Death of an Adjunct

By Stephen Herzenberg, Third and State

Appearing earlier this month on a radio program in Pittsburgh with labor historian Charles McCollester, I heard for the first time the story of Margaret Mary Vojtko, a 25-year adjunct faculty member at Duquesne University who died recently in poverty at the age of 83.

Two and a half years ago, the Keystone Research Center released the most comprehensive state report in the United States on the rising use of adjunct faculty at colleges and universities. The numbers were sobering. Even if they cobbled together a full-time (10 courses per year) load at multiple institutions, adjunct community college faculty in Pennsylvania earned only about $25,000 annually. Contingent faculty members and instructors taught 42% of the courses at all public colleges and universities in Pennsylvania (versus 49% nationally). Most part-time/adjunct faculty members in Pennsylvania public higher education received no health or pension benefits.

Given cuts in state funding for higher education since we wrote our report, the situation is surely worse today in Pennsylvania.

How do we avoid a future in which a majority of higher education faculty earn less than a “quality” wage – a wage sufficient to give teachers time to prepare lessons, establish office hours, and provide feedback that increases student learning?

It would help if we honored the rights of part-time/contingent faculty to join a union – starting, for example, at Margaret Mary’s Duquesne. One game-changing option would give all part-time and contingent faculty at publicly funded Pennsylvania higher education institutions the freedom to form a single statewide local union. This would enable part-time and contingent faculty to negotiate statewide wage and benefit standards and working conditions consistent with teaching excellence. (This type of geographically based union that lifts up low wages and benefits in service industries that can’t relocate – because they have to be near their “customers” – is exactly what is needed to rebuild the middle class generally in Pennsylvania and the United States. See my earlier posts on fast food workers and on the 50th Anniversary of Martin Luther King’s “I Have a Dream Speech.”)

State lawmakers also need to develop – and fund – a long-term plan for paying all higher education teachers a “quality wage.” In a world both moral and rational, this could be part of a broader plan that also makes post-secondary education affordable again for students, and marries online and in-person education to lower costs while maintaining quality.

This approach starts with values – the outcomes we want for students, faculty, and taxpayers – and then uses technology, collective problem-solving, and social negotiation to create a world that honors those values. Imagine the possibilities.

The story of Margaret Mary is a sad reminder that all public policy discussion should start from values – the world we want to create and, unfortunately, the world we want to avoid.

‘This Is What the Middle Class Looks Like’

By Stephen Herzenberg, Third and State

“This is what democracy looks like.” Even though this chant originated with the Seattle protests against the World Trade Organization (WTO), which haven’t yet led to major reforms, the phrase nonetheless captures the idea of a social movement that has crystallized its demands and has a better chance to succeed because of it. Other examples include the right to vote in the civil rights movement, or the fight to legalize gay marriage, a simple modern demand that culminates a fight for equality in all its dimensions.

One challenge in the U.S. fight for economic justice since inequality began to yawn wider in the 1970s has been the lack of a simple demand that either working people or elites thought could bring back the middle class. Having such a demand fuels social movements because it gives members of the movement confidence – conviction – that there is a way for the world to give them what they want. It also fuels social movements because it gives the broader society a way to let the protesters get a win.

The fast food workers engaging in one-day strikes across the country may be on the verge of crystallizing a simple demand to which their low-wage employers could accede – and, in the process, cracking the code to the next U.S. middle class.

Today’s story on these strikes in The New York Times says that the organizers aren’t actually clear yet on the path to victory. The demand is a $15-per-hour wage – a ticket to the middle class. But will progress result from a higher minimum wage, local living wage requirements for big chains, or companies themselves raising wages to get off the front page? (This is where you say in your best pompous pundit voice, “Well, ah, um, cough, good question.”)

Because these protesters have a practical, confident vision of the end point they want – an economy that pays lower-wage workers a middle-class wage (so what if Big Macs cost 50 cents more) – they have a good chance of finding the mechanism that can get them there and keep them there (or forcing the rest of us to figure out the mechanism).

I think the mechanism is pretty simple – it’s a union of all fast food workers in a metro area, across multiple companies. It would borrow heavily from building trades union models, such as electricians and carpenters. It would set area-wide wages, $15 an hour to start, as well as establish multi-employer health and pension plans. Most of the basic institutional solutions here were anticipated by SEIU’s Justice for Janitors campaigns going back to the late 1980s. Former KRC Research Director Howard Wial wrote a brilliant article about this back in 1993. Howard, another colleague, and I wrote a shorter version of the same pitch in the house organ of the Democratic Leadership Council (The New Democrat) in 1998. These ideas also overlap those in Dishing It Out, a history of waitress unions published by Dorothy Sue Cobble in 1991, in part because Cobble recognized the relevance of these unions to the contemporary low-wage service sector.

The same basic union model works in any service industry sector that cannot relocate because it has to be near customers – in other words, for virtually all the nation’s low-wage jobs. This includes workers in hotels, supermarkets, hardware stores, and other parts of retail; in non-fast-food restaurants; in child care, long-term care, and health care as a whole – doctors and some nurses are well paid, but too often workers on the lower end of the pay scale do not get middle-class wages even though their compensation is a small fraction of health-care costs. The generic formula: $15 per hour starting wage, decent benefits, and, if some businesses and policymakers are smart about it, more investment in training and the creation of career ladders.

This is what the middle class looks like.

If we can cross the Rubicon to this type of institutional solution and lock in $15 per hour in just one or two places, it will take off. We’ll have a mass variation on the old line from When Harry Met Sally – “I’ll have what she’s having.” Except, in this case, it will be, “I’ll have that kind of unionism New York, or Chicago, or St. Louis fast food workers are having.” This take-off would be analogous to when the United Auto Workers broke the code to establish a union at GM after the Flint sit-down strike, which paved the way for unionism at Chrysler, Ford, GE, Westinghouse, and in the steel industry. It paved the way for industry-wide wages and benefits through mass manufacturing. And the American middle class was born with employers paying, who knows, maybe twice what they paid before the upsurge.

So, with respect, I disagree with labor historian Nelson Lichtenstein who says in The New York Times that these protests won’t lead to unionization.

Of course, to paraphrase an old joke about economists and recessions (“I’ve predicted seven of the last three recessions”), I’ve predicted three of the last zero “New Deals for a New Economy.”

Still, I stand by my conviction. This IS what the middle class looks like. And it’s just right there, waiting to be born.

Diversion Politics and Factual Errors with ‘Americans for a Tiny Sliver of Rich People’

By Stephen Herzenberg, Third and State

Jennifer Stefano, the Pennsylvania director of Americans for Prosperity, published an op-ed in the Harrisburg Patriot-News Friday – the latest salvo in an organized right-wing assault on nutrition assistance and other safety net spending.

The op-ed claims that the number of Americans who receive some kind of subsidized food assistance is at more than 101 million and “has surpassed the number of full-time private-sector workers in our country.” Actually, there are 114 million private-sector workers in the United States, according to Bureau of Labor Statistics data for June 2013, but who’s counting.

Americans for Prosperity is a conservative advocacy group funded in part by the Koch Brothers. It is the 1% looking out for the interests of the 1%.

As I noted, Jennifer Stefano’s op-ed is part of a larger campaign to cut safety net spending. Food stamp spending in the current slow economy has temporarily risen to about 0.5% of GDP, from about 0.33% of GDP in the early 1980s recession. Of course, that recession was much shorter and shallower nationally than the recent Great Recession.

Today food assistance remains well targeted: 85% of households participating in the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, have gross incomes below the poverty line; 98.5% have disposable (or “net”) incomes below the poverty line. SNAP provides only $1.50 per person per meal and is scheduled to drop to $1.30 per person per meal in November. (Stefano has nothing to say about the preservation of farm subsidies for agribusiness – the most generous “food program” in the United States.)

Stefano presents the temporary growth in food assistance as a “kitchen table” issue. Let’s put it in perspective. Another kitchen table issue is the dramatic decline in the share of the economic pie going to the vast 99% of Americans – because the share going to the top 1% has risen by about 10 percentage points, The temporary increase in food stamps spending is thus about 1/50 the size of the not-so-temporary increase in the share of income going to the Koch Brothers and, I’m guessing, other funders of Americans for Prosperity.

Stefano’s piece is part of a well-oiled effort to distract middle-class families from the real cause of their economic struggles. When you look at the facts, that cause is not rising taxes or spending on social programs. It’s the rise in economic inequality (and, to a lesser degree, the fall in taxes paid by the more affluent).

Here’s hoping that Pennsylvanians and Americans will keep their eyes on the ball and not fall for the obfuscations of groups like Stefano’s.

Toshi Seeger and Respect for the Working Man and Woman

By Stephen Herzenberg, Third and State

Toshi Seeger's obituary last week in The New York Times brought a smile to my face.

Toshi provided her husband, the folk singer Pete Seeger, with the organizational skills without which he would have not been so influential or commercially successful.

Toshi also kept him grounded. “I hate it when people romanticize him,” she said. “He’s like anybody good at his craft, like a good bulldozer operator.”

That simple sentiment works in both directions. It helped make sure Pete Seeger would not become too big for his britches. It also communicates deep respect for the bulldozer operator — and for hardworking people more generally.

One of many problems with the obscene income inequality that has emerged in the United States since the 1970s is that too many people in the "1%" (and the smaller groups at the very, very top) seem to have convinced themselves that they are not only deserving but also somehow different than — better than — other people.

Economic elites and the broader culture have also come to respect much less the hard work of regular folks — the nurse's aide and the sanitation worker, the back hoe operator and the warehouse worker, the truck driver and the child-care teacher. Legislators and advocates for local government communicate this, for example, every single time they seek to cut the state's prevailing wage for construction workers.

Along with their serial refusal to look at the ample evidence that paying construction workers decently does not increase construction costs, these proponents of weakening prevailing wage laws imply, again and again, "anyone off the street can do construction work just as well as experienced crafts workers." It's not true. It's deeply offensive. And it's sad that the people being so dismissive of other people's skills don't even realize how insulting they are being.

Maybe a few folks reading Toshi Seeger's obituary will pause briefly to reflect on the moral compass that led her to equate her phenomenally successful folk singer husband and a good bulldozer operator. That would be a good thing.

The Reports of Unions’ Death Are Greatly Exaggerated

By Stephen Herzenberg, Third and State

There’s a good deal of crowing in conservative circles this week about the new 2012 numbers on union membership. Union membership nationally fell by about 400,000, to 14.4 million. Union membership in Pennsylvania declined 45,000, including 59,000 in the private sector.

Of course, for anyone who cares about, say, the American Dream, democracy, and rising living standards, the newest numbers are bad news. A simple chart put together by the Center for American Progress shows that unions are vital to the middle class. As unions have weakened, so has the share of income going to middle-income workers – and the gap between the 1% and the 99% has mushroomed.

As this blog has noted, inequality undermines not only economic opportunity, but it also slows economic growth and makes our democracy less responsive to typical families and the public good (and too responsive to rich special interests).

One silver lining in the new numbers is the great variation that exists across states. Unions are growing in some places. Another silver lining is that the weaker unions get, the more evidence we get that this is a bad thing. Evidence such as the fact that the top 1% of the population took home 93% of the increase in income in the United States in the last year for which we have data. And evidence such as the skills shortage in U.S. manufacturing: surprise, surprise, if you pay workers poorly and don’t invest in them, you can’t attract and retain the factory talent you need.

Fifteen years ago, we outlined why America needs “new unions for a new economy” – and noted that we couldn’t see how to restore widely shared prosperity without a revival of unionism. The evidence for our position grows with each day.

But beneath the overall numbers, even in Pennsylvania and even in manufacturing, there are signs of revival. Take, for example, a unionized Schott Glass plant near Scranton, which is pioneering a new labor-management apprenticeship program.

To paraphrase Mark Twain, the reports of unions’ death are greatly exaggerated.

Pennsylvania Tax Giveaways and an Island in the Sun

By Jamar Thrasher, Third and State

A few weeks ago, the Pennsylvania General Assembly fast-tracked a bill in the waning days of the legislative session to allow certain private companies to keep most of the state income taxes of new employees. News reports to follow indicated the new tax giveaway was designed to lure California-based software firm Oracle to State College.

Well, it turns out the CEO of Oracle, which will benefit from the largess of Pennsylvania taxpayers, recently bought his very own Hawaiian island, as CNN reported back in June.

Oracle CEO Larry Ellison, the third richest man in the U.S., purchased about 98% of Lana’i, the sixth largest of the Hawaiian islands. Forbes reported that the deal was rumored to be worth $500 million.

As CNN tells us:

The island includes two luxury resorts, two golf courses, two club houses and 88,000 acres of land, according to a document filed with the Public Utilities Commission.

Which bring us back to Pennsylvania, where Governor Corbett recently signed House Bill 2626, allowing qualifying companies that create at least 250 new jobs within five years to pocket 95% of the personal income taxes paid by the new employees. 

Legislative sources told The Philadelphia Inquirer that “the bill was designed to lure California-based Oracle, the world’s third-largest software maker with $37 billion in revenue last year, to open a facility in the Penn State region, which would provide a pool of highly educated job seekers.”

We’ve already blogged about why this bill is a bad deal for Pennsylvanians, but Larry Ellison’s island provides us with yet another reason. 

Oracle should not be pocketing the withholding taxes of new employees in State College, especially at a time when the state is cutting investments in schools and underfunding infrastructure. 

And especially when the boss is doing well enough to afford an island in the sun.

Predatory Payday Lending Bill Flies Out of Cramped PA House Committee

By Mark Price, Third and State

Room 148 of the State Capitol might as well double as a Capitol broom closet. That's where the House Consumer Affairs Committee this morning rushed out amendments to House Bill 2191, which legalizes predatory payday lending in Pennsylvania.

What is payday lending? Payday lending encompasses small loans, usually for two weeks or less, that require a post-dated check or electronic access to a borrower’s bank account as a condition of the loan. Fees and interest in states that allow payday lending typically total $15 to $17 for every $100 borrowed — amounting to an effective annual percentage rate of more than 300 percent for a loan due in full in 14-days.

The amendments to HB 2191 were misleadingly pitched as adding more consumer protections to the bill. Even the Navy Marine Corps Relief Society took a look at these amendments and said they do "nothing to mitigate the already harmful aspects of HB 2191," and that one amendment "actually worsens the problem it claims to solve."

One focus of the amendments this morning was language banning renewals or rollovers of a payday loan, as if that was a solution to stopping the long-term cycle of debt. It is not.

Payday lenders support amendments that ban renewals and rollovers because they know how to circumvent them. To avoid appearing to "rollover" or "renew" the debt, lenders ask the borrower to pay off the old loan and take out a new loan by paying a new fee and writing another check. Also, in a practice called "touch and go," lenders take a cash "payoff" for the old loan that they immediately re-loan with new loan funds the next day.

Here’s how it works: To repay the first loan, the borrower lets the lender cash the original post-dated check or pays the lender $300 in cash to tear up the check. In either case, they borrow again immediately or as soon as allowed by law. 

Under HB 2191 as amended, people would be able to borrow again the next day. In this way, a borrower in Pennsylvania could be indebted every payday of the year!

Because these types of transactions technically do involve paying off the loan — if only for one day before a new loan is originated — they are not considered renewals or rollovers, thus allowing serial use of payday lending to continue unabated. In states with a rollover ban, borrowers are stuck in an average of nine loans per year, and payday lenders earn 60% of their revenue from borrowers with 12 or more loans a year.

As the Keystone Research Center explains in a new policy brief, Bankrupt by Design: Payday Lenders Target Pennsylvania Working Families:

Research and experience in other states shows that payday loans with triple-digit APRs and quick due dates lead to the accumulation of long-term debt for working families, rather than serving as timely financial aid, as the industry often claims.

Customers typically do not use a payday lender just once; the average payday borrower takes out nine payday loans per year. Many borrowers cannot afford to pay back the principal, let alone the principal plus high interest and fees, two weeks or less after borrowing. 

When borrowers do pay back the loan, they often need an additional loan to meet their already established bills and obligations. The structure of the payday product itself exploits the already stretched budgets of low- and moderate-income families by luring them into a debt trap.  

In today’s committee meeting, Rep. Jesse White noted that in his legal practice helping low-income rural families struggling with bankruptcy, his clients often identified their use of payday lending (when it was legal in Pennsylvania) as the point at which their financial troubles got out of control.

It is no surprise then that the typical payday borrower takes out multiple (non-concurrent) loans over the year, each time falling further behind on their bills. It is also why payday borrowers are twice as likely to file for bankruptcy as applicants denied a payday loan. Payday lenders succeed not by targeting the completely destitute but by targeting desperate but resourceful people they can squeeze for money.

Predatory payday lending doesn't just put the squeeze on borrowers; excessive fees leave borrowers with less money to spend on goods and services, such as rent and food. This ends up erasing an estimated 1,843 good jobs from the economy. In this way, HB 2191, even with amendments, would transfer money from Main Street Pennsylvania to out-of-state and foreign payday lending corporations. 

Under current Pennsylvania law, payday lending at annual interest rates of 300% or more is illegal. It's also immoral. HB 2191 would do more harm to Pennsylvania than good.

Inequality and Infrastructure

By Chris Lilienthal, Third and State

U.S. funding of infrastructure has declined dramatically since the 1960s, and Congress appears to be moving in the direction of even more cutbacks in the years ahead.

There is a bit of irony to this. With borrowing costs still very low and the market still somewhat depressed, now would be an ideal time for government to step up investment in infrastructure. In other words, it costs a lot less to build roads and bridges today than it might down the road if we hold off on the billions of dollars in needed repairs.

Sam Pizzigati laments this irony in a recent op-ed in The Star Ledger of Newark, N.J. And he has an interesting take on why infrastructure is getting short shrift: blame income inequality:

The cost of borrowing for infrastructure projects has hit record lows — and the private construction companies that do infrastructure work remain desperate for contracts. They’re charging less.

Yet our political system seems totally incapable of responding to the enormous opportunity we have before us. Center for American Progress analysts David Madland and Nick Bunker blame this political dysfunction on inequality.

The more wealth concentrates, their research shows, the feebler a society’s investments in infrastructure become. Our nation’s long-term decline in federal infrastructure investment — from 3.3 percent of GDP in 1968 to 1.3 percent in 2011 — turns out to mirror almost exactly the long-term shift in income from America’s middle class to the richest Americans.

Pizzigati notes that middle-class families rely on good roads and mass transit more than wealthy families, but the middle class tends to be weaker in unequal societies:

That leaves Americans with a basic choice. We can press for greater equality. Or spend more time dodging potholes.

March Job Numbers For Pennsylvania and CEO Pay

By Mark Price, Third and State

The Pennsylvania Department of Labor and Industry released new data for March on Pennsylvania's employment situation. According to the household survey, the unemployment rate edged down slightly to 7.5%, and the survey of employers showed healthy growth in nonfarm payrolls of 7,800 jobs.

As always, caution should be exercised in interpreting a month change in employment statistics.

In terms of levels, there were big gains in Leisure and Hospitality (7,000), Trade Transportation and Utilities (4,000) and Manufacturing (2,100). We will not have full information until the fall whether the job losses in the public sector will put a drag on employment growth in 2012, but the March data shows we are off to an uncomfortable start, with 2,500 jobs lost.

Over the last several months, Pennsylvania nonfarm payroll counts have been particularly volatile, showing big one-month gains and losses thanks to a combination of unusually warm weather and some technical issues. On average over the last six months, Pennsylvania has added just under 6,000 jobs a month. We need about 10,000 jobs a month to move back to full employment by March 2015 (three years from now).

While unemployment remains high today and for the foreseeable future, the distance between CEO pay and the pay of the typical worker reached an all time high in 2011.

Corporate CEOs are now making 380 times the salary of the average American worker, a record high and the biggest pay gap in the whole world, according to the 2011 AFL-CIO's Executive Paywatch.

 

High CEO Pay Comes Under Fire from Shareholders

By Michael Wood, Third and State

In the news today, a couple of instances of CEOs being taken to task by shareholders over excessive pay.

USA Today reports that at Citigroup, 55% of shareholders rejected or abstained from rubberstamping a $25 million payday for their CEO Vikrom Pandit. The vote is only advisory, unfortunely, but is still described as being “historic” for Wall Street firms in the aftermath of the recession. The report notes:

Wall Street’s massive compensation packages have raised the ire of shareholders for years, especially when they appear to have little relation to the performance of specific executives. …

“Citigroup is one of most egregious example of disconnect between incentives of top management and value creation of shareholders,” said Mike Mayo, bank analyst at brokerage firm CLSA and author of the book “Exile on Wall Street.”

“The owners of the big banks, namely the shareholders, are finally taking a greater amount of responsibility by speaking up.”

Closer to home, the Pittsburgh Post-Gazette has a story this morning about discontent at Pittsburgh-based EQT’s annual shareholder meeting. Again, executive compensation seems to be at the heart of this dispute – as well as unease about natural gas production. 

Even though the Buffett Rule failed to get a vote in the U.S. Senate earlier this week, it seems that income inequality is on the minds of many Americans right now – as it should be. (In case you missed it, check out the Keystone Research Center and Pennsylvania Budget and Policy Center’s fact sheet on the Buffett Rule and what it means to Pennsylvania.)