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The Business of Change: Do Corporations Want to Save America?

Co-published by Fast Company
Grounded in a longer tradition of engagement on social and environmental issues, CEO activism has no doubt been invigorated by Donald Trump’s erratic and divisive leadership.

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Photo: www.bsr.org

Early CEO activism was reactive to disasters like the Exxon Valdez oil spill or Union Carbide’s toxic gas leak in Bhopal, India. But other more recent developments have propelled the movement.


Co-published by Fast Company

In August the New York Times celebrated CEO leadership after white supremacist violence erupted in Charlottesville, Virginia in a story headlined “The Moral Voice of Corporate America.” One of those CEOs, General Motors chairman Mary T. Barra, called on the country to come together “and reinforce values and ideals that unite us — tolerance, inclusion and diversity.” Breitbart News, the radical-right voice of aggrieved whites, meanwhile, was lamenting a “corporate antifa,” evoking the unlikely pairing of power ties and black bandanas.

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What’s really going on? In the era of Trump, are CEOs the new vanguard for upholding progressive ideals?

This past year, hundreds of corporate leaders have tweeted, signed letters, gone to court, sent out internal employee memos and quit presidential advisory councils in reaction to President Trump’s racially charged statements and his actions on climate change, refugees, immigration and the right of transgender people to serve in the military.

“It’s a very big sea change in the world of CEOs that [they] would publicly speak out and take stands on issues that are not necessarily tied to their bottom line,” says Leslie Gaines-Ross, a reputation consultant for Weber-Shandwick, a New York public relations firm.

If Trump has been the most visible cause of CEO outspokenness over the past year, he is certainly not the only cause for C-suite consternation. Nationalist and anti-free-trade leaders – notably Marine Le Pen in France and Geert Wilders in the Netherlands — have been gaining ground in Europe as well. Britain’s Brexit vote last year was propelled by anti-immigrant and anti-free-trade sentiment that is anathema to corporate leaders who generally favor free flows of capital and labor.

Widespread CEO condemnation of Trump’s response to the deadly violence in Charlottesville led to an exodus of executives from his business advisory councils and the councils being dissolved.

“When governments are not effective or not reliable, that means that businesses often have to step in and play a role,” says Aron Cramer, whose group BSR (formerly Businesses for Social Responsibility) advocates for progressive business practices. He adds, however, that it’s critical that they not “overstep” that role.

The pressure to pay attention to social issues is not just coming from the nativist movements that have propelled the rise of right-wing leaders. It is also coming from political and social progressives. Tech companies, for instance, once media darlings, are being reviled as gentrifiers that are pricing working-class families out of some West Coast cities. Congressional leaders recently berated Google, Facebook and Twitter for failing to protect the public from Russian meddling during the 2016 presidential election. And Bernie Sanders’ insurgent 2016 presidential campaign made unchecked corporate power its prime target.

Grounded in a longer tradition of engagement on social and environmental issues, CEO activism has no doubt been invigorated by Trump’s erratic and divisive leadership, observers say. But skeptics note that executives’ response to Trump will only go so far to advance the public interest in an era when companies are increasingly focused on short-term returns.

“This notion that consumers can be at once citizen-regulators, as well as consumers,
is kind of impossible.”

CEOs began agitating soon after Trump was elected. More than 100 U.S. technology companies went to court in February to oppose the president’s ban on immigration from seven majority Muslim countries. Hundreds of businesses – including tech companies, energy firms, and automakers – advocated staying in the Paris climate accords after Trump announced in June that the U.S. was pulling out. More than 1,700 companies and investors have signed a pledge to support climate action to meet the Paris targets.

Widespread CEO condemnation of Trump’s response to the deadly violence in Charlottesville led to an exodus of executives from his business advisory councils in August and the councils being dissolved in what many observers thought would be a pivotal moment for the presidency.

Less than a month later, more than 400 CEOs and business leaders signed a letter urging Trump to reinstate the Deferred Action for Childhood Arrivals (DACA), an Obama administration program giving thousands of immigrants brought to this country as children protection against deportation. Brad Smith, Microsoft’s president and chief legal officer, told NPR last August that in order for federal officials to deport any DACA recipients in the company’s employ, it would “have to go through us.” In early November, Google, Microsoft and Facebook joined 100-plus other tech companies to mount a legal challenge to President Trump’s effort to end DACA.

The outspokenness of CEOs on race, immigration, climate and diversity this year may have been aided by the groundwork laid by the corporate social responsibility movement, says Allen White of the Tellus Institute, a Cambridge, Massachusetts non-profit research and policy organization.

Corporate social responsibility can be traced to the late 1800s, but it is largely a 20th century phenomenon that has gained momentum since the 1950s. The current movement was once the dominion of a few mission-driven companies like Ben & Jerry’s and the Body Shop, but it is now incorporated into the operating practices of most multinational firms, which regularly set environmental goals, produce sustainability reports on meeting current needs without compromising the ability to meet future ones, and establish codes of conduct governing their practices in far-flung factories.

The genesis of the contemporary movement was reactive, says White, and came in the wake of the Exxon Valdez oil spill in Alaska and the Bhopal toxic gas leak at a Union Carbide pesticide plant in India that led to thousands of deaths. But other more recent developments have propelled the movement.

“We live in a Clark Kent economy where everybody has X-ray vision.”

Recent research shows that consumers—especially millennials—are more purpose-driven. They want to work for companies that share their values. Consumers also want to buy from brands that offer sustainable products, although research suggests that there is a limit to their willingness to pay more for that privilege. An increasing share of U.S. assets are under management that incorporates sustainability investment strategies. And CEOs spend time and resources trying to foster work cultures that value diversity and inclusion. Google invested $265 million in diversity programs in 2014 and 2015.

The speed at which bad publicity can travel the Internet is also a motivating force. “The cost and the penalty for being a bad company has gone up radically,” Mats Lederhausen told an October BSR conference in Huntington Beach. He is a self-described “concerned and confused capitalist” and founder of BE-CAUSE, a purpose-driven investment fund. “We live in a Clark Kent economy where everybody has X-ray vision,” he says.

BSR is one of the organizations that has helped establish the corporate responsibility movement. When it started organizing in the early 1990s, it was made up of social entrepreneurs and known to some as a collection of “candle makers and sandal makers.”

Twenty-five years later, BSR—a membership organization with offices on three continents—can bring together 21st century capitalism’s major players—McDonald’s, Microsoft, Walmart, the big boys and girls of tech, pharma, energy, food and retail.

“A lot of CEOs have spoken up loud and clear at a time when that has been so badly needed,” said BSR’s Cramer. He was warming up a dinner-time crowd for former Vice President Al Gore and a power point featuring climate refugees, the devastating super-storms of 2017 and an urgent call to action.

Hundreds of people filled the Hyatt Regency banquet room, many of them sustainability and compliance officers responsible for carrying out the day-to-day work of meeting environmental and social goals. Two days later, Planned Parenthood’s Cecile Richards capped off the conference with a plea to make women’s issues more central to the corporate agenda.

Meanwhile, Milton Friedman, conservative economist and corporate responsibility skeptic, was likely turning over in his grave. The only social responsibility of business is to “increase its profits,” Friedman famously wrote in 1962. But eight years later, Paul Samuelson, a Nobel laureate in economics, said, “A large corporation these days not only may engage in social responsibility, it had damn well better try to do so.” Critics on the left, like former U.S. Labor Secretary Robert Reich, though, argue that too many corporate responsibility initiatives merely constitute savvy marketing or, at worst, an attempt to avoid public scrutiny and needed regulations.

Executives avoid making their disagreements with Trump personal. Fewer than 35% of CEOs mention Trump’s name when discussing the Muslim travel ban and Charlottesville.

Joanne Bauer, a human rights advocate who teaches corporate social responsibility at Columbia University, questions whether energized consumers can serve as a check on corporations, given that their own desires for well-made, low-priced goods can often stand in conflict with ethical concerns for how those products are made.

“This notion that consumers can be at once citizen-regulators, as well as consumers, is kind of impossible,” says Bauer, who would sooner see the human rights agenda centered on the concerns of communities impacted by companies.

Another weakness of the corporate responsibility movement, critics say, is its inability to address the rising inequality that may be fueling right-wing movements sweeping the U.S. and Europe.

Tackling wealth inequality is a “no-go zone” for most executives, says the Tellus Institute’s White. “Their success and their tenure are rooted in share prices,” he says. White leads an initiative that seeks to remake the 21st century corporation in a way that would make a social purpose integral to its mission.

The BSR’s Cramer is not giving up on the idea that companies, as they are currently configured, can help to address an economy where Intuit research projects nearly half of the jobs will be contingent — part-time or with independent contractors — by 2020.

Companies—working with partners–will increasingly need to figure out how “to create new models of employment” and “new ways of establishing lifelong learning” in order to adapt to the changing nature of work, Cramer told his Huntington Beach audience. The next day, at a session on the fraying social contract, participants floated such ideas as portable benefits and a universal basic income.

Corporations will never be the vanguard of the resistance to Trump, argues White, who points out that many administration proposals– from reduced corporate tax rates to the easing of environmental and financial regulations – are central to business leaders’ agendas.

Many executives have tried to avoid making their disagreements with Trump personal. Fewer than 35 percent of CEOs mention Trump by name when discussing the Muslim travel ban and Charlottesville, according to an analysis of CEO responses conducted by Weber Shandwick’s Gaines-Ross.

Microsoft’s Smith performed that delicate dance as he spoke at the BSR conference. He credited the Trump administration for continuing an Obama-era initiative to fund computer science education and pointedly included a slide that pictured Smith in a Virginia classroom alongside Ivanka Trump. Smith said Microsoft will “partner whenever we can” and “stand apart when we should.”

Microsoft, currently working to bring broadband to rural parts of the country, is performing well, beating Wall Street revenue expectations in all but one of the last nine quarters. But CEOs who invest in corporate responsibility initiatives do not last as long if their companies are faring poorly, according to a recent study by Tim Hubbard of Notre Dame’s business school. This may also be true for those CEOs who speak out on controversial issues at a time when the country is so divided.

As Congress moved to repeal Obamacare—a central pledge of the Trump campaign— J. Mario Molina, of Long Beach-based Molina Healthcare, was the only insurance company executive who protested loudly. The company serves a mostly low-income clientele, including more than a million people through the Affordable Care Act exchanges.

Molina spoke critically of the Republican health-care legislation to the media and, in late April, wrote a letter to Congressional leaders projecting repeal would cause as many as 700,000 people to lose coverage in 2017.

In May, Molina and his brother, also an executive at the company, were abruptly fired from the firm their father founded. However, Molina’s criticism of the proposed Republican health insurance overhaul may not have been the only reason for his ouster. The company also had “short-term problems,” according to Chris Jennings, a Washington D.C.-based health-care policy consultant.

But if the company, which was profitable in the first quarter of 2017, was “doing extremely well across the board in all markets,” his board would likely have kept him in place, Jennings said.

The day Molina was fired, the company’s shares rose 20 percent.


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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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Labor & Economy

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.

*   *   *

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.

*   *   *

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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Labor & Economy

Wall Street Investors Intensify Affordable Housing Crisis

Co-published by Splinter
Research shows that corporate landlords are contributing to a rise in housing prices.

David Sirota

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The housing affordability crisis has happened in tandem with Wall Street’s home buying spree.


 

Co-published by Splinter

Wall Street firms drove up housing and rent prices while depressing homeownership rates after the financial crisis, according to a new study of economic data.

The analysis from researchers at the Philadelphia Federal Reserve found that after the collapse of the housing market a decade ago, institutional investors such as Blackstone, Cerberus Capital and Golden Tree seized on the opportunity to buy up homes and convert them into rental units.

In all, the researchers found that institutional investors’ purchases of residential properties represented nine percent of the overall housing price increases since the crisis — and 28 percent of the decline in homeownership rates.

“Institutional investors have helped local house price recovery but depressed local homeownership rates,” the study concluded. Such “buying and selling in the single-family housing market affected the local rental market, raising rental price growth rates.”

In mid-2018, housing prices hit their least affordable rates in a decade, according to data compiled by ATTOM Data Solutions. Meanwhile, between 2001 and 2015, America saw a 19 percent increase in the number of households that spend more than 30 percent of their income on housing, according to data from the Pew Charitable Trusts.

The housing affordability crisis has happened in tandem with Wall Street’s buying spree. Federal Reserve researchers noted that “the institutional investor-purchased share of single-family homes has been mostly flat during the early 2000s but picked up significantly since the mortgage crisis broke out in 2007.”

Corporate investors own roughly 200,000 single-family homes, according to industry data. In the last year, major Wall Street firms have continued buying up single-family homes, adding to the financial sector’s growing real estate empire.

At the same time, many of those same investment firms pumped big money into the campaign to defeat a California ballot measure that would have allowed local communities to enact rent control laws. In some cases, the resources backing the campaign came from investment firms managing public pension money.

The Fed study did offer one silver lining: It found that institutional investors’ presence in the housing market did contribute to declining unemployment rates, particularly in construction.


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House-Hunting for 3.5 Million People

Advocates say California’s new governor can use his bully pulpit to support affordable housing — and to build on 15 housing bills Jerry Brown signed in 2017.

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See Jessica Goodheart’s story, Can Newsom Make a Dent in California’s Affordable Housing Crisis?

 

Infographic by Marco Amador


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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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Behind Kaiser’s Mental Health Breakdown

“The best practices of psychotherapy state that patients should be seen weekly or every other week,” says one clinical psychologist. But at Kaiser, his average patient must wait five weeks between appointments.

Gabriel Thompson

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A strike by mental health professionals is impacting more than 100 Kaiser clinics and medical facilities.  The union has proposed that Kaiser increase staffing and cut patient wait times.


 

When clinical psychologist Mickey Fitzpatrick thinks about his job, the image that comes to mind is not of a hospital or a doctor’s office, but that of a conveyor belt. Since 2015, the 45-year-old has worked at a Kaiser Permanente hospital in the Northern California city of Pleasanton, where he sees an endless stream of patients dealing with serious mental illnesses: post-traumatic stress disorder, depression, bipolar disorder and anxiety. Each week he sees four to five new patients, and estimates that last year he counseled between 800 and 900 people, who represented a blur of needs that weren’t always easy to keep straight.

“The best practices of psychotherapy state that patients should be seen weekly or every other week,” Fitzpatrick told me. But at Kaiser, he’s never been able to get anywhere near that goal. With his heavy caseload, the average patient must wait five weeks between appointments, a figure that is consistent with other Kaiser therapists I spoke to. “We’re giving them the care that we can with the resources that we can, but we’re not able to do what we’re trained to do.”

This isn’t a new problem for Kaiser. In 2013, the California Department of Managed Healthcare (DMHC) fined the nonprofit medical-care giant $4 million after completing a routine medical survey and discovering what it called “serious deficiencies in providing access to mental health services” and the company’s failure to promptly correct the problems. The survey found that patients often did not have timely access to appointments and that their educational materials “included inaccurate information that could dissuade an enrollee from pursuing medically necessary care.”

In 2015, a follow-up report by DMHC revealed that Kaiser still regularly failed to provide mental health services as required by state law, which mandates that patients with urgent problems receive an appointment within 48 hours; those with non-urgent issues should be seen within 10 business days (or 15 business days if the appointment is with a specialist physician, such as a psychiatrist).

In a review of nearly 300 patient records, the agency found that 22 percent of cases in Kaiser’s northern region failed to meet the state’s requirements, along with nine percent in the southern region. Among the randomly selected files was a patient with suicidal ideation who waited 16 days for an appointment, and a therapist for another individual who wrote in their notes, “patient wants regular ongoing treatment so may look outside Kaiser.”

The goal of providing “regular ongoing treatment” for Kaiser patients by hiring new therapists is one of the principal demands of mental health care professionals like Fitzpatrick, who has joined 4,000 of his colleagues this week in a five-day strike. The strike, organized by the National Union of Healthcare Workers, is impacting more than 100 Kaiser clinics and medical facilities, and comes amidst contract negotiations that began in June but have stalled. During those negotiations, the union has proposed that Kaiser increase staffing with the goal of eventually seeing returning patients within two weeks, as opposed to over stretches of time that now routinely exceed one month.

Kaiser Permanente disputes the claims that it hasn’t made significant strides in providing timely access to mental health care. “We have been hiring therapists, increasing our staff by 30 percent since 2015 – that’s more than 500 new therapists in California – even though there’s a national shortage,” said John Nelson, the vice president of communications for Kaiser Permanente, in a prepared remark. Nelson also challenged the union’s assertion that the strike had anything to do with patient care, stating that one of the union’s demands was to reduce the amount of time therapists spend seeing patients, which now averages 75 percent of their days.

For Clement Papazian, a licensed social worker at Kaiser for 30 years who works in Oakland, reducing the time spent seeing patients would dramatically improve the quality of care given to patients, by allowing therapists to check in on family members by phone, write up more thorough notes and create a work environment that didn’t feel like a “patient mill.” Papazian said that he has seen many dedicated therapists drop out due to the “relentless pressure to see more patients” — what he describes as “rapid access to no care.”

Papazian acknowledges that Kaiser has hired new therapists, but argues that those new hires haven’t impacted the workload, due to Kaiser’s rapid growth — its number of enrolled patients in California has increased by nearly 11 percent since 2015. He also argues that Kaiser is well positioned to staff-up its mental health department, as the company made $3.8 billion in profit last year. “Kaiser is a big player that can really shape the industry,” he said. “What we want is to deliver on the care that Kaiser members deserve.”


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