Fast-Food Workers Seeking $15 Wage Planning Civil Disobedience

From NYT September 1 by Steven Greenhouse:

The next round of strikes by fast-food workers demanding higher wages is scheduled for Thursday, and this time labor organizers plan to increase the pressure by staging widespread civil disobedience and having thousands of home-care workers join the protests.

The organizers say fast-food workers — who are seeking a $15 hourly wage — will go on strike at restaurants in more than 100 cities and engage in sit-ins in more than a dozen cities.

But by having home-care workers join, workers and union leaders hope to expand their campaign into a broader movement.

“On Thursday, we are prepared to take arrests to show our commitment to the growing fight for $15,” said Terrence Wise, a Burger King employee in Kansas City, Mo., and a member of the fast-food workers’ national organizing committee. At a convention that was held outside Chicago in July, 1,300 fast-food workers unanimously approved a resolution calling for civil disobedience as a way to step up pressure on the fast-food chains.

“They’re going to use nonviolent civil disobedience as a way to call attention to what they’re facing,” said Mary Kay Henry, president of the Service Employees International Union, which has spent millions of dollars helping to underwrite the campaign. “They’re invoking civil rights history to make the case that these jobs ought to be paid $15 and the companies ought to recognize a union.”

President Obama, in a Labor Day speech in Milwaukee, mentioned the fast-food campaign, saying, “All across the country right now there’s a national movement going on made up of fast-food workers organizing to lift wages so they can provide for their families with pride and dignity.”

Mr. Obama added that if he had a service-sector job, and “wanted an honest day’s pay for an honest day’s work, I’d join a union.”

Fast-food chains and many franchise operators have said that $15 an hour was unrealistic and would wipe out profit margins at many restaurants. Some business groups have attacked the campaign as an attempt by a fading union movement to rally a new group of workers.

Some franchise operators have dismissed the walkout, saying that in previous one-day strikes, only a handful of employees at their restaurants walked out, barely disrupting business. But organizers say that workers walked out at restaurants in 150 cities nationwide during the last one-day strike in May, closing several of them for part of the day, with solidarity protests held in 30 countries.

The S.E.I.U., which represents hundreds of thousands of health care workers and janitors, is encouraging home-care aides to march alongside the fast-food strikers. The union hopes that if thousands of the nation’s approximately two million home-care aides join in it would put more pressure on cities and states to raise their minimum wage.

“They want to join,” Ms. Henry said. “They think their jobs should be valued at $15.”

S.E.I.U. officials are encouraging home-care aides to join protests in six cities — Atlanta, Boston, Chicago, Cleveland, Detroit and Seattle. Union leaders say the hope is to expand to more cities in future strikes.

Jasmine Almodovar, who earns $9.50 an hour as a home-care aide in Cleveland, said the $350 she took home weekly was barely enough to support herself and her 11-year-old daughter. “I work very hard — I’m underpaid,” she said. “We deserve a good life, too. We want to provide a nice future to our kids, but how can you provide a good life, how can you plan for the future, when you’re scraping by day to day?”

Within the S.E.I.U., there has been some grumbling about why has the union spent millions of dollars to back the fast-food workers when they are not in the industries that the union has traditionally represented.

But Ms. Henry defended the strategy, saying that underwriting the fast-food push has helped persuade many people that $15 is a credible wage floor for many workers. She said it prompted Seattle to adopt a $15 minimum wage and that San Francisco was considering a similar move. She also said the campaign helped persuade the Los Angeles school district to sign a contract for 20,000 cafeteria workers, custodians and other service workers that will raise their pay, now often $8 or $9 an hour, to $15 by 2016.

“This movement has made the impossible seem more possible in people’s minds,” Ms. Henry said. “The home-care workers’ joining will have a huge lift inside our union.”

End the Tyranny of 24/7 Email

From yesterday’s NYT “Opinion” by Clive Thompson:

This Labor Day weekend, odds are you’ll peek at your work email on your “day off” — and then feel guilty about it.

You might envy the serene workers at Daimler, the German automaker. On vacations, employees can set their corporate email to “holiday mode.” Anyone who emails them gets an auto-reply saying the employee isn’t in, and offering contact details for an alternate, on-call staff person. Then poof, the incoming email is deleted — so that employees don’t have to return to inboxes engorged with digital missives in their absence. “The idea behind it is to give people a break and let them rest,” a Daimler spokesman told Time magazine. “Then they can come back to work with a fresh spirit.”

Limiting workplace email seems radical, but it’s a trend in Germany, where Volkswagen and Deutsche Telekom have adopted policies that limit work-related email to some employees on evenings and weekends. If this can happen in precision-mad, high-productivity Germany, could it happen in the United States? Absolutely. It not only could, but it should.

White-collar cubicle dwellers complain about email for good reason. They spend 28 percent of their workweek slogging through the stuff, according to the McKinsey Global Institute. They check their messages 74 times a day, on average, according to Gloria Mark, an authority on workplace behavior and a professor at the University of California, Irvine.

And lots of that checking happens at home. Jennifer Deal, a senior research scientist at the Center for Creative Leadership, surveyed smartphone-using white-collar workers and found that most were umbilically tied to email a stunning 13.5 hours a day, well into the evening. Workers don’t even take a break during dinner — where, other research shows, fully 38 percent check work email “routinely,” peeking at the phone under the table. Half check it in bed in the morning. What agonizes workers is the expectation that they’ll reply instantly to a colleague or boss, no matter how ungodly the hour. Hence the endless, neurotic checking, and the dread of getting in trouble for ignoring something.

So as a matter of sheer human decency and workplace fairness, reducing the chokehold of after-hours email is a laudable goal.

But it also appears that, from a corporate standpoint, the sky won’t fall. The few North American firms that have emulated Daimler all say it is surprisingly manageable.

At the Toronto office of Edelman, the global public relations firm, managers created the “7-to-7” rule. Employees are strongly discouraged from emailing one another before 7 a.m. and after 7 p.m. Sure, they can check email if they want — but they’re not to send it to colleagues. It’s an acknowledgment that the only way to really reduce email is to persuade colleagues not to reflexively write every time they have the tiniest question.

Those who do are scolded. “You have to stick to it,” Lisa Kimmel, the general manager of the office, told me. “When we tell prospective employees about it, their eyes light up.”

Even start-ups are experimenting with email limits. Book Riot, a website for book lovers, has eight full-time employees who mostly work remotely, in different time zones, on often hectic schedules. They all agree: Email someone whenever you want, but don’t expect a reply until the recipient is back in the office.

“It’s understood that if someone has a crazy idea at 3 a.m. and sends it, that’s their problem that it’s 3 a.m. — you respond when you want,” Rebecca Schinsky, the site’s director of content, told me. At the Boston Consulting Group, when a team of stressed-out consultants began organizing “predictable time off” — no-messaging zones during their off time — their total work hours dropped by 11 percent, yet the same amount of work was accomplished.

Why would less email mean better productivity? Because, as Ms. Deal found in her research, endless email is an enabler. It often masks terrible management practices.

When employees shoot out a fusillade of miniature questions via email, or “cc” every team member about each niggling little decision, it’s because they don’t feel confident to make a decision on their own. Often, Ms. Deal found, they’re worried about getting in trouble or downsized if they mess up.

In contrast, when employees are actually empowered, they make more judgment calls on their own. They also start using phone calls and face-to-face chats to resolve issues quickly, so they don’t metastasize into email threads the length of “War and Peace.”

This is basic behavioral economics. When email is seen as an infinite resource, people abuse it. If a corporation constrains its use, each message becomes more valuable — and employees become more mindful of how and when they write.

Granted, not all late-night email is bad. As Ms. Deal found, employees don’t like being forced to reply at 1 a.m., but they appreciate the flexibility of being able to shift some work to the evening if they choose. And they don’t mind dealing with genuine work crises that crop up during leisure hours. At Edelman in Toronto, employees try not to bug each other in the evenings — but if a client emails with a time-sensitive issue, they’ll respond.

These changes can’t happen through personal behavior: The policy needs to come from the top. (If your boss regularly emails you a high-priority question at 11 p.m., the real message is, “At our company, we do email at midnight.”) And some changes may seem like matters of housekeeping, but have major repercussions, like keeping a separate email box for your personal messages. You can’t ignore your work inbox if that’s also the place where friends send you weepy accounts of their breakups.

But it’s worth it. More than a century ago, blue-collar workers fought for a limited workday with an activist anthem: “Eight hours for work, eight hours for rest, eight hours for what we will.” It’s a heritage that, this Labor Day, we need to restore.

Obama Plans New Scrutiny for Contractors on Labor Practices

From today’s NYT “Politics” section by Michael Shear and Steven Greenhouse:

President Obama is expected to sign an executive order on Thursday that could make it harder for companies that violate wage, labor and anti-discrimination laws to win federal contracts, administration officials said on Wednesday.

Under the order, Mr. Obama will require federal contractors to disclose any labor violations that their companies committed over the previous three years, with government procurement officials then being advised to steer clear of those with repeated and egregious violations.

“The president’s view is that taxpayer dollars should not reward corporations that break the law,” said an administration official, who insisted on anonymity because the executive order had not yet been issued. The order would affect about $500 billion a year in contracts like those awarded to make Navy uniforms and run federal cafeterias.

Read the entire article here.

N.L.R.B. Ruling Holds McDonald’s, Not Just Franchisees, Liable for Worker Treatment

From today’s NYT by Steven Greenhouse:

The general counsel of the National Labor Relations Board ruled on Tuesday that McDonald’s is jointly responsible for workers at its franchisees’ restaurants, a decision that if upheld would disrupt longtime practices in the fast-food industry and ease the way for unionizing nationwide.

Richard F. Griffin Jr., the labor board’s general counsel, said that of the 181 unfair labor practice complaints filed against McDonald’s and its franchisees over the last 20 months, he found that 43 had merit on such grounds as illegally firing or threatening workers for pro-union activities.

In those cases, Mr. Griffin said he would include McDonald’s as a joint employer, a classification that could hold the fast-food company responsible for actions taken at thousands of its restaurants. Roughly 90 percent of the chain’s restaurants in the United States are franchise operations.

McDonald’s said it would contest the decision, warning that the ruling would affect not only the fast-food industry but businesses like dry cleaners and car dealerships.

Read the entire article here.

No Accounting Skills? No Moral Reckoning

From NYT’s “The Great Divide” Blog by Jacob Soll:

“A population well-versed in double-entry accounting will not immediately solve our complex financial problems, but it would allow average citizens to understand the nuts and bolts of finance: balance sheets, mortgage interest, depreciation and long-term risk. It would also give them a clearer sense of what financial accountability really means and of how to ask for and assess audits. The explosion of data-driven journalism should also include a subset of reporters with training in accounting so that they can do a better job of explaining its central role in our economy and financial crises.

Without a society trained in accountability, one thing is certain: There will be more reckonings to come.”

Read the entire article here.

Outrage Over Wall Street Pay, but Shrugs for Silicon Valley?

From the New York Times Blog “DealBook” by Steven Davidoff:

Big paydays on Wall Street often come under laserlike scrutiny, while Silicon Valley gets a pass on its own compensation excesses. Why the double standard?

Take Eric Schmidt, the former chief executive and current chairman of Google. Google’s compensation committee last month awarded Mr. Schmidt $100 million in restricted stock plus $6 million in cash. The stock vests in four years and comes on the heels of a $100 million award made in 2011.

It’s unclear why Google felt the need to award Mr. Schmidt this amount.

When asked for comment, a representative of Google directed me to the regulatory filing Google made disclosing Mr. Schmidt’s compensation award. The filing states the award was paid “in recognition of his contributions to Google’s performance in fiscal year 2013.” How about that for detail?

Mr. Schmidt already owns shares worth billions of dollars in Google, and has a net worth of more than $8 billion, according to Forbes. So the latest award amount is just a few ducats to him.

As chairman, Mr. Schmidt does make a substantial contribution to Google, including helping the company negotiate a settlement with the European Union in an antitrust case. But his pay is extraordinarily high for a chairman. The typical director at a Standard & Poor’s 500 company was paid $251,000 in 2012, according to Bloomberg News. Mr. Schmidt is above that range by over $100 million.

Still, the pay award was greeted with few questions and apparently no criticism from Google’s shareholders or others. Compare this with the continued outcry over Wall Street executive pay.

The latest was the criticism of Jamie Dimon’s pay for 2013, given the many regulatory travails of his bank, JPMorgan Chase. The bank’s board awarded Mr. Dimon $20 million in pay for 2013, $18.5 million of which was in restricted stock that vests over three years.

In doing so, the JPMorgan board stated that the award was justified because of JPMorgan’s “sustained long-term performance; gains in market share and customer satisfaction; and the regulatory issues the company has faced and the steps the company has taken to resolve those issues.”

While JPMorgan may be hogging the regulatory limelight at the moment, other Wall Street banks have faced that glare and have been questioned about their chief executives’ compensation. Total pay for Lloyd Blankfein of Goldman Sachs, no stranger to regulatory scrutiny, has not yet been disclosed, but he was recently awarded $14 million in stock. Once his cash bonus is announced, Mr. Blankfein will probably be paid an amount similar to Mr. Dimon’s.

Like JPMorgan’s board, Goldman’s board has sought to justify such pay and is criticized just the same.

This double standard for finance and technology doesn’t make sense.

Read the entire article here.

Corporate leaders getting free legal pass on cleaning up financial crisis

From today’s New York Times Editorial Observer by Teresa Tritch:

In recent years, it has become increasingly clear that no prominent banker would be prosecuted for fraud in the run-up to the financial crisis. In the current issue of The New York Review of Books, Judge Jed Rakoff of the Federal District Court in Manhattan asks why.

The comforting answer — that no fraud was committed — is possible, but implausible. “While officials of the Department of Justice have been more circumspect in describing the roots of the financial crisis than have the various commissions of inquiry and other government agencies,” he wrote, “I have seen nothing to indicate their disagreement with the widespread conclusion that fraud at every level permeated the bubble in mortgage-backed securities.”

So why no high-level prosecutions? According to Judge Rakoff, evidence of fraud without prosecution of fraud indicates prosecutorial weaknesses.

This is not the first time Judge Rakoff has weighed in on the prosecutorial response to the financial crisis. In 2011, he rejected a settlement between Citigroup and the Securities and Exchange Commission because it did not require the bank to admit wrongdoing.

His insights on financial-crisis cases also apply to cases that have emerged since then, like JPMorgan Chase’s settlement with the government this week over the bank’s role in Bernard Madoff’s Ponzi scheme.

Under the deal, JPMorgan Chase, which served as Mr. Madoff’s primary bank for more than two decades, must pay a $1.7 billion penalty, essentially for turning a blind eye to Mr. Madoff’s fraud. It must also take steps to improve its anti-money-laundering controls. And it had to acknowledge, among other facts, that shortly before the fraud was revealed, the bank withdrew nearly $300 million of its money from Madoff-related funds.

By adhering to the settlement terms, the bank will avoid criminal indictment on two felony violations of the Bank Secrecy Act. No individuals were named or charged.

And that is the problem. Until relatively recently, it was rare for corporations to face criminal charges without the simultaneous prosecution of managers or executives. That changed over the past three decades, as prosecutors shifted their focus away from individuals and toward corporations, as if fault resides not in executives, but in corporate culture.

Read the entire article here.

Business behaving badly, why fines don’t deter corporate malfeasance

 

 

 

 

 

 

 

 

This last year was a record one for fines and financial settlements levied against corporations for breaking laws and wreaking havoc on the economy, especially banks and other financial institutions primarily responsible for creating the Great Recession.

The question is whether forcing corporations to pay changes their bad behavior.

Watch this New York Times video that reviews three examples of businesses behaving badly because they view such fines and settlements as the cost of doing business.

The question is whether more severe penalties, including jail time for executives who are responsible for the behavior of their corporations, can incentivize them to follow the law.

After all, corporations are citizens, and when citizens commit felonies, they often lose their rights. Perhaps we need legislation so that corporations that break the law lose their rights as well.

Tech start-up publishes employee salaries, encourages transparency

San Francisco tech start-up Buffer has been making waves with its transparency campaign, jump starting a national conversation about salaries and, by implication, the way businesses conduct their business in this country.

“We hope this might help other companies think about how to decide salaries, and will open us up to feedback from the community,” CEO Joel Gascoigne wrote in a blog post published on the company’s website Thursday. See the full post with published salaries here. By creating a transparent formula and paying above market rate, Gasciogne says he hopes to promote long-term commitment from employees. “In Silicon Valley, there’s a culture of people jumping from one place to the next. That’s why we focus on culture. Doing it this way means we can grow just as fast—if not faster—than doing it the ‘normal’ cutthroat way.”

The move is a radical departure from the normal but profoundly unjust practice of concealing salaries from other employees and the public in a country with a growing income inequality problem and a troubling trend of executive compensation that tops all other advanced industrialized countries. Despite the Great Recession and ongoing budget crises as a consequence of financial deregulation and corporate corruption, executive pay was 354 times greater than the average American worker’s salary.

In addition to regulatory reforms on the financial and banking industries the Dodd-Frank Wall Street Reform and Consumer Protection Act now requires companies to disclose their CEO-to-worker pay ratio. The SEC proposed the following rules to implement the law:

  • Section 951 requires advisory votes of shareholders about executive compensation and golden parachutes. This section also requires specific disclosure of golden parachutes in merger proxies. This section further requires institutional investment managers subject to Section 13(f) of the Securities Exchange Act to report at least annually how they voted on these advisory shareholder votes.
  • Section 952 requires disclosure about the role of, and potential conflicts involving, compensation consultants. This statute also requires the Commission to direct that the exchanges adopt listing standards that include certain enhanced independence requirements for members of issuers’ compensation committees. The Commission is also directed to establish competitively neutral independence factors for all who are retained to advise compensation committees.
  • Section 953 requires additional disclosure about certain compensation matters, including pay-for-performance and the ratio between the CEO’s total compensation and the median total compensation for all other company employees.
  • Section 954 requires the Commission to direct the exchanges to prohibit the listing of securities of issuers that have not developed and implemented compensation claw-back policies.
  • Section 955 requires additional disclosure about whether directors and employees are permitted to hedge any decrease in market value of the company’s stock.

Hopefully, the recent action taken by Buffer to make transparent the ratio between its executive pay and staff will help facilitate this national conversation about establishing appropriate limits to executive salaries and what to do about the more troubling question concerning the unsustainable growth of income inequality in this country.

Five regulatory agencies approve Volcker Rule, curbing risky banking

Five federal regulatory agencies approved the so-called “Volcker Rule” today, restricting commercial banks from trading stocks and derivatives for their own gain and limits their ability to invest in hedge funds. The five agencies include the Federal Reserve, the Federal Deposit Insurance Corporation, Securities and Exchange Commission, the Commodity Futures Trading Commission and the Comptroller of the Currency:  all five agencies approved the Volcker rule, named after former Fed Chair Paul Volcker who championed restrictions on proprietary trading by banks, which puts into effect the centerpiece of the Dodd-Frank Act’s attempt to reign in financial corruption on Wall Street.

Congress passed and regulators approved the legislation despite the lobbying efforts of Wall Street banks, and the rule itself includes new wording aimed at curbing the risky practices responsible for the $6 billion trading loss, known as the so-called “London Whale,” at JPMorgan Chase last year. The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by Congress and signed into law by President Obama in July 2010, but the complex nature of financial regulation and the lobbying efforts of Wall Street slowed down the process of enacting the law.

The outgoing Fed Chair Ben S. Bernanke stated that “getting to this vote has taken longer than we would have liked, but five agencies have had to work together to grapple with a large number of difficult issues and respond to extensive public comments.”

Consumer advocacy groups praised the spirit of the rule as much needed reform of the greed and corruption that have become synonymous with Wall Street’s practices in the last decade, which led to the catastrophic consequences of the Great Recession including trillions of dollars and millions of jobs lost.

Dennis Kelleher, the head of Better Markets, said:  “The rule recognizes that compliance must be robust, that C.E.O.’s are responsible for ensuring a compliance program that works, that compensation must be limited, and that banned proprietary trading cannot legally be disguised, as market making, risk mitigating hedging or otherwise…Those requirements will not end all gambling activities on Wall Street, but should limit them and reduce the risk to Main Street.”

For a good summary of the Volcker Rule watch this video.