CFPB to reconsider rule on payday loans

From CNN Money Edition:

The watchdog agency said in a statement Tuesday that it intends to “reconsider” a regulation, issued in October, that would have required payday lenders to vet whether borrower can pay back their loans. It also would have restricted some loan practices.

If the rule is thrown out or rewritten, it would mark a major shift for an agency that had zealously pursued new limits on banks and creditors before Mick Mulvaney, President Trump’s budget director, became the CFPB’s acting director.

Mulvaney took over the top job at the CFPB in November following a leadership scramble. A vocal critic of the CFPB when it was run by President Obama appointee Richard Cordray, Mulvaney since said the agency would cut back on burdensome regulations.

Tuesday’s announcement does not amount to a formal repeal of the payday lending rule. But it does cast doubt on whether it will ultimately be implemented.

Payday loans provide those in need with small amounts of cash — typically between $200 and $1,000. The money needs to be paid back in full when a borrower receives his or her next paycheck, and such loans often come with exorbitantly high interest rates.

Consumer advocates that have supported the CFPB’s restrictions on the loans say such transactions often take advantage of people in desperate financial situations.

“The CFPB thoroughly and thoughtfully considered every aspect of this issue over the course of several years,” Karl Frisch, executive director of progressive group Allied Progress, said in a statement. “There is no reason to delay implementation of this rule — unless you are more concerned with the needs of payday lenders than you are with the interests of the consumers these financial bottom-feeders prey upon.”

The sentiment was echoed in a statement by Sen. Elizabeth Warren, a Democrat who helped create the CFPB.

“Payday lenders spent $63,000 helping Mick Mulvaney get elected to Congress and now their investment is paying off many times over. By scrapping this rule, Mulvaney will allow his campaign donors to continue to generate massive fees peddling some of the most abusive financial products in existence,” Warren said.

Read the complete article here.

MLK Day 2018, A Time to Reflect on Socio-Economic Injustice In All Forms

In honor of MLK Day, we post a short educational video here with excerpts from Martin Luther King, Jr. and James Baldwin that draw the connection between racial injustice and economic inequality in the United States. Their insights are as true today as they were fifty years ago, showing just how far we’ve come and how far we have to go. If we want peace, we must work for justice in all its forms.

Icelandic Companies Required By Law to Show They Pay Men, Women Fairly

From today’s National Public Radio:

Starting this week, companies in Iceland are required to demonstrate that they pay male and female employees fairly — without gender discrimination. Failing to do so can result in daily fines.

The law, which was passed last year and went into effect on Monday, is believed to be the first of its kind in the world and covers both the private and public sectors.

Proposals Aim To Combat Discrimination Based On Salary History

Some headlines have claimed that the new law makes it illegal to pay men more than women. That is not exactly what happened. In Iceland — as in many countries, including the U.S. — it was already illegal to pay men and women differently on the basis of their gender. (And, to be clear, it was and is legal to pay a man more than a woman, or vice versa, provided there is a valid reason.)

What is remarkable about the new law in Iceland is how it enforces equal pay standards. It does not rely on an employee to prove she was discriminated against. Instead, the burden is on companies to prove that their pay practices are fair.

The policy change comes after years of discussion and pilot testing, based on frustration with the fact that several gender-equity laws were not budging the actual pay gap.

Iceland has the best track record on gender equality in the world, according to the World Economic Forum. But the country still had a persistent pay gap just over 16 percent as of last year. The gap exists across all occupational groups. According to the Nordic Labour Journal, figures from 2010 showed about 8 percent of that year’s gap remained “unexplained” after factoring in possible justifications.

Iceland’s new law applies to companies with 25 employees or more. Every three years, the companies will need to confirm that they are paying men and women equally for jobs of equal value. If they aren’t certified, a daily fine will stack up.

Read the complete article here.

Robots Are Coming, and Sweden Is Fine

From New York Times:

From inside the control room carved into the rock more than half a mile underground, Mika Persson can see the robots on the march, supposedly coming for his job here at the New Boliden mine.

He’s fine with it.

Sweden’s famously generous social welfare system makes this a place not prone to fretting about automation — or much else, for that matter.

Mr. Persson, 35, sits in front of four computer screens, one displaying the loader he steers as it lifts freshly blasted rock containing silver, zinc and lead. If he were down in the mine shaft operating the loader manually, he would be inhaling dust and exhaust fumes. Instead, he reclines in an office chair while using a joystick to control the machine.

He is cognizant that robots are evolving by the day. Boliden is testing self-driving vehicles to replace truck drivers. But Mr. Persson assumes people will always be needed to keep the machines running. He has faith in the Swedish economic model and its protections against the torment of joblessness.

“I’m not really worried,” he says. “There are so many jobs in this mine that even if this job disappears, they will have another one. The company will take care of us.”

In much of the world, people whose livelihoods depend on paychecks are increasingly anxious about a potential wave of unemployment threatened by automation. As the frightening tale goes, globalization forced people in wealthier lands like North America and Europe to compete directly with cheaper laborers in Asia and Latin America, sowing joblessness. Now, the robots are coming to finish off the humans.

Read the complete article here.

Proof Retail Jobs Don’t Need to Be Bad

From today’s New York Times by Eduardo Porter

Bethamy Magrow is grateful that the minimum wage in New York City is rising to $13 at the end of next month. Earning the current minimum of $11 an hour at a Times Square fashion retailer and scheduled to work some weeks for only 19 hours, the 25-year-old sales worker realizes she doesn’t quite clear New York’s poverty line.

It would be nice if her schedule didn’t change so much from week to week, she told me, so she could set up her doctors’ appointments in advance. But at least New York bars retailers from changing the schedule from one day to the next. In any case, jobs she has had at Whole Foods and Pokéworks, a restaurant on Union Square, were no better or worse.

Millions of Americans have similar stories to tell. For all the talk about the “end of retail,” it is one of the largest employers in the country, accounting for about one in eight workers in the private sector. For every miner toiling in the United States, there are almost 25 retail workers. Manufacturing, the apple of President Trump’s eye, doesn’t employ nearly as many.

Typically paying full-time employees less than $33,000 a year, well below the midpoint across the economy, retail jobs have become the work of the lower class, the main source of support for Americans left behind by economic change.

This raises a fairly urgent question: If retail work sets the living standard for so many low-income families, why doesn’t it get more attention?

Read the entire article here.

Employees do want their job to matter, but meaning at work can be hard to find

From today’s Chicago Tribune by Alexia Elejalde-Ruiz:

Jennifer Ruiz holds her patient’s trembling hand as she presses a stethoscope to the frail woman’s chest and belly. She compliments the woman on her recently painted fingernails. She cheerfully asks how she’s feeling, knowing she’ll get no answer from the little curled body in the big hospital bed but for a penetrating stare.

Ruiz, a hospice nurse, finds her work deeply meaningful, in part for reasons that are obvious: “We get to be there for people during some of the most tragic and tough times in their lives,” she said.

But even those who shepherd the dying and their families through the fear, heartbreak and mystery of the end of life can lose sight of a job’s meaning in the stress of the day-to-day, if their employer doesn’t foster it.

“You have to fan that flame,” said Brenda McGarvey, corporate director of program development at Skokie-based Unity Hospice, where Ruiz works. “It’s your responsibility.”

A job’s meaningfulness — a sense that the work has a broader purpose — is consistently and overwhelmingly ranked by employees as one of the most important factors driving job satisfaction. It’s the linchpin of qualities that make for a valuable employee: motivation, job performance and a desire to show up and stay.

Meaningful work needn’t be lofty. People find meaning picking up garbage, installing windows and selling electronics — if they connect with why it matters.

But many Chicago-area employers seem to be missing an opportunity to tap this critical vein.

In a survey conducted by Energage for the Chicago Tribune’s 2017 Top Workplaces magazine, local employees regarded their employers more positively than the national average on nearly all measures, but companies fell significantly short in response to this statement: “My job makes me feel like I am part of something meaningful.” Meaningfulness also was the only measure that did not see any improvement among Chicago-area respondents this year, compared with last.

Read the article here.

House GOP passes bill that rolls back “joint employer” protections for workers

From yesterday’s New York Times by Christine Owens:

House Republicans on Tuesday took another step in their campaign to cheat workers out of fair pay and workplace rights. On a vote largely along party lines, the House advanced a bill to roll back longstanding “joint employer” protections for workers contracted by big companies like Apple or Alaska Airlines.

For years, when two companies both control the terms and conditions of employment, they are also both considered responsible for workplace violations like wage theft, sexual harassment or safety problems. So if a window washer working for a contractor fell because safety equipment was improperly installed by the company whose building he was cleaning, he could sue both the contractor and the larger company for damages.

But under the bill passed on Tuesday, large corporations that outsource jobs would get virtually full immunity from workplace violations, while the typically smaller, poorly capitalized local businesses that provide the workers would bear all the liability. This could leave these small businesses exposed to bankruptcy, leaving workers in danger of having no remedies at all.

Contracting out work is not necessarily bad; it’s often a smart way for companies to efficiently handle certain tasks, like payroll administration and cleaning work.

But the problem is that many companies also contract out to lower compensation costs and, sometimes, to avoid basic legal responsibilities to workers. Even when such cost-cutting is not the top reason a company outsources, workers usually suffer.

Read the entire article here.

Ralph Nader: Trump’s Anti-Consumer Agenda Hurts His Voters

From today’s New York Times “Opinion” Section by Ralph Nader;

As a candidate, Donald Trump promised regular people, “I will be your voice,” and attacked the drug industry for “getting away with murder” in setting high prices for lifesaving medications. But as president, he has declared war on regulatory programs protecting the health, safety and economic rights of consumers. He has done so in disregard of evidence that such protections help the economy and financial well-being of the working-class voters he claims to champion.

Already his aggressive actions exceed those of the Reagan administration in returning the country to the “Let the buyer beware” days of the 1950s.

Though Mr. Trump is brazen in his opposition to consumer protections, many of his most damaging attacks are occurring in corners of the bureaucracy that receive minimal news coverage. His administration, for instance, wants to strip the elderly of their right to challenge nursing home abuses in court by allowing arbitration clauses in nursing home contracts. The Federal Motor Carrier Safety Administration has announced that it is canceling a proposed rule intended to reduce the risk of sleep apnea-related accidents among truck drivers and railway workers.

And the Environmental Protection Agency is busy weakening, repealing and under-enforcing protections, including for children, from toxic exposure. Scott Pruitt, the director, went against his agency’s scientists to jettison an imminent ban on the use of chlorpyrifos, an insecticide widely used on vegetables and fruits. Long-accumulated evidence shows that the chemical is poisoning the drinking water of farm workers and their families.

This assault began with Mr. Trump choosing agency chiefs who are tested corporate loyalists driven to undermine the lifesaving, income-protecting institutions whose laws they have sworn to uphold.

At the Food and Drug Administration, Mr. Trump has installed Dr. Scott Gottlieb, a former pharmaceutical industry consultant, who supports weakening drug and medical device safety standards and has shown no real commitment to reducing sky-high drug prices. At the Department of Education, Betsy DeVos, a billionaire investor in for-profit colleges, has weakened enforcement policy on that predatory industry, hiring industry insiders and abandoning protections for students and taxpayers.

Mr. Pruitt, as the attorney general of Oklahoma, filed suits against the E.P.A. He has hired former lobbyists for the fossil fuel and chemical industries. Mr. Trump’s aides and Republicans in Congress are pushing to restrict access to state courts by plaintiffs who seek to hold polluters accountable.

The administration is even threatening to dismantlethe Consumer Financial Protection Bureau and fire its director, Richard Cordray, who was installed after Wall Street’s 2008 crash. Their sins: They returned over $12 billion to defrauded consumers and plan to issue regulations dealing with payday debt traps and compulsory arbitration clauses that deny aggrieved consumers their day in court. (The Senate is now considering legislation to gut the arbitration rule.)

Draconian budget cuts, new restrictions on health insurance, diminished privacy protections and denying climate change while putting off fuel-efficiency deadlines and auto safety standards will hurt all Americans, including Mr. Trump’s most die-hard supporters.

Read the complete article here.

In the Fight Against Poverty, Work Is Our Most Powerful Weapon

From today’s Harvard Business Review by Leila Janah:

Fourteen years ago, I left suburban Los Angeles to teach English in rural Ghana. I’d expected, like so many young people with bleeding hearts and big dreams, to make a difference by donating my time as a schoolteacher for six months. Upon arrival in the village, I was shocked to discover that my students, avid listeners of Voice of America and BBC radio, already spoke English quite well, and some could speak to me about President Clinton’s state visit to Africa. These were blind or partially sighted kids from families earning less than $3 a day.

How was this possible? I’d learned from countless TV specials on war and poverty in the continent that Africans needed aid. They needed us to send food and clothes and to build wells and schools. But on the ground, almost every poor person I spoke to told me the same thing: “We don’t want aid, we want work.” I spent the next four years studying development economics at Harvard, designing a special major to focus on African development, and later working at the World Bank to further understand the problem of poverty and how to fix it.

My conclusion after all this time isn’t so novel. But it bears repeating because we’ve lost our way: Work is the most powerful weapon we have to fight poverty and all its downstream effects, from child malnutrition to maternal mortality, both domestically and abroad. We need to modernize workforce training, incentivize companies to hire low-income people, and encourage consumers to support those organizations that #GiveWork, not aid.

Last year, the 2,000 largest companies spent an estimated $12 trillion on goods and services, a lot of it directed to suppliers that mine or harvest raw materials or make and grow things in poor countries. The fair trade movement was a strong first step in working to access these reserves of capital to fund poverty reduction directly. Started in the 1950s, it pushed purveyors of commodity goods like coffee, chocolate, sugar, and cotton to adhere to a rigorous set of core principles, including deliberately working in marginalized communities and paying living wages. And the results have been good. For example, Starbucks sources all its European espresso beans from fair trade certified producers, and Dutch company Fairphone sells the world’s first entirely fair trade Android phone, with batteries made from ethically mined minerals.

But I believe we now need something broader and simpler to mobilize companies and consumers to think differently about aid: a model called “impact sourcing,” which pushes for workforces (whether directly employed or employed through suppliers) to be economically diverse enough to include some of the world’s most disadvantaged people. This shift could, by our estimation, lift millions out of poverty in a single year.

Read the entire article here.

American households finally earn more than they did in 1999, but poverty and inequality are on the rise

From today’s Los Angeles Times “Business” section by Don Lee:

Income inequality

After a long period of plodding economic growth, significant earnings gains over the past two years have finally enabled the average American household to surpass the peak income level it reached in 1999.

The median household income in the U.S. climbed to $59,039 last year, up 3.2% from 2015 after adjusting for inflation, the Census Bureau reported Tuesday.

That comes on the heels of a 5.2% jump in income in 2015, the highest annual percentage increase on record.

The back-to-back increases brought the median income — in which half of households earn more and half less — above the previous peak of $58,665 in 1999.

The median household income in California rose 3.4% last year to $66,637, surpassing the earlier high of $65,852 in 2006.

The national measure of poor people in America also improved significantly for the second year in a row: The poverty rate fell last year to 12.7%, from 13.5% in 2015 and 14.8% in 2014.

That translates into a decline of about 6 million people in poverty over the last two years.

The latest poverty rate is comparable to 2007, the year before the Great Recession took hold. But there were still 40.6 million poor people in the nation last year. A household with two adults and two children is considered poor if their total income was less than $24,339.

“We consider 2015 and 2016 to be the turning point on the real median household income front, as employment and wage gains, combined with modest consumer price inflation, have boosted the well-being of many American households,” said Chris G. Christopher Jr., executive director of IHS Markit, an economic research firm.

“Real median household income has finally completed its nine-year slog of digging out of the ditch,” he said.

But the annual Census report was not as glowing beneath the surface, and economists are concerned that budget proposals curtailing things like food stamps could thwart continuing progress.

The impact of Trump’s promised tax reform could also change trends for the poor and middle class.

While the latest data showed solid gains for blacks and Latinos and younger adults, median incomes for full-time, year-round workers, men and women, were essentially flat in 2016, reflecting sluggish wage growth that has persisted into this year.

What’s more, a key measure of income disparity remains at the highest level in at least a half century.

And although the median income for urban dwellers jumped 5.4% last year to $61,521, households in rural areas saw their earnings basically stagnate at less than $46,000.

Read the entire article here.