A recently published study found evidence that Seattle’s phased-in $15 hourly minimum wage has led to an overall decrease in low-wage jobs. But some analysts doubt the study’s methodology, and attribute the low-wage job decrease to Seattle’s booming labor market. Low-wage workers are simply getting paid more because of the market, critics of the study contend, thus the decrease in wages for lower paying jobs.

In 2014, Seattle became one of the first jurisdictions to commit to a $15 per hour minimum wage, a benchmark that would be phased-in over a few years. The first wage hike was in April 2015, as large businesses began paying their employees at least $11 per hour, up from $9.47. In January 2016, the minimum hourly wage for large businesses rose to $13; in January of this year, the rate finally hit $15. The wage increases for smaller businesses were more modest–many have yet to reach the $15 benchmark.

The study, conducted by University of Washington researchers, concluded the following:

Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016.

But not everyone is taking the study’s findings at face value. For one, it has not been peer reviewed. Critics say the drop in working hours for low-wage jobs is not necessarily a result of the minimum wage bump–the decline is due to Seattle’s flowering economy, they say. Instead, some analysts say, lower wage earners have seen a paycheck bump because of natural economic trends.

“The key challenge this study faces is how to separate the normal shift that’s happening in a booming labor market — where low-wage jobs disappear and are replaced by higher-wage jobs — from an actual increase in the minimum wage,” Ben Zipperer, an economist at the liberal Economic Policy Institute, told the New York Times.

To discern the precise cause of the decrease in low-wage jobs–either Seattle’s economic forces or its minimum wage hike–the researchers cobbled together a control group. Normally, researchers would compare Seattle to a city with near-identical variables, but a city that, unlike Seattle, did not significantly raise its minimum wage. For this study, however, the researchers took parts of areas throughout Washington State and patched them together to create a control group. Still, the researchers found Seattle’s situation to be unique.

“You see the biggest difference in the effect when the minimum wage increased from $11 to $13,” said Mark Long, one of the authors of the UW study. “The timing suggests it’s the minimum wage,” he added, not the natural effects of a growing economy. But Long did allow that his study’s conclusions might be flawed: “If the areas we’re picking to put weight on don’t match what would have happened to Seattle in the absence of the minimum wage, our results would be potentially biased.”

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

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To raise or not to raise? That is the question when it comes to the minimum wage. The national minimum wage is $7.25, but many states have set their own minimum wages a few dollars higher (see how your state stacks up). A person working at the federal rate would earn about $15,000 a year. When the current rate was set in 2009, a single parent raising a child under the age of 18 would be above the poverty line…though not by much.

According to the Office of the Assistant Secretary for Planning and Evaluation (ASPE), the federal poverty line for a two-person household in 2009 was $14,570. In 2016, the ASPE put the poverty line for a two-person household at $16,240. And while the poverty line has increased, the minimum wage has not, prompting many people to push for a raise in the minimum wage.

But it’s not that simple. Many people fight back against the thought of raising the minimum wage. One argument against raising the minimum wage is that it would hurt low-skilled workers. Companies will not want to pay more to employees for the same work they were getting before the rise in the minimum wage. Thus, they will lay off employees to not lose profits. What’s more, they will not hire as many workers either, now that they “cost” more.

Tim Worstall, a Forbes contributor, raised this exact concern when talking about Seattle raising its minimum wage back in 2016. “A rise in the price of something will lead to people purchasing less of that thing,” he said in an article for Forbes. “So a rise in the price of low-skill labor will lead to employers purchasing less of low-skill labor.” A trend, Worstall said, that was confirmed when Seattle raised its minimum wage and saw a decrease in hiring low-wage workers.

History of the Minimum Wage

The first minimum wage was set in 1938. It was introduced under President Franklin Delano Roosevelt during the Great Depression. The idea of a minimum wage is to protect workers, and having a minimum wage helps the government, too. If people are working and staying above the poverty line, that is less money that the government has to spend on welfare or other government programs to help the poor. When it was first introduced, the minimum wage was $0.25 an hour. In today’s dollars that would be $4.19.

Since its introduction, Congress has raised the minimum wage 22 times. The most recent raise was in 2009 when it increased from $6.55 to $7.25. There are many reasons why the minimum wage gets raised, including inflation and the changing value of the dollar, as well as an increase in productivity.

The Case for Raising the Minimum Wage

One of the strongest cases for raising the minimum wage is the fact that a single parent, working for the minimum wage and raising a child under the age of 18, is living below the poverty line. If the minimum wage was invented to help and protect workers, this is a clear failure.

Another argument for raising the minimum wage would be the positive effect it might have on the economy. According to a report from the Federal Reserve Bank of Chicago, increasing the minimum wage by $1.75 an hour would result in an increase of $48 billion in household spending. When people have more money, they will spend more money. If a family is living at or below the poverty line, they are less inclined to spend what little money they have on anything but the essentials. Earning even a little more an hour, households would have more to spend on products that they normally would not have purchased.

In addition, raising the minimum wage could help augment the disparity in wages in the U.S. The disparity between the richest one percent and the rest of the country is staggering. Raising the minimum wage has the potential to move almost 900,000 people (out of 45 million) out of poverty, according to the Congressional Budget Office. While this is a small percentage, it is a step in the right direction. Bringing people out of poverty eases tension on the government, as a less impoverished populace means that the government will spend less on welfare and programs.

Peer pressure is another reason to raise the minimum wage. An article in The Economist explains that the U.S. is an outlier when it comes to other countries’s minimum wage rate. Considering the U.S.’ GDP per person ($53,000), the country’s minimum wage should be about $12 per hour. Converted to U.S. dollars, the minimum wages of many other western countries far surpass America’s. Australia, France, Germany, the U.K., and Canada all have higher minimum wages than we do. However, this is not a case of apples to oranges. Living conditions, local economies, taxes, health care, and a slew of other factors play into this as well. 

The Case Against Raising the Minimum Wage

Now let’s address some of the arguments against raising the minimum wage. While the current minimum wage would put a single parent below the poverty line, it would not put a dual-income household below the poverty line. Furthermore, not all living conditions are equal around the country. Many states have minimum wages that are higher than the federal one in order to compensate for higher living costs within those states.

Next, while decreasing the need for welfare paid by the government sounds positive, the money does have to come from somewhere. While the government is not paying as much for welfare, companies now take on that burden of paying people more. The effect of this is two-fold. Companies, in an effort to save money, may lay off workers, thus putting more people on welfare anyway. Companies may also raise the prices of their products, so the consumers will take a hit for the higher paid employees.

Also, companies may slow hiring employees because they now “cost” more. When it comes down to someone getting paid $7.25 an hour or $0.00 an hour, getting paid something is more beneficial than not earning anything at all. These threats are not just hypothetical. Rising minimum wage rates are happening in certain states and the effects are already starting to show.

In January 2017 some states raised their local minimum wages, causing national chains based in those restaurants to start paying their workers more for the same job they were doing before. Wendy’s CEO Bob Wright expects to spend four percent more on employees’ wages. To offset this, Wright had every store cut 31 hours of labor per week and replaced that lost labor with automated kiosks at some locations.

Some critics also argue that raising the minimum wage hurts lower-skilled workers and younger workers. The Pew Research Center published an article claiming that nearly half of all workers who are earning minimum wage are aged 16 to 24. Young members of the workforce who are trying to break their way in will have a harder time.

Companies might be less willing to hire someone with no experience and pay them a higher wage. They will be more willing to hire someone with more experience who they feel will be a better value for this higher price. Of course this then becomes a vicious cycle of young workers not getting hired because they do not have experience and having a harder time finding work because they continue to not get experience. A lower minimum wage might give young workers more opportunities.

What Should the Minimum Wage Be?

If the minimum wage is going to increase, how much should it increase by? There are a variety of numbers that get thrown around when talking about raising the minimum wage. Here is a breakdown of how people arrive at these figures.

Some people argue it should be raised to $21.67. The minimum wage had the highest purchasing power in 1968 when it was $1.60, or roughly $10.55 today when adjusting for inflation. Some studies show that personal income, excluding Social Security, has increased by 100 percent, and thus the minimum wage should be adjusted to fit that standard as well.

Others argue it should be raised to $15. In 2014 and 2015, many major cities put into place economic plans that would gradually increase the minimum wage to $15 by 2017 and 2018. Cities that enacted those plans include New York, Seattle, San Francisco, Los Angeles, and Washington D.C. 

In 2014, The Economic Policy Institute made the case that the minimum wage should be raised to $10.10, arguing that it should be raised over a three-year period. This amount was determined to ease pressure on Medicaid and other governmental assistance programs. The debate over the minimum wage rages on, and states may adjust their own minimum wages because the federal one is too hard to change right now.

What’s Happening Now?

There has not been much movement at the federal level. Individual states are combating the federal inertia. On January 1, 2017, 19 states raised their minimum wages. The majority of the changes were to adjust for inflation (Missouri, Ohio, and Florida raising their minimum wages by only $0.05 an hour), but some states saw significant increases, like Maine (from $7.50 to $9.00), Washington ($9.47 to $11.00), and Arizona ($8.05 to $10.00). Many states have plans to increase their minimum wages in the coming years as well.

As a candidate, President Donald Trump suggested the minimum wage might be too high. In a debate in November 2015, he said in his opening statement that he would not raise the minimum wage and that wages were “too high.” He had said previously that year in an interview with MSNBC that a higher minimum wage would hurt America. “We can’t have a situation where our labor is so much more expensive than other countries’ that we can no longer win,” Trump said. This may be bad news for Trump supporters, many of whom work at the minimum wage and struggle to get by.

Conclusion

The minimum wage debate is not a new one and it’s not one that will end any time soon. Inflation and the fluctuating value of the dollar will forever throw the minimum wage’s value into question. As it stands, the current minimum wage is too low for many people to live on, but too drastic of an increase could result in far more catastrophic job loss. A delicate hand and a knowledgable course of action will be the best hope going forward. It seems that this issue will not be raised in the current administration any time soon; individual states should (and are) trying to ameliorate the issue on a local scale. If you want to see change, go out and call, mail, email, tweet, or visit your local representatives. They’re the ones who will be able to help the most right now.

Anne Grae Martin

Anne Grae Martin is a member of the class of 2017 University of Delaware. She is majoring in English Professional Writing and minoring in French and Spanish. When she’s not writing for Law Street, Anne Grae loves doing yoga, cooking, and correcting her friends’ grammar mistakes. Contact Anne Grae at staff@LawStreetMedia.com.

The post The Minimum Wage: Where Are We Going and How Did We Get Here? appeared first on Law Street.

Thousands of people marched in Chicago on Tuesday and Wednesday, in front of McDonald’s storefronts and the fast food giant’s headquarters, protesting its low hourly wage. Organized by “Fight for 15,” a labor group that advocates for a $15 per hour minimum wage, the protests began on Tuesday, as McDonald’s employees waved banners and signs in the streets.

On Wednesday, a couple hundred people gathered in front of the company’s suburban headquarters during its annual shareholder meeting. According to Reuters, 30 protesters were arrested on Wednesday for blocking a road. Terrance Wise, 42, was at the protest, and told Reuters he was there because he believes the minimum wage should be increased.

“I saw my mother, who worked for 30 years for Hardee’s, struggle on food stamps to raise her family and now I’m doing the same things,” he said, referencing another fast food giant. “Instead of paying their CEO $15 million, they should give him $10 million and pay their workers what’s right.” According to company figures, McDonald’s CEO Steve Easterbrook made $15.3 million last year.

March is about to kickoff. Thousands are ready to shut down streets and march #fightfor15 pic.twitter.com/4TSD27S6u2

— Fight For 15 Chicago (@chifightfor15) May 23, 2017

 “Fight for 15” has referred to McDonald’s as the “Donald Trump of corporations.” A page on its website reads: “Trump AND McDonald’s have a long history of sexual harassment, stealing from or refusing to pay employees, and ripping off taxpayers.”

Since 2015, in the franchises that it owns, McDonald’s pays its employees a wage of $10 per hour. But the majority of its stores are controlled by other owners, who can set the hourly wage as they please. The current federal minimum wage is $7.25 an hour. While many cities and states have raised their minimum wage, and some congressional Democrats have supported a steep increase, the Republican-controlled Congress is unlikely to make a federal change any time soon.

Meanwhile, Trump’s stance on raising the federal minimum wage has flipped more times than a McDouble. He has taken almost every position imaginable: from suggesting the minimum wage should be lowered, to saying it should stay the same. His most recent public comments, however, suggest he would like to see it increased to $10.

Last July, he said: “The minimum wage has to go up. People are — at least $10, but it has to go up. But I think that states — federal — I think that states should really call the shot.”

One-time presidential hopeful Bernie Sanders tweeted his two cents on the minimum wage debate on Thursday:

I know a $15 minimum wage is radical to Republicans.

You know what’s radical? That people working 40 or 50 hours a week live in poverty.

— Bernie Sanders (@SenSanders) May 25, 2017

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

The post Thousands Protest McDonald’s Wages, Demand $15 Per Hour appeared first on Law Street.

On Tuesday many big cities saw thousands of low-wage workers taking to the streets, protesting in favor of a $15 minimum wage. Union activists, politicians, and church members joined the nationwide demonstrations and almost 200 people were arrested across the U.S.

Workers joined the cause in airports, travel hubs, and highways by walking off their jobs or blocking traffic. About 500 employees at O’Hare International Airport in Chicago took part in a strike, alleging unfair labor practices. Hundreds of people chanted slogans outside of the terminals while police officers had to put up gates to make room for travelers to walk past. “We’re not asking for special treatment, we’re asking for decent treatment. We’re asking for decent wages,” said Kisha Rivera, an airplane cabin cleaner at O’Hare.

Thousands of people planned to walk out from their jobs at different McDonald’s restaurants, according to organizers, and one of the chain’s restaurants in St Louis had its drive-through blocked by people for half an hour. A state senator in Massachusetts who sat down with protesters in the middle of a street in Cambridge was arrested. In North Carolina a reverend was arrested, and in Manhattan four local and state officials were arrested as well, after 200 protesters blocked traffic in the Financial District. By Wednesday morning, arrests were up to 26 in New York City, 36 in Cambridge, Massachusetts, 39 in Detroit, and 40 in Los Angeles.

#Durham police have arrested NAACP NC President Rev. William Barber II #Fightfor15 pic.twitter.com/lPN0KRpOHz

— Derrick Lewis (@DerrickQLewis) November 29, 2016

We’re here and we can’t be moved! #Fightfor15 pic.twitter.com/0CMJScioco

— ATLRaiseUp (@ATLRaiseUp) November 29, 2016

Whether or not to raise the minimum wage is always a hot political topic. Liberal think tank Economic Policy Institute says that raising the minimum wage from the current $7.25 per hour to $12 per hour would affect 35 million workers across the nation and help them get off government assistant programs. But conservative organization Employment Policies Institute argues that the raised costs of a higher minimum wage would result in fewer jobs and the closure of businesses.

President-elect Donald Trump has not been very clear on his stance on the minimum wage. At a Fox Business debate last year he said that wages are too high, but later denied having said that, and claimed he only meant that there’s no need to raise the minimum wage. And then this summer he said at a press conference that the federal “minimum wage has to go up” to at least $10, but only a few months earlier he said it should be up to each state to decide. At this point it’s unclear if he’s made up his mind on minimum wage policy.

If someone in America works 40 hours a week, that person should not be living in poverty. #Fightfor15

— Bernie Sanders (@SenSanders) November 29, 2016

Politicians among 26 arrested this morning in Zuccotti Park #Fightfor15 protest, NYPD says: https://t.co/8pEoK3S2KY pic.twitter.com/di1Se39JH5

— DNAinfo New York (@DNAinfoNY) November 29, 2016

The main organizer behind the nationwide protests was the Fight for $15 movement, which is supported by many labor unions. Organizers said that they wanted to draw attention to more areas than just traditional low-wage jobs like fast-food restaurants, by focusing on all kinds of working class Americans. The tactic of protesting at places like airports rather than outside of restaurants, and trying to appeal to people in other fields, seemed to be successful. Workers from childcare facilities, individuals who work in healthcare, and even Uber drivers joined the cause. The question is whether Trump (and other politicians) will listen.

Emma Von Zeipel

Emma Von Zeipel is a staff writer at Law Street Media. She is originally from one of the islands of Stockholm, Sweden. After working for Democratic Voice of Burma in Thailand, she ended up in New York City. She has a BA in journalism from Stockholm University and is passionate about human rights, good books, horses, and European chocolate. Contact Emma at EVonZeipel@LawStreetMedia.com.

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Right now we all hear a lot of “Hillary Clinton this,” “Donald Trump that.” Love or hate Donald and Hillary, the 2016 presidential election has dominated our newsfeeds and happy hour conversations. And don’t get me wrong–the presidential election is incredibly important. But many of the laws that affect us on a day-to-day basis are made at the state level, often by our state legislators, but also by us, the American people. States give voters the opportunity to weigh in on important questions, and in some cases directly impact our state’s laws through ballot measures. And there’s a bunch up for grabs this year that millennials should be paying attention to. Learn more about ballot measures, and Law Street’s picks for the top five types of ballot measures we should all be paying attention to below. 

What is a Ballot Measure?

Generally speaking, a ballot measure is a public vote on a proposed issue or question that voters get to weigh in on. Rules about ballot measures vary from state to state and there are a few different ways that ballot measures end up on the ballot. One type, a ballot initiative, requires signatures from citizens who want to see the question weighed by voters. Another option is legislative referral, in which the legislature puts up a law it’s considering to be voted on. In some states, this process is required to pass an amendment to the state constitution.

Why Should I Care About Ballot Measures?

They give you a chance to weigh in directly on issues. America’s government is, at its core, a representative democracy. We elect people to make decisions for us, and we have to accept that sometimes we don’t like those decisions. We, as millennials, routinely answer in polls that we don’t trust the government, the path our country is on, or our elected officials.

But ballot initiatives are different–they’re a real, legitimate way to vote on issues we care about. There’s not really political middlemen to deal with. They’re direct democracy. Regardless of how you feel about the politicians you’ll be asked to vote for in November, it’s important that you make your voice heard on these issues, many of which can and likely will affect millennials.

Gun Control

Image courtesy of Peretz Partensky; License: (CC BY-SA 2.0)

What States are Looking at Gun Control Measures?

California’s Proposition 63: Proposition 63, which is also called the “Safety for All Initiative,” would prohibit Californians from owning high-capacity magazines, make any gun theft a felony, and tighten a variety of loopholes regarding felons owning guns. The especially contentious part of the proposal, however, is that it would require a background check and a four-year permit to obtain ammunition. Here’s the full text.

Maine’s Question 3: Question 3 would require a background check when an individual who is not a licensed firearm dealer sells or transfers a gun to another individual. They would have to meet at a licensed firearm dealer in order to conduct the background check, although there are exceptions, such as for family members. Here’s the full text.

Nevada’s Question 1: Nevada will be asking voters to vote on whether firearm transfers have to go through licensed gun dealers, and therefore be required to have a background check. Like Maine, there would be some exceptions to these provisions, like temporary transfers or transfers to family members would not require a gun dealer. Here’s the full text.

Washington’s Initiative 1491: Formally named the “Individual Gun Access Prevention by Court Order” a “yes” vote on this initiative would allow the use of courts to issue “extreme risk protection orders,” that would prevent someone from having a firearm. This would be used for people who pose a serious threat to themselves or others. Here’s the full text.

Image copyright Law Street Media

Why should we be paying attention to gun control measures?

From Columbine, to Virginia Tech, to Sandy Hook, our lives have been marked by high profile gun violence. We learned what to do if there was an armed shooter in our schools–a drill that probably would have been unthinkable to our parents. We grew up watching violent movies and playing first person shooter video games–a phenomenon that had some worried about the relationship between young people and violence. And guns affect many of our daily lives too–54 percent of Americans killed by gun violence in 2010 were under the age of 30. But exactly how to deal with this violence hasn’t necessarily manifested itself in strong support for one side or the other: do we need more control or less?

Millennials remain split on gun control measures as a whole. A 2015 Gallup poll found that 50 percent of millennials support more gun control, which stands in contrast to 57 percent of the 30-49 age bracket. A 2015 Pew poll also saw millennials almost perfectly split on whether or not to ban assault weapons.

These measures give us the chance to weigh in more directly depending on how we feel about the prospect of more restrictions and the Second Amendment.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

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When I last worked in an office (many moons ago) I was one of the millions of workers who are exempt from overtime. I did have some managerial responsibilities but I would not have characterized my job as “executive” or “professional.” Anyone with some common sense and a calendar could have effectively done the work I was doing. But because I was above the $23,660 per year threshold I was not eligible for overtime pay for the extra hours I worked. Depending on the season (my work ebbed and flowed dramatically based on the school calendar), I could work 60 hours a week and still be scrambling to get it all done; I could also be hunting for projects outside of my department just to make up a full work day. I started to think that I MIGHT be better off as an hourly wage worker because then at least I would be getting paid for how much I was working. But under the system, I was sometimes working 20 hours a week for free.

The recent changes in overtime rules are designed to address this concern for many employees who find themselves in a peculiar middle place. They are working more than 40 hours a week, but instead of being paid time and a half for the time they put in over 40 hours, they are barred from compensation for those hours because they make more than $23,660 a year or $455 per week. They are working for free. The recent changes to overtime rules–which will go into effect late this year–will raise the threshold from 23,660 to $47,476 per year. Meaning that all the workers who earn between $23,660 and $47,476 will now be eligible for time and a half–one and a half times their regular wage–for each hour they work beyond the 40-hour work week.

Are these workers going to be better off? Or are we going to place such a burden on employers that we actually do harm to these employees?

All About That Base

Nothing is more exciting than the phrase “let’s do some math!” but to understand the debate surrounding overtime we have to look at the numbers.

The previous $23,660 threshold, which was established in 2004, works out in the following way. Let’s say you have a job where you are right at the $23,660 and not eligible for overtime. If you are working 40 hours a week then the magic of math breaks that down $11.38 an hour gross ($23,660 a year divided by 52 weeks per year divided by 40 hours each week). That’s better than the federal minimum wage. But if you are working 60 hours a week for that same salary with no overtime eligibility, you’re only making $7.58 an hour. That’s barely more than the $7.25 federal minimum wage and in many states it’s actually lower than the required minimum.

If your $23,660 a year job is being a manager at a retail store and you’re working 60 hours a week with no overtime, there is a good chance that you are making less than the employees that you manage. Which seems inconsistent with the whole idea of managers being worth extra pay for their expertise and responsiblities and unfair that you are working for less than the minimum wage or working for free. Either way, you slice it that’s a fairly raw deal.

Under the new rules, which raises the threshold to $47,476 per year or $913 per week, many salaried workers are now entitled to overtime pay. In the same scenario as before–with a worker earning $23,660 per year–he or she would be paid the same 11.38 for a 40 hour work week. But for a 60-hour work week, that worker would make an average of 13.27 per hour, when you include the 20 hours of time and a half pay. That is a considerable improvement from the $7.58 per hour that he or she would earn without overtime.

In the video below, PBS NewsHour gives a brief explanation of how the overtime regulations currently work and what the proposed changes will do for workers.

How Businesses Might Respond

There are a few points to unpack from that video in terms of the arguments and counter-arguments for overtime. The reason that some people don’t think this is a sound policy is because employers are likely to react in several ways which could have negative consequences for employees.

The first way they might react is by reducing hours for workers who would be newly eligible for overtime and hiring multiple part-time workers instead in order to keep their labor costs about the same as they were before the change in the rules.

But is this necessarily a bad thing for the existing workers? Maybe not. Currently, a worker who is putting in 60 hours a week for a salary of $36,000 a year won’t be losing any money if their company reduces them to 40 hours a week and then hires someone else to work for 20 hours a week to avoid paying overtime. In fact, if you think about your time as having a monetary value you are getting more money because you are getting 20 extra hours a week back in time. The trickier scenario is a company that decides to change from one employee working 60 hours a week to two employees working 30 hours each–while also reducing the salary of the original employee or paying them on an hourly basis. This would, in fact, be a reduction in that worker’s total wages from $36,000 to about $27,000 per year (assuming that the hourly rate was the same).

That’s a significant decrease and a trade that many employees might not want to make for 30 extra hours a week. In a job market that had more positions available, those individuals would be able to get a second job for 30 hours a week. If it had a comparable salary they would actually be doubling their income. But in an economy where there isn’t a second job to take on with your extra time, this could be financially devastating.

In fact, some economists argue that increasing the threshold for overtime eligibility would be a good thing overall because it will help create jobs. Some employers will choose the second option of splitting one job into two. This change could be a mixed blessing for workers–a source of more jobs even if it might depress wages.

Another way employers might respond is by increasing salaries for workers to the new $47,476 per year cap, thereby rendering them ineligible for overtime. For workers who are close to that level, it may just be cheaper for employers to pay an extra few thousand dollars a year than to deal with the added hassle of calculating overtime pay or the added expense of paying it. Workers in that situation will get a raise.

In the video below, the Department of Labor explains the history of overtime as well as the recent rule change:

Obviously increasing labor costs places a burden on employers and some employers will have difficulty accommodating. The argument against increasing the overtime threshold essentially boils down to not wanting workers to lose what they already have in an effort to get a deal that is fairer. Instead of elevating worker wages, changes in overtime may decrease worker pay overall and alter the flexibility that some workers enjoy.

One of the benefits of being overtime exempt, some argue, is that you have more freedom from your employer to work a 30-hour week to make up for the 60-hour week you had to work. That was my experience when I was working–although culturally at the office it may breed resentment when other employees see you leaving early or not working Fridays if they don’t also see you working late or doing some of your tasks from home on the weekends. But for many workers, the mythical 30-hour work week never comes and so employees have essentially just charitably donated hundreds of hours of their time to their employers. Or they have worked as “managers” for less than the minimum wage.

The greatest danger that this change in overtime rules presents is that employers may cut workers and not replace them, making the unemployment situation worse. For some companies that will undoubtedly be the case and these businesses will take hits in productivity and be run by skeleton crews. But it is unclear whether, on balance, the changes will do more harm than good or more good than harm. And it is hard to anticipate how many workers will be cut versus how many will get raises. It’s even harder to know beforehand whether this change will be worth it for the overall health of the economy.

Conclusion

If you look at the numbers an increase in overtime benefits is undoubtedly helpful for those workers who currently are putting in more than 40 hours a week at their jobs. They will be more fairly compensated for the hours they work. But the larger effects on the economy are tricky to determine. Depending on how employers react, and how much of an increase in labor costs employers can absorb, this change can have serious negative impacts as well.

There will undoubtedly be some job loss and wage depression, as well as job gains and wage increases. As we get closer to the December 1 deadline when this change will go into effect, there will probably be more predictions about how this will ultimately shake out. But the fairness argument that workers should be paid for the time that they work when they aren’t actually making the high salaries for an executive or professional role is hard to refute.

Resources

U.S. Department of Labor: Final Rule: Overtime

U.S. Department of Labor: Questions and Answers

US News: Are The New Overtime Rules About To Boost Your Paycheck?

The Atlantic: Overtime Pay For Millions of Workers

Bloomberg: Obama’s Overtime Rule Defies Econ 101

The Hill: Senate GOP Files Motion To Roll Back Obama Overtime Rule

Mary Kate Leahy

Mary Kate Leahy (@marykate_leahy) has a J.D. from William and Mary and a Bachelor’s in Political Science from Manhattanville College. She is also a proud graduate of Woodlands Academy of the Sacred Heart. She enjoys spending her time with her kuvasz, Finn, and tackling a never-ending list of projects. Contact Mary Kate at staff@LawStreetMedia.com

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Tipping is a cultural practice that is deeply ingrained in the American service industry, particularly food service, that most of us have not stopped to consider. If we eat at a restaurant, we leave a tip for the person waiting on us. There are dozens of social rules about how and when to tip and being a “good tipper” is considered a positive social trait.

Tipping also allows restaurant owners to defray some of their labor costs onto the customers who use their services. The rules in each state are different but organizations like the National Restaurant Association lobby for a lower minimum wage for wait staff, which is then supplemented by tip income. Their rationale is that lowering the costs for employers allows them to hire more wait staff and increase their profitability, which in turn puts their workers in a better position.

So what are we actually doing when we leave a tip for a waiter at a restaurant? Are we encouraging efficient service or subsidizing the profits of restaurant owners?

Topping Off

The most common tipping scenario we come across is tipping wait staff at a restaurant, so let’s use that as an example for how tipping actually works in practice. In many states, wait staff employees are exempt from being paid the usual minimum wage. Instead, they are paid a much lower wage by their employer, the restaurant, and make the rest of their money in tips. In theory, the restaurant is supposed to pay the waiter more if their tips plus their base wage do not equal the minimum wage. For example, if the minimum wage is $7 an hour and the restaurant pays $2 as the base wage, if the employee isn’t getting $5 an hour in tips the employer is supposed to “top off” and pay them extra. For a breakdown of which states require employers to “top off” and how much take a look at the Department of Labor chart here.

There are basically three kinds of states: full credit, partial credit, and no credit. These terms indicate whether employers are able to get a tax credit for topping off their employees’ wages to meet the minimum requirements. Full credit states follow the federal minimum wage for tipped employees, which is $2.13 an hour and then rely on customer tips to raise the wage of those employees to the state minimum wage. Workers in partial credit states earn somewhere above the federal $2.13 minimum but below whatever that state’s minimum wage is. So the cost of labor is still being subsidized but not quite as much. In no credit states (there are seven including D.C.) tipped workers and non-tipped workers are paid the full minimum wage, meaning that employers cannot take a credit for topping off their employees’ wages because their base wages already meet the state requirement.

Poverty Among Tipped Workers

How do these policies affect the actual workers involved? Nationally, the poverty rate for all workers, in general, is 6.5 percent but for tipped workers the poverty rate is 12.8 percent. The subcategory of tipped workers who are waiters and bartenders experience a poverty rate of 14.9 percent.

But when you break this down for the three different kinds of states (full, partial, and no credit) there is a difference in poverty rates. According to the Economic Policy Institute, tipped workers, waiters, and bartenders fare much better in the no credit states–where base wages for all employees must meet the state minimum. For example, in no credit states the poverty rate for waiters and bartenders is 10.2 percent and in full credit states, the poverty rate for these workers is 18 percent. The poverty rate among waiters and bartenders in partial credit states falls in between at 14.4 percent. The evidence suggests that tipped workers, which includes waiters and bartenders, experience less poverty when employers pay a higher percentage of their wage and experience the least poverty when employers are responsible for the full amount.

The chart below from the Economic Policy Institute shows how poverty rates correlate to state requirements for tipped workers.

So while raising the minimum wage may be a worthy goal to help non-tipped workers, doing so will not actually affect tipped workers in most states. Even though these workers may be the people who need an increase the most, given that they experience higher rates of poverty and receive higher rates of government assistance than non-tipped workers.

An added problem with the “topping off” policy is that it doesn’t always happen. A compliance sweep of 9,000 restaurants by the U.S. Department of Labor’s Wage and Hour Division found that 83.8 percent of these restaurants were in violation. This resulted in $56.8 million dollars being collected in back wages for the employees at these businesses. Because employees have to insist upon it and the actual calculations are complicated, businesses may not consistently pay these employees what they are supposed to and these employees end up earning less than the minimum wage.

For a more thorough explanation of the concept and how it can affect wait staff, take a look at this segment from PBS:

Is Tipping Fair?

For a waiter in a state that allows this practice there are a lot of potential problems. Tipping is often based not on the quality of service but on race and perceptions of attractiveness. This can lead to employees who are working the front of the house on the same shift–covering the same amount of tables with the same level of efficiency–making vastly different wages because one is white and one is black. There is also a $4 per hour wage gap between white workers and workers of color in the restaurant industry due to the positions workers of color can get–they may work as bussers versus servers, for example.

The restaurant industry has, by far, the highest rate of sexual harassment in the workplace. For women, the rate of sexual harassment in restaurants is five times the rate of sexual harassment in other industries. This can lead to servers being subjected to unwanted sexual advances that they feel obligated to put up with because they’re working for tips. This motivation is also present in states that pay the same minimum wage for all types of employees but is particularly strong when the tips are necessary to even earn the minimum wage.

Most restaurants do not split the tips that are received between “front of house” (the wait staff) and the “back of house” (the kitchen staff). So the people who prepare the food are not rewarded at all in the tip. They aren’t given a higher base salary to compensate for this either. In fact, there is a gross disparity in pay between workers in the front and back of the house, even though working in the kitchen requires training and is arguably just as difficult as working in the front of the house.

This is even stranger when you consider that the tip for the wait staff is calculated as part of the cost of the meal, which typically depends on the quality of the ingredients and the cooking. But the staff responsible for that increase in quality doesn’t get rewarded. If a restaurant runs a special on a particular dish, reducing its price and therefore the tip, it does not make the waiter’s job any easier yet they are paid less. Tipping and the wage disparity that it creates can lead to a shortage of labor in the back of house and resentment between the staffs.

Why Do We Still Tip?

If tipping is so unfair to the wait staff and to the back of the house why are we doing it? Basically, tipping is a subsidy for the restaurant business. It allows restaurants to offer their potential wait staff less money than they otherwise would have to in order to attract workers. Restaurants are also able to pay their employees below the minimum wage because they are supposed to earn the difference in tips. And if tipped employees still make below the minimum wage, restaurants can get a tax credit for paying the difference.

Requiring that restaurants pay their workers a higher base wage rather than relying on tips to make up the difference would, according to advocates of the current structure, cause restaurants to close, cut staff, or increase prices–all of which have economic consequences. The restaurant industry supports many Americans and their families. If they are forced to pay the full minimum wage they would need to cut labor costs by firing workers or raise their prices to make up the difference. Raised prices would ultimately reduce their profits because a reduction in demand and that would be catastrophic to the families that rely on these restaurants.

However, the restaurant industry is also not supporting many American families. When workers aren’t taking home a reasonable living wage they end up relying on government services to meet their needs or foregoing those necessities. This effectively creates a second subsidy by the public for the restaurant industry, allowing them to pay their workers less than they need and then having taxpayers pick up the rest of the cost.

Conclusion

Tipping industries effectively split the responsibilities of the employer between business owners and their customers. It creates a divided loyalty from the staff to please their bosses and their customers, which sometimes leads to conflict and sometimes to abuse and discrimination. Tipping artificially lowers the cost of operating the business so that employers will be able to make a profit in a competitive industry, rather than letting capitalism take its course and eliminate an industry that may not otherwise survive.

That may not be a bad thing. Or at least not entirely a bad thing. An effort to eliminate tipping to help the workers in the restaurant industry, and correct the unfairness that tipping creates, might help them right out of their jobs. And deciding that you no longer wish to tip at restaurants will only get you some dirty looks. Even if tipping is unfair and a system of a higher base wage would be preferable for workers, it would only be preferable for employees who work for businesses that can afford to pay their employees more. Others could potentially lose their jobs because of an increase in labor costs.

Resources

Economic Policy Institute : Twenty-Three Years and Still Waiting For Change – Why It’s Time To Give Tipped Workers The Regular Minimum Wage 

Department of Labor: Minimum Wages for Tipped Employees

The Washington Post: I Dare You To Read This And Still Feel Good About Tipping

Freakonomics Podcast: The No-Tipping Point

Slate: What Happens When You Abolish Tipping

Economic Policy Institute: Twenty-Three Years and Still Waiting for Change

Department of Labor: Tipped Employees Fact Sheet

Mary Kate Leahy

Mary Kate Leahy (@marykate_leahy) has a J.D. from William and Mary and a Bachelor’s in Political Science from Manhattanville College. She is also a proud graduate of Woodlands Academy of the Sacred Heart. She enjoys spending her time with her kuvasz, Finn, and tackling a never-ending list of projects. Contact Mary Kate at staff@LawStreetMedia.com

The post The Trouble With Tipping appeared first on Law Street.

A 10-month-long contract dispute has finally come to a head as 36,000 Verizon employees went on strike Wednesday. The strike began after Verizon and the two labor unions that represent Verizon’s wireline service workers could not reach an agreement before the two unions’ proposed deadline of 6 am, Wednesday. On Thursday, a large group of low-wage employees in other industries walked out of work in an effort to increase the minimum wage to $15 per hour.

Both the strike and the fight for $15 protest come after New York and California passed laws to increase their minimum wage laws. Some point to this as a pattern, in which low-wage workers are finally trying to make up for years of stagnant pay and economic hardship. For others, this is merely another blip in the perennial struggle between labor and business. Either way, this is one of the largest strikes in recent history and has quickly become a political issue.

What do both sides want?

The primary point of disagreement between Verizon and its workers is the company’s desire to have more flexibility with its workforce and the workers’ hope for sustained job security. Verizon argues that the company needs to adjust to meet the changing economy’s demands. It claims that it has offered reasonable solutions to prevent benefit costs from increasing dramatically and has offered significant pay increases. Meanwhile, workers argue that it is unfair for their company to force them to relocate and travel long distances for work, noting that if they refuse to do so they will likely lose their jobs.

An interesting aspect of the strike is that it seems to have less to do with wages specifically. Verizon has offered a 6.5 percent pay increase and most of the two unions’ complaints have not focused on wages. Verizon frames the negotiations as an effort to allow the company to get with the times, while workers argue that the contract should focus on protecting decent paying middle-class jobs.

Some Context

Underlying the negotiations is the changing importance of the wireline side of Verizon’s business. As Verizon shifts its focus to its rapidly expanding wireless service, its wireline service–which includes television, phone, and internet–has actually decreased. The wireless side of the company, which is largely ununionized, has seen its profits soar while the more costly wireline service has contracted slightly as landline phone and television service becomes less popular. In light of this change, the company wants to cut costs on the less profitable component of its business by stretching its workers more.

While the workers are right when they say Verizon’s profits have soared in recent years, the bulk of that increase came from the wireless business. Over the last several years, Verizon has made a clear effort to transition much of its business to wireless. In 2013, Verizon Communications bought Vodaphone out of its 45 percent stake in Verizon Wireless, giving the company full control over the wireless side of the business. In February 2015, Verizon sold a large chunk of its landline service to Frontier Communications. The deal, which included most of the company’s wireline infrastructure in the western part of the United States, allowed Verizon to buy additional wireless spectrum, further shifting its business in that direction. Aside from its recent announcement to bring FIOS infrastructure to Boston, Massachusetts, Verizon has been relatively uninterested in expanding its wireline service.

So Who’s Right?

Naturally, this question is the most difficult to answer. But when you take a closer look at the dynamics at play it tells us a lot about current labor dynamics in the United States. Can Verizon’s wireline business continue to be a source of good, middle-class jobs as it has been for decades, given that the company wants to shift toward wireless? More to the point, what happens to workers when technological and economic shifts make certain businesses less profitable? Unfortunately, these are questions that we probably won’t have a consensus on anytime soon, if ever.

According to a press release from Verizon, the workers on strike make an average of $130,000 per year, including salary and benefits, which indicates that wages aren’t the entire problem. It also doesn’t seem like the workers went on strike because their wages aren’t high enough. Instead, they fear that Verizon is trying to make it easier to ship jobs overseas and continue its shift away from wireline services. Although there is a significant market for Verizon FIOS, its fiber-optic internet service, its landline telephone, and video services are not as profitable as they have been in recent decades.

The exact details behind the negotiations are hard to pin down, but the dispute may end up taking some time to resolve. In the meantime, Verizon has been training non-union workers to fill in for the strikers. But even if the dispute is settled soon, it seems likely that the underlying debate will continue for quite some time. As Bernie Sanders gains national attention on a campaign to fight for workers and the push to increase the minimum wage maintains the spotlight, developed economies will have to answer some tough questions about the future of middle-class jobs in a time of rapid technological change.

Kevin Rizzo

Kevin Rizzo is the Crime in America Editor at Law Street Media. An Ohio Native, the George Washington University graduate is a founding member of the company. Contact Kevin at krizzo@LawStreetMedia.com.

The post What’s Going on with the Verizon Strike? appeared first on Law Street.

A judge just ruled that a lawsuit brought against the Buffalo Bills by their cheerleaders–the Buffalo Jills–is allowed to move forward. The cheerleaders are suing the NFL team for better wages and work conditions. While five former cheerleaders brought the suit, the judge’s ruling means that “all Buffalo Bills cheerleaders and ambassadors since April 2008” can join. While this lawsuit is in process, the Buffalo Jills have actually been on hiatus, and haven’t appeared at any games over the last year. But the Buffalo Jills aren’t the first cheerleaders to bring a suit against the team they cheer for–in fact they’re just one more in a growing trend.

The Buffalo Jills each made $1,800 per season, despite the fact that the team takes in a total of $256 million each year. The women claim that their compensation is well below minimum wage. They also claim that they had to attend some events for which they were not paid. The team treated them as independent contractors as opposed to employees, which is how it was able to get away with such low compensation.

Another point of contention in the lawsuit was that the women were held to an incredibly strict, and seemingly inappropriate, guidebook. The book included requirements for things like personal hygiene; for example, it told the women to change their tampons “at least every four hours.” It also instructed them what kind of soap to use, stating: “Intimate areas: Never use a deodorant or chemically enhanced product. Simple nondeodorant soap will help maintain the right PH balance.” My personal favorite is the eating recommendations, which instruct: “Do not overeat bread in a formal setting.”

At the same time that this lawsuit is being allowed to move forward, New York is considering a bill called the “Cheerleaders’ Fair Pay Act.” It would extend all the “rights, benefits and protections” to the cheerleaders that the rest of the team’s employees have.

The Buffalo Jills aren’t the first group of cheerleaders to get into this kind of showdown with the team they cheer for. Other teams that have been sued by their cheerleaders include the New York Jets, the Tampa Bay Buccaneers, and the Oakland Raiders.

The lawsuit won’t be decided for a while, but allowing the plaintiffs to move forward together in a class-action capacity is a big step.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

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Save money, live better…don’t work at Walmart?

Last week Walmart closed five stores in four states and only gave employees five hours notice. That’s right—five hours. Why the sudden closure? The retailer cited plumbing issues that could take up to six months to complete.

Courtesy of Giphy.

That’s right, Blanche Devereaux—something doesn’t add up here. Plumbing work, even extensive plumbing work, does not take six months to complete. Additionally, what are the odds that the plumbing systems of five geographically unrelated stores would all need repairs at the same time? The situation was ridiculous enough to warrant a proper lampooning from Larry Wilmore on Tuesday night’s episode of The Nightly Show. [Note: despite claiming problems with plumbing, none of the Walmart stores that were abruptly closed have filed for plumbing permits yet].

Walmart workers say that the company probably closed at least one store in retaliation against workers protesting for better pay and working conditions. [So that’s why they can justify shutting down stores and losing revenue from five stores for half a year]. Walmart does not want its workers to unionize. In fact, it never has.

Back in 2000 a group of Walmart butchers voted to unionize. After the butchers formed their union, Walmart stopped cutting meat in stores and only sold pre-packaged meat. This year, it appears Walmart has evolved its bullying tactics by closing entire stores rather than just closing down smaller sections.

A rather wacky theory has emerged online as to why Walmart has closed some of its stores, and it has nothing to do with plumbing or unions. Some Internet users believe that the military will be using the closed stores as shelters once Martial Law is declared.

Courtesy of Giphy.

All theories and conjectures aside, the reality is that more than 2,200 Walmart workers were laid off and given two months of severance pay. Will they be forgotten like the Walmart butchers, or will they find ways to stand up to their bully?

Corinne Fitamant

Corinne Fitamant is a graduate of Fordham College at Lincoln Center where she received a Bachelors degree in Communications and a minor in Theatre Arts. When she isn’t pondering issues of social justice and/or celebrity culture, she can be found playing the guitar and eating chocolate. Contact Corinne at staff@LawStreetMedia.com.

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Nebraska may be making changes to its minimum-wage laws that affect a particular portion of the population–minors. A bill to pay minors below the new minimum wage that will be enacted next year is moving forward.

Nebraska voters voted to raise the minimum wage to $9 an hour; however, the new bill would set the minimum wage for student workers under the age of 19 at $8 an hour, the same as the current minimum wage for all workers. The bill would, however, prevent a company from hiring only workers under 19 in order to take advantage of the lower wages that would need to be paid to older workers. It would allow businesses to pay the lower wage for only 25 percent of the total hours worked.

State Senator Laura Ebke is the sponsor of the bill, and she claims that it is to help small businesses such as family-owned grocery stores that often hire high school students. State Senator Lydia Brasch said regarding those small businesses, “What they are truly trying to do is to make ends meet and hire one more worker or two more workers.” The measure is supported by the Nebraska Grocery Industry Association.

There are plenty of concerns coming out of Nebraska about the bill, however. First of all, it applies to those under 19, so the vast majority of the people affected are not able to vote. A bill that disproportionately applies to these people seems unfair, and according to State Senator Adam Morfield, takes advantage of those young people. There’s also concern that businesses would want to hire young people they could pay less, to the detriment of older workers. Furthermore, given that the lower wage only applies to those who are in school, students could drop out in order to up their pay to $9 an hour rather than $8, meaning that the measure could end up being counter productive.

Some senators also worry that the bill could create financial hardships for students–after all, the reason that minimum wages are being raised is to keep up with the cost of living, and that cost of living can apply to young people as well. Some may be working to support their families or to save for college. As college costs continue to rise astronomically and many of our students suffer from extremely high levels of debt, the fact that some senators in Nebraska aren’t willing to give students every advantage is concerning. Some do agree–Senator Jeremy Nordquist said about the bill, “It’s an affront to our democracy.” We’ll see if those who feel that way will have enough support to prevent the  bill from passing.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

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If you’ve ever worked retail before you should be familiar with “on-call” scheduling. If not, think of it as a kind of shift limbo, where employees are told whether or not to report to work a day or less before the scheduled shift. But according to New York’s attorney general this common staffing practice could be criminal, violating New York Labor laws.

According to the New York Times, Attorney General Eric Schneiderman sent letters to retailers Friday including Gap, Target, JC Penney, Abercrombie & Fitch, Sears and several others questioning the practice. In the letters Schneiderman wrote:

If the employee is told that his or her services are not needed, the employee will receive no pay for that day. For many workers, that is too little time to make arrangements for family needs, let alone to find an alternative source of income to compensate for the lost pay.

The on-call system currently allows retailers to adjust their staff depending on the projected volume of customers on a given day. These shifts are used as a cost saving measure in order to eliminate potential over-staffing or under-staffing.

In the letters Schneiderman said that the “on-call” practice could be potentially violating a New York law that says employees who report for a scheduled shift on any day have to be paid for at least four hours at the basic minimum hourly wage.

Reuters contacted some accused of the retailers who all invariably denied the allegations writing:

Target said workers are informed of their schedules 10 days before the start of a work week and it does not employ ‘on-call’ shifts. JC Penney said it has a policy against on-call scheduling. The Gap said it is committed to ‘sustainable scheduling practices’ and is conducting research on the matter.

While the U.S. Labor Department is reportedly looking into the matter, the 13 retailers have until May 4 to provide information on how they schedule employee shifts.

As someone who has worked in retail, I can tell you that the last thing you want is an on-call shift. They’re unpredictable and tie up your schedule. When given one of these shifts you’re forced to keep your schedule open in case you might be needed, but if not your wallet is out of luck, and it’s usually too late to make alternate plans. Requiring retailers to pay a minimum wage for workers slighted by these shifts seems only fair. America is ready for retailers and other big businesses to start showing that they respect their workers, and don’t just take them for granted.

Alexis Evans

Alexis Evans is an Assistant Editor at Law Street and a Buckeye State native. She has a Bachelor’s Degree in Journalism and a minor in Business from Ohio University. Contact Alexis at aevans@LawStreetMedia.com.

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McDonald’s has never really been known for treating its employees well, per se. That being said, I’m not sure many of us realized quite how bad it is at some of the roughly 15,000 McDonald’s locations nationwide until this week when news broke that workers in 19 different states filed complaints with the U.S. Occupational Safety and Health Administration.

These complaints allege dangerous working conditions, lack of training, and hazardous equipment, among other faults. A particularly common complaint appears to be that workers are often burned by the equipment they have to handle on the job. Workers cited not having gloves when they are required to handle hot equipment, or that they’ve had to clean hot grills that haven’t been turned off.

A particularly disturbing story was told by one Chicago McDonald’s worker, Brittney Berry. She claims that she slipped and burnt her arm on a grill to the extent that the burn caused nerve damage. What’s even more worrisome is that she reports that her managers responded to the incident by telling her to put mustard on her arms, of all things. She stated:

My managers kept pushing me to work faster. The managers told me to put mustard on it, but I ended up having to get rushed to the hospital in an ambulance. This is exactly why workers at McDonald’s need union rights.

While this sounds shocking and horrible, it’s evidently not that unheard of. Polling group Hart Research Associates conducted a survey last year of nearly 1,500 adult fast food workers about their injuries on the job. Almost 80 percent reported suffering from burns, and Berry’s manager apparently wasn’t too unique, because a third of those who suffered burns reported having a member of management tell them to put some sort of condiment–like mustard, mayo, butter, or ketchup–on it to treat the problem. In addition, the survey found that two-thirds of those workers had been cut by something on the job, 33 percent had been hurt while carrying some sort of heavy item, and 23 percent had fallen on a slippery surface. Overall, nearly 90 percent of the fast food workers surveyed had been hurt in some way. While that survey didn’t just focus on McDonald’s workers, but rather on the industry as a whole, it’s hard to imagine that the conditions at McDonald’s are significant outliers from its peer companies.

These complaints fit into a ongoing campaign for workers’ rights being waged against McDonald’s by the Service Employees International Union (SEIU) and other groups. Called the “Fight for $15” campaign, it aims to up the minimum wage for McDonald’s workers as well as provide them with safer working conditions.

McDonald’s has of course responded to the allegations levied against it, bringing up the “Fight for $15” campaign in a rather dismissive way:

McDonald’s and its independent franchisees are committed to providing safe working conditions for employees in the 14,000 McDonald’s Brand U.S. restaurants. We will review these allegations. It is important to note that these complaints are part of a larger strategy orchestrated by activists targeting our brand and designed to generate media coverage.

OSHA has confirmed that the allegations are being looked into, so whether they are actually true will be decided by the government. Either way, it creates a pretty grim picture of the working conditions at these branches, and a rather convincing argument for reform.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post Do You Want Pain With Your Fries? OSHA Investigating McDonald’s appeared first on Law Street.

The 2014 midterm elections weren’t the only reason to pay attention to political news this year. Keep scrolling to check Law Street’s top 10 political stories of 2014.

1. BridgeGate: 7 Reasons to Watch the Chris Christie Scandal

This winter, revelations about Governor Chris Christie’s involvement in the shutting down of the George Washington Bridge came to light. The whole scandal raised a lot of questions about Christie’s ability to be a contender on the national stage, quite possibly as the 2016 Republican Presidential nominee. Whether or not Christie chooses to run, there will be a lot of eyes on his handling of “Bridgegate.”

2. Marijuana Legalization: Let’s Be Blunt 

The states of Colorado and Washington voted to legalize recreational marijuana in 2012, and the sale and use started moving into the public sphere earlier this year. However, given that Colorado and Washington were the first two states to do so, many were left with questions about how exactly the legalization worked, what affects it could have on society, and how the Washington and Colorado laws would interact with federal law.

3. Drone Rules: Are They Enough to Protect Civilians?

Drones have evolved from being a futuristic fantasy to real part of American military strategy. However, like any new innovation, the legality is developed after the technology itself. In early 2014, the Obama Administration’s drone strike policies were a hot topic of conversation, especially after the disclosures regarding a December 2013 strike in Yemen.

4. Hobby Lobby: They Want to Remove the Corporate Veil — and Your Birth Control Coverage

Image courtesy of [Annabelle Shemer via Flickr]

Another hot political topic in 2014 was the Supreme Court case that’s widely become known as Hobby Lobby. It questioned whether or not the Affordable Care Act (ObamaCare) required employers to provide contraception for their employees, regardless of the company’s religious beliefs. Concerns about the case extended far beyond whether or not those particular employees would get contraceptive coverage, as it could have set a dangerous precedent for all sorts of discriminatory policies.

5. Obamacare Is Here to Stay! But It Still Kind of Sucks

Image courtesy of [Daniel Borman via Flickr]

The much maligned Affordable Care Act (Obamacare) finally went into effect this year, with the first open enrollment period. The act provided healthcare for many who previously didn’t have it, but that doesn’t mean that it was anywhere close to perfect. Partisan bickering over the law remained steady, but the Affordable Care Act can certainly be considered a step in the right direction.

6. Stuck in McAllen: Jose Vargas and the Texas Immigration Crisis

This summer, the arrival of undocumented youth at the Texas border sparked political debates, some outrage, and acts of compassion. One of the biggest advocates for these young people was a man named Jose Vargas, a prominent undocumented immigrant who works as a journalist and advocate. When Vargas traveled to McAllen, Texas, one of the towns most heavily affected by the arrival of the children, he was briefly detained and then released–cementing his status as one of the lucky few.

7. Debating Minimum Wage in America

As the cost of living in the United States continues to creep upward, and the American economy rebounds from one of the worst economic crises in recent history, many people still struggle to meet ends meet. Minimum wage jobs are an important sector of our economy–but what exactly do we mean when we say minimum wage? It’s an important political question that has yet to find an exact answer.

8. “Gay Panic” Defense Outlawed in California

For some time, the “gay panic” defense served as a way to claim a sort of self-defense in regards to hate crimes. While it doesn’t have a strong track record of actually succeeding, there were no laws specifically forbidding it. This fall, California became the first state to actually ban the “gay panic” defense, an important step in the fight against homophobia.

9. Campaign Finance: Free Speech or Unfair Influence?

In the wake of Citizens United and other landmark court decisions, our rules about campaign finance have seen some extreme changes in the last few years. These changes will have a huge impact on the 2016 Presidential elections, and pretty much every election moving forward, unless more changes happen. Given the topsy-turvy world that is the debate over campaign finance, anything is possible.

10. Just Get Ready For It: Another Clinton in the White House

We’ve all barely recovered from 2012, not to mention this year’s midterms, but speculation about 2016 has, predictably, already begun. Probably the Democratic front-runner at this point, Hillary Clinton has a lot of support. There are many reasons to get on the Hills bandwagon–including feminism, foreign policy, and her awesome facial expressions.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post ICYMI: Top 10 Political Stories of 2014 appeared first on Law Street.

The minimum wage was first created to ensure that workers are protected from being underpaid for their work; however, given that national and local costs of living have varied over time, whether or not the minimum wage amounts are fair has been the main pillar of the  national debate for some time. Read on to learn about the minimum wage and all of the controversies and debates surrounding it.

Current Minimum Wage Laws

The Fair Minimum Wage Act of 2007 is a law passed by Congress that requires employees to be paid at least $7.25 per hour. The act took effect in 2009 as an amendment to the Fair Labor Standards Act. This law only applies to jobs that are under the purview of the Fair Labor Standards Act. Tipped workers may only be paid less than $7.25 an hour if their hourly wages plus tips match or exceed $7.25.

The Fair Labor Standards Act is a federal law that Congress passed pursuant to the Commerce Clause of the Constitution. Federal laws passed under that power are only effective if they pertain to an area that affects commerce between multiple states. Therefore, the Fair Labor Standards Act and the Fair Minimum Wage Act only regulate wages in businesses that are involved in interstate commerce. Businesses that are not sufficiently involved in interstate commerce are not regulated by the federal law but may still be regulated by state or local minimum wage laws. If there are state or local minimum wage laws in effect in the area a (non-interstate commercial) business operates then those laws determine the minimum wage employees of such a business can be paid.

State minimum wage laws are very variable.

The map below represents the minimum wage in a number of states. Green indicates a state minimum wage that is higher than federal minimum wage, yellow shows states with no minimum wage laws, blue states have the same minimum wage as the federal minimum wage, and red states have minimum wage laws lower than the federal minimum wage.

Map of minimum wage variations by state, courtesy of the U.S. Department of Labor via Wikipedia.

According to the Department of Labor, the laws are interpreted as follows:

Federal minimum wage law supersedes state minimum wage laws where the federal minimum wage is greater than the state minimum wage. In those states where the state minimum wage is greater than the federal minimum wage, the state minimum wage prevails.

So why do we still have separate federal and state minimum wage laws? One reason is, of course, politics. The states that have lower minimum wage laws keep them on the books in part to protest what they see as too high of a federal minimum wage. There’s also a more practical application: there are certain workers, such as seasonal workers or those on small farms, who are exempt from the federal laws. In some cases, the state laws may still offer some parameters for those workers.

What are arguments for keeping the federal minimum wage as is?

Supporters of the current federal minimum wage argue that raising the minimum wage will diminish the job market in an economy that is already suffering. They argue that raising the minimum wage to benefit the poor is a shortsighted strategy. Since a majority of the poor (60 percent) are unemployed, raising the minimum wage only makes it more difficult for them to find jobs because it raises the value that they have to demonstrate in order to justify being hired. Moreover, most of the people receiving minimum wage pay are above the nation’s median income so most of the funds workers receive from a higher minimum wage won’t go to the impoverished.

Supporters of keeping the minimum wage law where it is also worry that the costs of a higher minimum wage would be passed on to the consumers, who may be struggling themselves. They reason that the money has to come from somewhere, and in many cases it would come from an increase in the price of goods. In general, it would make it more expensive for employers to hire employees, and have negative ramifications throughout many parts of the economy.

Another argument against raising the minimum wage stems from an idea about the purpose of the minimum wage. Minimum wage jobs are often viewed as “stepping stones” for young people, or those looking to get back on their feet–not jobs for those who need to raise families or be permanently employed in that particular place of business. Those who subscribe to this argument tend to worry that with a higher minimum wage, these jobs become permanent paths rather than just stepping stones, and younger people will no longer be able to get their foot in the door.

What are arguments for increasing the minimum wage?

Those who argue in favor of increasing the current federal minimum wage argue that it does not even pay enough to keep a family of three above the poverty line. The average cost of living has increased by leaps and bounds, especially in larger cities. The minimum wage has not increased proportionately with inflation or the pay of the average worker. Today, the minimum wage is insufficient to keep a full-time working parent and one child out of poverty. At a bare minimum the federal minimum wage should be enough to keep a working parent and her child above the poverty line. Along the same lines, supporters of increasing the minimum wage point out that because those who work minimum wage jobs have such a difficult time making ends meet, many of them have to get some sort of government assistance, which is also a big problem for the economy.

That is why the Obama Administration is advocating for legislation to raise the federal minimum wage to $10.10 an hour. This change would raise America’s GDP, and reduce income disparities between several population demographics.

Conclusion

The minimum wage, and its many derivations across the states, will always be a contentious and politicized issue. The actual economic implications of raising or lowering the minimum wage are difficult to glean, and the arguments are sharp. That being said, the minimum wage debate is far from over.

Resources

Primary 

US Senate: Fair Minimum Wage Act of 2007

Department of Labor: Minimum Wage

Department of Labor: History of Changes to the Minimum Wage Law

Department of Labor: Minimum Wage Laws in the States

Additional

Forbes: Why Raising the Minimum Wage Kills Jobs

Washington Post: Economists Agree: Raising the Minimum Wage Reduces Poverty

The New York Times: Raise That Wage

The White House: Remarks by the President in the State of the Union Address

Atlantic: Minimum Wage Was Once Enough to Keep a Family of Three Out of Poverty

Economic Policy Institute: Raising the Federal Minimum Wage to $10.10 Would Give Working Families, and the Overall Economy, a Much-Needed Boost

CNN: Raising Minimum Wage Won’t Lower Poverty

America’s Best Companies: Five Important Exceptions to Know Regarding Minimum Wage

The New York Times: Raising Minimum Wage Would Ease Income Gap but Carries Political Risks

Entrepreneur: Listen to Small Business: Don’t Increase the Minimum Wage

Deseret News: In Our Opinion: Don’t Raise the Minimum Wage

John Gomis

John Gomis earned a Juris Doctor from Brooklyn Law School in June 2014 and lives in New York City. Contact John at staff@LawStreetMedia.com.

The post Debating Minimum Wage in America appeared first on Law Street.

For a long time, a dominant narrative in the United States has been that we can pull ourselves up by our bootstraps and that it just takes a little hard work to make it work. I’ve heard the argument more times than I can count that people on welfare are lazy, or that the minimum wage is fine the way it is. Based on just my personal experiences alone, I truly think that there are many Americans who believe that it’s easy to succeed here if you simply try hard enough.

That idea needs to be put to bed. Because for many people, that picture-perfect American life of prosperity really isn’t possible, even if you work incredibly hard.

Take the recently released story of Maria Fernandes, for example. The 32 year old from Newark, New Jersey, was recently found dead in her car. The woman was working four part-time jobs. She would go straight from job to job, so she would often nap in between shifts. She had pulled over for a nap on the side of the road early Monday, and left her car on. The fumes from her exhaust, combined with those from a gas tank that had spilled in the back of her car unfortunately led to her death.

Fernandes’s story is beyond tragic, and it’s certainly a dramatic example, but to me, it was unsurprising. Nearly half of Americans live paycheck-to-paycheck. According to a study published in April 2014, more than 25 million American families that are considered middle class fall under the paycheck-to-paycheck distinction. The middle class families included in this category have a median income of $41,000, yet still struggle to make ends meet. Many of them have very small rainy day funds, if at all. They’re not working four part-time jobs, sure, but the work they are doing is barely enough. There’s also the fact that the American dream also emphasizes the need for a college education, which now costs the average student more than it ever has.

And that’s just the middle class. Those who aren’t so fortunate have it even worse.  According to the Brookings Institution, roughly 12 million Americans live on $2 a day or less.

Then there’s the minimum wage debacle. It would be close to impossible to live on a minimum wage job in pretty much every state. Check out this amazing infographic from USA Today. It’s based on the question, “How many hours must minimum wage earners work to afford rent?” The answer ranges from state to state, but they’re all equally unreasonable. In Texas, you’d need 93 hours. California clocks in at 130 hours. New York is slightly lower at 124 hours. In order to survive on minimum wage in Hawaii, you’d need to work 174 hours a week, which is a bit difficult, given that there are only 168 hours total. But never fear, guys, in Arkansas and Montana you can get by on working a measly 69 hours of minimum wage work a week!

Of course, the argument can be made that minimum wage work isn’t intended to be a career, rather a stepping stone. But that’s pretty much a crock of bullshit at this point. When education is so expensive, families are living hand to mouth, and the unemployment level is only slowly getting better, it can be hard for people without educational opportunities to raise above minimum wage. In that environment, four jobs isn’t ridiculous, it’s pretty much understandable. It’s pretty hard to pull yourself up by your boot straps when the boots are so old that the straps are falling off.

Finally, let’s juxtapose all this uplifting news with how Americans feel about minimum wage jobs. More than three quarters of conservative Americans believe that the poor “have it easy.” Overall, when surveying all Americans, 44 percent think that the poor “have it easy.” When asked the question, “Why are people poor?” a majority of conservatives responded that people are poor because of a lack of effort on their part. And in case I haven’t made you too depressed yet on this beautiful Friday, check out these tweets that sum up how some truly spectacular idiots feel about minimum wage jobs:

Thanks PublicShaming

Thanks, PublicShaming

Ms. Fernandes, I’m so very sorry that your life had to end the way it did. You were just trying to provide for yourself, and we all know how truly hard that can be. You were not alone, but I do hope that someday we get to the point where stories like yours are a thing of the past.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

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In June, Seattle made the news when the city announced that it would be upping its minimum wage to $15 per hour. In a time when arguments over the minimum wage has led to various strikes, discussions, and political debates, the Seattle move was unprecedented. It was pretty smooth too–the Seattle mayor was able to negotiate between a lot of different parties in order to create such a high minimum wage without much resistance. But now the change has finally hit a road bump–attorney Paul Clement is suing the city of Seattle for the minimum wage hike.

The lawsuit, filed by Clement, is on behalf of an organization called the International Franchise Organization. This move has received support from several major organizations, including the United States Chamber of Commerce and National Restaurant Organization, both of which recently joined the lawsuit.

The problem that these groups have with the new minimum wage law stems from the way in which it distinguishes between national chains, franchises, and small businesses. The current text of the law will require large corporations with chains in Seattle to adopt the $15 minimum wage within the next three years. Small businesses have up to seven years to implement it. Franchisees–small businesses that are affiliated with but not operated by larger chains, must implement it within three years. Examples of franchises include Pizza Hut, Dunkin Donuts, and Subway.

The Mayor of Seattle, Ed Murray claims that franchises have support that small mom-and-pop businesses don’t–namely in the form of advertisements, supplies, and menu creation.

The lawyer filing the suit on behalf of the franchisees, Paul Clement,  has had a lot of success with arguing cases in front of the Supreme Court. He has argued 74 cases in front of the highest court in the land, including two of the most talked-about cases of this year–Clement was involved in both the Hobby Lobby and Aereo cases. Clement was also involved in cases related to the Affordable Care Act, and argued on behalf of the Defense of Marriage Act.

He explained why he felt so strongly about the rights of franchisees to receive more time to implement the minimum wage:

I think that that points to the issue that’s at the heart of this case: corporate separateness. When you walk into a McDonald’s or Days Inn or coffee shop that has a dozen outlets, you’re not walking into corporate headquarters. These franchised companies are organized differently from a company that’s one monolithic company with one set of management and one set of employees.

Clement also claims that this is a direct attack on the franchise model of business–mostly coordinated by unions.

This suit marks an interesting turn in a large nation-wide debate about minimum wages. The argument isn’t being made that the wage hike shouldn’t happen, but rather that it’s being pushed on too quick of a time-table. That’s a good sign for minimum wage increases, and indicates that the organizations currently challenging the law realize that. Although $15 is a lot more than what most places are proposing, the idea of a minimum wage hike in general appears to be widely supported. As of a poll about 10 months ago, roughly 75 percent of American support raising the federal minimum wage to $9 per hour. Whichever way the Seattle fight goes, hopefully the minimum wage will soon take a big jump.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post Seattle Minimum Wage Battle Heading to Court appeared first on Law Street.

Where is the line between independent contractor and employee? That was the question presented in the case of Coleman vs Pink Poodle Enterprises, where 11 former exotic dancers at the Pink Poodle strip club sued their former employer for failing to pay them minimum wage and overtime or provide them with benefits. The club is located in San Jose, California and has been owned and operated by the Kuzinich family for the past 57 years.

The club got around these provisions in the California Labor Code by classifying the dancers as “independent contractors”, rather than “employees”, despite the fact that dancers had regular work schedules, specific dress codes, and were required to attend employee meetings the way a typical “employee” would.  As independent contractors, the dancers were ineligible for benefits such as Medicare and Social Security. This is the main legal argument that the Kuzinich family is using to counter the dancers’ claims: they are independent contractors, and therefore minimum wage and benefit laws do not apply. This is certainly a stretch, since “independent contractors” are not bound by employer guidelines the way that these dancers were.

Not only were the dancers deprived benefits, but some of them were not even paid for their labor at all. Instead, they were required to pay the club for the opportunity to dance there. This is referred to by many club owners as a “house fee” that the dancers must pay in order to get time on stage, similar to the way that a hairstylist can rent out a chair at a salon. However, hair stylists who do this are usually not bound to salon schedules or meeting times the way that these dancers were.

This is an issue that is being raised in clubs across the country, and it is not the first time that dancers are fighting back against their employers. Another lawsuit, filed in 2013 by Felicia Harmon and others against Foxy Lady, Inc. and Arthur Dillard, raised the same employment issues as the dancers at the Pink Poodle. In addition, dancers at the Foxy Lady were forced to pay a “bar fee” so that they could choose to work any shift and were required to pay a fine if they showed up to work late. Now I don’t know about you, but the idea of paying my employer to work seems outrageous. Regardless of one’s personal opinion towards exotic dancing as a profession, labor is labor.

There is an upside to being labeled as an independent contractor–tips. Since the dancers are not given an hourly wage, they are able to keep all (or the majority) of the tips that they make from their dances. According to an exotic dancer who goes by the name Menagerii, this can be between $500 and $1500 on an average night. In fact, many of the dancers didn’t even realize that they were being taken advantage of because they walked away with a decent amount of cash each night.  However, while $1500 may seem like a lot, when the fee to dance at the club and the cost of medical care are taken into account that number drops fast.

The majority of past cases have ruled in favor of the dancers, rewarding them with settlements of millions of dollars. In 2012, another club in California settled a similar lawsuit for $12.9 million and a third lawsuit settled in 2013 required the Penthouse Executive Club to pay $8 million to its dancers in wages and overtime. While we don’t know explicitly how much compensation the dancers from the Pink Poodle are seeking, past precedent shows that the dancers are likely to be victorious and receive a large settlement.

Featured image courtesy of [401(K) 2012 via Flickr]

Brittany Alzfan

Brittany Alzfan is a student at the George Washington University majoring in Criminal Justice. She was a member of Law Street’s founding Law School Rankings team during the summer of 2014. Contact Brittany at staff@LawStreetMedia.com.

The post Exotic Dancers Sue Strip Club over Benefits and Wages appeared first on Law Street.

Recently, I have noticed with the talk of 2014 midterm elections, articles about minimum wage are starting to pop up more in my daily reading. The problem with these articles (one, two, and three) is no one completely gets the argument right. The problem is not that that the wealthy made more money, but that the rate at which they are making more money is increasing more quickly compared to other groups. Between 1979-2007, the ‘99%’ saw a 53% change in comprehensive income, while the top ‘1%’ had a 314% increase. The concern surrounding this trend has given rise to the hot political debate of a suggested federal minimum wage increase to $10.10. But, as we continue to discuss the validity of minimum wage legislation, we need to be clear on its effectiveness, purpose, and discuss more powerful alternatives like unionization and collective bargaining.

Why Conservatives Are Wrong About the Minimum Wage

There is a very popular myth among conservatives that the minimum wage always hurts job growth and in fact leads to a decrease in available jobs. We need to realize that this not always the case, and in fact, significant amount of data suggests that increasing the minimum wage is a very practical thing to do because it provides needed benefits to workers with zero impact on employment levels. According to Madland and Bunker at the Center for American Progress, “at least five different academic studies focusing on increases to the minimum wage… find an increase in the minimum wage has no significant effect on employment levels.” People often forget that an increase in the minimum wage does have benefits, and it seems these benefits prove to be very effective and helpful during times of high unemployment. A minimum wage increase results in ‘boosts in demand and reduction in turnover’.

Contrary to conservative doctrine, it is actually the consumer that keeps the economy going. This is for two reasons. First, when more people are buying products the economy grows faster. Second, people with less money, spend more money. Director of the CBO Doug Elmendorf notes that “increases in disposable income are likely to boost purchases more for lower-income than for higher-income households,” thus a minimum wage increase provides more money for these families and that results in more spending which boosts demand.

Turnover refers to the process of workers quitting and companies having to re-hire and re-train new employees, thus high levels of turnover create a very inefficient system. Some companies, such as Costco, have implemented ‘efficiency wages’ to avoid high turn-over among workers. Costco pays its employees $15.60 per hour, which is significantly over the minimum wage. Their philosophy is that a higher wage will yield more productivity with less turnover and retention of good workers. This model has been extremely successful. Consider their numbers in comparison to Wal-Mart, which pursues the path of cheap labor.

Why Liberals Are Wrong About the Minimum Wage

What we need to understand is that liberals have two goals in mind with the minimum wage. The first is to create a level of income that constitutes a living wage. The second, and more philosophical reason, has to do with establishing a sense of equity in society. The United States is currently the third most unequal society among OECD nations. We have extremely low social and economic mobility, which means that the likelihood of someone moving from a low-income status to the middle class or from the middle class to a high-income status is extremely unlikely. I suggest that the protection and promotion of unions would be a more efficient policy for achieving both of the liberal’s goals — helping workers obtain a living wage and instilling equity in our society.

Unions and Living Wages

We find that unions, like the minimum wage, are effective in helping ensure workers are making a living wage. Lawrence Mishel and Matthew Walters of the Economic Policy Institute, complete a thorough analysis of data sets, and conclude that “unions raise wages of unionized workers by roughly 20%.” However, one of the advantages of unions over the minimum wage, is that unions do more than just help provide workers with better compensation. Unionized workers are much more likely to receive benefits that many would consider fundamental to a stable economic status. Mishel and Walters also point out that

Unionized workers are more likely than their nonunionized counterparts to receive paid leave, are approximately 18% to 28% more likely to have employer-provided health insurance, and are 23% to 54% more likely to be in employer-provided pension plans.

These benefits are not included in a minimum wage increase, yet they are extremely important to helping people stay at the ‘living wage’ threshold. It used to be the case that a majority firms offered employer-based health insurance. However, over the last thirty years, the number of firms offering this benefit has been on the decline along with the presence of unions in the labor market. Since it was the strong unionized labor force the procured benefits like employer-provided health insurance in the first place, it shouldn’t be a surprise that as unions have decreased so have worker benefits.

Unions and Equity

 Liberals support minimum wage legislation also to establish a sense of equity in society. This goal will not be achieved through a minimum wage increase, and in fact, supporting an increase may be further perpetuating a system of inequality. In Why Nations Fail, M.I.T. economist Daron Acemoglu and the Harvard political scientist James A. Robinson provide an account of what factors contribute to the constitution of a successful and flourishing nation. New York Times columnist Thomas Friedman does a nice job of summarizing the main thesis of the book, “nations thrive when they develop ‘inclusive’ political and economic institutions, and they fail when those institutions become ‘extractive’ and concentrate power and opportunity in the hands of only a few. The important thing is that you need to have both a politically and economically inclusive system, because they depend on each other. Without one, you will lose the other, and that in turn creates a downward spiral into collapse and failure.

What does this have to do with Unions? My contention is this: the best way to ensure that the people experience political and economic inclusivity is through the presence of unions and collective bargaining in the work force.

We have already seen that unions are effective at improving the economic well-being of its members. However, members of society still need political inclusivity. Interestingly, in their conclusion, Mishel and Walters make an important observation, namely that, “unions enable due process in the workplace and facilitate a strong worker voice in the broader community and in politics.” Unlike an increase in the minimum wage, an increase in unionization can help citizens improve their political standing along with their economic position.

Citizen’s United

It is quite clear that we have become a very economic exclusive society with extreme income inequality, relatively high-poverty, and an low social mobility.

When it comes to the status of political inclusivity, things are a little more gray. It would seem that the US must be politically inclusive because it is a democratic-republic and everybody has the right to vote for elected leaders. However, the rise of big-money in politics has greatly changed the political landscape. In the current system corporations have the right to spend money on political campaigns, so companies like Bank of America and Goldman Sach’s donating over a million dollars to political campaigns through Super PACs. These extremely large donations allow significant access to the candidate, and a platform to communicate what they would like to see from their candidate while in office.

Low income and middle class citizens are losing political power, because their one vote is not as valuable as a million dollars in campaign financing, and unfortunately, it seems there is no solution to this problem except for reversing Citizen’s United, which is not a promising outlook.

If this problem cannot be fixed directly through the political sector, maybe it can be solved through unionization. Collective bargaining is a form of political power. Unions have a history of being key players in political movements such as the struggle for civil rights, the fight for Fair Employment Practices Commission, the Montgomery Bus Boycott, etc.

If conservatives and liberals really are interested into making the United States a thriving democracy, we really need to rethink our attitude towards Unions. They may be our best option for preserving and restoring economic and political inclusion which are fundamental components of a successful society.

[EPI] [NY Times] [OpenSecrets] [CBPP] [EPI – Mishel]

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Bo Donoghue

Featured Image Courtesy of [Flickr/401(K) 2012]

Bo Donoghue

Bo Donoghue is a student at The George Washington University. Contact Bo at staff@LawStreetMedia.com.

The post Why Conservatives & Liberals Are Both Wrong About Minimum Wage appeared first on Law Street.

Stop me if you’ve heard this one before. Low-wage workers are pissed that their multimillion dollar employer pays them next to nothing while spending exorbitantly elsewhere and mooching from the same taxpayers they’re screwing. No I’m not talking about the cashiers at McDonald’s or Wal-Mart or the millions of other employees working at or below minimum wage, I’m talking about the cheering squad for the Cincinnati Bengals. Cheerleaders?! Getting paid?! I know, I know. Next thing you know, gays will want to marry and immigrant soldiers will request a path to citizenship. But these ladies actually seem to have a fair gripe, and their story may be instructive on which direction low-wage American workers are headed.

On February 11, 2014, Cincinnati Ben-Gal cheerleader Alexa Brenneman filed a class-action suit against the Bengals organization on behalf of her cheering squad, alleging that her employer violated federal and state wage laws by paying them less than the minimum wage. In her complaint (which can be read here), Ms. Brenneman argues that she made roughly $855 (or $2.85 an hour) for her work as a Ben-Gal cheerleader in 2013. That work included activities such as required practice, charity appearances, makeup clinics, and photo shoots. Ms. Brenneman also claims Ben-Gal cheerleaders received nothing for the time they spent modeling for and promoting the cheerleader calendar, and they were routinely condescended by Bengals management. The statement below, seemingly authored by Big Brother, is from the organization’s Ben-Gal Rules:

Insubordination: Webster defines this word as “not submitting to authority; disobedient.” Syn. Rebellious, mutinous, defiant. Insubordination to even the slightest degree IS ABSOLUTELY NOT TOLERATED!!! You will be benched or dismissed!!!

Authority: ABSOLUTELY NO ARGUING OR QUESTIONING THE PERSON IN AUTHORITY!!!

Ms. Brenneman’s argument isn’t one of a kind. Less than a month earlier, a Raiderettes cheerleader sued the Oakland Raiders for similar wage violations. On a more temporary basis, unpaid interns and volunteers have begun organizing their class-action wage suits against movie studios, publishing moguls, and Major League Baseball.  So why all the hostility?

Beyond the inability to make ends meet, the unpaid and low paid could be upset with the massive pay inequality occurring throughout the country. Labor is becoming cheaper and more dispensable, yet ceo pay is continuing to grow, and is often due to the good fortune and political maneuvering that is not available to the average American.

The Cincinnati Bengals may exemplify this point. The Bengals are owned by Mike Brown, the prodigal son of Bengals founder and NFL mogul, Paul Brown. Mike Brown has owned the team since 1991 when he inherited responsibility upon his father’s passing. Since then, he has widely been criticized, often for poor hiring decisions and for refusing to cede management control of player personnel despite amassing one of the worst records in football during his tenure as owner.

Mike Brown is also despised for conning Hamilton County, Ohio into bankrolling a new stadium for his team. In 1995, Brown threatened to move his team to Baltimore if the county didn’t pay for a new stadium. His tactics worked. Brown, a Republican political donor, secured public financing for his new stadium, which would be paid for in part by increased sales and property taxes in Hamilton County. Paul Brown Stadium is still considered one of the costliest publicly financed stadiums in the country, while Mike Brown and his team continue to make millions.

Although the outrage among low-level Bengals workers may be palpable, things are unlikely to become more fair. Instead of increasing wages, employers often double down on the theory that interns and low-wage workers are expendable by eliminating their position entirely. Condé Nast has ended their internship program after they were sued for wage violations last June. In the world of cheerleading, six NFL teams have nixed their squads, and you can bet this number is likely to grow. Just as employers seek to avoid health care expenses, they seek to avoid costly litigation. So although the Ben-Gals squad may be victorious in their class-action lawsuits, professional cheerleaders as a whole may be the latest group of workers left with nothing to cheer about.

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Andrew Blancato (@BigDogBlancato) holds a J.D. from New York Law School, and is a graduate of the University of Massachusetts, Amherst. When he’s not writing, he is either clerking at a trial court in Connecticut, or obsessing over Boston sports.

Featured image courtesy of [Chris Breeze via Wikipedia]

Andrew Blancato

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Robots are the future- and they are already here. Although, the average “joe” may not interact with these human replacements, military personnel, across seas, encounter robots on a daily basis.

 Today, there is a powerful shift in robotic technology for domestic use. In fact, just last Monday, Amazon strategically released their drone delivery concept. Robotic machinery is blending into the average citizens’ everyday life. So should we be worried?

Well that depends…

A company, Knightscope, in California has recently developed a robot called K5 Autonomous Data Machine (this machine is quite remarkable).

Within months of its debut, this security robot has already created quite a ruckus — “R2D2’s evil twin,” to be exact according to Marc Rotenberg, the director of the Electronic Privacy and Information Center, in Washington, DC.

What makes this robot truly evil? Well…

 The first point is obvious. This device is the NSA’s fantasy; a harmless looking device that collects images and records sound 24/7.

Now, some may say this is awfully Orwellian. Yes, that may be so, but the intentions are good. William Santana Li,  co-founder of the technology company that created K5 Autonomous Data Machine claims that they created this robot “after what happened at Sandy Hook”, based on their assertion that “[we] are never going to have an armed officer in every school”.

School shootings have become more prevalent in the United States over the past few years. There have been 34 shooting events in 1990’s contrasting with 86 shooting events between 2000-2013, according to the American Center for Disease Control and Prevention. Consequently, K5 Autonomous Data Machine was developed to ensure the safety and security of schools, and possibly an alternative to human guards.

But did you catch that second detriment? No? Human Security will be rendered pointless. Is our world becoming so efficient that it is destroying the working middle class?

Yeah, robots are efficient. Yeah, it’s cheap. Yeah, it’s cool and futuristic, and it feels like you are living on Tatooine.

 But this could drastically hurt our economy, on such a large economic scale proving esteemed economist, David Author, from Massachusetts Institute of Technology’s theory that technology decimates the working class.

In the United States, the Federal minimum wage in $7.25 an hour, while the implementation of K5 would short the American middle class by an entire dollar at a mere $6.25 an hour reported by the Department of Labor.

This also brings up the recurring argument of privacy vs. security. How much is the common citizen going to compromise in order to procure their safety?

However, I am less worried about security than I am more concerned about the dying off of the middle class. At what point do you draw the line? Case and point, robots don’t need to worry about feeding a family.

 At the end of the day, people are going to complain about both sides. Either, there is not enough protection, or it is too invasive. Myself personally? I’m conflicted. As of now, I want to see more of Evil R2D2.

[NY Times]

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Featured image courtesy of [littlelostrobot via Flickr]

Zachary Schneider

Zach Schneider is a student at American University and formerly an intern at Law Street Media. Contact Zach at staff@LawStreetMedia.com.

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The United States of America. Land of the free, home of the brave. Doesn’t that have a nice ring to it?

Anyone from anywhere, regardless of socioeconomic class, religion, or culture can come and make a name for themselves in the United States. We believe in “Life, Liberty and the Pursuit of Happiness.” Pull yourself up by your bootstraps, set your mind on the prize, and go claim what is yours.

Yet each year the range in wealth disparity increases, rendering it more difficult–to a point where it is impossible to succeed economically.

In the United States, there is an immense wealth disparity. The vast majority of capital is owned by the top 5%, leaving 95% with huge levels of wealth disparity.

As the standard of living increases, the federal minimum wage should increases respectively.

A step forward in the right direction was the Minimum Wage Act of 2012, specifying that the federal minimum wage would be increased to $9.80 by 2014.

The question is often asked, why raise minimum wage? This video explains why.

Minimum wage is a mechanism the protects the Average Joe, the working class. The issue is that the “Average Joe” ten years ago is nothing like “Joe” in the status quo. The cost of living has increased exponentially, so much that individuals paid at a minimum wage can barely support themselves, let alone a family.  Often times, families have to rely on food stamps and governments subsidies on a daily basis just to survive.

With an increased minimum wage, the government will be inherently be removed from the lives of Americans across the country and a free market will be able to flourish.

With an increased minimum wage, the gap in wealth subsequently decreases. Individuals, along side their families, have more money to spend and invest. Not only does this end the cyclical process of poverty and create a stronger middle class, but it provides for a stronger economy.

The United States should want to encourage these people to move up to the higher echelons in society, not keep them in the current cycle of cyclical poverty. If we increased the minimum wage, we would inherently have less people on food stamps and government programs, thus more people would be supporting the free market.

By increasing the minimum wage, not only with the United States shrink its ever growing wealth gap, but it will improve the lives of millions of Americans.

[BusinessWeek] [DepartmentofLabor]

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Featured image courtesy of [Fibonacci Blue via Flickr]

Zachary Schneider

Zach Schneider is a student at American University and formerly an intern at Law Street Media. Contact Zach at staff@LawStreetMedia.com.

The post Wealth Disparity in the United States: Minimum Wage appeared first on Law Street.