to a meeting with a client. Instead, she lit one last fire in the hearth at her empty apartment and played host to half-dozen tenant activists as they waited for sheriff’s deputies to arrive.

She spoke of some of last year’s challenges: the anxiety about whether Madeline would be able to remain in her school, her husband’s worry that publicity about their activism might impede his ability to find a job and their concern that a lost eviction case will make it more difficult to rent an apartment in the future. “I’ve lost business this past year, with the stress,” she said.

For now, the family is “a little bit on top of each other” in temporary digs in Los Feliz that previously served as a short-term rental, said Peffer, reached by phone a few days later. But Madeline loves their new landlady, who learned about their plight after they lost their eviction case in early December. “That’s helped her the most with transition,” she said.


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Business Leader: Trump’s “Economic Miracle” Is a Mirage

Co-published by Fast Company
“If the press doesn’t step up and more consistently identify the realities of the economy,” says Leo Hindery, “then President Trump could be reelected.”

Danny Feingold

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Photo: Shealah Craighead
Co-published by Fast Company

If there is an “economic miracle” of the kind Donald Trump touted in his State of the Union speech Tuesday, business leader Leo Hindery has yet to see it. Hindery’s “U.S. Real Unemployment” report paints a very different portrait than the federal government’s statistics. It’s a far more troubling picture, because it takes into account the millions of Americans who either did not look for work or cannot find full-time work.

By this measure, the Trump economy’s unemployment rate is twice as high as the official rate. At the same time, 40 percent of Americans cannot afford an unexpected expense of $400, according to the Federal Reserve, while roughly half of the nation’s income goes to approximately three percent of salary earners.

Hindery, managing partner of InterMedia Partners and a longtime private equity investor, spoke to Capital & Main about Trump’s economic policies, the real state of the union and the 2020 election. The interview excerpt has been edited for concision and clarity.


Capital & Main: President Trump said Tuesday night that “an economic miracle is taking place in the United States.” Do you agree?

Leo Hindery: I think it’s one of the great obfuscations. Look at the January jobs report to contrast the difference between real unemployment and Bureau of Labor Statistics employment. The real unemployment in this country is still on the order of 8.1 percent, which contrasts with the much lower Bureau of Labor Statistics’ unemployment rate of four percent. There’s about 13.3 million women and men who are in every sense of the phrase real unemployed workers.


“The sobering statistic that we have to never forget is that about half of this nation’s income is earned by about three percent of our wage earners. And the other half is earned by 97 percent of our wage earners”


Clearly, President Trump has benefited from the foundation that President Obama laid for him. And there has been improvement in jobs. But it’s nothing as dramatic as the president suggests, and it really does hide and obfuscate the realities of the massive number of uncounted, unemployed women and men.

Have Trump’s policies by and large helped or hurt the unemployed population that you’re referring to?

If you look at the numbers, they’ve indisputably hurt. Corporations and wealthy individuals were the beneficiaries of the Trump tax plan. What weren’t the beneficiary were the manufacturing and job-oriented companies.


“One of the great disgraces are the CEOs who don’t feel that it’s their responsibility to speak out.”


So we’ve actually seen an increase in the number of uncounted, real unemployed workers. And I just was so dismayed [Tuesday] evening when numbers that are available to refute the president’s contentions were seemingly ignored by his speechwriters, and he took credit for outcomes and activities that just aren’t real and haven’t yet materialized to the extent that he suggests.

Are we the hottest economy in the world, as he claimed that night?

Well, we’re certainly hotter than Europe. [But] we’re certainly not as hot as China — that’s foolishness to suggest we are. Their growth in GDP, even being less than expected, is roughly twice ours. The economy in the United States is strong, certainly stronger than anything we find in Africa, large parts of Asia – excluding China – and Latin America, and only rivaled by the Scandinavian countries. It’s good. It’s not great. But what needs to be focused on are the millions of women and men who are being uncounted and are chronically underemployed or unemployed.

What do we know about the quality of the jobs that have been produced under Trump?

We know that the average American worker hasn’t had a real wage increase since 1968. We had hoped that the [Republican] tax plan that was foisted upon us would have addressed that issue.

The Federal Reserve found that 40 percent of Americans cannot afford an unexpected expense of $400. How do we reconcile that with the traditional markers that show a healthy economy and healthy job market?

It’s indisputable that real wages are much lower than they should be. Women’s and men’s ability to save for the catastrophic event that might confront their families is less than marginal, it’s dangerously low. And the wrong people have been the beneficiary of the Trump tax and economic plan. What is so concerning to me is that we saw nothing [Tuesday] evening that was verifiable. It ranged from the absurd to the outright lie. And you pick up a newspaper today and you don’t get the sense of criticism for that lying that I hoped we would see.

Have America’s media been giving President Trump a pass on the economy as it relates to the basic well-being of the American middle class and working class?

The president’s behavior, and that of certain of his cabinet officials and of the women and men who helped him become president, is so outrageous that the press understandably focuses on it. It’s the bright light shining in your eyes and you can’t ignore it. In doing so, however, he has been given a relief on criticism and truth-telling around the economy. The economy discussions are complex. They’re not easy. They take study. Whereas his behavior takes no study at all.

We often see in the press that if President Trump were to get out of his own way and simply talk about the economic progress that has been made during in his time in office, he would have a lot to run on for a second term. Do you agree with that?

The president has been the beneficiary of the fixes that President Obama put in. And we know that, back to the Clinton era, that “it is the economy, stupid.” And these numbers can be portrayed more positively than they really are. And if the press doesn’t step up and more consistently, more outspokenly, identify the realities of the economy, then President Trump could be reelected. He certainly could find a lot of support in the states that he was successful in against Secretary Clinton, particularly in the Middle West. So I think it’s incumbent not only on the press, but it’s incumbent on the women and men who suggested they would like to be president, or on the presidential nominee of the Democratic Party, for them to stay focused on the entirety of the Trump administration — its economic policies, its foreign affairs and its behavior patterns that we saw again Tuesday night as he waved his arm and took credit for things for which he deserves no credit.

In relation to the 2020 race, what big policy ideas would you like to see Democratic candidates embrace that would address the real unemployment rate? And more generally, the pervasive economic inequality that is still affecting very large swathes of the American population?

Roughly two years ago, we saw the Trump tax plan. I hope our candidates in 2020 will throw it out the window, it should have been thrown out a long time ago. And I hope there will be another tax plan, this one that focuses on the middle class of this country rather than the wealthiest. We still have large pockets of underserved health-care recipients [for whom], as good as the Obamacare program is, as grateful as we are that it has survived the Republican onslaught, there are still holes, and there’s still millions of women, men and children who deserve better health care than they’re receiving today.

Do you think the Democrats can win on a platform that calls for major increases in taxes on the wealthy, as we’re starting to see from some of the candidates?

Sure they can. They should. We’ve abandoned the progressive taxation structures of this country that we built our tax code on. Too many of the wealthy of this country have a lesser tax rate than the hard-working middle-class women and men who serve this nation so ably. The sobering statistic that we have to never forget is that about half of this nation’s income is earned by about three percent of our wage earners. And the other half is earned by 97 percent of our wage earners. The disparity in income, the abuse of income, is indisputable and needs to be a major part of the 2020 campaign for whoever becomes our candidate.

What would you like to see from business leaders in the lead up to the 2020 election when it comes to economic fairness?

All I ask is that we get back to what stood us in such good stead for fully a century, which is concurrent responsibility on the part of business — not just to shareholders but to employees, to their communities, to our customers, and if you’re large enough, to the country itself. We have to get rational again in executive compensation, which now is measured in the hundreds of times what the average employee makes.

We have exalted CEOs. We overpay CEOs. And we do that to the detriment of our employees and the communities in which they reside, and to the country itself.

Do you believe that business leaders and CEOs have a responsibility at this moment to be more outspoken about the political, constitutional and economic challenges that we face under President Trump?

One of the great disgraces are the CEOs who don’t feel that it’s their responsibility to speak out. I’m so proud of some of the CEOs that have stood up in this era. But they’re few and far between. And the responsibility is acute. The performance is a little bit lacking, right now.


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Anand Giridharadas on the Traps of Philanthropic Democracy

The journalist argues that philanthropy is often a tool that helps the rich maintain their power, wealth and status.

David Sirota

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Anand Giridharadas photo by Thatcher Cook for PopTech


“Mark Zuckerberg is one of the most dangerous people in America. Mark Zuckerberg is also one of the most earnest and sincere and well-meaning people in America.”


 

Crises like economic inequality and climate change are creating rampant pain and suffering, all while government programs to combat these emergencies are either nonexistent or severely underfunded. Into this vacuum have come fabulously wealthy CEOs and moguls who often say solutions can be found in their philanthropic efforts. But is that really a solution?

Journalist Anand Giridharadas says no in his new book Winners Take All: The Elite Charade of Changing the World. Giridharadas argues that philanthropy is often a tool that helps the rich maintain their power, wealth and status — because philanthropy does not flow to initiatives that fundamentally change the power structures sowing inequality.

Giridharadas was a guest on Capital & Main reporter David Sirota’s podcast. The following is a verbatim excerpt of their discussion. 


 

David Sirota: What do you mean by “winners take all”?

Anand Giridharadas: That we live in this age in the United States defined by a winners-take-all economy, and that the winners of our age refuse to concede and refuse to do a lot of change. They make many efforts to claim to be changing the world and making it a better place and giving back and helping. You see that in Silicon Valley companies that claim their business itself is humanitarian, or is social enterprise or impact investing or big philanthropy, more money being given away than ever, or young people who set out to change the world through their careers and yet throughout it all the one thing that very few elites are actually willing to let go of is the winners take all economy and society that keeps them on top and keeps them winning.

 

Is this a deliberate effort to trick people? Is it a way that wealthy philanthropists to soothe themselves into thinking that they’re doing good for the world? Or is this an earnest of way of thinking that you just disagree with?

I think it’s all of the above. There’s a spectrum, to quote Paulo Freire, “I think a coming together of the naïve and the shrewd.”

If you think about someone like Mark Zuckerberg, who I think is one of the most dangerous people in America, I think Mark Zuckerberg is also one of the most earnest and sincere and well-meaning people in America. I do not think Mark Zuckerberg is motivated to make as much money as possible. I may be wrong, but I actually think Mark Zuckerberg feels that he is incredibly lucky to have stumbled upon a time and place and set of tools that he believes if he’s able to build to their potential he will be able to transform the world. He’ll be able to empower every girl in Afghanistan. He’ll be able to create community where community has dried up in America. He’ll be able to create a forum where we can have the kinds of political discussions that we are not able to have. I think Mark Zuckerberg feels incredibly lucky to be able to have found and be an owner of those tools.


“When I have a whiskey with people who work in finance, off the record they’re very clear that money is the scorecard of their lives.”


Now, where the naive part comes in is that Mark Zuckerberg is utterly blind to the ways in which he has amassed monopoly power, the ways in which in the pursuit of user growth and that idea of a universal community of mankind, he has perhaps become the first CEO in American history to tip a federal election, and the ways in which people who work for him, like Sheryl Sandberg, have gone after their critics and journalists and others.

That’s not a story of greed so much as it is an almost Mao-like messianic vision of how to make the world a better place in your image that has no space for the idea that your power needs to be checked or sometimes may create unintended consequences that you need to react to.

If you look at an institution like Goldman Sachs, it’s a very different story. Often when you have these kind of institutions where money is the goal as opposed to something other than money like technology, when money itself is the goal as it is in finance, you have people who are naturally motivated by money. When I have a whiskey with people who work in finance, off the record, they’re very clear that money is the scorecard of their lives, not so they can afford that one extra thing, more just because that’s what they pursue. That’s what they chase.

In that world of finance…it’s much more the case that [philanthropy] is understood to be lubricant in the engine of continued taking. In other words, there’s an understanding that a Wall Street house needs to have some program like Goldman Sachs’s 10,000 Women program to empower 10,000 women in order to evade scrutiny for the 10 million women that it helped to beach through its role in creating the financial crisis.

If Mark Zuckerberg suddenly woke up and decided that your entire analysis is correct, what should someone like him do?

I would ask him first to do a complicity audit. Before he starts trying to eradicate diseases or invent a primary school model or do all this other philanthropic stuff, I would actually ask him, because I guarantee you the number of Dreamers he’s helped through his little philanthropy is way fewer than the number of immigrants in this country who he screwed over by helping to throw this election to Donald Trump in his pursuit of user growth.


“If you are a Democrat pushing for an egalitarian America where people have equal chances, you need to be against Wall Street banks and private equity funds.”


I would ask him first to actually look at what he’s done, because nothing he will do philanthropically may matter as much as the way he’s contributed to the Trump presidency happening and to polarization in this country and to becoming the chassis of a Russian cyber war attack on this country. I would ask him to look at his complicity and think about the ways in which his choices, his setup, the systems and structures of Facebook, allowed that to happen. I would unwind those first. Shut down the philanthropy for now. Take some of those people who are very smart, I know some of them, and actually bring them into the company and help him make his day job not just his side hustle, put it on the side of justice.

I think he would probably need to go to his Washington office, which first of all, why does he have a Washington office? Why do all these rich and powerful people have Washington offices? They like to talk about the free market but they’re not happy to just hack it out there in the market. They’re insecure about their ability to hack it in the market so they spend millions of dollars in Washington trying to rig things in their favor, prevent antitrust scrutiny, prevent regulation. I would shut that office down if he really has a moment of conscience. We don’t need his wife to spend all that time creating a little primary school over there. Maybe his wife could be in charge of actually going over there to Washington and shutting down their lobbyist office where they rig public policy in a way that frankly will have way more of an effect on this country than anything her primary school is going to do.

I would first just unwind what he has done and is doing to this country. Then if he still has time and energy left over, and wants to be a philanthropist with some of these resources he earned putting our country in peril, he could give in ways that are better than the ways he’s giving now.

Let’s talk about the philanthropists who really think they’re trying to help the world. A lot of these folks fund the Democratic Party and Democratic Party infrastructure. What are they doing wrong — and what should they be doing?

One of the things that research conclusively shows is that the Democratic Party’s donors don’t just write checks to an organization or organizations that would do whatever they’re going to do anyway. They alter those organizations by writing checks to them. The public policies espoused by Democrats, by the organizations around them, change because of who the donors are. That makes sense. If I’m giving you all your money in life, you might think that my views end up playing a role in how you live that life…Those donations move Democrats in the direction of being more market-friendly.


“How do we actually speak to the American public’s very real instinct that something was stolen from them?”


Let’s take a couple examples. A lot of people of the kind you talk about who are big donors to Democratic causes and believe in equality and justice will donate to all those organizations, but are they willing to actually concede what is truly cruel and unfair, which is the fact that we fund public education by local property taxes, which particularly benefits, frankly, rich liberals in these super zip codes like Greenwich and Evanston and Marin County, which are often very liberal areas, where because we ring-fence public education dollars that way, rich liberals’ kids get much better public schools than everybody else’s. I know a lot of rich liberals who love to donate to all these egalitarian causes, but they don’t support ending that.

When President Obama tried to lower the cap on the 529 accounts there was an outcry from his affluent supporters. When you have the kind of billionaire Democrats who give, are they interested in cracking down on tax havens? I don’t think so…

They’re the kind of elites I’m writing about who are standing as like Tolstoy’s (character) sitting on a man’s back choking him and saying that, “I’ll do anything I can to help him except by getting off his back.” These are Democrats who are willing to fight for equality and justice in ways that protect their ability to continue to exploit a system that deprives most Americans of the American Dream.

Does this require a shift in priorities among philanthropists?

The two pivots that I think some of these rich folks you’re talking about need to make are to shift from giving back to giving up, and from crowding government out to crowding government in. When you shift from giving back to giving up you’re actually shifting from standing on top of an indefensible mountain and throwing some scraps down to putting your own privilege on the line and questioning the systems atop which you stand.

Jeff Bezos is doing a lot of giving back right now. He just gave a little money to a charity in Minnesota. He’s giving to the homeless and to education for the poor in and around Seattle I believe. That’s giving back. He’s not changing how Amazon operates. He’s not changing how he operates. He’s just giving back while standing on top of a frankly bad system.

What would be more exciting, if Jeff Bezos were braver and bolder, would be for Jeff Bezos to give a billion dollars to people thinking about the future of unions and collective bargaining. We need to rebuild the unions in this country but it’s not going to look like the unions of the past. It’s going to be something new.

When you talk about crowding government out to crowding government in…In the book I really critique Andrew Carnegie, but one of the ideas that was good that he had was you use private giving as a spur to teach the public sector to do something better than it should be doing but isn’t. A lot of his library deals, he made the library and then he made the government sign a contract to adopt the library and fund its ongoing maintenance.

The reason he did that was not because he couldn’t afford 10 years of library maintenance costs. It was because he wanted to teach the government a habit. He wanted to take something that was not widely understood to be a necessary public service until that moment, libraries, and essentially the way you teach a kid to ride a bike, he wanted to teach government to make that a service.

You have critiqued our culture’s obsession with the concept of “win-win” — the idea that problems can be solved by policies that require no one to sacrifice. This is a big theme in our politics. What’s wrong with that?

A great example of that, of someone who’s very inspiring right now, is Beto O’Rourke in Texas, who had all of these lines about, “We’re not against anybody. We’re for this and that.”…The reality is if you are for something that is worth being for, you have to be against something and someone. I think this is actually [something] the right understands much better than the left and uses it in my view for ill, but understands human nature and the nature of actually having a vision.

When you have a vision, if you’re trying to sell an America-first nationalism and you’re trying to sell it to white people who are resentful, you actually need enemies to point to. Unfortunately that’s the wrong vision and it’s the wrong enemies and it’s a disaster.

However, if you are a Democrat pushing for an egalitarian America where people have equal chances, you need to be against Wall Street banks and private equity funds that have pushed for a vision in which middle and working class people can’t make a life anymore. If you’re not against that, you’re not really for those people. If you are for an America in which your birth circumstances do not decide your destiny, you have to be against Chevy Chase and Marin and Evanston hoarding local property tax dollars. You can’t be for an equal education for everybody if you’re not against that.

Is part of the problem that the political class wants to focus on positive solutions, rather than litigating who is at fault for the problems?

I just think there is, particularly in the left, this kind of sunny, well, let’s not blame anybody, let’s just talk about what we can do. People often ask me, “You shouldn’t have written this book. You should’ve just written a book of solutions.” There’s this way in which I think a lot of the more pointy-headed, Democratic, educated elites don’t actually understand the way the world works and don’t understand the way regular people think.

I think regular people’s intuitions on these issues are actually much smarter. The reality is the bottom half of this country not getting a raise since 1979, that is not a natural occurrence the way rain is a natural occurrence. That is an engineered occurrence. When people talk about they feel America’s rigged, that’s passive voice. Someone rigged it.

You as a Democrat are not talking about who rigged it. You’re not talking about how they did it. If you’re not talking about your plan to block them from rigging it further and to face justice for rigging it, you’re selling a positivity that is an aesthetic positivity. You are almost pre-committed to just being positive regardless of where the facts sit…

I think a lot of Democrats don’t know how to think forensically about why this happened to [the] American Dream. Who did this to the American Dream? Who on the other side did it? Who on our side did it? Which of our donors are complicit? Which of our own policies were complicit? How do we actually speak to the American public’s very real instinct that something was stolen from them?

When Democrats refuse to do that and tell a true story about who stole the American Dream from Americans, you know what happens? That is left to semi-literate white nationalists like Donald Trump who tell a false story of who stole the American Dream to people, that resonates with them because at least someone is telling them the truth that something was stolen from them.


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Will Growers’ Demand for Wage Cuts Get Help From U.S. Government?

Co-published by the American Prospect
A national growers’ lobby has sued the U.S. Department of Labor to freeze the wages of H-2A workers at a level barely above minimum wage.

David Bacon

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Central Valley farm workers organize in McFarland. (Photo by David Bacon)

Co-published by the American Prospect

California growers have complained of a tight labor market for years. And President Trump’s dispatch of military units to the border, along with a decade of deportations, have tightened that market even more by restricting the flow of migrants into the fields. This recipe for confrontation has produced an escalating legal battle in Washington, D.C., and a walkout by hundreds of tangerine pickers in the Central Valley.

Growers have increasingly turned to H-2A visas for guest workers as a remedy, with the decade ending in 2018 seeing a more than 370 percent increase, with no decline in sight. Although some growers have signed union contracts and provided better wages and benefits in order to attract a stable workforce, others are not happy with the federally mandated pay rates for guest workers — and are actively seeking to hold wages down.

The National Council of Agricultural Employers, a growers’ lobby, filed suit this month against the U.S. Department of Labor to freeze the wages of H-2A workers at a level barely above the minimum wage. Growers recruit guest workers every year from other countries, mainly Mexico. They’re given visas for less than a year, requiring them to work for the employer who contracts them. They must leave the country when their work is done. Growers have to advertise for local workers first, and can only bring in guest workers if no local workers are available.

Companies using the H-2A program must apply to the Labor Department, specifying the work, the living conditions and wages workers will receive. Each year the federal government sets the wage that growers must pay H-2A workers on a state-by-state basis.  This wage, called the Adverse Effect Wage Rate, is set at a level that supposedly won’t undermine the wages of local workers, but it’s usually just slightly above the minimum wage.  In 2019 the wage in California, for example, is set to increase from $13.18 per hour to $13.92.  California’s minimum wage, for employers with more than 25 workers, will go to $12.00.

On January 8, the day before the new H-2A wages were to go into effect, the growers’ lobby was denied a temporary injunction to halt the increases. The organization then filed its suit to roll back guest worker wages to last year’s levels. Michael Marsh, president of the growers’ lobby, said the increases were “unsustainable” and would cost growers “hundreds of millions of dollars.” Agribusiness is being “hammered by unfair retaliatory tariffs,” he charged, in a dig directed against Trump’s trade war with China.

The wage increases directly affect a sizeable chunk of the farm labor workforce. The Department of Labor’s National Agricultural Workers Survey, the best analysis of farm worker demographics for over two decades, says there are about 2.5 million farm workers in the U.S., with about three-quarters of them born outside the U.S., and half undocumented. Last year growers were certified to bring in 242,762 H-2A workers – a tenth of the total workforce and a rapidly rising number. Holding down their wages would save growers a lot of money.Farmworker Justice, a Washington, D.C.-based advocacy coalition, says the average annual income for farm worker families is between $17,500 and $19,999. A quarter of all farm worker families earn below the federal poverty line of $19,790, the coalition says.

The United Farm Workers union and Farmworker Justice asked to intervene in the growers’ suit on the side of the Department of Labor, arguing to uphold the wage increases. “The growers’ suit will affect farm workers across the country,” said UFW President Teresa Romero. “If H-2A wages are frozen, fewer farm workers already living here will want to work for them. Growers will have an excuse to bring in more H-2A workers. It’s becoming more like the bracero program.”

While the suit would have a national impact, it is closely connected to California growers.  President Tom Nassif of the California-based Western Growers Association belongs to President Trump’s agricultural advisory board, and prominent WGA member Dennis Nuxoll sits on the NCEA executive committee.  NCEA President Michael Marsh was CEO of Western United Dairymen and an officer of the Almond Board of California, both headquartered in Modesto.

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Growers have challenged the Labor Department’s formula used to calculate the yearly wage increase. Under President George W. Bush they knocked it out, but President Barack Obama reinstated it. Now the formula is being challenged again, under another grower-friendly administration. Last May 24 the secretaries of Agriculture, Homeland Security, State and Labor issued a 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.”

Farm worker advocates worry that the Trump administration’s Labor Department may not vigorously defend the wage increase against the growers’ legal challenge.

“We would intervene in the [growers’ lobby] suit no matter what,” said Bruce Goldstein, director of Farmworker Justice. “But we are clearly concerned about what position [the Labor Department] will take in defending against it in light of the President’s other anti-worker and anti-regulatory actions.”

The suit is one of a number of moves growers have made in the past two years to roll back H-2A wages and protections. At the behest of the Washington state Farm Labor Association, one of the largest H-2A labor contractors, the state and federal labor departments effectively slashed the AEWR wage for H-2A farm workers by up to $6 per hour. The two agencies agreed with the labor contractors to remove a piece-rate minimum for picking apples, the state’s largest harvest, effectively lowering the harvest wage by as much as a third.

The assault on farm worker wages has also surfaced in Congress as Republicans in the House and Senate introduced bills in the last two years to end protections for H-2A workers and expand their recruitment. Republicans representing California’s San Joaquin Valley in the House supported these bills, which failed, but two of those representatives were turned out of office in the midterm elections. What attitude their new Democratic replacements will take has yet to be seen. Some California Democrats, however, especially Senator Diane Feinstein, have a record of supporting growers’ use of the H-2A program.

Senator Feinstein and Democratic Representative Zoe Lofgren, however, have reintroduced a bill, the Agricultural Worker Program Act of 2019, which would allow undocumented farm workers to gain legal status by working a minimum number of days, pass security checks, and meet other requirements. “The bill would minimize the need for employers’ use of the H-2A guest worker program by providing a meaningful opportunity for immigration status for the hard-working undocumented farmworkers who put food on our table,” said a statement from Farmworker Justice.

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Grower efforts to cut wages have affected workers who are not H-2A visa holders as well. Low wages for farm workers have already provoked a strike this year at one of California’s largest agribusiness corporations, the Wonderful Company. On January 11 an estimated 1,800 field hands refused to go to work harvesting tangerines in Kern County orchards, after the piece rate they were being paid was lowered from $53 to $48 per bin.

Striking pickers told reporters that a fast worker could harvest two bins a day. Assuming an eught-hour day, they would earn about $12 per hour. Some workers told UFW organizers that they often made less than the $12 per hour legal minimum, a violation of state law.

“They’re also told to report to work at a given time, but the work sometimes doesn’t start for a few hours, and they’re not paid for waiting,” said UFW President Teresa Romero. “They tried to talk with the company, but the company refused to talk with them. We don’t know yet if the management will come to the table. The workers want to work, but they also want to be respected.”

Wonderful spokesman Mark T. Carmel said in a statement the company was “disappointed that some of our third-party labor contractors decided to protest at one of our fields.” A month ago, however, the company said it was raising its wages to a $15 per hour minimum in all its subsidiaries.

Wonderful’s billionaire owner, Los Angeles investor Stewart Resnick, called his workers “dedicated and hard-working employees . . . our greatest asset, and the reason for our tremendous success as a company.” Co-owner Lynda Resnick, his wife, added, “This substantial investment in our workers will have an immediate and meaningful impact on their lives.”

The Wonderful Company was known as Paramount Farms until it changed its name in 2015.

Its parent corporation, Los Angeles-based Roll Global, also operates the Fiji Water and Teleflora companies. In a 2016 Mother Jones article, writer Josh Harkinson said the Resnicks “are now thought to consume more of the state’s water than any other family, farm, or company. They control more of it in some years than what’s used by the residents of Los Angeles and the entire San Francisco Bay Area combined.”

Paramount Farms had a long history of labor conflict. In 1999 it broke an effort by a thousand workers to join the Laborers Union in its huge packing plant near Lost Hills on the west side of the San Joaquin Valley. At the time the company issued a press release saying that “employees are doing well and do not need a union,” and that its pay and benefits “are superior to most employers in the area.” In 2002, however, the National Labor Relations Board ruled that it had illegally threatened workers with firing, and had illegally fired two workers, Margarita Aviso and Leticia Ortiz, for supporting the union.

Romero said that workers, meeting at the UFW’s historic “40 Acres” headquarters in Delano, on January 14 discussed the possibility of organizing a union, filing a petition for an election at Wonderful, and bargaining a contract. During the day the company offered to reinstate the $53 per bin wage, and the pickers decided to go back into the orchards Tuesday morning. A statement by Wonderful’s Mark Carmel said, “We’ve resolved the main concern raised by our third-party labor contractors and are currently paying the same bin rate for picking mandarins that we previously paid for clementines. Our workers are back on the job and operations have returned to normal.”

UFW  secretary-treasurer Armando Elenes felt workers had taken a big step. “They came out of the strike with real leaders and a good organization,” he said. The strikers are mostly indigenous Mixteco migrants from Oaxaca. Two years ago workers from the same indigenous farm worker community struck the Gourmet Trading Company’s grape vineyards, also over a cut in wages. They then voted for the UFW in a union election, and the company agreed to a union contract covering over 500 employees.

“Our main focus nowadays is trying to talk with the company to avoid conflict,” Romero explained. “But some growers take longer to understand than others that this is a better way. Stewart Resnick is a powerful man. But is he willing to get beyond this and recognize what workers want?”


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Labor & Economy

Government Shutdown’s Silver Lining: A Corporate Hiring Guru Speaks Out

Co-published by Fast Company
Ending the shutdown won’t curtail the hiring opportunities for corporate recruiters, says one expert. It’s like divorce: Once you start thinking about leaving, the odds that it will happen go up dramatically.

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Photo: Bekah Richards

 


In the new economic climate, even the most mission-driven of federal workers might be forgiven for abandoning the nation’s parks, airways and regulatory agencies.


 

Co-published by Fast Company

When the federal government shut down for 16 days in 2013, corporate hiring guru John Sullivan advised companies on how to raid federal government workplaces for talent.

A blog post he penned at the time caused some to charge him with being unpatriotic, he said recently, while others thanked him for the reminder that federal workers were ripe for the plucking.

This time around, the climate is even better for corporations looking to cull staff from a workforce that is already well-trained and also known for its loyalty, Sullivan tells Capital & Main by phone. He describes the current moment—with hundreds of thousands of federal employees forgoing paychecks and, in many cases, sitting at home — as tantamount to “a sale on Black Friday.”


Congresswoman:  The shutdown could have a long-term impact on the federal government’s ability to attract workers with IT skills.


“If you’ve been screaming for the last two years” about the skills-and-talent shortage, “this week there isn’t one,” says Sullivan, who heads the human resource management program at San Francisco State University’s College of Business.

The partial shutdown, that began on December 22 when President Trump failed to secure funding from Congress for his border wall, has impacted employees at a host of federal agencies, including the departments of Agriculture, Commerce, Homeland Security, Housing and Urban Development, Interior, Justice, State, Transportation and Treasury and the NASA.

What makes this particular shutdown so suitable for raiding federal workplaces? It’s not just that employee morale has taken a nosedive, thanks to a president who is at war with many of the agencies he oversees. Nor is it only the fact that Trump threatened to keep the government closed for as long as a year, a notion that “really scares people,” says Sullivan.


With Amazon’s opening new offices in the District of Columbia area, three out of four IT workers in DC say they would consider leaving their current jobs for the tech behemoth.


It’s also the economic climate. Companies are growing. Unemployment is low. Remote work is increasingly an option. Technical advances have made looking for a job easier than it was in 2013. “You can say ‘boo’ to your phone and apply for a job,” adds Sullivan, delivering his matchmaking pitch with such force that even the most mission-driven of federal workers might be forgiven for abandoning the nation’s parks, airways and regulatory agencies.

Congresswoman Robin Kelly (D-IL), the ranking member of the House Subcommittee on Information Technology, worried, in a statement last week, that the shutdown would have a long-term impact on the federal government’s ability to attract workers with IT skills. The federal government has generally struggled to attract young tech workers, and Amazon’s new offices in the District of Columbia area has three out of four IT workers in DC saying they would consider leaving their current jobs for the tech behemoth.

Tech workers — and upper-salaried talent — are not the only employees coveted by the private sector, says Sullivan. Forest Service employees. Coast Guard workers. Transportation and Safety Administration agents. Any unpaid workers could be lured away, especially in states like California and Texas, where economies are strong, he maintains. An employment agency for California’s casinos recently put this shout out on Twitter: “Any @TSA employees looking for new opportunities, PTGaming is hiring!” along with the popular hashtag, #shutdownstories.

The shutdown could also prompt federal employees to throw scruples to the wind and step into the infamous revolving door that leads workers from government jobs to the private sector and back again. When Sullivan was advising companies in 2013, he helped firms hire from agencies that regulated them.

“And by the way,” asks Sullivan, persisting with his siren song, “if I was a regulator, [with] President Trump eliminating all those regulations, why am I needed? Why not go to the private sector?”

Sullivan, who says he is an underpaid government worker in his own right, is concerned about the public cost of his and others’ efforts to lure away the federal government’s top talent. The best employees will leave first, and “literally billions” in training dollars will be lost, he predicts.

But he puts the blame squarely on a public sector that undervalues its workers. Corporations that pilfer federal government workforce for talent offer a kind of public service and corrective by demonstrating the price that must be paid “for degrading public service and unnecessarily frustrating federal employees,” he wrote in his 2013 post.

And one more thing.

Ending the shutdown won’t curtail the hiring opportunities for corporate recruiters, says Sullivan. “It’s like divorce. Once you start thinking about [leaving], the odds [that it will happen] go up dramatically.”


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L.A. Teachers Strike

L.A. Teachers’ Potential ‘Meta-Strike’ Reveals Battle Lines in U.S. Public Education War

Co-published by the American Prospect
Superintendent Austin Beutner and his allies have made it clear they do not believe that the L.A. Unified School District in its current incarnation is worth investing in – or even preserving.

Danny Feingold

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Photo by Bill Raden

Co-published by the American Prospect

Sometimes strikes are exactly what they seem to be – battles over wages and working conditions, with relatively few implications for anything or anyone else. But sometimes a strike is about something much bigger: a fundamental clash over vision and values, with repercussions that extend far beyond the warring parties. Call it a meta-strike.

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If Los Angeles teachers walk off the job January 14, as widely expected, it will be a meta-strike with extremely high stakes not only for teachers, students and parents in L.A., but for public education across the U.S. The stalemated negotiations over wages, class size, staffing and other issues matter – but they are proxies for an epic fight that has been playing out in American school districts for more than a decade.


The head of the country’s second-largest school district is aggressively advancing a controversial blueprint that could make LAUSD almost unrecognizable.


On one side of this divide are those who believe that public education as an institution should be preserved more or less in its current form, with a greater infusion of money to address chronic underfunding and understaffing. On the other side is an array of forces that want to radically restructure public schools, and who have made it clear they do not believe that the L.A. Unified School District in its current incarnation is worth investing in – or even preserving.

Austin Beutner, LAUSD’s superintendent, is nothing if not a proponent of radical restructuring. He was appointed to his post not because of his experience in education – he has never held a position in that field – but because he is a fervent advocate of an approach that has its roots in the private sector, where he spent the bulk of his career. Beutner made his considerable fortune in business, starting at the powerhouse private equity firm Blackstone and then co-founding the investment banking company Evercore Partners.

Selected by a divided school board in May, Beutner is now arguably the most powerful figure in the national movement to upend traditional public education. As head of the country’s second-largest school district, he is aggressively advancing a controversial blueprint that could make LAUSD almost unrecognizable.

Though Beutner has yet to unveil his proposal, he has tipped his hand in a big way with the hiring of consultant Cami Anderson, the former superintendent of Newark, New Jersey public schools. In Newark, Anderson pushed through a disruptive plan called the “portfolio model.” As the L.A. Times reported in November, under the portfolio model the district would be divided into 32 networks. These networks, observed reporter Bill Raden on this site, “would be overseen like a stock portfolio. A portfolio manager would keep the ‘good’ schools and dump the ‘bad’ by turning them over to a charter or shutting them down much like a bum stock. The changes in Newark included neighborhood school closures, mass firings of teachers and principals, a spike in new charters and a revolt by parents that drove out . . . Anderson.”

Why Beutner and the board majority that hired him think that the portfolio model will be more successful in L.A. than it was in Newark is uncertain. They don’t see the unchecked growth of largely unregulated charter schools as a problem, despite more and more evidence that charters discriminate against disabled students, increase racial stratification and on the whole do not perform better than traditional schools. On the contrary, they view charter expansion as elemental to the future of the district.

This is in stark contrast to United Teachers Los Angeles, the teachers union, which sees investment — in the form of higher salaries, reduced class sizes, more support staff including psychologists and nurses – and the regulation of charters and community schools as the linchpin of progress. They do not see the public school as a failed institution, but as an egregiously underfunded one whose challenges have been made significantly worse by the rise of charter schools that drain resources from traditional schools. While some influential philanthropic and community organizations have embraced Beutner’s restructuring plan, the teachers union has been somewhat successful in building community support for its vision of reinvestment, particularly for the idea of public oversight and for schools that address all the complex needs of an overwhelmingly poor student population.

While the two sides continue to negotiate, they could hardly be farther apart in how they view the future of public education. Which is why a teachers strike is almost certain.


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