Fox guarding the chicken coop

We need a champion of workers now, more than at any point since the Great Depression.

In his inaugural address, the President promised that every decision he makes will be for the benefit of American workers. His choice for Secretary of Labor, Andrew Puzder, suggests quite the opposite.

The mission of the Department of Labor is quite clear: “To foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.” In other words, to be a champion of workers.

We need a champion of workers now, more than at any point since the Great Depression. Wage earners have seen decades of stagnant wages even while productivity has risen. The gains from growth have gone almost entirely to those at the top, to Wall Street, to soaring CEO salaries, to those who profited from the financial meltdown that left millions of workers facing foreclosure. Wage theft has become commonplace, and labor unions are under attack and dwindling in numbers. We have become a low-wage economy.

So who does the President propose to run the one department that could do the most to reverse some of these trends? The millionaire CEO of a low-wage corporation that has been a serial violator of wages and hours laws, the very laws he would be charged with enforcing.

Andrew Puzder is the CEO of CKE restaurants, which runs two fast-food chains: Carl’s Jr. and Hardee’s. Those businesses have been investigated numerous times; in 53 percent of the wage and hour investigations and 51 percent of the workplace safety investigations they have been found in violation of the law. His companies have been sued for sexual harassment and sex discrimination.

As CEO, Puzder made more in one day than a minimum wage worker could earn in a year, yet he opposes any meaningful increase in the minimum wage. He opposed the Obama administration rule change that expanded overtime protections to 12.5 million middle class workers. That rule would prevent employers from classifying workers as salaried instead of hourly and then requiring them to work unpaid overtime.

Puzder has opposed meal and rest breaks for workers. He opposes mandatory sick leave. In fact, he would prefer not to have to deal with workers at all; he has expressed interest in replacing Carl’s Jr. employees with machines.

Putting Puzder in charge of enforcing wage laws is letting the fox guard the chicken coop. The fast food industry that he represents is one of the lowest wage sectors of the economy and one of the most prone to violating labor standards. That presents a clear conflict of interest.

Puzder would join a cabinet full of Wall Street executives, millionaires, and at least two billionaires, the wealthiest administration in modern times, many times wealthier than that of Obama or George W. Bush. One-percenters will be running the show.

Much of what the secretary of labor does is under the radar for most Americans. But the daily lives of millions of workers can be improved or worsened in significant ways, depending on how well the agency protects them from the worst abuses of our low-wage economy. If Andrew Puzder becomes Secretary of Labor, the prospects for workers are not bright.

2010-PFw5464Posted by Peter Fisher, Research Director of the nonpartisan Iowa Policy Project.

Contact: pfisher@iowapolicyproject.org

Job 1 for Day 1 — putting Iowa families first

Issues that were big for our state before the election remain big issues.

As election dust settles, priorities remain clear for Iowa families

Now that the votes are counted, the real work begins. Job 1? It could be any of a number of areas where solid research and analysis have shown better public policy could make a difference for a more prosperous, healthier Iowa. Take a step back from the TV ads and “gotcha” politics and these issues come clearly in focus.

In Iowa, research shows solid approaches to economic prosperity for working families include:

In Iowa, research shows a fiscally responsible approach to both find revenues and do better with what we have includes:

  • Stopping tax giveaways to companies that pay no income tax — which occurs at a cost of between $32 million and $45 million a year through one research subsidy program alone, even though there is nothing to show this spending boosts the Iowa economy or produces activity that would not occur anyway. http://www.iowafiscal.org/big-money-big-companies-whose-benefit/
  • Reining in unnecessary “tax expenditures” — tax breaks, tax credits and other spending done through the tax code — could bring in tens or hundreds of millions of dollars for public services. A five-year sunset on all tax credits would force lawmakers to review and formally pass renewals of this kind of spending, now on autopilot. The last attempt at real reform fell woefully short. http://www.iowafiscal.org/tax-credit-reform-glass-half-full-maybe-some-moisture/
  • Plugging tax loopholes — a $60 to $100 million problem — would pay for a 2 or 3 percent annual increase in state per-pupil funding of K-12 schools. Twenty-three states, including 4 of 6 Iowa neighbors, don’t permit multistate corporations to shift profits out of state to avoid Iowa income tax and contribute their fair share to local education and other state services. https://iowapolicypoints.org/2013/05/22/will-outrage-translate-into-policy/
  • Reforming TIF — tax-increment financing, which is overused and often abused by cities around the state, has caught lawmakers’ attention in the past and should again. Like many tools that provide subsidies to private companies and developers, it should be redesigned to assure subsidies only go to projects with a public benefit and only where the project could not otherwise occur. Further, it should be designed to assure that only the taxpayers who benefit are the ones footing the bill, which is a problem with current TIF practice. http://www.iowafiscal.org/category/research/taxes/tax-increment-financing-tif/

In Iowa, research shows a healthy environment and smart energy choices for Iowa’s future includes:

  • Putting teeth into pollution law — which means reforms in Iowa’s Nutrient Reduction Strategy to eliminate pollution in waterways. http://www.iowapolicyproject.org/2014Research/140717-nutrient.html
  • Allowing local government to regulate frac sand mining — When it comes to cigarettes, guns and large hog facilities the Iowa Legislature took away the right of local government to listen to citizen desires. The General Assembly and the Governor should let democracy thrive and not take away local control of sand mining.
  • Encouraging more use of solar electricity in Iowa — Jobs are created while we confront climate change if we build better solar policy in Iowa. http://www.iowapolicyproject.org/110325-solar-release.html
  • Promoting local food and good food choices with school gardens — and a pilot project to offer stipends to Iowa school districts could encourage both learning and better nutrition. http://www.iowapolicyproject.org/2014Research/140514-school_gardens.html

None of these issues are new and it’s not an exhaustive list. But these were big issues for our state before the election and remain so, no matter who is in charge.

Together, we can build on the solid research cited above and lay the foundation for better public policy to support those priorities.

Owen-2013-57   Posted by Mike Owen, Executive Director of the Iowa Policy Project

Focusing better on new Iowans

While the future of immigration reform is uncertain, we can be certain that immigrants contribute to the state’s workforce, economy, tax revenues and communities.

Oftentimes the topic of immigration reform stirs up heavy debates and preconceived notions about what it means to be an immigrant in the United States. Reality about immigrants, their occupations and contributions to the economy can be misunderstood.

But here in Iowa, we know immigrants are important to our state and our economy. There are 120,000 documented and undocumented immigrants contributing both as workers and as employers. Most immigrants came to find jobs so it shouldn’t be surprising that most are of prime working age, and are working.

Look around your community and you will see them working in grocery stores and delis as butchers and meat cutters, teaching in high schools and colleges, cleaning homes and businesses, and working as computer programmers. Some are small business owners, filling gaps for particular goods and services in Main Street-type businesses.

10371388_10154327977850154_8158749370873517078_nOne big misunderstanding is about the state and local taxes that immigrants pay, regardless of their legal status, on the income they earn, the goods they purchase and the homes where their families live.

It is also estimated that 50-70 percent of undocumented workers — those who do not have legal authorization to work or live in the United States, have federal and state income and payroll taxes withheld from their paychecks.

Our new Iowa Policy Project report estimates that undocumented immigrants annually pay $64 million in Iowa state and local taxes, increasing revenue available for public programs and services, including many services they are unable to access themselves.

Immigration reform enabling work authorization and a path to citizenship for current undocumented residents would bring benefits not only to immigrants but all Iowans. Legal work status would open up better job opportunities and make it more worthwhile to invest in worker education and training. Immigrants would be less susceptible to wage theft and other exploitation by employers.

Legal status would increase earnings for workers and revenues for the state. It would mean that young adults brought here as children (DREAMers) could attend college and get better jobs and it would give immigrant business owners access to more options to start or expand a business.

While the future of immigration reform is uncertain, we can be certain that immigrants contribute to the state’s workforce, economy, tax revenues and communities.

IPP-gibney5464Posted by Heather Gibney, IPP Research Associate

Wage theft: Atalissa case just tip of the iceberg

Doing what is right on wage theft also is doing right by the economy and by the taxpayer.

The Catholic Messenger in Davenport last week presented a good illustration of wage theft in the sad case of a group of men in Atalissa taken advantage of for decades.

A recent Cedar Rapids Gazette story looked at another case, in which an employee of a contractor for a now-closed Outback restaurant is fighting for wages she believes she is owed — even though the contractor remains in business, still serving another nearby Outback restaurant.

Iowans need to understand these are not isolated cases, but just the tip of the iceberg. Every year some $600 million is lost to workers and the Iowa economy because of wage theft, and about $60 million in taxes and unemployment trust fund revenues.

As Iowa Policy Project research has shown, wage theft takes many forms, and affects Iowans across a wide range of occupations, in both blue-collar and white-collar positions. That work goes on. IPP is at work right now on a new survey to document and collect worker experiences with wage theft and enforcement systems.

Yet corrective action passed by the State Senate (SF2295) was not even considered in the Iowa House in 2014. The bill would have required businesses to tell workers in writing how they would be paid — and to notify employees of deductions before they were made.

Meanwhile, enforcement has remained woefully underfunded, a chronic problem in Iowa left unaddressed by the 2014 session of the Legislature.

Doing what is right on this issue of wage theft also is doing right by the economy and by the taxpayer. When will Iowans demand action?

Owen-2013-57   Posted by Mike Owen, IPP Executive Director

Policy choices are about quality, not quantity

Iowa is on record that we will not ask the wealthy and well-connected to do more. Sometimes, not passing something says as much about legislative priorities as passing it.

The headline on my doorstep today says, “Legislature continues trend of passing fewer bills.” That lead story in the Cedar Rapids Gazette notes that for the fourth straight year, a divided Iowa Legislature has passed fewer than 150 pieces of legislation.

Ah, numbers. Can’t live with ’em. Can’t live without ’em. But in this case, they don’t make a lot of difference.

What matters are the words and the policies embodied in those 150 or fewer bills. It’s about quality, not quantity.

What have those bills included in recent years? Here are some key points:

  • A commercial property tax overhaul that is tainted by big benefits to huge out-of-state retailers that need no help and pay too little in Iowa tax as it is.
  • An expanded Earned Income Tax Credit that improves tax fairness for low- and moderate-income working families across Iowa.
  • Funding to assure a tuition freeze remains for a second year in regents institutions.
  • A small boost in child care assistance for working students, making them eligible for the benefit so they can get skills for better paying jobs to sustain their families.

What have those bills not included in recent years? Here are some noteworthy omissions:

  • No overhaul of the personal income-tax system to better balance tax responsibilities for all taxpayers regardless of income, or to assure revenues are kept adequate to meet costs of critical services.
  • No greater accountability on spending that is done through the corporate tax code, outside the budget process.
  • No increase in the minimum wage, stagnant at $7.25 for over six years now.
  • No broad expansion of child care access for struggling families who don’t make enough to cover costs, but make too much to receive assistance.
  • No move to battle wage theft, which we have estimated to be a $600 million annual problem in Iowa’s economy — not including the $60 million lost in uncollected taxes and unemployment insurance.
  • No long-term answers for funding of education at all levels, violating the promise of law for K-12 schools, and leaving a legacy of debt for many college students and their families.

Those are not exhaustive lists, but a statement of priorities established by agreement, stalemate or inertia. We covered some of these points in our end of session statement. Some will like the overall product of recent years, some will not. Few will ask how many bills were passed.

At least one theme weaved by this record cannot be disputed: Iowa is on record that we will not ask the wealthy and well-connected to do more. We pretend more often than not that we can meet our obligations to the citizens of Iowa without investing in the public services they require, that if we just keep cutting taxes all will be well. Every now and then we’ll say something about opportunity for all and mean it, but we’re not ready to make that a long-term commitment.

Sometimes, not passing something says as much about legislative priorities as passing it.

Owen-2013-57   Posted by Mike Owen, Executive Director

A better choice for full-time investigator

When unscrupulous employers know we’re not even watching them, we effectively encourage the very behavior we don’t want.

Today’s Des Moines Register reports that the big push by Iowa Secretary of State Matt Schultz to crack down on voter fraud is proving what he doesn’t want: that it’s not a problem in Iowa.

A full-time criminal investigator is on the job with five guilty pleas to show for it. Kind of makes you wonder why we bother, doesn’t it?

On the other hand, wage theft is a pervasive problem in America and, as we have shown, Iowa is no exception.

Yet Iowa has only one full-time position for enforcement of wage-and-hour rules even though the Iowa Policy Project has shown violations are pervasive and other states do more. Wage theft deprives Iowa workers of an estimated $600 million, when wages are not paid or underpaid, tips are skimmed by employers, and employees are misclassified as “independent contractors” to avoid taxes, unemployment insurance and workers’ compensation. It also deprives the state of tax revenue and deprives law-abiding businesses of an even playing field.

Budgets are a statement of values. We focus our finances — in the home and at the State Capitol — on what we think is important. Surely making sure hard-working people are paid what they are owed is on that list.

It defies good budgeting sense to devote a full-time criminal investigator to a phantom issue, particularly when those resources could be put toward sensible budget choices, such as enforcing worker protections. When unscrupulous employers know we’re not even watching them, we effectively encourage the very behavior we don’t want in Iowa.

Mike OwenPosted by Mike Owen, Executive Director

Time to address wage theft in Iowa

Annually, wage theft deprives low-wage Iowa workers of an estimated $600 million, deprives state and local government of revenue, and puts law-abiding businesses at a competitive disadvantage.

Every year, far too many Iowans experience “wage theft” when they are cheated out of wages they have earned. Some are not paid for all of the hours they actually worked; some are paid “off the books” at less than the legally mandated minimum wage; some earn tips they do not get to keep; some are not paid at the legally mandated rate for overtime; some leave a job or contract arrangement and never receive their final paycheck.

What is Wage Theft?

Wage theft occurs whenever a worker is robbed of legally owed wages because an employer breaks the law or a contract. Common forms of wage theft include:

•   Nonpayment of wages: An employer fails to pay workers for some or all hours of work performed, or fails to pay workers in a timely fashion.

•   Underpayment of wages: An employer pays workers less than they were promised or less than they are legally owed under state or federal minimum wage or overtime statutes.

•   Tipped job violations: An employer pays tipped employees less than the legally mandated minimum wage for tipped jobs, forces tips to be “shared” with managers or steals workers’ tips.

•   Deduction violations: An employer diminishes workers’ pay by making unauthorized or illegal deductions from paychecks

•   Misclassification of employees: An employer falsely labels an employee as an “independent contractor” in order to avoid obligations to pay minimum wage and overtime (along with a host of other employment laws, and unemployment insurance, workers’ compensation, and income tax payments). The “independent contractor” exemption is not meant to apply to those providing services under the direction and control of others; one example of misclassification would be to call a cashier a “salaried manager” to avoid the overtime provisions of federal law.

Annually, wage theft deprives low-wage Iowa workers of an estimated $600 million, deprives state and local government of revenue, and puts law-abiding businesses at a competitive disadvantage. A new report for the Iowa Policy Project estimates the impact of wage theft in Iowa, assesses the current state of public policy and enforcement systems intended to prevent wage theft, and surveys effective models for addressing the problem so that communities, state agencies, and policymakers in Iowa can begin to address it.

Posted by Jennifer Sherer
Director, University of Iowa Labor Center
President, Iowa Policy Project board of directors