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Low-Wage Workers Are Being Sued for Unpaid Medical Bills by a Nonprofit Christian Hospital That Employs Them

[Editor's note: today's guest post, by reporters at ProPublica, discusses business practices within the healthcare industry, and related issues of wages and debt collection. It is reprinted with permission.]

By Wendi C. Thomas, MLK50

MEMPHIS, Tennessee — This year, a Methodist Le Bonheur Healthcare housekeeper left her job just three hours into her shift and caught a bus to Shelby County General Sessions Court. Wearing her black and gray uniform, she had a different kind of appointment with her employer: The hospital was suing her for unpaid medical bills.

In 2017, the nonprofit hospital system based in Memphis sued the woman for the cost of hospital stays to treat chronic abdominal pain she experienced before the hospital hired her. She now owes Methodist more than $23,000, including around $5,800 in attorney’s fees.

It’s surreal, she said, to be sued by the organization that pays her $12.25 an hour. “You know how much you pay me. And the money you’re paying, I can’t live on,” said the housekeeper, who asked that her name not be used for fear that the hospital would fire her for talking to a reporter.

From 2014 through 2018, the hospital system affiliated with the United Methodist Church has filed more than 8,300 lawsuits against patients, including its own workers. After winning judgments, it has sought to garnish the wages of more than 160 Methodist workers and has actually done so in more than 70 instances over that time, according to an MLK50-ProPublica analysis of Shelby County General Sessions Court records, online docket reports and case files.

Some of the debts were accrued while the employees worked at Methodist; others predated their time there. The figures do not include debts incurred by onetime Methodist employees who have since moved on.

Between January and mid-June, a reporter observed more than a dozen Methodist employees in court to defend themselves in suits brought by the hospital over hospital bills.

That includes a Methodist Le Bonheur employee who owes more than $1,200. In January, she proposed paying $100 a month, even though her sworn affidavit listed monthly expenses that exceeded her $1,650 monthly income. After conferring with an attorney for Methodist, Judge Betty Thomas Moore agreed to the worker’s proposal, but she has already missed a payment.

A few weeks later, a Methodist employee appeared for an initial hearing wearing hospital scrubs. The hospital had sued her for more than $4,000. When she left the courtroom, she was annoyed. Her employer knew where she worked, she said, and should have contacted her before suing her. “I don’t know why they can’t come upstairs,” she said outside the courtroom.

And in May, an employee who has worked for Methodist for more than four years carried a large envelope full of bills with her into the courtroom. She owed more than $5,400, which included a 2017 hospital charge from the newborn unit. That is the same year that her daughter was born, according to her sworn affidavit, which also listed a checking account balance of less than $4. She offered to pay $10 biweekly, or $20 most months, but Methodist’s attorney wanted $200 per month. The judge ordered her to pay $100 per month.

It’s not uncommon for hospitals to sue patients over unpaid debts, but what is striking at Methodist, the largest hospital system in the Memphis region, is how many of those patients end up being its own employees. Hardly a week goes by in which Methodist workers aren’t on the court docket fighting debt lawsuits filed by their employer.

Making matters worse, employees say, is that Methodist’s health insurance benefits only allow employees to seek medical care at Methodist facilities, even though the financial assistance policies at its competitors are more generous.

An expert in hospital billing practices said that if the hospital is suing a fair number of its own employees, it’s time to look both at the insurance provided to workers and the pay scale.

“One would hope that if this is an action being taken against a significant amount of employees, the hospital would look at the insurance they provide workers,” said Mark Rukavina, an expert in nonprofit hospitals and a manager at Community Catalyst, a health care advocacy organization.

Methodist declined requests for an interview. It did not respond to specific written questions about the lawsuits it files against its workers or about how its policies reflect the values of the United Methodist Church. Instead, in a statement, it said it is committed to working with patients who are having trouble paying their medical bills.

“As the second largest private employer in Shelby County, we recognize the responsibility we have as an organization to contribute to the success of the diverse communities we serve and are purposeful about creating jobs in our community — intentionally choosing to keep services like printing, laundry and others in-house that are typically outsourced by the healthcare industry,” the hospital said.

Methodist also declined to answer a question about whether it has any policy that prohibits employees being sued by Methodist from talking to a reporter about the lawsuits filed against them by the hospital.

Employer and Legal Adversary

On a single January day, there were 10 defendants on the docket whose place of employment was listed in court records as Methodist.

Employees in scrubs sat just feet away from the attorneys in dress suits whom their employer hired to sue them. The hospital’s role as a tax-exempt organization that both employs the defendants and is suing them went unremarked upon by judges, attorneys and the defendants themselves.

Methodist’s financial assistance policy stands out from peers in Memphis and across the country, MLK50 and ProPublica found. The policy offers no assistance for patients with any form of health insurance, no matter their out-of-pocket costs. Under Methodist’s insurance plan, employees are responsible for a $750 individual deductible and then 20% of inpatient and outpatient costs, up to a maximum out-of-pocket cost of $4,100 per year.

The housekeeper’s story is documented in Shelby County General Sessions Court records, including online docket reports and online payment history. A reporter interviewed the housekeeper multiple times in person and on the phone. The employee gave the reporter six years of itemized Methodist hospital bills, her credit report and other past-due medical bills. Most of her debts were incurred before she started working at Methodist.

Five times between 2012 and 2014, she visited the hospital for stomach problems, according to the itemized bills. (Years later, she had surgery to treat diverticulitis.) At those times, she had insurance through her job at a hotel, where she cleaned rooms for $10.66 an hour. After insurance paid its share, she owed just over $17,500.

In 2015, the housekeeper left the hotel job and lost her insurance. Three times that year she went to Methodist’s ER, but since she was uninsured and had little income, she qualified for financial assistance. Methodist wrote off more than $45,000 in hospital bills.

In a statement, Methodist said it gives an automatic 70% discount to uninsured patients and free care to uninsured patients at or below 125% of the federal poverty guidelines. For a single adult with two dependents, that would be just over $26,600. Uninsured patients who earn more than that, but less than twice the poverty limit, are also eligible for discounts, it said.

In 2016, unable to find work, the housekeeper left Memphis. For more than a year, she said, she and her son were homeless, bouncing between relatives in Chicago, where she was born, and Texas.

But she missed her daughter and grandchildren in Memphis, so in 2017, she returned. In August 2017, Methodist sued her for the bills she accumulated when she was insured years earlier. Later that month, she was hired at a Methodist hospital, starting at $11.95 an hour.

The hospital’s collections agency, which it owns, didn’t have her correct address and was unable to serve notice that she had been sued, but last year, Methodist tried again. This time, it had the right address.

In November, a process server handed her the civil warrant at her South Memphis apartment.

At the process server’s recommendation, she called the hospital’s collection agency and offered to pay $50 every two weeks. “But they said it wasn’t enough,” she recalled. “I would just have to go to court. They said I’d be owing them all my life,” she recalled.

In a sworn affidavit filed with the court this year, the housekeeper listed her dependents as a grandson and her 27-year-old son, who she said has bipolar disorder and schizophrenia. She told the court she earned $16,000 in 2017, which puts her more than $4,000 below that year’s federal poverty level for a family of three. (Because she had insurance, though, she was ineligible for assistance under the hospital’s policy.)

Fred Morton, a retired Methodist minister in Memphis, said he was surprised to learn that Methodist is suing its own employees.

“The employees should be paid an adequate minimum wage at the very least,” he said. “Certainly they should not be predatory to their own employees on medical bills. That’s very much contrary to Scripture.”

He said that Methodist bishops who serve on its board bear responsibility for reminding it of the denomination’s values. “It’s a matter of the church pushing on its own,” Morton said.

Three United Methodist Church bishops serve on the hospital’s board. Bishop Gary Mueller’s office referred a reporter to Methodist Le Bonheur Healthcare’s communications office. Bishop Bill McAilly declined to comment. Bishop James E. Swanson did not respond to multiple requests for comment.

When the housekeeper appeared before a General Sessions Court judge this year, she’d filed a motion offering to pay $50 biweekly, or $100 in most months. When the hospital’s attorney asked for a $200 per month, she was stunned.

“This is my only job, this is my only income, so how am I supposed to live?” she remembered thinking.

Nervous that the judge would side with the hospital, the housekeeper made another offer.

“I could do $75 every two weeks,” she said quickly. The attorney agreed and the judge signed the order.

Being an employee and defendant is “really kind of sad,” the housekeeper said. Asked how she manages to make ends meet, she says she doesn’t. “It’s killing me, killing me softly,” she said.

She said she didn’t reach out to the hospital’s payroll department or a manager about the hospital bills she’s being sued for. “They don’t care about that... That I do know.”

“I Don’t Want to Be Homeless Again”

Part of what makes paying medical bills so hard for some Methodist employees is that their wages are low, lagging behind several other large employers in the Memphis market. In December, St. Jude Children’s Research Hospital announced it was raising its minimum pay for full and part-time workers to $15 an hour. St. Jude’s decision followed a similar commitment by the Shelby County government, Shelby County Schools and Blue Cross Blue Shield of Tennessee.

At Methodist, which operates five hospitals in Shelby County, the lowest-paid employees make $10 an hour and about 18% of workers make less than $15 an hour, the hospital reported in response to MLK50’s 2018 Living Wage Survey.

As recently as 2017, the Greater Memphis Chamber advertised on its website that the city offered a workforce at “wage rates that are lower than most other parts of the country.”

The United Methodist Church’s Social Principles, which state the denomination’s position on everything from climate change to the death penalty, speak directly to what employees should earn. “Every person has the right to a job at a living wage,” it states.

The Living Wage Model statement on the church’s website says, “Exploitation or underpayment of workers is incompatible with Christ’s commandment to love our neighbor.”

Methodist, which made Forbes’ 2019 list of Best Employers by State, did not answer specific questions about pay for employees. On its website, it says, “It is the policy of Methodist Le Bonheur Healthcare to pay its employees competitive, market-based wages.”

Neither Methodist, nonprofit Baptist Memorial Healthcare or Regional One, the public hospital, pay all their employees at least $15 an hour. Even that figure would make it impossible to make ends meet for an employee trying alone to support a household with dependents, according to MIT’s Living Wage Calculator and another created by the Economic Policy Institute, both of which take into account local living expenses.

The housekeeper’s $12.25 an hour pay falls well short of that. Without overtime, she said her take-home pay would be around $1,600 per month. Her rent is $610.

Even with as much overtime as she gets, she’s turned to payday loans. Since December, she’s renewed a $425 payday loan every two weeks, paying $71 each time. “You have to rob from Paul to pay Peter,” she said. “It doesn’t never seem like you can get ahead.”

The housekeeper applied for a job at Walmart but was told the store nearest her is not accepting applications. She doubts the pay will be any better, but she hopes it’ll be less stressful.

"Times be hard, because sometimes my body feels like I can’t make it, but I get up anyway, because I don’t want to be homeless again."


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If You're Over 50, Chances Are The Decision To Leave a Job Won't Be Yours

[Editor's note: today's guest post, by reporters at ProPublica, discusses workplace discrimination. It is reprinted with permission. Older than 50? Some of the employment experiences below may be familiar. Younger than 50? Save as much money as you can -- now.]

By Peter Gosselin, ProPublica

Tom Steckel hunched over a laptop in the overheated basement of the state Capitol building in Pierre, South Dakota, early last week, trying to figure out how a newly awarded benefit claims contract will make it easier for him do his job. Steckel is South Dakota’s director of employee benefits. His department administers programs that help the state’s 13,500 public employees pay for health care and prepare for retirement.

It’s steady work and, for that, Steckel, 62, is grateful. After turning 50, he was laid off three times before landing his current position in 2014, weathering unemployment stints of up to eight months. When he started, his $90,000-a-year salary was only 60 percent of what he made at his highest-paying job. Even with a subsequent raise, he’s nowhere close to matching his peak earnings.

Money is hardly the only trade-off Steckel has made to hang onto the South Dakota post.

He spends three weeks of every four away from his wife, Mary, and the couple’s three children, who live 700 miles away in Plymouth, Wisconsin, in a house the family was unable to sell for most of the last decade.

Before Christmas, he set off late on Dec. 18 for the 11-hour drive home. After the holiday is over, he drove back to Pierre. “I’m glad to be employed,” he said, “but this isn’t what I would have planned for this point in my life.”

Many Americans assume that by the time they reach their 50s they’ll have steady work, time to save and the right to make their own decisions about when to retire. But as Steckel’s situation suggests, that’s no longer the reality for many — indeed, most — people.

ProPublica and the Urban Institute, a Washington think tank, analyzed data from the Health and Retirement Study, or HRS, the premier source of quantitative information about aging in America. Since 1992, the study has followed a nationally representative sample of about 20,000 people from the time they turn 50 through the rest of their lives.

Through 2016, our analysis found that between the time older workers enter the study and when they leave paid employment, 56 percent are laid off at least once or leave jobs under such financially damaging circumstances that it’s likely they were pushed out rather than choosing to go voluntarily.

Only one in 10 of these workers ever again earns as much as they did before their employment setbacks, our analysis showed. Even years afterward, the household incomes of over half of those who experience such work disruptions remain substantially below those of workers who don’t.

“This isn’t how most people think they’re going to finish out their work lives,” said Richard Johnson, an Urban Institute economist and veteran scholar of the older labor force who worked on the analysis. “For the majority of older Americans, working after 50 is considerably riskier and more turbulent than we previously thought.”

The HRS is based on employee surveys, not employer records, so it can’t definitively identify what’s behind every setback, but it includes detailed information about the circumstances under which workers leave jobs and the consequences of these departures.

We focused on workers who enter their 50s with stable, full-time jobs and who’ve been with the same employer for at least five years — those who HRS data and other economic studies show are least likely to encounter employment problems. We considered only separations that result in at least six months of unemployment or at least a 50 percent drop in earnings from pre-separation levels.

Then, we sorted job departures into voluntary and involuntary and, among involuntary departures, distinguished between those likely driven by employers and those resulting from personal issues, such as poor health or family problems. (See the full analysis here.)

We found that 28 percent of stable, longtime employees sustain at least one damaging layoff by their employers between turning 50 and leaving work for retirement.

“We’ve known that some workers get a nudge from their employers to exit the work force and some get a great big kick,” said Gary Burtless, a prominent labor economist with the Brookings Institution in Washington. “What these results suggest is that a whole lot more are getting the great big kick.”

An additional 13 percent of workers who start their 50s in long-held positions unexpectedly retire under conditions that suggest they were forced out. They begin by telling survey takers they plan to keep working for many years, but, within a couple of years, they suddenly announce they’ve retired, amid a substantial drop in earnings and income.

Jeffrey Wenger, a senior labor economist with the RAND Corp., said some of these people likely were laid off, but they cover it up by saying they retired. “There’s so much social stigma around being separated from work,” he said, “even people who are fired or let go will say they retired to save face.”

Finally, a further 15 percent of over-50 workers who begin with stable jobs quit or leave them after reporting that their pay, hours, work locations or treatment by supervisors have deteriorated. These, too, indicate departures that may well not be freely chosen.

Taken together, the scale of damage sustained by older workers is substantial. According to the U.S. Census Bureau, there are currently 40 million Americans age 50 and older who are working. Our analysis of the HRS data suggests that as many as 22 million of these people have or will suffer a layoff, forced retirement or other involuntary job separation. Of these, only a little over 2 million have recovered or will.

“These findings tell us that a sizable percentage, possibly a majority, of workers who hold career jobs in their 50s will get pushed out of those jobs on their way to retirement,” Burtless said. “Yes, workers can find jobs after a career job comes to an early, unexpected end. But way too often, the replacement job is a whole lot worse than the career job. This leaves little room for the worker to rebuild.”

When you add in those forced to leave their jobs for personal reasons such as poor health or family trouble, the share of Americans pushed out of regular work late in their careers rises to almost two-thirds. That’s a far cry from the voluntary glide path to retirement that most economists assume, and many Americans expect.

Steckel knows a lot about how tough the labor market can be for older workers, and not just because of his own job losses. He’s spent much of his career in human resources, often helping employers show workers — including many, like him, over 50 — the door.

In most instances, he said he’s understood the business rationale for the cuts. Employers need to reduce costs, boost profits and beat the competition. But he also understands the frustration and loss of control older workers feel at having their experience work against them and their expectations come undone.

“Nobody plans to lose their job. If there’s work to do and you’re doing it, you figure you’ll get to keep doing it,” he said recently. But once employers start pushing people out, no amount of hard work will save you, he added, and “nothing you do at your job really prepares you for being out” of work.

For 50 years, it has been illegal under the federal Age Discrimination in Employment Act, or ADEA, for employers to treat older workers differently than younger ones with only a few exceptions, such as when a job requires great stamina or quick reflexes.

For decades, judges and policymakers treated the age law’s provisions as part and parcel of the nation’s fundamental civil rights guarantee against discrimination on the basis of race, sex, ethnic origin and other categories.

But in recent years, employers’ pleas for greater freedom to remake their workforces to meet global competition have won an increasingly sympathetic hearing. Federal appeals courts and the U.S. Supreme Court have reacted by widening the reach of the ADEA’s exceptions and restricting the law’s protections.

Meanwhile, most employers have stopped offering traditional pensions, which once delivered a double-barreled incentive for older workers to retire voluntarily: maximum payouts for date-certain departures and the assurance that benefits would last as long as the people receiving them. That’s left workers largely responsible for financing their own retirements and many in need of continued work.

“There’s no safe haven in today’s labor market,” said Carl Van Horn, a public policy professor and director of the Heldrich Center for Workforce Development at Rutgers University in New Jersey. “Even older workers who have held jobs with the same employer for decades may be laid off without warning” or otherwise cut.

In a story this year, ProPublica described how IBM has forced out more than 20,000 U.S. workers aged 40 and over in just the past five years in order to, in the words of one internal company planning document, “correct seniority mix.” To accomplish this, the company used a combination of layoffs and forced retirements, as well as tactics such as mandatory relocations seemingly designed to push longtime workers to quit.

In response, IBM issued a statement that said, in part, “We are proud of our company and our employees’ ability to reinvent themselves era after era, while always complying with the law.”

As an older tech firm trying to keep up in what’s seen as a young industry, IBM might seem unique, but our analysis of the HRS data suggests the company is no outlier in how it approaches shaping its workforce.

The share of U.S. workers who’ve suffered financially damaging, employer-driven job separations after age 50 has risen steadily from just over 10 percent in 1998 to almost 30 percent in 2016, the analysis shows.

The turbulence experienced by older workers is about the same regardless of their income, education, geography or industry.

Some 58 percent of those with high school educations who reach their 50s working steadily in long-term jobs subsequently face a damaging layoff or other involuntarily separation. Yet more education provides little additional protection; 55 percent of those with college or graduate degrees experience similar job losses.

Across major industrial sectors and regions of the country, more than half of older workers experience involuntarily separations. The same is true across sexes, races and ethnicities, although a larger share of older African-American and Hispanic workers than whites are forced out of work by poor health and family crises, the data shows. This could indicate that minority workers are more likely to have jobs that take a bigger toll on health.

Once out, older workers only rarely regain the income and stability they once enjoyed.

Jaye Crist, 58, of Lancaster, Pennsylvania, was a mid-level executive with printing giant RR Donnelley until his May 2016 layoff. Today, he supports his family on less than half his previous $100,000-a-year salary, working 9 a.m. to 5 p.m. at a local print shop, 7 p.m. to 2 a.m. at the front desk of a Planet Fitness gym and bartending on Sundays.

Linda Norris, 62, of Nashua, New Hampshire, earned a similar amount doing engineering work for defense contractors before being laid off in late 2015. She spent much of 2016 campaigning for then-candidate Donald Trump and is convinced her fortunes will change now that he’s president. In the meantime, she hasn’t been able to find a permanent full-time job and said she has $25 to her name.

The HRS is widely considered the gold standard for information about the economic lives and health of older Americans. It’s funded by the National Institutes of Health and the Social Security Administration and is administered by the University of Michigan. It has been cited in thousands of academic papers and has served as the basis for a generation of business and government policymaking.

Our analysis suggests that some of those policies, as well as a good deal of what analysts and advocates focus on when it comes to aging, don’t grapple with the key challenges faced by working Americans during the last third or so of their lives.

Much public discussion of aging focuses on Social Security, Medicare and how to boost private retirement savings. But our analysis shows that many, perhaps most, older workers encounter trouble well before they’re eligible for these benefits and that their biggest economic challenge may be hanging onto a job that allows for any kind of savings at all.

“We’re talking about the wrong issues,” said Anne Colamosca, an economic commentator who co-authored one of the earliest critiques of tax-advantaged savings plans, “The Great 401(k) Hoax.” “Having a stable job with good wages is more important to most people than what’s in their 401(k). Getting to the point where you can collect Social Security and Medicare can be every bit as hard as trying to live on the benefits once you start getting them.”

Layoffs are the most common way workers over 50 get pushed out of their jobs, and more than a third of those who sustain one major involuntary departure go on to experience additional ones, as the last decade of Steckel’s work life illustrates.

Steckel spent 27 years with the U.S. affiliate of Maersk, the world’s largest container cargo company, working at several of its operations across the country. It was while managing a trucking terminal in Chicago that he met his wife, an MBA student who went on to become the marketing director at Thorek Memorial Hospital on the city’s North Side.

In the late 1990s, Steckel was promoted to a human resources position. It required the family to relocate to the company’s headquarters in northern New Jersey, but the salary — which, with bonuses, would eventually reach about $130,000 — allowed Mary to be a stay-at-home mom.

Steckel saw himself continuing to climb the company’s ranks, but as shipping technology changed and business slumped in the middle of the last decade, Maersk started consolidating operations and laying people off. Steckel flew around the country to notify employees, including some he knew personally.

“It was pretty hard not to notice that many — not all, but many — were over 50,” he said. A Maersk spokesman confirmed Steckel worked for the company but otherwise declined to comment.

In early 2007, Steckel, then 51, was laid off. He and Mary moved back to the Midwest, where the cost of living was lower and they had relatives.

Layoffs are common in the U.S. economy; there were 20.7 million of them last year alone, according to the Bureau of Labor Statistics. In most instances, those who lose their jobs find new ones quickly. Steckel certainly assumed he would.

But laid-off workers in their 50s and beyond are more apt than those in their 30s or 40s to be unemployed for long periods and land poorer subsequent jobs, the HRS data shows. “Older workers don’t lose their jobs any more frequently than younger ones,” said Princeton labor economist Henry Farber, “but when they do, they’re substantially less likely to be re-employed.”

Steckel was out of work for eight months. The family made do, buoyed by generous severance pay and a short consulting contract. They did without dinners out, vacations or big purchases, but were basically okay.

Steckel was hired again in January 2008, this time as a benefits manager for Kohler, a manufacturer of bathroom fixtures. At about $90,000, his salary was 30 percent lower than what he’d made at Maersk, but Wisconsin was so affordable that the family was able to buy the house and five acres in Plymouth.

Kohler seemed like a safe bet. Many of its employees had never worked anywhere else, following their parents and grandparents into lifetime jobs with the company. But as Steckel started in his new position, the U.S. financial crisis cratered real estate and home construction and, with them, Kohler’s business.

This time, Steckel’s role in executing layoffs was explaining severance packages to the company’s shellshocked factory workers.

“Most of these people were in their late 40s and 50s and there was nothing out there for them,” he said. “They’d come in with their wives and some of them would break down and cry.”

After three years, Kohler’s problems leapt from the factory to the front office. Steckel, by then 54, was laid off again in April 2010. A Kohler spokeswoman did not reply to phone calls and emails.

Still the family’s sole breadwinner, with kids in fourth, eighth and ninth grades, he scrambled for new work and, after a string of interviews, landed a job just four months later as the manager of retirement plans at Alpha Natural Resources.

Alpha, in the coal mining business, was riding a double wave of demand from China and U.S. steel producers, snapping up smaller companies on its way to becoming an industry behemoth.

Steckel’s job was a big one, overseeing complicated, union-negotiated pensions and savings arrangements. At $145,000, the salary represented a substantial raise from what he’d been making at Kohler and was even more than he’d earned at Maersk. The Steckels relocated again, this time to the tiny southwest Virginia town of Abingdon.

“We started thinking: ‘This may be it. This is where we’ll stay,’” Mary Steckel said. “Then, all that changed.”

In January 2011, Alpha bought Massey Energy for $8.5 billion and with it the responsibility for reaching financial settlements with the families of 29 miners killed the previous year in an explosion at Massey’s Upper Big Branch mine in West Virginia. The combination of the settlement costs and a sustained fall in coal prices forced layoffs at Alpha and eventually led to the company’s bankruptcy.

Steckel struggled to collect decades of paper records on wages and years of service in order to calculate pension payments for laid-off miners, virtually all in their 50s and 60s. “There were no jobs for them, but they were owed [pension benefits] and they wanted their money yesterday,” he said. A spokesman for the successor company to Alpha, Contura Energy, did not return phone calls or emails.

Once again, he processed other employees’ layoffs right up until his own, in March 2013. He was 56. The Steckels packed the kids and the family’s belongings into their Mercury Sable station wagon and went back to Wisconsin.

There, Mary took a job at Oshkosh Defense, which builds Humvees and other equipment for the military. Tom was out of work almost six months before landing a consulting contract to work in Milwaukee with Harley-Davidson, the motorcycle maker.

If it had lasted, the position would have paid about $90,000, or about what he’d made at Kohler, and, for a time, it seemed possible that it might turn into a regular job. But it didn’t, and he was out again that December.

Unlike Steckel, Jean Potter of Dallas, Georgia, seemed to leave her longtime job at BellSouth by her own choice, taking early retirement in 2009, when she was 55.

But that wasn’t the full story, she said. Potter, who’d had a 27-year career with the telephone company, rising from operator services to pole-climbing line work to technical troubleshooting, said she only retired after hearing she was going to lose her $54,000-a-year job along with thousands of other employees being laid off as part of the company’s acquisition by AT&T.

Under the law, retirements are supposed to be voluntary decisions made by employees. The 1967 ADEA barred companies from setting a mandatory retirement age lower than 65. Congress raised that to 70 and then, in 1986, largely prohibited mandatory retirement at any age. Outraged by companies’ giving employees the unpalatable choice of retiring or getting laid off, lawmakers subsequently added a requirement that people’s retirement decisions must be “knowing and voluntary.”

Yet for almost two decades now, when HRS respondents who’ve recently retired have been asked whether their retirements were “something you wanted to do or something you felt forced into,” those who’ve answered they were forced or partially forced has risen steadily. The number of respondents saying this has grown from 33 percent in 1998 to 55 percent in 2014, the last year for which comparable figures are available.

“The expectation that American workers decide when they want to retire is no longer realistic for a significant number of older workers who are pushed out before they are ready to retire,” said Rutgers’ Van Horn.

Potter was convinced she’d secured money and benefits by leaving as a retiree that she would not otherwise have received. She felt better for making the decision herself and figured she’d go back to school, get a college degree and find a better job.

“I thought I’d gotten the drop on them by retiring,” she said.

But looking back, Potter acknowledges, her decision to retire was hardly freely chosen.

“If I had to do it over, I’d take early retirement again, but you can’t very well call it voluntary,” she said recently. “All the old people were toast. They were going to get laid off, me included.”

Jim Kimberly, a spokesman for AT&T, said the company could not confirm Potter’s employment at BellSouth because of privacy concerns. Speaking more generally, Kimberly said “We’re recognized for our longstanding commitment to diversity. We don’t tolerate discrimination based on an employee’s age.”

There was a time when older workers thought they could use early retirements as a stepping stone, locking in years of payments for leaving and then adding income from new jobs on top of that.

But many have discovered they can’t land comparable new jobs, or, in many cases, any jobs at all. In the decade since she left Bell South, Potter, now 65, has yet to find stable, long-term work.

After getting her bachelor’s degree in Spanish in 2014, Potter applied to teach in the Cobb County, Georgia, public schools but could only get substitute work. She got certified to teach English as a second language but said she was told she’d need a master’s degree to land anything beyond temporary jobs.

She’s scheduled to receive her master’s degree next June. In the meantime, she tutors grade-school students in math, English and Spanish and works as a graduate assistant in the office of multicultural student affairs at Kennesaw State University. She makes do on $1,129 a month from Social Security and a graduate-student stipend of $634, while applying, so far unsuccessfully, for other work.

She’s applied for jobs selling cellphones in a mall, providing call-center customer service and even being a waitress at a Waffle House. For the Waffle House job, she said she was told she wouldn’t be hired because she’d just leave when she got a better offer.

“Isn’t that what every waitress does?” she recalled replying. “Why hire them and not me?”

As with retirements, our analysis of the HRS data shows that, among older workers, quitting a job isn’t always the voluntary act most people, including economists, assume it to be.

The survey asks why people leave their jobs, including when they quit. It includes questions about whether their supervisors encouraged the departure, whether their wages or hours were reduced prior to their exit and whether they thought they “would have been laid off” if they didn’t leave.

We found that even when we excluded all but the most consequential cases — those in which workers subsequently experienced at least six months of unemployment or a 50 percent wage decline — 15 percent of workers over 50 who’d had long-term, stable jobs quit or left their positions after their working conditions deteriorated or they felt pressured to do so.

Quitting a job carries far greater risk for older workers than for younger ones, both because it’s harder to get rehired and because there’s less time to make up for what’s lost in being out of work.

After a simmering disagreement with a supervisor, David Burns, 50, of Roswell, Georgia, quit his $90,000-a-year logistics job with a major shipping company last February. He figured that the combination of his education and experience and the fact that unemployment nationally is at a 20-year low assured that he’d easily land a new position. But 10 months on, he says he’s yet to receive a single offer of comparable work. To help bring in some money, he’s doing woodworking for $20 an hour.

Burns has an MBA from Georgia State University and two decades in shipping logistics. A quick scan of online job ads turns up dozens for logistics management positions like the one he had in the area where he lives.

When he’d last lost a job at the age of 35, he said it took him only a couple of months and four applications to get three offers and a new spot. But in the years since, he said, he seems to have crossed a line that he wasn’t aware existed, eliminating his appeal to employers.

He keeps a spreadsheet of his current efforts to find new work. Through November, it shows he filed 160 online job applications and landed 14 phone interviews, nine face-to-face meetings and zero offers.

“My skills are in high demand,” he said. “But what’s not in high demand is me, a 50-year-old dude!”

“People can quibble about exactly why this kind of thing is going on or what to do about it, but it’s going on.”

Meg Bourbonniere had a similar experience just as she seemingly had reached the pinnacle of a successful career.

Two weeks after being appointed to a $200,000-a-year directorship managing a group of researchers at Massachusetts General Hospital in Boston in March 2015, Bourbonniere, then 59, said her supervisor called with an odd question: When did she think she’d be retiring?

“I kept asking myself, ‘Why would that be important today?’” she recalled. “The only thing I could come up with was they think I’m too old for the job.‘’

After she answered, “I’ll be here as long as you are,” she said she ran into an array of problems on the job: her decisions were countermanded, she was given what she saw as an unfairly negative job review and she was put on a “personal improvement plan” that required her to step up her performance or risk dismissal. Finally, a year after being hired, she was demoted from director to nurse scientist, the title held by those she’d managed.

Michael Morrison, a spokesman for Mass General’s parent organization, Partners HealthCare, confirmed the dates of Bourbonniere’s employment but said there was nothing further he could share as the company doesn’t comment on individual employees.

Bourbonniere said she accepted the demotion because her husband was unemployed at the time. “I couldn’t not work,” she said. “I was the chief wage earner.”

Through a friend, she found out about an opening for an assistant professor of nursing at the University of Rhode Island that, at about $75,000, paid only a third as much as the Mass General job. She told the friend she’d apply on one condition. “I said she had to tell the dean how old I was so I wouldn’t go through the same experience all over again.”

On paper, Bourbonniere quit Mass General of her own accord to take the position at URI. But, in her eyes, there was nothing voluntary about the move. “I had to go find another job,” she said. “They demoted me; I couldn’t stay.”

Soon after Steckel’s consulting contract ended in late 2013, he got what he saw as a sharp reminder of the role age was playing in his efforts to get and keep a job.

While searching job sites on his computer, Steckel stumbled across what seemed like his dream job on LinkedIn. Business insurer CNA Financial was looking for an assistant vice president to head its employee benefits operation. Best yet, the position was at CNA’s Chicago headquarters, a mere 145 miles from Plymouth. He immediately applied.

The application asked for the year he’d graduated from college.

Older job seekers are almost universally counseled not to answer questions like this. The ADEA bars employers from putting age requirements in help-wanted ads, but as job searches have moved online, companies have found other ways to target or exclude applicants by age. Last year, ProPublica and The New York Times reported that employers were using platforms like Facebook to micro-target jobs ads to younger users. Companies also digitally scour resumes for age indicators, including graduation dates.

Steckel left the field in the CNA application blank, but when he pushed “submit,” the system kicked it back, saying it was incomplete. He reluctantly filled in 1978. This time, the system accepted the application and sent back an automated response that he was in the top 10 percent of applicants based on his LinkedIn resume.

Hours later, however, he received a second automated response saying CNA had decided to “move forward with other candidates.” The rejection rankled Steckel enough that he tracked down the email address of the CNA recruiter responsible for filling the slot.

“Apparently, CNA believes a college application date is so important that it is a mandatory element in your job application process,” his email to the recruiter said. “Please cite a credible, peer-reviewed study that affirms the value of the year and date of one’s college graduation as a valid and reliable predictor of job success.”

He never got an answer.

Contacted by ProPublica, CNA spokesman Brandon Davis did not respond to questions but issued a statement. “CNA adheres to all applicable federal, state and local employment laws, and our policy prohibits any form of discrimination,” it said.

Steckel landed his current job with the state of South Dakota in March 2014.

Going back and forth between Pierre and Plymouth since then, he’s driven the equivalent of once around the world. If, as he hopes, he can hang onto the position until he retires, he figures he’ll make it around a second time.

During his off hours in the spring, when he’s not with his family, he fishes in the Black Hills. In the fall, he goes out with his Mossberg 12-gauge shotgun and hunts duck. The loneliest months are January and February. That’s when the Legislature is in session, so he can’t go home, and it’s usually too cold to do much outside. He spends a lot of time at the Y.

A half-century ago, in a report that led to enactment of the ADEA, then-U.S. Labor Secretary W. Willard Wirtz said that half of all private-sector job ads at the time explicitly barred anyone over the age of 55 from applying and a quarter barred anyone over 45.

Wirtz lambasted the practice in terms that, although backward in their depiction of work as solely a male concern, still ring true for older workers like Steckel and their families.

“There is no harsher verdict in most men’s lives than someone else’s judgment that they are no longer worth their keep,” he wrote. “It is then, when the answer at the hiring gate is ‘You’re too old,’ that a man turns away … finding nothing to look backwards to with pride [or] forward to with hope.”

Asked how the years of job turmoil and now separation have affected her family, Mary Steckel resists anger or bitterness. “The children know they are loved by two parents, even if Tom is not always here,” she said. She doesn’t dwell on the current arrangement. “I just deal with it.”

As for Tom?

“He hasn’t admitted defeat,” Mary said, although something has changed. “He’s not hopeful anymore.”

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Federal Watchdog Launches Investigation of Age Bias at IBM

[Editor's note: today's guest post, by reporters at ProPublica, updates a prior post about employment practices. It is reprinted with permission. A data breach at IBM in 2007 led to the creation of this blog.]

IBM logo By Peter Gosselin, ProPublica

The U.S. Equal Employment Opportunity Commission has launched a nationwide probe of age bias at IBM in the wake of a ProPublica investigation showing the company has flouted or outflanked laws intended to protect older workers from discrimination.

More than five years after IBM stopped providing legally required disclosures to older workers being laid off, the EEOC’s New York district office has begun consolidating individuals’ complaints from across the country and asking the company to explain practices recounted in the ProPublica story, according to ex-employees who’ve spoken with investigators and people familiar with the agency’s actions.

"Whenever you see the EEOC pulling cases and sending them to investigations, you know they’re taking things seriously," said the agency’s former general counsel, David Lopez. "I suspect IBM’s treatment of its later-career workers and older applicants is going to get a thorough vetting."

EEOC officials refused to comment on the agency’s investigation, but a dozen ex-IBM employees from California, Colorado, Texas, New Jersey and elsewhere allowed ProPublica to view the status screens for their cases on the agency’s website. The screens show the cases being transferred to EEOC’s New York district office shortly after the March 22 publication of ProPublica’s original story, and then being shifted to the office’s investigations division, in most instances, between April 5 and April 10.

The agency’s acting chair, Victoria Lipnic, a Republican, has made age discrimination a priority. The EEOC’s New York office won a settlement last year from Kentucky-based national restaurant chain Texas Roadhouse in the largest age-related case as measured by number of workers covered to go to trial in more than three decades.

IBM did not respond to questions about the EEOC investigation. In response to detailed questions for our earlier story, the company issued a brief statement, saying in part, "We are proud of our company and its employees’ ability to reinvent themselves era after era while always complying with the law."

Just prior to publication of the story, IBM issued a video recounting its long history of support for equal employment and diversity. In it, CEO Virginia "Ginni" Rometty said, "Every generation of IBMers has asked ‘How can we in our own time expand our understanding of inclusion?’ "

ProPublica reported in March that the tech giant, which has an annual revenue of about $80 billion, has ousted an estimated 20,000 U.S. employees ages 40 and over since 2014, about 60 percent of its American job cuts during those years. In some instances, it earmarked money saved by the departures to hire young replacements in order to, in the words of one internal company document, "correct seniority mix."

ProPublica reported that IBM regularly denied older workers information the law says they’re entitled to in order to decide whether they’ve been victims of age bias, and used point systems and other methods to pick older workers for removal, even when the company rated them high performers.

In some cases, IBM treated job cuts as voluntary retirements, even over employees’ objections. This reduced the number of departures counted as layoffs, which can trigger public reporting requirements in high enough numbers, and prevented employees from seeking jobless benefits for which voluntary retirees can’t file.

In addition to the complaints covered in the EEOC probe, a number of current and former employees say they have recently filed new complaints with the agency about age bias and are contemplating legal action against the company.

Edvin Rusis of Laguna Niguel, a suburb south of Los Angeles, said IBM has told him he’ll be laid off June 27 from his job of 15 years as a technical specialist. Rusis refused to sign a severance agreement and hired a class-action lawyer. They have filed an EEOC complaint claiming Rusis was one of "thousands" discriminated against by IBM.

If the agency issues a right-to-sue letter indicating Rusis has exhausted administrative remedies for his claim, they can take IBM to court. "I don’t see a clear reason for why they’re laying me off," the 59-year-old Rusis said in an interview. "I can only assume it’s age, and I don’t want to go silently."

Coretta Roddey of suburban Atlanta, 49, an African-American Army veteran and former IBM employee, said she’s applied more than 50 times to return to the company, but has been turned down or received no response. She’s hired a lawyer and filed an age discrimination complaint with EEOC.

"It’s frustrating," she said of the multiple rejections. "It makes you feel you don’t have the qualifications (for the job) when you really do."

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Citigroup Promises To Close Pay Gaps For Female And Minority Workers

Logo-citigroupUSA Today reported that Citigroup:

"... will boost job compensation for women and minorities in a bid to close pay gaps in the U.S., United Kingdom, and Germany, becoming the first U.S. bank to respond to shareholder pressure about the inequalities. The New York-based financial company announced the effort Monday, saying it came after a Citigroup compensation assessment in the three countries found that women on average were paid 99% of what men got and minorities on average received 99% of what non-minorities were paid... Citigroup's action prompted investment advisory company Arjuna Capital to withdraw the 2018 gender pay shareholder proposal it had filed in an effort to force an investor vote that would require the bank to address pay inequality."

So, the bank made changes only after a major investor forced it to. The news report cited other banks (text links added):

"No other U.S. bank has taken similar action, Arjuna said. Along with Citigroup, Arjuna said it had filed gender pay shareholder proposals this year with U.S. banks JPMorgan Chase, Wells Fargo, Bank of America and Bank of New York Mellon. The investment adviser said it had filed similar proposals with American Express, Mastercard, Reinsurance Group, and Progressive Insurance. If approved by shareholders, the proposals would require the companies to publish their policies and goals to reduce gender pay gaps."

JP Morgan Chase promised in 2016 to raise the pay of 18,000 tellers and branch workers. It seems that the banking industry, kicking and screaming, has been forced to confront its pay-gap issues for employees. What do you think?

Trump Administration Quietly Rolls Back Civil Rights Efforts Across Federal Government

[Editor's Note: today's guest blog post is by the reporters at ProPublica. Consent decrees are an important oversight tool to ensure corporate responsibility after wrongdoing. Today's post is reprinted with permission.]

By Jessica Huseman and Annie Waldman, ProPublica

Department of Justice logo For decades, the Department of Justice has used court-enforced agreements to protect civil rights, successfully desegregating school systems, reforming police departments, ensuring access for the disabled and defending the religious.

Now, under Attorney General Jeff Sessions, the DOJ appears to be turning away from this storied tool, called consent decrees. Top officials in the DOJ civil rights division have issued verbal instructions through the ranks to seek settlements without consent decrees -- which would result in no continuing court oversight.

The move is just one part of a move by the Trump administration to limit federal civil rights enforcement. Other departments have scaled back the power of their internal divisions that monitor such abuses. In a previously unreported development, the Education Department last week reversed an Obama-era reform that broadened the agency's approach to protecting rights of students. The Labor Department and the Environmental Protection Agency have also announced sweeping cuts to their enforcement.

"At best, this administration believes that civil rights enforcement is superfluous and can be easily cut. At worst, it really is part of a systematic agenda to roll back civil rights," said Vanita Gupta, the former acting head of the DOJ's civil rights division under President Barack Obama.

Consent decrees have not been abandoned entirely by the DOJ, a person with knowledge of the instructions said. Instead, there is a presumption against their use -- attorneys should default to using settlements without court oversight unless there is an unavoidable reason for a consent decree. The instructions came from the civil rights division's office of acting Assistant Attorney General Tom Wheeler and Deputy Assistant Attorney General John Gore. There is no written policy guidance.

Devin O'Malley, a spokesperson for the DOJ, declined to comment for this story.

Consent decrees can be a powerful tool, and spell out specific steps that must be taken to remedy the harm. These are agreed to by both parties and signed off on by a judge, whom the parties can appear before again if the terms are not being met. Though critics say the DOJ sometimes does not enforce consent decrees well enough, they are more powerful than settlements that aren't overseen by a judge and have no built-in enforcement mechanism.

Such settlements have "far fewer teeth to ensure adequate enforcement," Gupta said.

Consent decrees often require agencies or municipalities to take expensive steps toward reform. Local leaders and agency heads then can point to the binding court authority when requesting budget increases to ensure reforms. Without consent decrees, many localities or government departments would simply never make such comprehensive changes, said William Yeomans, who spent 26 years at the DOJ, mostly in the civil rights division.

"They are key to civil rights enforcement," he said. "That's why Sessions and his ilk don't like them."

Some, however, believe the Obama administration relied on consent decrees too often and sometimes took advantage of vulnerable cities unable to effectively defend themselves against a well-resourced DOJ.

"I think a recalibration would be welcome," said Richard Epstein, a professor at New York University School of Law and a fellow at the Hoover Institution at Stanford, adding that consent decrees should be used in cases where clear, systemic issues of discrimination exist.

Though it's too early to see how widespread the effect of the changes will be, the Justice Department appears to be adhering to the directive already.

On May 30, the DOJ announced Bernards Township in New Jersey had agreed to pay $3.25 million to settle an accusation it denied zoning approval for a local Islamic group to build a mosque. Staff attorneys at the U.S. attorney's office in New Jersey initially sought to resolve the case with a consent decree, according to a spokesperson for Bernards Township. But because of the DOJ's new stance, the terms were changed after the township protested, according to a person familiar with the matter. A spokesperson for the New Jersey U.S. attorney's office declined comment.

Sessions has long been a public critic of consent decrees. As a senator, he wrote they "constitute an end run around the democratic process." He lambasted local agencies that seek them out as a way to inflate their budgets, a "particularly offensive" use of consent decrees that took decision-making power from legislatures.

On March 31, Sessions ordered a sweeping review of all consent decrees with troubled police departments nationwide to ensure they were in line with the Trump administration's law-and-order goals. Days before, the DOJ had asked a judge to postpone a hearing on a consent decree with the Baltimore Police Department that had been arranged during the last days of the Obama administration. The judge denied that request, and the consent decree has moved forward.

The DOJ has already come under fire from critics for altering its approach to voting rights cases. After nearly six years of litigation over Texas' voter ID law -- which Obama DOJ attorneys said was written to intentionally discriminate against minority voters and had such a discriminatory effect -- the Trump DOJ abruptly withdrew its intent claims in late February.

Attorneys who worked on the case for years were barely consulted about the change -- many weren't consulted at all, according to two former DOJ officials with knowledge of the matter. Gore wrote the filing changing the DOJ's position largely by himself and asked the attorneys who'd been involved in the case for years to sign it to show continuity. Not all of the attorneys fell in line. Avner Shapiro -- who has been a prosecutor in the civil rights division for more than 20 years -- left his name off the filings written by Gore. Shapiro was particularly involved in developing the DOJ's argument that Texas had intentionally discriminated against minorities in crafting its voter ID legislation.

"That's the ultimate act of rebellion," Yeomans, the former civil rights division prosecutor, said. A rare act, removing one's name from a legal filing is one of the few ways career attorneys can express public disagreement with an administration.

Gore has no history of bringing civil rights cases. A former partner at the law firm Jones Day, he has instead defended states against claims of racial gerrymandering and represented North Carolina when the state was sued over its controversial "bathroom bill," which requires transgender people to use the facility that matched their birth gender.

All of the internal changes at the DOJ have left attorneys and staff with "a great deal of fear and uncertainty," said Yeomans. While he says the lawyers there would like to stay at the department, they fear Sessions' priorities will have devastating impact on their work.

The DOJ's civil rights office is not alone in fearing rollbacks in enforcement. Across federal departments, the Trump administration has made moves to diminish the power of civil rights divisions.

U.S. Department of Education logo The Department of Education has laid out plans to loosen requirements on investigations into civil rights complaints, according to an internal memo sent to staff on June 8 and obtained by ProPublica.

Under the Obama administration, the department's office for civil rights applied an expansive approach to investigations. Individual complaints related to complex issues such as school discipline, sexual violence and harassment, equal access to educational resources, or racism at a single school might have prompted broader probes to determine whether the allegations were part of a pattern of discrimination or harassment.

The new memo, sent by Candice Jackson, the acting assistant secretary for civil rights, to regional directors at the department's civil rights office, trims this approach. Jackson was appointed deputy assistant secretary for the office in April and will remain as the acting head of the office until the Senate confirms a full-time assistant secretary. Trump has not publicly nominated anyone for the role yet.

The office will apply the broader approach "only" if the original allegations raise systemic concerns or the investigative team argues for it, Jackson wrote in the memo.

As part of the new approach, the Education Department will no longer require civil rights investigators to obtain three years of complaint data from a specific school or district to assess compliance with civil rights law.

Critics contend the Obama administration's probes were onerous. The office "did such a thorough review of everything that the investigations were demanding and very expensive" for schools, said Boston College American politics professor R. Shep Melnick, adding that the new approach could take some regulatory pressure off schools and districts.

But some civil rights leaders believe the change could undermine the office's mission. This narrowing of the department's investigations "is stunning to me and dangerous," said Catherine Lhamon, who led the Education Department's civil rights office from August 2013 until January 2017 and currently chairs the United States Commission on Civil Rights. "It's important to take an expansive view of the potential for harm because if you look only at the most recent year, you won't necessarily see the pattern," said Lhamon.

The department's new directive also gives more autonomy to regional offices, no longer requiring oversight or review of some cases by department headquarters, according to the memo.

The Education Department did not respond to ProPublica's request for comment.

Education Secretary Betsy DeVos has also proposed cutting over 40 positions from the civil rights office. With reduced staff, the office will have to "make difficult choices, including cutting back on initiating proactive investigations," according to the department's proposed budget.

Elsewhere, Trump administration appointees have launched similar initiatives. In its 2018 fiscal plan, the Labor Department has proposed dissolving the office that handles discrimination complaints. Similarly, new leadership at the Environmental Protection Agency has proposed entirely eliminating the environmental justice program, which addresses concerns that almost exclusively impact minority communities. The Washington Post reports the plan transfers all environmental justice work to the Office of Policy, which provides policy and regulatory guidance across the agency.

Mustafa Ali, a former EPA senior adviser and assistant associate administrator for environmental justice who served more than 20 years, quit the agency in protest days before the plan was announced. In his resignation letter, widely circulated in the media, Ali suggested the new leadership was abandoning "those who need our help most."

Ryan Gabrielson contributed to this report.

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JPMorgan Chase To Raise Pay of 18,000 Tellers And Branch Workers

JPMorgan Chase logo Jaime Dimon, the Chairman and CEO of JPMorgan Chase, announced that the bank will raise the pay of about 18,000 tellers and branch workers in 75 cities. The announcement appeared in an opinion article in The New York Times:

"Our minimum salary for American employees today is $10.15 an hour (plus meaningful benefits, which I’ll explain later), almost $3 above the current national minimum wage. Over the next three years, we will raise the minimum pay for 18,000 employees to between $12 and $16.50 an hour for full-time, part-time and new employees, depending on geographic and market factors."

The article discussed the bank's non-wage benefits for employees, why the pay increase was the right thing to do, and related investments:

"It is true that some businesses cannot afford to raise wages right now. But every business can do its part through whatever ways work best for it and its community. It can identify local partners to address economic inequality. It can encourage and provide continuous training, teach leadership capabilities and identify mentors to help sharpen employee skills. In our case, we will invest over $200 million in 2016 on training for thousands of entry-level employees in our consumer banking business... We are also investing $325 million in career-oriented education aligned to growing sectors. This fall, through partnerships with education organizations, we will provide 10 states with up to $2 million each to strengthen and expand career-focused education in their school systems..."

An economist in the company's commercial banking unit wrote in October 2015:

"Raising the minimum wage has the potential to vastly improve the lives of low-income workers who are currently employed—but it could also limit opportunities for future job seekers... Proposals for raising the minimum wage have strong political appeal. It would be wonderful, of course, if it were that easy to help low-income earners who are struggling. Unfortunately, despite the well-meaning intentions behind this effort, non-business actions that force businesses to absorb higher costs would likely carry hidden costs. Though higher wages would undoubtedly benefit low-earning workers who retain their jobs, those who become unemployed, or future potential workers who are trying to get a start in the job market, could find fewer opportunities to rejoin the labor force."

Will the bank's hiring slow as a result? Time will tell.

An August, 2015 report by the National Employment Law Project found that while bBank tellers comprise the largest banking-related occupation in the United States, with almost half a million workers nationwide, three in four (74.1 percent) earn less than $15 an hour, compared with 42.4 percent of the total U.S. workforce. Tellers’ median hourly wage is just $12.44.

JPMorgan isn't the only bank to raise the pay of its employees. In January 2016, Bangor Savings Bank raised its minimum wage to $13.00 an hour. In August 2015, Amalgamated Bank raised its minimum wage to $15.00 per hour. In July 2015, C1 Bank raised its minimum wage to $15.00 per hour.

In 2012, JPMorgan Chase was part of a group of banks that paid $25 billion to resolve allegations of foreclosure abuses of homeowners' mortgages. The bank paid $13 billion in 2014 to settle charges by the U.S. Justice Department about alleged wrongdoing with mortgage-backed asset securities. Later that year, we taxpayers learned that large portions of the fines were tax deductible.

Dimon's April 6, 2016 letter to shareholders about the company's performance in 2015 said:

"Our company earned a record $24.4 billion in net income on revenue of $96.6 billion in 2015. In fact, we have delivered record results in the last five out of six years, and we hope to continue to deliver in the future. Our financial results reflected strong underlying performance across our businesses..."

The bank has done well financially. It's good that the bank shared some of its success with employees, but why not raise the minimum wage with a $15.00 per hour floor? Dimon's pay (including incentives rose 35 percent last year, from $20 million to $27 million. One person summarized accurately the bank's pay increase in a comment on Robert Reich's Facebook page:

"I think that pushing larger crumbs off the table isn't quite the same as setting a place."

Dimon's statement in the New York Times did not mention the total cost of the pay increase and related programs. Even if the total is $1 billion (spread over 3 years), it seems that JPMorgan Chase can easily afford that without a slow-down in hiring. If the bank can afford multiple, massive settlement agreement payments, it can easily afford the pay increase for its employees.

What do you think?

Digital Economy Workers Fight For Their Rights And Fair Treatment

The digital economy includes a variety of industries, ranging from e-commerce and auction sites (e.g., eBay, Etsy) to ride-sharing services (e.g., Uber, Lyft), and more. A lot of people love them, and participate as consumers, sellers, or workers. A recent article New York Times article about workers in the digital economy caught my attention:

"... many workers have felt squeezed and at times dehumanized by a business structure that promises independence but often leaves them at the mercy of increasingly powerful companies. Some are beginning to band together in search of leverage and to secure what they see as fairer treatment from the platforms that make the work possible."

Uber logo The article described a growing awareness among workers:

“We started realizing we’re not contractors, we’re more like employees,” said Berhane Alemayoh, one of the UberBlack drivers in Dallas. “They tell us what kind of car to drive. They kick you out if a customer accused you of not having a clean car. They started to tighten the rope. Gradually, we can’t breathe any more.”

In June, the California Labor Commission ruled that Uber drivers are employees, not contractors. In December, the Seattle City Council approved an ordinance allowing ride-sharing drivers to unionize. That was a first.

Uber drivers in New York City have protested. Clearly, rates for drivers must exceed the costs of auto payments, insurance, government fees, maintenance, repairs, gasoline, and commissions due the ride-sharing company. Otherwise, it's pointless. Learn more about UberBlack and how it differs from Uber X. Learn about UberSelect, UberBlack, and UberXL in Los Angeles.

Postmates logo The article cited more examples, including compensation and workers' safety issues:

"A group of couriers who find work on the platform Postmates is waging a campaign to create an “I’m done after this delivery” button because they worry that turning down jobs will affect how many future assignments they receive... The National Domestic Workers Alliance, which organizes nannies and housekeepers, recently produced what it calls the Good Work Code, which it has urged gig economy companies to adopt. “They would be dispatched to a home that didn’t feel safe, but would be hesitant to exit themselves from that situation because it might affect their ratings...”

National Domestic Workers Alliance logo Historically, independent contractors negotiate rates with businesses. Employees don't. Independent contractors, often called freelance workers, typically set their own hours and work approach. Employees don't. Employers typically tell employees when to work, where to work, how to do the job, specify the materials they must use, and dictate the pay rate. Perhaps, most importantly:

"... to the extent that the Dallas drivers have been successful, one crucial advantage is that they were able to organize in person rather than depend exclusively on the Internet and social media. That also helps explain the success of the campaign in Seattle, where Uber had previously reversed a rate cut after facing pressure from drivers..."

Experts have observed:

" "There’s a sense of workplace identity and group consciousness despite the insistence from many of these platforms that they are simply open ‘marketplaces’ or ‘malls’ for digital labor," said Mary L. Gray, a researcher at Microsoft Research and professor in the Media School at Indiana University who studies gig economy workers."

Who are these freelance workers? Forbes Magazine explained:

"... 53 million Americans, or 34% of the population, qualify as freelancers. Not all of them make their living exclusively as freelancers. The number includes 14.3 million workers who would be called “moonlighters”—people who have a primary, traditional job that pays benefits, and supplement their income with extra work, like a full-time tech support worker... Of the remaining 38.7 million, 21.1 million are what the survey calls “traditional” freelancers who do temporary work on a project basis. Some 9.3 million have multiple sources of income which can include a part-time job like working 20 hours a week at a dentist’s office. Another 5.5 million are temporary staffers who work for a single employer but not on a permanent basis that comes with benefits, like a business strategy consultant working for a startup on a contract that can include months of employment. Then there are the 2.8 million business owners who have between one and five employees..."

The issues aren't going away, as companies continue to outsource work globally, not only in the United States. So, you probably know people who work as freelancers. I know many in graphic design, website and mobile app development, and copy writing. Maybe you're a freelancer. I am.

Like any other business, companies in the digital economy merit watching by both freelancers and by customers. Nobody wants to support a business that mistreats its workers.

The examples cited in the newspaper highlight the fact that there's strength in numbers. Companies organize into trade associations, or industry trade groups, to promote their interests and influence government policies through federal, state, and local politicians. Workers should have the same freedoms to organize, if they choose. Both are natural (and necessary) components of a free-market capitalist system.

Don't like organizing? You don't have to join any group. However, when bad things happen in the workplace and you're unable to solve it alone, you may regret having rejected the support of a group. What are your opinions?

SEC Adopts Pay Ratio Rule For Public Companies

Securities and Exchange Commission logo The U.S. Securities and Exchange Commission (SEC) announced this week that it has adopted a final rule that requires public companies to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees. The median pay is the amount which half of a company's employees earn less and half of its employees earn more. The SEC announcement:

"The new rule will provide shareholders with information they can use to evaluate a CEO’s compensation, and will require disclosure of the pay ratio in registration statements, proxy and information statements, and annual reports that call for executive compensation disclosure.  Companies will be required to provide disclosure of their pay ratios for their first fiscal year beginning on or after Jan. 1, 2017."

The new rule was required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Adobe PDF). The rule does not apply to:

"...smaller reporting companies, emerging growth companies, foreign private issuers, MJDS filers, or registered investment companies."

Critics claimed that the cost is high for companies to comply with the rule. The Los Angeles Times reported:

"The SEC estimated the requirement would cost companies about $73 million, but the U.S. Chamber of Commerce puts the price tag far higher -- at an "egregious" $700 million a year or more. The chamber said most large companies do not have a centralized payroll, which would make the cost of compiling data 'prohibitively high.' "

The new rule provides flexibility for companies to calculate their pay ratios. In its Fact Sheet, the SEC explained:

"To identify the median employee, the rule would allow companies to select a methodology based on their own facts and circumstances.  A company could use its total employee population or a statistical sampling of that population and/or other reasonable methods... A company could apply a cost-of-living adjustment to the compensation measure used to identify the median employee...  A company also would be permitted to identify its median employee once every three years unless there has been a change in its employee population or employee compensation arrangements that it reasonably believes would result in a significant change to its pay ratio disclosure...  A company would be required to calculate the annual total compensation for its median employee using the same rules that apply to the CEO’s compensation..."

The Fact Sheet contains more details about the methodology, disclosures, assumptions, and estimates for calculating pay ratios.

College professor and former U.S. Secretary of Labor Robert Reich said Wednesday on Facebook:

"This is an important step. It will focus public attention on the pay gap that's become a giant chasm. It won't shame corporations into reducing the gap, but it may prompt shareholders to take some action and perhaps even consumers to boycott companies with the largest gaps. It could also bolster efforts, such as I've outlined in recent days, to increase corporate taxes on companies with high ratios and reduce them on companies with low ratios."

I agree. What are your opinions?

Banks Pay Most of Their Tellers Less Than $15 Per Hour

Everyone knows that many low wage employees work in restaurants, fast food, and construction. Add banks to the list.

The National Employment Law Project (NELP) published an August 2015 report about the earnings of employees in banks. The report focused upon retail banks, where consumers and small businesses typically have checking accounts, savings accounts, and loans. NELP studied the pay at banks because:

"Bank tellers constitute the largest banking-related occupation in the United States, with almost half a million workers nationwide. Three in four (74.1 percent) earn less than $15 an hour, compared with 42.4 percent of the total U.S. workforce, according to NELP’s report. Tellers’ median hourly wage is just $12.44. The workforce is overwhelmingly female: more than five in six bank tellers are women."

The media hourly wage is the amount that divides any group in half. Half of the group earns less and half of the group earns more that the median hourly pay. The median hourly pay for several positions in retail banks:

  • Financial clerks: $18.52
  • Secretaries and administrative assistants: $18.22
  • Credit authorizers, checkers, and clerks: $17.65
  • Loan interviewers and clerks: $17.34
  • Bill and account collectors: $17.20
  • Bookkeeping, accounting, and auditing clerks: $17.04
  • New accounts clerks: $16.33
  • Customer service representatives: $15.94
  • Office clerks: $14.64
  • Receptionists and information clerks: $12.93
  • Janitors and cleaners: $10.65

Additional findings from the report (click any image to view a larger version):

Figure 1: Bank employees earning less than $15 per hour. NELP. Click to view larger image

Figure 2: Most bank tellers are women. NELP. Click to view larger image

Figure 3: Most bank tellers are white. Latinos are over-represented. NELP. Click to view larger image

Christine Owens, executive director of NELP said:

“Many people hear about bank profits and lavish CEO compensation and assume that all jobs in banking pay well. But the reality is far different for bank tellers: Though they handle other people’s money all day, many tellers struggle to survive on wages too low to sustain families... In New York, the families of nearly 4 in 10 bank tellers must rely on some form of public assistance to get by; nationally, almost one in three do so.”

The last sentence is worthy of emphasis: 4 in 10 bank tellers must rely on some form of public assistance. So, when companies pay extremely low wages, the rest of us -- taxpayers -- end up paying to support companies that have decided not to pay their employees what many call a "living wage." You can conclude: minimum wage jobs encourage bigger government via assistance programs.

Don't like big government? Then, support minimum wage increases in the state where you live.

Download the full report (Adobe PDF). What are your opinions of these wages?

Study: Companies Pay Their Senior Executives More Than They Pay In Federal Taxes

The Institute For Policy Studies released the results of a study of executive compensation and corporate taxes. Researchers analyzed the pay of Chief Executive Officers (CEOs) in the largest corporation and the highest paid CEOs. Key findings were:

"Of America’s 30 largest corporations, seven (23 percent) paid their CEOs more than they paid in federal income taxes last year... Of America’s 100 highest-paid CEOs, 29 received more in pay last year than their company paid in federal income taxes—up from 25 out of the top 100 in our 2010 and 2011 surveys."

The pay of those 29 CEOs averaged $32 million. The study also investigated tax shelters. The 29 corporations that paid more to their CEOs than federal income taxes also operated:

"... 237 subsidiaries in tax havens. The company with the most subsidiaries in tax havens was Abbott Laboratories, with 79. The pharmaceutical firm’s CEO paycheck was $4 million larger than its IRS bill in 2013. Of the 29 firms, only 12 reported U.S. losses in 2013. At these 12 unprofitable firms, CEO pay averaged $36.6 million—more than three times the $11.7 million national average for large company CEOs..."

The corporations are familiar brands and names:

"The company that received the largest tax refund was Citigroup, which owes its existence to taxpayer bailouts. In 2013, Citi paid its CEO $18 million while pocketing an IRS refund of $260 million. Three firms have made the list in all three years surveyed. Boeing, Chesapeake Energy, and Ford Motors paid their CEO more than Uncle Sam in 2010, 2011, and 2013."

It would seem that the shareholders at these 12 unprofitable firms either don't care or have allowed the boards of directors to authorize exorbitant pay packages in the face of unprofitable performances. If those seven largest, profitable corporations had paid the full statutory tax rate of 35 percent, they would have paid $25.9 billion in federal taxes, which could have been used instead for:

"... Restoring elementary and high school teaching jobs lost to recession and austerity budget cuts... Resurfacing 22,240 miles of four-lane roads... Running the U.S. Department of Veterans Affairs for two months... Making pre-K [educaton] universal..."

The authors, Scott Klinger and Sarah Anderson, concluded:

"For corporations to reward one individual, no matter how talented, more than they are contributing to the cost of all the public services needed for business success reflects the deep flaws in our corporate tax system. Rather than more tax breaks, Congress should focus on addressing these deep flaws by cracking down on the use of tax havens, eliminating wasteful corporate subsidies, and closing loopholes that encourage excessive executive compensation."

Some specific actions Congress could take (links added):

"... the CUT Loopholes Act would close a variety of loopholes that facilitate tax dodging through offshoring. This bill would treat the foreign subsidiaries of U.S. corporations, whose management and control occur primarily in the United States, as U.S. domestic corporations for income tax purposes. It would also force corporations to take the same expense for stock option grants on their tax returns as they report on their shareholder books... Passing this legislation would reduce the incentive to shift profits and jobs overseas and could raise an additional $189 billion over ten years without raising corporate tax rates... Corporate Tax Fairness Act (S. 250 and H.R. 694)... would eliminate the ability of corporations to defer tax payments on their offshore profits. Instead, all worldwide profits earned by U.S. corporations would be immediately taxable in the United States. Firms would receive a dollar-for-dollar tax credit for any taxes paid to foreign governments. Corporations earning their profits in places like the United Kingdom, Germany, or France, where effective corporate tax rates are similar to U.S. rates, would pay little if any additional tax to the U.S. government. But firms stashing their profits in offshore tax havens would be forced to pay up for their years of tax haven abuse. The bill would raise an estimated $590 billion over ten years."

Download the report, "Fleecing Uncle Sam" (Adobe PDF). A copy is also available here.

Uber: Its Labor Ruling In California, Lawsuits, And Privacy Concerns

Uber logo During June, Uber, the ride-sharing company, has been in the news for a variety of reasons. Many consumers like the ride-sharing service as an alternative to tradition taxi-cabs. Uber is one of the largest ride-sharing services with about 8 million users worldwide and 160,000 drivers in the United States.

First, in March the State of California Labor Commission ruled that Uber drivers are employees and not independent contractors, as the company claimed. The ruling became public after the company appealed the original decision. In the original complaint, an Uber driver filed a claim for reimbursement of $4,152.00 of expenses.

The issues are worthy noting. Time reported:

"... the ruling is non-binding, has no legal bearing on any other drivers, and won’t force any money to change hands. But Uber’s decision to appeal will now move the fight to California’s court system where — along with several similar lawsuits pending in the state..."

One of several pending lawsuits:

"Uber has essentially shifted to its workers all the costs of running a business, the costs of owning a car, maintaining a car, paying for gas,” says Shannon Liss-Riordan, a Boston-based attorney who has a class-action case pending against Uber in California federal court. “Uber has saved massive amounts …. It’s important that the labor laws be enforced so that the companies can’t take advantage of workers that way. Uber’s a $50-billion company and I think it can afford to bear the responsibilities of an employer...”

Second, a new Uber policy bans firearms in its vehicles. KRJH in Tulsa, Oklahoma reported:

"Uber drivers and passengers have to follow a new company policy. Uber has banned all firearms from any vehicle used for its service. The policy comes two months after an Uber driver shot a man who was firing into a crowd of people in a Chicago neighborhood. The Uber driver had a concealed carry license and was not charged with a crime, but it raised the question of safety and comfort for its drivers and riders."

Third, the Electronic Privacy Rights Center (EPIC) has filed a complaint with the U.S. Federal Trade Commission (FTC) about Uber's upcoming privacy policy amendments to both collect more data about its customers and to track customers. Uber's new Privacy Policy goes into effect on July 15:

Location Information: When you use the Services for transportation or delivery, we collect precise location data about the trip from the Uber app used by the Driver. If you permit the Uber app to access location services through the permission system used by your mobile operating system (“platform”), we may also collect the precise location of your device when the app is running in the foreground or background. We may also derive your approximate location from your IP address."

"Contacts Information: If you permit the Uber app to access the address book on your device through the permission system used by your mobile platform, we may access and store names and contact information from your address book to facilitate social interactions through our Services and for other purposes described in this Statement or at the time of consent or collection."

The sharing of customers' information by Uber seems extensive:

"We may share your information: With Uber subsidiaries and affiliated entities that provide services or conduct data processing on our behalf, or for data centralization and / or logistics purposes; With vendors, consultants, marketing partners, and other service providers who need access to such information to carry out work on our behalf; In response to a request for information by a competent authority if we believe disclosure is in accordance with, or is otherwise required by, any applicable law, regulation, or legal process; With law enforcement officials, government authorities, or other third parties if we believe your actions are inconsistent with our User agreements, Terms of Service, or policies, or to protect the rights, property, or safety of Uber or others; In connection with, or during negotiations of, any merger, sale of company assets, consolidation or restructuring, financing, or acquisition of all or a portion of our business by or into another company..."

Words to focus upon include vendors, consultants, marketing partners, and other service providers. That can include a lot of companies anywhere. Note: that sharing is in addition to any sharing you may perform with social networking sites.

You may remember that ethics and privacy issues surfaced after news reports in 2014 about Uber allegedly using customer and tracking data it collected to target journalists critical of the service.

The EPIC complaint filed with the FTC (Adobe PDF) stated:

"19. Uber will also collect precise location information if the app is operating in the background. On phones running iOS, this means that Uber may be able collect location data even after an app has been terminated by the user."

"20. Even if a user disables the GPS location services on their phone, the company may still derive approximate location from riders’ IP addresses."

"21. This collection of user’s information far exceeds what customers expect from the transportation service. Users would not expect the company to collect location information when customers are not actively using the app, or have turned off their GPS location finder (as Uber can still collect location information through the phones’ IP addresses)..."

"24. Uber claims that it will allow users to opt-out of these features. However, this change in business practices places an unreasonable burden on consumers and is not easy to exercise: while iOS users can later disable the contact syncing option by changing the contacts setting on their mobile devices, the Android platform does not provide any such setting..."

"31. Job interviewees have been granted provisional access all the customer location data available to full-time employees, allowing non-Uber employees to temporarily track any customer. One such interviewee was granted this access for an entire day, even after the job interview ended. He admitted using the database to search records of people he knew, including politician’s relatives."

Based upon the new privacy policy, the tracking and data collection seems very invasive since it will also occur when customers aren't using the service. It seems invasive because the address book collection includes people who aren't Uber customers, didn't agree to the data collection, can't opt out of the collection, and have no control over how their contact information is used. Based upon the company's history, Uber executives seem to play fast and loose with consumers' personal private information.

If you don't like the privacy invasion, there are several resources online about how to cancel and delete your Uber account: C/Net, Reddit, and wikiHow.

What are your opinions of Uber's new privacy policy?

Guestworker Programs, Reshoring, And Skilled Workers. The Impacts Upon American Workers

In March 2015, Ron Hira, a Research Associate and Associate Professor of Public Policy at Howard University, testified before the U.S. Senate Judiciary Committee hearing about immigration reforms needed to protect skilled American workers. That classification includes workers in various high-tech jobs. Mr. Hira testified:

"Congress and multiple Administrations have inadvertently created a highly lucrative business model of bringing in cheaper H-1B workers to substitute for Americans. There are mainframe-sized loopholes built into the H-1B program’s design... Some of these loopholes are intentional, some are not, but they all add up to a system that encourages employers to exploit the H-1B program for cheap labor. Given the extraordinarily high profits involved in using guestworkers instead of Americans, it should surprise no one that many employers are taking advantage of this business model and lobbying to expand it... Myth: Employers must prove there are no qualified American workers before hiring an H-1B... Myth: H-1B workers cannot be cheaper than Americans because employers must pay the “prevailing wage”... Myth: Compliance with the program’s rules that protect American workers is robust..."

You may have believed those myths. Now you know otherwise. That abuse of the H-1B visa program may affect you, an employed family member, or somebody you know. How? Mr. Hira explained:

"... This is not just adversely affecting a few workers. The H-1B program is very large with approximately 120,000 new workers admitted annually. Once admitted those workers can remain in the U.S. up to six years. While no one knows exactly how many H-1Bs are currently in the country, analysts estimate the stock of H-1B workers at 600,000..."

Of course, the corporations claim that they can't find skilled American workers. Mr. Hira explained what's really happening and how it extends beyond H-1B visa recipients:

"Most of the H-1B program is now being used to import cheaper foreign guestworkers, replacing American workers, and undercutting their wages... There are hundreds of thousands of additional guestworkers admitted on L-1 and OPT visas, and they too are harming the job prospects of American workers. Because Congress never expected L-1 and OPT workers to be potential competition to American workers those programs have virtually no rules to protect American workers. That expectation was incorrect. As with the H-1B program, these guestworker visa programs are now being used too to replace and undercut American workers."

Sadly, government agencies also perpetuate the problem:

"The recent case of Southern California Edison (SCE) illustrates the most flagrant abuses of the H-1B program and exposes the flaws in the protections for American workers. As reported by ComputerWorld and the Los Angeles Times, SCE is replacing its American workers with H-1B workers hired by outsourcers Tata and Infosys. To add insult to injury, SCE forced its American workers to train their H-1B replacements as a condition of receiving their severance packages. There could not be a clearer case of the H-1B program being used to harm American workers’ wages and working conditions."

You may remember a similar incident at Disney where fired American workers were forced to train their foreign replacements before leaving. Pew Charitable Trusts reported about other alleged abuses:

"A computer programmer from India was promised a $46,500 salary in New York, plus tuition to study for a master’s degree. Instead, his annual pay averaged less than $13,000 and his degree was withheld when his employer failed to make the promised tuition payments. In California, veteran computer workers at a health care company say they were forced to train cheaper foreign replacements before being laid off, even though the replacements were hired under a program meant to fill critical jobs when employers can’t find qualified U.S. citizens or permanent residents who hold green cards to fill them."

I encourage you to visit the Pew Charitable trusts article, because it features an interactive map where you can discover the number H-1B workers in your state.

Some readers in denial may be thinking: I have a college degree, or I work in a high-tech job such as writing code for websites and mobile apps. It won't affect me. I'm immune.

Don't fool yourself. It will affect you. It probably already has. Former U.S. Labor Secretary and professor Robert Reich summarized the problem in a June 16 Facebook post (links added):

"... the [U.S.] Senate is considering a bill to raise the number of skilled foreign workers that can come to the U.S. on H-1B visas... It’s a bad idea. When Secretary of Labor, I was responsible for implementing the H-1B visa program – and again and again found high-tech companies claiming they needed skilled workers from abroad because they couldn’t find ...such workers in the U.S. -- when in reality they just didn’t want to pay higher wages to Americans with those same skills... A study released in April by the National Bureau of Economic Research found that H-1B visa recipients crowd out American workers, lowering wages and raising profits without increasing productivity. A 2013 analysis by the Economic Policy Institute found there are more than enough U.S.-born high-tech workers to fill jobs here, and that companies have been using foreign workers to cut costs, knowing they’re easy to intimidate because if they lose their jobs they have to leave the U.S."

You can read this study by researchers at the University of Notre Dame and University of California at Berkeley (Adobe PDF). They concluded:

"We find some evidence that additional H-1Bs lead to lower average employee wages while raising firm profits... we robustly find that new H-1Bs cause no significant increase in firm employment..."

Think about that. Firms pay less to other employees. So, even if you aren't replaced, you may be paid less or your annual wage increases are smaller. The savings went to the company's profits, and to senior executives rewarded for those savings via bonuses.

I have experienced the high-tech guest-worker situation. As a freelancer with a master's degree and plenty of experience, I work with a variety of digital agencies to produce websites for corporate clients. Several years ago, I subcontracted with an agency to work on a website redesign project. That project included a client company's internal website (called an "Intranet") to automate and streamline its human resources processes, forms, and performance reviews for both managers and employees. I was hired to perform the usability work and lead several focus-group sessions with the client company's employees and managers.

After meeting my project team members, I saw immediately the situation. Another person and I were the only two American workers on this project team. The rest of the team included workers from India to perform the project management, documentation, website development, quality assurance, and coding work. Plenty of my peers at other digital agencies, and some as freelancers, regularly perform all of these tasks. So, there's no shortage of qualified, experienced American workers.

During this three-month project, the foreign guest workers flew in from Mumbai as needed for their roles, and shared rooms in a rented home (cheaper than a hotel). When their role on the project was finished, they either returned to Mumbai or traveled to another U.S. location for their next project. The math probably went like this: the digital agency probably charged it's corporate client an average of about $120 per hour across all project team members. The digital agency paid me $90.00 per hour, paid the foreign workers maybe $40.00 per hour, and pocketed the difference. So, the agency's profits were $30.00 per hour for American workers like me, but a far higher $80.00 per hour with foreign workers.

This looked to me like a clear corporate choice aided by a willing digital agency. You'd never know it happened unless you worked directly on the project.

Multiply my experience by thousands of others and you get an idea of how vast the problem is. Corporations, politicians, and news media that defend this employment abuse may announce that thousands of jobs are returning to the USA (often called "reshoring"), but you now know what's really happening. Informed voters question announcements and demand to know if the returning jobs are pre-filled with foreign guest-workers while the employers don't bother looking to hire American workers. You now know more to contact your elected officials and demand that they explain what they are doing to protect American workers.

When returning jobs are pre-filled with guest workers, then there's really no benefit to USA citizens and plenty of downside: unemployment levels remain high, it is harder to find full-time work, and for workers over 55 years of age it can be impossible to find full-time work. You now know it's a pro-business free-for-all at the expense of middle-class and skilled workers.

What are your opinions of skilled guest workers? Of the H-1B visa program? Have you had to train foreign guest workers?

Two Graphics About Wage And Wealth Inequality In The USA

Today's blog post includes two factual graphics. The first graphic compares the bonuses (not salaries, but the year-end bonuses in addition to salaries) paid to executives at Wall Street firms to the earnings of all full-time minimum-wage workers nationwide:

Comparison of Wall Street bank bonuses to minimum wage earnings

The current Federal minimum wage is $7.25 per hour. Given a 40 hour work week, that equals about $15,000 a year. Tough to live on that. Meanwhile, the average bonus for Wall Street executives was about $170,000 per person. Read this detailed discussion about the bonus culture on Wall Street:

"Wall Street bonuses rose 3 percent last year, despite a 4.5 percent decline in industry profits. The size of the bonus pool was 27 perfect higher than in 2009, the last time Congress increased the minimum wage... The bonus pool is so large it would be far more than enough to lift all 2.9 million restaurant servers and bartenders, all 1.5 million home health and personal care aides, or all 2.2 million fast food preparation and serving workers up to $15 per hour."

Yes, the playing field is tilted this badly. This is another reason to move your money from big banks to smaller, regional banks or to credit unions.

The second graphic (see below) compares the actual distribution of wealth (the top bar) to what Americans perceive it to be (the second bar), and to what Americans think it should be (the bottom bar). Former U.S. Labor Secretary and professor Robert Reich presented this graphic on his Facebook page:

How consumers view inequality compared to the reality

Mr. Reich said on March 10:

"If more Americans knew the truth, we'd have a better shot at changing what must be changed -- raising the minimum wage, expanding the EITC, raising the cap on income subject to Social Security taxes, limiting the deductibility of CEO pay, making it easier to form labor unions, and increasing taxes at the top to pay for world-class education for all our kids. So, please, spread the truth."

Now, you know the truth. Tell your friends, family, coworkers, and classmates. Not only is the situation worse than you thought, but it's easier for the wealthy to retain their wealthy since investments are taxed at a lower rates than wages. (Or depending upon your point-of-view, more difficult for wage earners to amass wealth.) And, some politicians want to eliminate the Federal minimum wage supposedly to increase employment, but more likely to facilitate a race to the bottom in some states to lower wages further and increase company profits.

Notice a trend that benefits the people who are already wealthy?

Take a moment to study both graphics. You can select either graphic to view a larger version. Remember this when you vote.

More Wage Theft Complaints Filed By Employees Against Their Employers

The New York Times reported recently about a surge in lawsuits by workers against their employers:

"... a flood of recent cases — brought in California and across the nation — that accuse employers of violating minimum wage and overtime laws, erasing work hours and wrongfully taking employees’ tips... Some federal and state officials agree. They assert that more companies are violating wage laws than ever before, pointing to the record number of enforcement actions they have pursued."

One possible reason why wage theft is increasing:

"... underlying changes in the nation’s business structure. The increased use of franchise operators, subcontractors and temp agencies leads to more employers being squeezed on costs and more cutting corners... companies on top can deny any knowledge of wage violations [by contractors]...".

The news story reported plenty of examples:

"... Guadalupe Rangel worked seven days straight, sometimes 11 hours a day, unloading dining room sets, trampolines, television stands and other imports... Even though he often clocked 70 hours a week at the Schneider warehouse here, he was never paid time-and-a-half overtime, he said. And now, having joined a lawsuit involving hundreds of warehouse workers..."

One wage-theft tactic is to force workers to sign blank timesheets:

"Julie Su, the state labor commissioner, recently ordered a janitorial company in Fremont to pay $332,675 in back pay and penalties to 41 workers who cleaned 17 supermarkets. She found that the company forced employees to sign blank time sheets, which it then used to record inaccurate, minimal hours of work."

Reclassifying jobs is another tactic:

"... in California, a federal appeals court ruled last week that FedEx had in effect committed wage theft by insisting that its drivers were independent contractors rather than employees. FedEx orders many drivers to work 10 hours a day, but does not pay them overtime, which is required only for employees. FedEx said it planned to appeal."

And, the wage theft problem is spreading:

"Commissioner Su of California said... My agency has found more wages being stolen from workers in California than any time in history... This has spread to multiple industries across many sectors. It’s affected not just minimum-wage workers, but also middle-class workers..."

Terrible business practices and unethical behaviors. The tiny bit of good news: more workers are learning what their rights are and are standing up for their rights.

I am not surprised at all by these mounting wage-theft allegations. Why? First, professor and former U.S. Labor Secretary Robert Reich summarized the ethical problem well in September 2013 on Twitter.com while discussing wrongdoing at the big banks:

"Fines effective only if risk of being caught x probability of being prosecuted x amount of fine > profits to be made."

Besides banks, executives in other and medium-sized businesses have done the math, too. Browse the website for the atate attorney general where you live. Some enforce wage laws vigorously. Others, not so much -- leaving it to workers to file civil suits. Low- and minimum-wage workers often don't have the funds to hire an attorney; if they know their rights. They are busy trying to survive, feed their families, and pay their bills.

Second, many unethical executives have concluded that labor laws in their states are weak. This 2013 study by NELP highlighted the problem: 83 percent of workers still had problems collecting unpaid wages -- even when they already had a court decision in their favor. That means, employers realize there are likely no consequences from violating labor laws.

Third, with any search engine you can easily find news reports about wage-theft settlements. I have reported about some recent cases in New York State: Domino's, McDonald's, and Masonry Services. Fourth, you see similar unethical behavior by executives with employer-operated retirement plans. This blog post reported about some typical cases. Overall, the U.S. Department of Labor recovered $1.2 billion in 2012 for workers. The facts speak for themselves.

What are your opinions of the wage-theft allegations?

Market Basket Returns To Normal Operations As Arthur T. Demoulas Buys Company And Resumes Management

This seemed like timely content for a Labor Day holiday.

On Thursday, the New Hampshire Union Leader reported that a deal had been reached regarding the confrontation at the Market Basket supermarkets in Massachusetts and New Hampshire. Arthur T. Demoulas will acquire a 50.5 percent ownerhsip of the company and return to managing it. He had been ousted last year by the company's Board of Directors, which included other family members. Reportedly, the company issued a statement that Arthur T. Demoulas:

"... and his management team will return to Market Basket during the interim period while the transaction to purchase the company is completed... All associates are welcome back to work with the former management team to restore the company back to normal operations.”

A grassroots effort of managers and employees had stopped work, promising to return to work when Arthur T. Demoulas was reinstated. Supporting this effort, most customers stopped shopping at the supermarket chain, whose revenues dropped more than 90 percent. Store shelves became bare, and many workers had their hours reduced. The confrontation lasted about five weeks and made news headlines worldwide.

Reportedly, the sale will be completed in a couple months. Mr Arthur T. Demoulas thanked cheering employees and supporters.

I cannot recall a time in history when a group of managers and employees banded together to support a senior executive of a corporation. When Arthur T. Demoulas previously managed Market Basket, he managed it more like a benefit corporation --  a joint enterprise between the company, its owners, and the community. He kept prices lower than competitors' prices, paid employees more, and gave both employees and managers more authority.

Professor and former U.S. Labor Secretary Robert Reich posted on August 28 via Facebook:

"In a big win for employees, managers, and customers of “Market Basket” -- the supermarket chain in Massachusetts, New Hampshire, and Maine whose beloved CEO, Arthur T. Demoulas, was fired by a greedy board of directors who thought him too generous – Arthur T. is now back. Yesterday the board relented and agreed to sell the company to him. Arthur T. told cheering workers at the company’s headquarters in Tewksbury that he loved them, appreciated their efforts helping him gain control of the company, and was “in awe of what you have all accomplished.” Over the last several weeks, the sacrifices of employees, managers, and customers of “Market Basket” gives new meaning to the old term “solidarity.” It also illustrates the power of treating such people as partners in an enterprise rather than as costs to be cut. When all benefit from a business's success, all will sacrifice to keep it successful. May the rest of American business take note."

Note: workers as partners, not a cost to be cut. And...  a sacrifice, indeed, by managers, employees, and customers. It showed what solidarity can achieve. Congratulations!

Burger King And Tim Horton's Agree To Merge. The Consequences

Burger King logo This morning, several news sources reported that Burger King, the fast-food chain, and Tim Horton's restaurants have agreed to merge. Horton's is based in Canada. The merger allows Burger King to benefit from a tax inversion, where:

"The combined Canadian coffee chain and U.S. burger chain will have its global headquarters in Canada... In a tax inversion, two international companies merge and move their tax domicile to the lower tax country."

Last month, Bloomberg BusinessWeek published an interesting and informative analysis of the company, its young management, corporate history, and current marketplace challenges. You'll probably want to read the BusinessWeek report titled, "Burger King Is Run By Children."

Professor and former U.S. Labor Secretary Robert Reich posted on Facebook the following about the merger (links added):

"BK’s profits have been flat, mainly because its mostly lower-income customers don’t have enough money to boost sales. So the pending deal is welcome news to investors, who today sent its stock up nearly 20 percent. But it’s a lousy deal for you and me and other Americans because we’ll have to make up for the taxes Burger King stops paying. We’re already subsidizing Burger King because it refuses to raise the pay of its frontline workers, who are now at or near the minimum wage. So we're paying for the food stamps, Medicaid, and wage subsidies its workers need in order to stay out of poverty. That means when BK deserts America to cut its tax bill, we’ll be paying twice. That's a whopper of a slap at America."

A whopper of a slap, indeed. Mr. Reich posted in an update (link added):

"It’s one thing when a company the Pfizer flirts with corporation desertion (technically, a tax “inversion”) to become a foreign company and lower its tax bill. But Burger King, like Walgreen, is highly visible to consumers. Walgreen dropped its plan to desert the United States after a customer backlash and bad publicity. So a boycott of Burger King, accompanied by letters to the local press, picketing for the broadcast media, and a general ruckus, should be helpful."

The phrase "tax inverson" sounds clinical and almost meaningless. I like and prefer the phrase, "corporate desertion" since it better describes what is really happening. And, a boycott seems the appropriate consequence for the burger chain's actions.

What are your opinions of Burger King's tax inversion? Of the "corporate desertion" phrase? Of a boycott?

B Corporations: What They Are And Why They Are Different

Here in Massachusetts, the local news media has reported extensively about the confrontations at Market Basket, a regional, low-price supermarket chain. Perhaps, you have heard about it.

The first confrontation was between family members for control of the company. The company's board of directors fired Arthur T. Demoulas in June 2013 and replaced him with two new managers. After that event, workers and managers at the stores banded together to demand Arthur T's return. That led to the current work stoppage and boycot by many customers. Store sales have declined and shelves in most stores are largely empty. During the last few days, hours for many on-the-job workers have been cut.

Former Labor Secretary Robert Reich explained how Arthur T. Demoulas managed Market Basket:

"... his business model. He kept prices lower than his competitors, paid his employees more and gave them and his managers more authority. Late last year he offered customers an additional four percent discount, arguing they could use the money more than the shareholders. In other words, Arthur T. viewed the company as a joint enterprise from which everyone should benefit, not just shareholders. Which is why the board fired him."

In his article, Mr. Reich concluded, perhaps most importantly:

"... interestingly, we’re beginning to see the Arthur T. business model pop up all over the place."

Mr. Reich explained Arthur T's managerial approach was similar to the "B Corporations" (a/k/a "B Corps"):

"That’s a for-profit company whose articles of incorporation require it to take into account the interests of workers, the community and the environment, as well as shareholders. The performance of B-corporations according to this measure is regularly reviewed and certified by a nonprofit entity called B Lab. To date, over 500 companies in sixty industries have been certified as B-corporations... 27 states have passed laws allowing companies to incorporate as “benefit corporations.” This gives directors legal protection to consider the interests of all stakeholders rather than just the shareholders who elected them."

Take a moment for that to sink in.

Benefit corporations intentionally structured themselves to provide benefits for several groups: workers, the community, the environment, and shareholders. That means other types of corporations focus only on benefits for shareholders. They may provide benefits for groups besides shareholders, but they don't have to. In fact, the dominant, traditional business structure provides incentives to benefit primarily shareholders. Mr. Reich explained how this dominant corporate structure happened:

"In the 1980s, corporate raiders began mounting unfriendly takeovers of companies that could deliver higher returns to their shareholders – if they abandoned their other stakeholders. The raiders figured profits would be higher if the companies fought unions, cut workers’ pay or fired them, automated as many jobs as possible or moved jobs abroad, shuttered factories, abandoned their communities and squeezed their customers. Although the law didn’t require companies to maximize shareholder value, shareholders had the legal right to replace directors. The raiders pushed them to vote out directors who wouldn’t make these changes..."

You're probably wondering if any brands or companies you know are B Corps. Maybe you are curious, or maybe you want to shop only at businesses that are B Corps. Maybe you want to invest in B Corps, or socially responsible corporations.

The folks at B Labs developed a nifty mechanism to search their database. You can search by name, industry, city, state, and/or country. I ran several searches and found:

  • Amazon: no
  • Ben & Jerry's: yes
  • Breckinridge Capital Advisors: yes
  • Etsy: yes
  • Hobby Lobby: no
  • King Arthur Flour Company: yes
  • McDonald's: no
  • Tech Networks of Boston: yes
  • Trillium Asset Management: yes
  • Whole Foods: no

After searching, you can click through to a detailed report about each company and how it performs against B Corps criteria; often for both the current and prior years. The B Labs site explained it:

"B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk. B Corps are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Today, there is a growing community of more than 1,000 Certified B Corps from 33 countries and over 60 industries..."

This search tool allows consumers to learn whether your favorite brand walks the talk, or not. Any corporation can hire an advertising agency to develop ads, taglines, slogan, websites, and/or apps that say their company provides benefits to groups beyond shareholders. But do they really? Are they structured to do so? How have they performed? You can use the B Labs site to start answering these questions. You can find corporations that are walking the talk.

It is important to remember that there is a difference between "B Corps" and "Benefits corporations." The Cullinane Law Group emphasized the difference:

"B Corps and Benefit Corporations are distinct terms that are often used interchangeably, but there are clear differences. In short,
- B Corp: a certification or “stamp of approval” by a third-party certifying company.
- Benefit Corporation: is a specific legal corporate structure within a state."

The states that provide the "Benefit Corporation" structure:

"... Arizona (effective December 31, 2014), Arkansas (effective August 2013), California, Colorado (effective April 1, 2014), Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Nevada (effective January 1, 2014), New Jersey, New York, Oregon (effective January 1, 2014), Pennsylvania, South Carolina, Vermont, Virginia, and Washington D.C."

Will Market Basket workers or its board prevail? That remains to be seen. Will Market Basket restructure as a Benefit Corporation? That, too, remains to be seen. Perhaps, if it did the company could have avoided the pain it is now experiencing.

What are your opinions of B Corporations? Of the B Labs search tool? Should more states enact legislation for benefits corporations?

New York State Senate Passes Bill To Amend The State's Wage Theft Law

The New York State Senate passed a bill on June 19 that would amend, if it becomes law, several provisions in the state's landmark 2010 Wage Theft Protection Act. The amendments repeal the annual wage notification employers must provide to employees, and increase the fines for employers for wage payment violations. Supporters of the bill emphasized the paper work reduction benefits for employers.

Specific components of the legislation:

"Section 1 amends Subdivision 1(a) of Section 195 of the Labor Law to strike the annual notice requirement from the Wage Theft Prevention Act when the same information is provided in another manner.

Section 2 amends Subdivisions 1-b and 1-d of Section 198 of the Labor Law to increase penalties for employers' failure to comply with certain sections of the Wage Theft Prevention Act."

So, employers would no longer be required to inform employees each year of pay rates; only new employees. The potential penalties for failing to notify new employees increases from $50 per week with a maximum of $2,000 to $50 per day with a maximum of $5,000, plus costs and attorney's fees. The court may award other payments, too.

The bill also includes provisions for employers that are repeat and/or egregious offenders:

"Section 6 amends Subdivision 1(b) of Section 215 of the Labor Law to authorize the Commissioner to assess a greater civil penalty for those employers who have committed wage theft and had a previous violation within the previous six years...

Section 3 amends Subdivision 1 of Section 218 of the Labor Law if an order directing payment of wages, benefits, wage supplements and liquidated damages is issued to an employer who had previously committed wage theft, or to an employer whose violation is willful or egregious, the employer will be required to report specified employee and wage data to the Commissioner of Labor, which will be published on the Department of Labor's website."

Offenders will often reorganize their business (e.g., declare bankruptcy and shed debt) to avoid paying employees and contractors. So, this section of the bill is important:

"Section 3 also adds a new Subdivision 5 of Section 218 of the Labor Law to provide that an employer similar in operation or ownership to a prior employer who had previously committed wage theft is liable for the acts of the prior employer for the purposes of civil penalties."

The bill would also extend liability to the ten (10) largest owners in limited liability companies (LLCs):

"Section 11 adds new Subdivisions (c) and (d) to the Limited Liability Company Law requiring that the ten members with the largest percentage ownership in a limited liability company be personally liable for all debts, wages, or salaries due and owing to any of its laborers, servants or employees, for services performed by them for such limited liability company... An action to enforce such liability shall be commenced within ninety days after the return of an execution unsatisfied against the limited liability company upon a judgment recovered against it for such services. The bill allows for any member who has paid more than his or her pro rata share to be entitled to contribution pro rata from the other members liable under this section with respect to the excess so paid, over and above his or her pro rata share, and may sue them jointly or severally or any number of them to recover the amount due from them..."

This component appeals since it holds owners accountable, and encourages them not to ignore the actions of the company's executives.

The bill now moves to the Assembly for a vote and/or changes. The law would go into effect 60 days after it is signed by Governor Andrew Cuomo. Learn more about Senate Bill A08106C.

What Kind Of Society Allows This?

Robert Reich, former U.S. Labor Secretary and Professor of Public Policy at UC-Berkely, posted on Wednesday May 7 the message below on Facebook (link added):

"According to annual rankings published yesterday by Institutional Investor’s Alpha Magazine, hedge-fund manager David Tepper took home $3.5 billion last year. Assuming he worked 40 hours a week and went on a two-week vacation, that came to $1,750,000 an hour. $1,750,000 an hour is enough money to hire 241,380 workers at the nation’s current minimum wage of $7.25 an hour. It’s enough to lift the wages of 538,461 minimum-wage workers (roughly one out of every seven of today's minimum-wage workers) to $10.40, which the President and Democrats are seeking as the new minimum wage. It’s enough to hire 103,734 workers at the nation’s median hourly wage of $16.87."

Pause for a moment and let that statistic sink in: $1.75 million per hour. That was not per month or per week. It was per hour. Using an average annual salary of $36,587 for workers in the USA,  it would take an average-paid worker almost 48 years -- your entire working career -- to make what Tepper made in one hour. Something is very wrong.

Reich also wrote in his Facebook post:

"I’m not suggesting Tepper do any of these things, but I can’t help wondering how he possibly can spend $1,750,000 an hour. I also wonder what kind of society is it that won’t raise the minimum wage from $7.25 to $10.10 an hour but gives hedge-fund managers earning well over a million dollars an hour a special tax break allowing them to treat their income as capital gains subject to the lower capital-gains rate instead of ordinary income?"

Good question: what kind of society allows this type of senior executive pay while at the same time refuses to raise the Federal minimum wage for the lowest paid workers? Remember, the minimum wage doesn't affect all workers; just the lowest paid workers.

The Federal minimu wage rate has been stuck at $7.25 since 2009. Meanwhile, elected officials in Congress get automatic cost-of-living increases (COLA) to their pay. (Their COLAs are in addition to what appears to be legalized "insider trading" for member of Congress.) Is that fair? If COLAs are good for a few, they are good for everyone.

Are these your values? These are not my values, and I doubt that they are your values either. These don't seem like Christian values either. Yet, we've elected government officials that have crafted and voted for laws that allow this to continue.

And, it's not only income inequality. It's wealth inequality, too. Some of the problems with wealth inequality (link added):

"Wealth gathering at the top creates all sorts of problems. Some of these elites will hoard their wealth and fail to do anything productive with it. Others channel it into harmful activities like speculation, which can throw the economy out of whack. Some increase their wealth by preying on the less well-off. As inequality grows, regular people lose their purchasing power. They go into debt. The economy gets destabilized... By the time you get to 2010, US inequality, according to Piketty’s data, is quantitatively as extreme as in old Europe in the first decade of the 20th century..."

This is a mugging of the middle class. This is a mugging of the American Dream. This is a war on both the middle class and the poor. Can you imagine making $1.75 million an hour? I can't imagine anyone being worth that much. Can you?

What type of society allows this? What type of person denies others the benefits they enjoy? One possible explanation: academic studies have found that right-wing conservatives, and the rich CEOs they support, are often sociopaths.

Learn more about income inequality, the six principles of the new populism, the film Inequality For All, and take action. Consumers worldwide are slowly waking up to the issues. For higher wages and more rights in the workplace, fast food workers will protext on May 15 in 150 cities and 30 countries.