We Do Not Want a Deadbeat Employer in the Oval Office

June 9, 2016 Paul Constant

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2016, Donald Trump, Economics, small business

Just yesterday on this here blog , I was talking about toxic employers. I discussed McDonald’s and Wal-Mart, which are two of the all-time classic examples of the form. But there are plenty of bad employers out there—the kind of cheap SOBs who lower the bar for employers everywhere—and they’re not all doing business under a pair of golden arches or behind smiley faces. Why, a great USA Today report about a particularly bad employer just hit the internet today . His name is Donald Trump: Donald Trump often portrays himself as a savior of the working class who will “protect your job.” But a USA TODAY NETWORK analysis found he has been involved in more than 3,500 lawsuits over the past three decades – and a large number of those involve ordinary Americans, like the Friels, who say Trump or his companies have refused to pay them. At least 60 lawsuits, along with hundreds of liens, judgments, and other government filings reviewed by the USA TODAY NETWORK, document people who have accused Trump and his businesses of failing to pay them for their work. Among them: a dishwasher in Florida. A glass company in New Jersey. A carpet company. A plumber. Painters. Forty-eight waiters. Dozens of bartenders and other hourly workers at his resorts and clubs, coast to coast. Real estate brokers who sold his properties. And, ironically, several law firms that once represented him in these suits and others. Lots of people—myself included—believe that if you want to know a person’s soul, you should watch the way they deal with their servers at a restaurant. If a person yells at, mistreats, or stiffs a waiter, they’re likely not a decent person. Along those lines, Trump is proving with this story that he’s a terrible employer. Which probably means he’s a terrible person, and which definitely proves he’s not a good leader. I mean, really. Do you want a man who doesn’t fairly
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A New Report Says We Should Stop Treating Our Employees Like They’re Paperclips

June 8, 2016 Paul Constant

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parasite economy, Policy

As Nick Hanauer wrote in the American Prospect, the American economy today is home to two types of businesses: “those that pay their workers a living wage—the real economy—and those that don’t—the parasite economy.” Put another way, there are employers who invest in their employees, and there are employers who drain their employees of their resources; the two big pairs of examples that Hanauer uses in the article are McDonald’s (parasite economy) and In-N-Out Burger (real economy) and Wal-Mart (parasite economy) and Costco (real economy). Parasite economy employers often write food stamps and other government assistance programs into their business model; the government must step in to ensure that low-wage employees can survive on what their employers pay. What eventually happens is that real economy employers wind up subsidizing parasite economy employers. So as a nation, we want to encourage real-economy employers and discourage parasite-economy employers. A terrific new report from the Center for American Progress titled “Workers or Waste?” offers a quick and easy way to reward honorable real-economy employers for their investments in human capital. We want businesses to train and educate their employees; everyone understands almost instinctually that trained employees earn more, work more efficiently, stay on the job longer, and have better prospects when they move on. A smarter, more employable workforce is not just great for employers, it’s great for the economy. But we currently disincentivize that investment. As the authors explain : …A $10 million investment in worker training shows up in a firm’s financial statement—not on its own but lumped into selling, general, and administrative expenses, or SG&A, a measure that includes items such as company lunches and paper clips. Companies’ expenditures on worker training and skills show up not as a valuable investment similar to R&D but as an increase in general overhead, a measure that managers have shown a proclivity for cutting and whose reduction is often cheered by investors.
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Paul Ryan Dusts Off His Terrible Poverty Plan One More Time

June 7, 2016 Paul Constant

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2016, Policy, poverty

Speaker Paul Ryan today decried Donald Trump’s comments about Judge Gonzalo Curiel as “the textbook definition of a racist comment.” In a question-and-answer period with the press, Ryan also used words like “disavow” and “regret” to describe his reaction to Trump’s racist comment. So does that mean Ryan regrets his all-but-an-endorsement endorsement of Trump? Well, no. Specifically, here’s what he said about that: “Do I think Hillary Clinton is the answer? No I do not.” So to be clear, Ryan acknowledges that Trump made a “textbook…racist comment.” But he also acknowledged that he’s still voting for Trump. Which is good to know! It’s obviously good to know when our elected leaders don’t consider alarming racist comments to be a reason to not vote for someone. Hell, at least Ryan made a statement. Washington gubernatorial candidate Bill Bryant recently received 15 minutes of grilling from journalist Joni Balter and he still won’t admit whether or not he’s voting for Donald Trump. (“I am not going to turn the governor’s race into a comment on the presidential race,” Bryant told Balter. Uh, good luck with the next half-year or so, Bill.) Anyway, Ryan’s unsatisfying statements on Trump completely buried the news that Ryan had hoped would lead the day: he just revealed his hope for the 2016 Republican agenda, which he optimistically titled “A Better Day .” Specifics for “A Better Day” will be rolled out over the next few weeks, but Ryan started today with poverty. Here, from the “A Better Day” website, are the GOP’s ideas for solving poverty: Okay. Well, a lot of these are so vague that it’s impossible to argue — does anyone really want to worsen skills and schools? — but others hint at the direction Ryan is going with this anti-poverty program. Specifically, Ryan is interested in blaming the poor for being poor. Let’s talk specifically about number one on the agenda, which is about
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It’s Time to Reform Debt Buying and Debt Collection

June 6, 2016 Paul Constant

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debt, Policy

Last night on Last Week Tonight, John Oliver made television history for the largest giveaway by a TV show, easily surpassing Oprah’s “ You get a car! You get a car! Everybody gets a car! ” moment. The thing that Oliver was giving away was not as sexy as new cars, but it was much more life-changing: he forgave $14 million in medical debt. At twenty minutes, this video is long by internet standards (and it’s riddled with swears so if you’re at work you should put your headphones in) but it’s very worth it. If you don’t have the capacity to watch videos right now, here’s a short recap: American households carry over twelve trillion dollars in debt. Nearly 450 billion of that debt is over ninety days overdue. That 450 billion is likely to be sold for a fraction of the cost by banks and other financial institutions to collection companies, which then often use smarmy methods to try to collect on the debt. Oliver’s show spent $50 to incorporate as a collection company, and within a matter of days, his corporation was offered just shy of $15,000,000 of medical debt information for nine thousand people, which they then bought for less than $60,000. The information consisted of a bare-bones spreadsheet with names, Social Security numbers, and addresses. Ordinarily, that would be the point when the collection company would start shaking down the debtors with continuous phone calls, legal threats, and other, potentially illegal methods (including calling friends, coworkers, and family of the debtors in an effort to publicly shame them) to get some of that money back. Instead, Oliver forgave the debt, thereby breaking Oprah’s record. Obviously, debt collection reform is necessary. Look into the history of debt buying and you’ll see some small efforts to rein in debt buyers, like this, from last year: Under consent orders, Encore Capital Group and Portfolio Recovery Associates will
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Here’s What You Can do to Stop Predatory Payday Lenders

June 2, 2016 Paul Constant

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Payday Loans, Policy

In Kansas City today, the Consumer Financial Protection Bureau—the independent government agency created by Senator Elizabeth Warren in the aftermath of the 2008 financial crisis—announced their new set of rules for payday lenders and other predatory loan operations. These are commonsense rules that no sane person should oppose; they’re guidelines that prevent some of the poorest, most desperate Americans from doing grievous harm to their own finances. One rule, for instance, insists that lenders check to see if a borrower can realistically repay a loan. Imagine if you or I could walk into a bank and get a home loan without even a credit check beforehand. Predatory lenders are currently handing out money to people without ensuring first that they the capacity to pay the loan back within a reasonable amount of time. It sounds counterintuitive, but they obviously do this because their interest rates are so high that they can get people with bad credit histories on the hook for years a time, turning one bad decision into years of monetary gain for lenders. Additionally, lenders won’t be allowed to offer a second loan within 30 days of a previous loan, unless the borrower can prove that their financial situation has significantly improved. Further, lenders won’t be able to offer more than three loans within a few months of each other. It’s a straightforward “waiting period” that allows borrowers to catch their breath and get a sense of their finances before burrowing even deeper into debt. And finally, lenders won’t be able to repeatedly and without permission shake down the bank accounts of their customers, thereby saving consumers from untold millions in overdraft and penalty fees. Under the new rule, lenders will have to contact borrowers with written notice before requesting funds from their bank accounts, and they will be restricted to
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If Overtime Isn’t Good for Your Corporate Culture, Maybe You Should Change the Culture

June 1, 2016 Paul Constant

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Overtime

New York Times journalist Noam Scheiber wrote a piece over the weekend about the increasing overtime threshold. Did he profile one of the many fast food managers who will make more money when the new overtime threshold takes hold? Did he chat with a low-wage worker from New Hampshire who suddenly won’t have to work 13 additional hours a week for absolutely no extra money? Well, no. Instead, he talked with “bosses at publishing houses, glossy magazines, consulting firms, advocacy groups, movie production companies and talent agencies.” For example: “You want to bump into the boss at 8 o’clock at night,” said Dan Reynolds, chief executive of Workman Publishing, the publisher of “What to Expect When You’re Expecting” and many of Sandra Boynton’s children’s books. “I’m interested in how this will affect that,” Mr. Reynolds said. “It’s more of a cultural thing than anything else.” Uh huh. Okay. And what does this “cultural thing” entail, exactly? Workman’s general manager, Jill Salayi, suggested that because the company could not afford to pay overtime to all newly eligible staff members or raise their salaries over the new threshold, it would have to cut back their hours in many cases. “Less will be asked of them,” she argued, “which means they will not receive sufficient career development or see timely advancement and/or promotions.” I don’t know about you, but I’ve heard these same kind of arguments from terrible bosses at terrible jobs when they explained why they couldn’t pay any more even though they were asking me to do more work. They told me that without hard work—by which they meant unpaid work, above and beyond the 40-hours-per-week in the job description—I would never get ahead. This is a classic example of the kind of intimidation tactic that people in power use to keep the masses in line. By
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Paul Ryan Releases Bizarre Anti-Trump Ad That Never Mentions Trump By Name

May 26, 2016 Paul Constant

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2016, Donald Trump, Paul Ryan

Yesterday, Speaker of the House Paul Ryan’s office published a very strange video. Titled “The Choice,” the video features Ryan speaking very vaguely about something that he thinks is a real problem today. He doesn’t really name the problem he’s discussing, but it’s pretty obvious that he’s talking about Donald Trump. Here’s the video: And here’s the transcript: I have not seen the kind of bitterness in our discourse, our politics, like we have today, and I gotta say I think it’s both sides — I’d love to say it’s just Democrats, but it’s not, it’s both. And it doesn’t have to be this way. America can do better. This anxiety has got to be channeled, and dealt with with solutions instead of just amplified and accelerated and exacerbating it. How do you fix that? I think leaders fix this. We haven’t had that kind of leadership lately. Leaders need to say, “Here’s my principle, here’s my solution and let’s try and do it in a way that is inclusive, that’s optimistic, that aspirational and that’s focusing on solutions.” And so that’s the choice you’ll have, far more than personality. Republicans lose personality contests anyway. We always do. But we win ideas contests. We owe you that choice. So a little Ryan-to-English translation is necessary: by “it’s both sides” who participate in bitterness, Ryan is really just calling out Donald Trump. When he says that we “haven’t had that kind of leadership lately,” he’s likely calling out both President Obama and Donald Trump. This is exceptionally weird, right? I can’t recall another time when a prominent elected official has put out a commercial trashing the presumptive presidential nominee of his own party. Also interesting? Ryan’s idea of what leaders do. Nobody, really, can argue with his claim that leaders should be
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Just Another Day in Trickle-Down America

May 24, 2016 Paul Constant

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Economics, Minimum Wage

Part of the reason why we’re finally recognizing trickle-down economics as a scam is that we have so many examples of its failures. The clearest and most obvious failure, of course, is Kansas, which is maybe the purest laboratory of trickle-down economics ever devised by politicians. Governor Sam Brownback and his conservative legislature pushed through tax cut after tax cut, driving more and more money to Kansas’s top one percent. They cut regulations for corporations, and they did as much trickle-down triage as possible. As we all know by now, the trickle down motto is that if you give enough money to the wealthiest Americans, that money will then trickle down (often in the form of jobs) for everyone else. How’s it working out? The Chicago Tribune‘s Eric Zorn did a little check-in on Kansas last week . Seems that Governor Brownback is the least popular governor in America right now—yes, even lower-rated than Michigan Governor Rick Snyder, who is largely viewed as responsible for Flint’s over-leaded water supply. Zorn continues: The Congressional Joint Economic Committee reported earlier this year that Kansas had just 9,400 new private-sector jobs in 2015 (out of 2.6 million nationwide). U.S. Department of Commerce data show that, prior to Brownback’s tax cuts, Kansas ranked 12th in the nation in personal income growth; after the tax cuts it fell to 41st. A handful of school districts in the state had to close early last year for lack of funds, and the state Supreme Court has had to issue orders requiring Kansas to cough up enough money to pay for K-12 education. In March, Brownback cut $17 million in funding, 3 percent, from the state’s six public universities in response to revenue shortfalls. In April, he announced that he was going to have to delay a $93 million contribution to the state pension fund, prompting Moody’s Investors Services to downgrade
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Watch Elizabeth Warren Explain Why America Needs to Have a Conversation About the Future of Work

May 23, 2016 Paul Constant

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2016, Economics, shared security, Shared Security System, workers

Last week, Elizabeth Warren gave an important speech at New America , a progressive policy institute in Washington DC. Titled “Strengthening the Basic Bargain for Workers in the Modern Economy,” the speech addressed ways workers and employers can adapt to the gig economy while still keeping America’s middle class strong. It’s important to note that Warren did not attack Uber or Lyft for their employment practices, and she was not advocating a return to 1950s work standards. In fact, Warren praised those two companies for the way they encouraged “more rides, cheaper rides, and shorter wait times” than the taxicab industry. But she acknowledged that the disruption caused by gig economy employers was affecting the nature of work in America today: fewer workers now enjoy the security of a middle-class life because their jobs have changed .”While their businesses provide workers with great flexibility,” Warren said, “companies like Lyft and Uber have often resisted the efforts of those same workers to access a greater share of the wealth generated from their work. Their business model is, in part, dependent on extremely low wages for drivers.” This is a problem: America is built on the strength of its middle class, and if we exclude low-wage workers from the economy, the economy will suffer. So what should we do about this? We can’t (and in fact we shouldn’t want to) turn back the clock to a pre-gig economy time. Warren rightly compared the gig economy with the industrial revolution, which was another period of massive disruption: America’s response wasn’t to abandon the technological innovations and improvements of the industrial revolution. We didn’t send everyone back to their farms. No. Instead, we came together, and through our government we changed public policies to adapt to a changing economy – to keep the good and get rid of much
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If You Think the New Overtime Rule Is “Entirely Trivial,” You Really Should Get Out More

May 19, 2016 Paul Constant

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Overtime, Tim Worstall, Worstall

Our old “ friend ” Tim Worstall is back at it on his occasionally almost nearly coherent Forbes blog . This time, he’s talking about the increased overtime threshold . As you may have expected, he thinks paying more overtime is a bad idea . Here Tim is being, if nothing else, consistent; he thinks a minimum wage is a bad idea, after all, so why wouldn’t he be against a policy like overtime that benefits workers? But the truth about overtime is that Tim just doesn’t care all that much . No, really. He calls the new threshold “entirely trivial.” That’s a direct quote. In fact, he uses the word “trivial” twice to describe the effects of overtime and then he says he’s not even sure the White House estimates of what the overtime raise will pay out—”$1.2 billion a year over the next decade”—are worthy of the word “trivial,” they’re so insignificant. He concludes: Probably the correct way to think of this is as a nice piece of politics that everyone can have a good shout about rather than a piece of useful economics. Everyone gets to show where they stand with a lot of heat and not much light. Or, of course, that very small tempest in a not very large teapot. Wow. Tim, here, is a classic example of what happens when someone argues politics on the internet for too long. Everything becomes academic. When you call a policy that will directly improve the lives of 12 and a half million Americans “a nice piece of politics,” you’ve passed a very significant point. When you have your head in the conservative economics bubble for years at a time, apparently, you forget that you’re arguing about real human beings with real lives and you start to think of it as points on a scorecard. Sure, maybe to our buddy Tim 1.2 billion dollars a year is nothing. But to a retail manager who’s trying to raise two kids on
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