Feature

A Billionaire’s Bid to Bring Amazon to Detroit

| Jason Fernandes
Getty/Pawel Gaul

When Amazon solicited bids this fall for the location of its new 50,000-employee headquarters, 238 North American cities tossed their hats in the ring. They’re competing with one another to put together the most attractive incentive package for the tech giant, offering everything from cash to large-scale infrastructure projects. And many of their proposals divert public funds—which would otherwise go to schools, public transportation, or other city services—directly into Amazon’s pockets.

Chicago, for instance, would allow Amazon to directly collect $1.32 billion in income taxes paid by its workers. Fresno, California’s bid creates a committee jointly run by Amazon and city officials to determine how to spend the taxes and fees generated by Amazon’s presence in the city. Newark, New Jersey is going the most direct route, with a $7 billion tax incentive package that includes an option for Amazon to dodge the city’s wage tax for 20 years.

Cities with less money have gotten more creative in their attempts to lure the company. Stonecrest, Georgia offered to annex 345 acres for Amazon to run its own city, named “Amazon, Georgia,” with Jeff Bezos as the appointed “mayor for life.” Kansas City’s mayor purchased 1,000 products on Amazon just so he could write product reviews persuading the company to come to his city. And Tucson, Arizona sent a 21-foot saguaro cactus to Amazon headquarters in Seattle (which the company rejected, saying they “can’t accept gifts”).

Yet perhaps the most noteworthy bid came from Detroit, not because of what it contains—the details of the bid are still private—but because of who submitted it. Unlike almost all of the other 237 proposals, Detroit’s bid wasn’t submitted by its city government or Chamber of Commerce. It was submitted by Dan Gilbert.

With a net worth of $6.1 billion, Gilbert is Michigan’s richest citizen. He built his fortune mainly through his company, Quicken Loans, though he’s perhaps best known as the owner of the Cleveland Cavaliers. During Detroit’s foreclosure crisis, Gilbert invested heavily in downtown real estate, buying up blighted and struggling properties through his real estate company, Bedrock. To date, he’s spent more than $2 billion of his own money on Detroit real estate—slightly more than the city’s annual budget—and he now owns more than 70 properties downtown.

Amazon’s list of criteria for its new headquarters includes a metropolitan area with more than 1 million people, a “business-friendly environment,” and up to 8 million square feet to build its sprawling campus. Many cities are disqualified because they simply don’t have enough space—8 million square feet is more than the combined office space in the entire city of Wilmington, Delaware. But Dan Gilbert can meet this requirement on his own: He currently owns 15 million square feet of real estate in downtown Detroit.

Like many of our country’s beloved billionaires, Gilbert’s accumulation of wealth may have involved less-than-scrupulous practices. A suite of lawsuits against Quicken Loans allege that the company engaged in fraudulent and predatory lending. In 2012, the West Virginia Supreme Court awarded $2.8 million to a plaintiff after Quicken added a balloon payment of $107,015.71 on the end of a $144,800 loan after 30 years. In July, a federal district court fined the company $11 million in a separate class action suit that alleged that Quicken’s appraisers inflated the market value of customers’ properties, “putting them underwater on their loans from the start.” Quicken Loans has said it plans to appeal the ruling. Yet another lawsuit is still pending: The U.S. Justice Department alleges that the company violated the False Claims Act—which prevents corporations from defrauding government programs—and knowingly altered or overlooked information in loan applications.

Regardless of how Gilbert obtained his fortune, it’s given him immense power over his struggling city. A 2014 National Journal article, “Is Dan Gilbert Detroit’s New Superhero?”, describes Gilbert’s growing regional power: “elected office could hardly augment his financial influence over Detroit … Gilbert has established himself as Detroit’s de facto CEO.” Even though the article sounds like it was written by Gilbert’s public relations team—at one point it suggests that he’s the “savior of Detroit”—its description of his control over the city’s downtown is frightening:

In the absence of a functioning, solvent local government, Gilbert has taken it upon himself to confront safety concerns by installing a state-of-the-art surveillance system downtown to supplement an underfunded and undermanned Detroit Police Department. The ACLU says it disapproves of this given the potential privacy concerns but says it cannot prevent business owners from monitoring their own properties.

However, a journalist for Motor City Muckraker claimed that Gilbert’s company, Rock Ventures, wasn’t just monitoring its own properties. He interviewed building owners who claimed that the company installed cameras on their property without their consent. (Rock Ventures denies these claims, and Dan Gilbert referred to the journalist as “dirty scum.”)

Three years later, his power is still growing. In May, the Michigan state legislature passed the “Transformational Brownfield” bills—colloquially known as the “Gilbert bills”—which give him access to up to $1 billion in public funds for his development projects. The bills divert the income taxes paid by any resident or employee who moves into his buildings, creating a situation like that in Chicago’s bid for Amazon’s second headquarters—citizens no longer pay taxes to the city government; instead, they pay taxes directly to Gilbert’s real estate corporation.

Peter Hammer, director of the Damon J. Keith Center for Civil Rights, says the Gilbert bills “marked a dangerous shift between public and private.” Hammer says that you used to be able to say that Gilbert “was an entrepreneur using his own money,” so whether you approved of him or not, at least it was on his own dime. But now, that’s changed.

Detroit has been cutting deals with developers in an attempt to revitalize the city for at least a decade. In 2013, the city approved $283 million in taxpayer funds to finance the construction of a new Red Wings stadium—at least $18 million of which came from school funding, according to former Michigan House Representative Rashida Tlaib. And in 2007, Detroit’s city council gave Marathon Oil a $175 million tax break to expand its operations, with the understanding that they would hire more Detroiters. But the project only created 15 jobs for Detroit’s citizens, which means the city’s taxpayers paid more than $11 million per job. In return, Marathon Oil has been dumping petcoke, a petroleum byproduct, on the outskirts of the Detroit River. On windy days, this produces thick, black dust clouds that blow far beyond the banks of the river.

That trickle-down approach is what has allowed Gilbert to thrive while the rest of Detroit falls apart

The return on investment for subsidies to Gilbert’s Quicken Loans isn’t much better. Residential mortgage lending has completely dried up in Detroit. There were just 356 new mortgages each year on average from 2009 to 2014, compared with 6,103 from 2004 to 2008.

“You get this huge contrast downtown, where you’re getting huge public subsidies for development, and in your neighborhoods, you can’t even get a commercial mortgage to buy a house,” Hammer says.

That disparity has created what residents call “the tale of two cities.” The city is 142 square miles, but almost all of the media attention and investment—Gilbert’s included—goes to the 7.2 square miles that make up its gentrifying core. While Detroit is 83 percent black, this downtown core is overwhelmingly white.

In July, Rock Ventures appeared to brag about Detroit’s racial disparity in a downtown window ad. The ad featured an almost entirely white crowd next to the slogan “See Detroit like we do.”

Gilbert seems to have learned his lesson about advertising optics when he helped create the “Detroit Moves the World” campaign for the city’s Amazon bid. Their masthead video is narrated with a spoken word performance from Jessica Care Moore, a black activist and poet, and features rhythmic images of a diverse array of artists, scientists, and workers in the city.

The video is inspiring, but after years of uneven revitalization, it may prove fruitless. Aside from Gilbert, most people don’t consider Detroit to be a serious contender, in large part because its development has ignored the majority of its citizens. One of Amazon’s selection criteria is a robust transportation system that can easily handle an influx of 50,000 new workers. On this point alone, Detroit fails spectacularly. Its largest transportation project in recent years is a new streetcar line that only travels 3.3 miles up and down Detroit’s gentrified core. It was largely privately funded, and has been named “QLINE” in honor of one of its major backers, Quicken Loans.

Even if Amazon were to select Detroit for its new headquarters, there’s not much evidence to suggest that it would solve the crisis residents are facing. How would it help a family whose water has just been shut off, and who must find a new school for their kids because all the schools in the neighborhood have closed? It’s tempting to think that a profitable, futuristic firm like Amazon is just what a city needs to kick start its development. But that trickle-down approach is what has allowed Gilbert to thrive while the rest of Detroit falls apart.

Of course, it’s not Dan Gilbert’s job—nor is it Amazon’s—to ensure that the city’s residents have their basic needs met. But if Detroiters have to wait for a billionaire to save their city, they’ll be waiting forever.

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Analysis

The Tax Plan Isn’t Just About Taxes—It’s About Shredding the Safety Net

| Greg Kaufmann
AP Photo/Jacquelyn Martin

In a recent interview, Congressman Jim McGovern (D-MA) described the congressional Republican approach to government as “survival of the fittest.”

“If you’re well off, great, if you’re not—too bad,” he said.

McGovern is right. The congressional GOP tax bill, which is expected to win final approval today, is effectively a bid to weed out people struggling to make ends meet. It could have dire consequences for the social safety net—and for the 70 percent of us who will turn to a means-tested program like Medicaid or the Supplemental Nutrition Assistance Program (SNAP) at some point in our lives. And it could impact millions who expect to rely later in life on Medicare and Social Security.

Think of it as a two-step project. A deficit-exploding tax giveaway to the very wealthiest corporations and individuals is step one. You cannot invest in the strategies that have been proven to help lift families out of poverty—we’ll get back to that in a moment—without adequate revenues. Not only will revenues take a hit at the federal level, but it’s expected that local and state governments will roll back investments in necessities like schools, drug treatment centers, pensions and more to lessen the tax burden on residents who will no longer be able to take the same federal tax deduction on property, state, and local income taxes.

Then, by adding $1.5 trillion to the deficit, the tax plan sets in motion the second step: in the name of deficit reduction, congressional Republicans will move to cut the programs that help Americans experiencing financial hardship have at least some shot at affording basic necessities like food, housing, health care, education, and a little dignity in our later years. Indeed, according to The Hill, House Speaker Paul Ryan intends to fast-track so-called “welfare reform” in 2018, in a bid to push it through with a simple majority. President Donald Trump is expected to sign an executive order reflecting similar priorities.

There is a persistent lack of education about what our safety net is, and who it benefits

The skids for these cuts have been greased by decades of lies about anti-poverty programs and their effectiveness. Conservatives usually refer to cutting the safety net as an attempt to reduce “waste, fraud, and abuse,” or end a “culture of dependence”—but in reality it’s simply looking squarely at our neighbors, demonizing them, and then turning our backs. The only thing missing is a spit in the eye for emphasis. The underlying problem is that Americans often buy into conservative rhetoric about “welfare” and an all too often complicit media. A long history of racially coded language has painted people with low incomes as undeserving of assistance, and there is a persistent lack of education about what our safety net is, and who it benefits. How many Americans know that more than 1 in 2 of us will experience at least a year of poverty or near-poverty during our working years?

While conservatives say that people are living off their food stamps, few Americans know that the average benefit is $1.40 per person, per meal. The notion of supporting a family on that is absurd. The public also envisions extensive subsidized housing—it has no idea that only 1 in 4 families that qualify for federal rental assistance actually receive it, and that their average income is approximately $12,500 per year. They think people are getting “free cash,” but cash assistance (TANF) only goes to 23 of every 100 families in poverty nationwide, and the program is virtually nonexistent in many states.  (It’s little surprise that a gutted TANF “block grant” is the model for what congressional Republicans would like to do with nutrition assistance, Medicaid, housing, and more—watch it lose value with inflation over the years, and watch fewer and fewer people receive it.)

It also doesn’t matter a whit to conservatives what the evidence says about the kinds of things that make a difference in people’s lives. It doesn’t seem to matter that our antipoverty programs cut poverty in half—that poverty would have been as high as nearly 30 percent in recent years without them; or that girls who had access to food stamps (SNAP) saw increases in their economic self-sufficiency as adults—including less welfare participation—compared to their disadvantaged peers who didn’t have access; or that a little assistance for children up to age 5 is associated with boosted educational performance, and increased work and earnings as adults; or that children under 13 who were able to use a housing voucher to move to a low-poverty neighborhood were 32 percent more likely to attend college and earned 31 percent more annually as young adults, compared to their peers in families that didn’t receive a voucher.  Or even that expansion of Medicaid eligibility has reduced infant mortality and childhood deaths, and that children eligible for Medicaid are more likely to go on to graduate college.

You’d think some of these data would make an impression on Speaker Ryan, who is constantly clambering about the need for evidence. The fact is he simply doesn’t like the evidence he sees. When he wrote a report on the “War on Poverty” in 2014, concluding that our antipoverty investments have failed, numerous academics came forward to say that he had misrepresented their work; apparently that was the only way Ryan could support his fictitious thesis.

Ironically, despite Ryan and his conservative brethren’s concern with “dependence” on government assistance, rewarding work just doesn’t seem to register as a key antipoverty strategy. In the late 1960s, the minimum wage was enough for a full-time worker to lift a family of three out of poverty—now that same family is about $5,000 below the poverty line. But Republican leaders vote against raising the minimum wage every chance they get. (Ryan himself has voted against raising it at least 10 times since he’s been in office.) The Trump administration is also making it harder for low-wage workers to unionize, collectively bargain, enforce labor standards, or even collect the tips they receive to supplement their $2.13 an hour tipped minimum wage.

In the coming months, the fight against conservative proposals that target struggling Americans should transcend the specifics of the policy debate, much as the electoral contest between Doug Jones and Roy Moore transcended the candidates. This is a fight about who we are as a nation, and who we want to be; whether we are comfortable treating people as disposable, or whether we invest in human potential and dignity; and whether we’ll accept conservative charlatans as serious leaders on decisions that have such high stakes. All of the evidence suggests we should reject them.

This article was produced in partnership with The Nation.

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Interview

Congress Is Probably Going to Pass Its Tax Bill. Rep. Jim McGovern Explains What’s Next.

| Rebecca Vallas
(AP Photo/J. Scott Applewhite)

President Trump and his colleagues in Congress have nearly finalized legislation to secure tax cuts for billionaires and wealthy corporations. After months of wheeling and dealing to secure the votes they need to pass the bill, conservative lawmakers have started to reveal their plans to pay for it—by slashing vital programs like Social Security, Medicare, Medicaid, nutrition assistance, and affordable housing.

I spoke with Representative Jim McGovern (D-MA) to examine where conservatives are headed and what they really mean when they use buzzwords like “entitlement reform” and “welfare reform.”

Rebecca Vallas: “Robin Hood in reverse” has always been the congressional GOP’s playbook, and their most recent budget proposals released earlier this year were basically a hit list of programs they want to slash. But is it surprising to hear them say it out loud while they’re trying to do “tax reform” that is actually tax cuts for billionaires and corporations?

Rep. Jim McGovern: I’m not surprised because congressional Republicans have never been enthusiastic about programs that feed people who are hungry or provide them health care or some sort of security. They’ve had this kind survival of the fittest approach to government—if you’re well off, great; if you’re not, too bad. But we have a group of Republicans in Congress that are determined to undo all government, and if they succeed with their agenda a lot of people are going to be hurt.

RV: I’ll have to confess, I was surprised to hear Congress dress their calls for cuts to these programs up in their same standard language about deficit reduction and unsustainable deficits. Was it surprising to you?

JM: I mean the tax plan adds over a trillion dollars to the deficit, and this is not a tax cut for the middle class. Basically this is a tax giveaway to big corporation, to those who are very well off and those who are very well connected. It will be a tax increase on middle class families, and it will be a tax increase on those struggling to get into the middle class.

RV: I want to focus on programs that people typically think about as anti-poverty programs. The U.S. Department of Agriculture sent a letter to state food stamp administrators who administer the Supplemental Nutrition Assistance Program (SNAP), and some people have interpreted it as the Trump administration actually encouraging states to take steps to make it harder for struggling workers and families to access nutrition assistance when they need it.

JM: We’re going to have to wait and see what USDA is up to, but they haven’t been very forthcoming and I don’t have a good feeling about this. Conservatives have for years wanted to cut programs like SNAP. They have presented as fact a version of SNAP that is clearly not true—that the program helps people who are lazy, encourages dependency. But of the people on SNAP, the vast majority are not expected to work—they are kids, they’re senior citizens, they’re people who are disabled. The majority of people who can work, do, and they earn so little they still qualify for SNAP.

There are some things we can live without, but food isn’t one of them. The average SNAP benefit is about $1.40 per person per meal. You can’t even buy a cup of coffee with that. We should be talking about expanding the SNAP benefit so that people have the resources to buy not just food, but nutritious food for their families. And we ought to remind people that this program is incredibly successful. It is one of the most efficiently and effectively run programs by the federal government and has very low fraud and error rate. It also is a program that is an economic stimulus—it helps our farmers, our grocers, our economy overall.

To the extent that SNAP needs to be improved, it is that the benefit is inadequate. Most people on SNAP end up having to go to food banks at the end of the month.

RV: So there is a huge gap between what Congressional Republicans make it sound like these programs are about and the reality of who gets helped by them. The fact is that 70 percent of Americans will turn to at least one means-tested program at some point during their lives. But that seems to be the playbook—to flat out lie about what these programs are and who they help.

This Congress has demonized poor people

JM: Right, they promote this myth that somehow programs like SNAP promote dependency. The average time that households are on SNAP is 12 months or less. We do hill briefings with people who had been on SNAP and are now quite successful, and they remind Members of Congress how important that benefit was when they needed it. But this Congress has demonized poor people, belittled their struggle, and blamed them for all of our economic problems.

I wish there was more of an outcry about making sure that work pays in this country. If you work in this country you ought not to have to live in poverty. The fact that we haven’t addressed this issue the way we should is very, very costly. There are all these avoidable medical costs that are associated with food insecurity. Kids can’t learn if they go to school hungry. Workers aren’t productive if they go to work hungry. Senior citizens who have to make choices between prescription drugs or putting food on the table and they choose to take a prescription drug on an empty stomach end up in a hospital. Women who are pregnant don’t give birth to healthy babies unless they have adequate nutrition. And so we need to take this issue more seriously than we have, and we certainly shouldn’t be demonizing people who are struggling.

RV: The federal minimum wage has been stuck at $7.25 an hour for the past almost nine years because Republicans in Congress refuse to raise it. And yet their rhetoric is all about “self-sufficiency.”

JM: The fact of the matter is that the jobs that are out there keep people in poverty. And so when I hear Speaker Ryan or Republicans talk about self-sufficiency I respond by screaming that people are working out there. They’re working harder than ever and they are still stuck in poverty. So let us address the issue of wages. Let’s help lift people up.

[Instead] we have Wisconsin Governor Scott Walker moving forward with drug testing some food stamp recipients. I have an idea. Let’s go drug test Scott Walker—maybe people who have stupid ideas like that ought to be drug tested. Because that is insulting. We’re not saying drug test big heads of defense contractors who get billions of taxpayer dollars. We’re not talking about farmers who get crop insurance, we’re not talking about testing any other recipient of government money—just poor people. That is just offensive and insulting and that’s the kind of stuff that is coming out of this Congress.

Hunger is a political condition when all is said and done.

RV: Do you think that the public still buys Speaker Paul Ryan and President Trump as champions of the forgotten man and the forgotten woman, or do you think that the tax fight has laid bare what they’re really after?

The tax fight has laid bare what they’re really after

JM: Well I think the tax fight has laid bare what they’re really after. I think their attempt to repeal the Affordable Care Act and come up with a replacement that would throw 30 million off of health insurance has shown who they really are. I really believe that a lot of people who may have supported Paul Ryan or Donald Trump in the last go around are now seeing who they really are. These aren’t champions for the forgotten man or woman. And they are not champions for people struggling in poverty. They are the problem; they are the enemy of so many people in this country who are trying to make ends meet. And people need to stand up and fight back.

I’m proud to live in a country that has a program designed to make sure that people don’t go hungry. I’m proud to live in a country that has programs like Medicare that guarantee health care for our older population. I’m glad we have programs like Medicaid. I believe that everybody is important—that nobody should be invisible in this country and that the whole purpose of government is to be there for those who need a helping hand during a very difficult time. Donald Trump doesn’t need government. He’s a billionaire. But there are millions of families in this country that do and they’re every bit as important as he is.

We need to take back our country. We need to watch very carefully what Paul Ryan means by entitlement reform and we have to make sure that he doesn’t view programs like SNAP as an ATM machine to pay for the corporate welfare that is part of their tax bill.

This interview was originally conducted for Off-Kilter. It was edited for length and clarity.

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First Person

Private Schools Promised Me Opportunity. Instead, I Got Classism.

| Loryn Wilson Carter
AP Photo/John Locher

From Grades 4 to 6, I went to a small, independent school in West Los Angeles. I was the first black child at the school, and for the first two years, I was the only one. I was also likely the only student who wasn’t upper-middle class. Before I even set foot on campus, my mother sat me down and told me that my future classmates would have more than me—much more—but it didn’t mean they were better than me. It didn’t mean I wasn’t good enough. “You are just as good as any other child there,” she said.

But even with those words of encouragement, there were still times when I felt I was lacking, and that I stuck out like a sore thumb—beyond the difference in my race and skin color. I had my fair share of racist encounters: classmates asking if we were going to get shot by gang bangers on a school trip to see Watts Towers, and being bullied by boys who were universally kind to the white girls in my class. I also had my first experiences with classism, even at the age of 9.

Classism—especially in a country where most people believe they are middle class—is subtle and implicit. It was there when my Spanish teacher didn’t realize some students might not be able to afford a camcorder to complete an assignment, until my mother called and asked for an alternative way for me to complete the project. It was there when the same teacher became inexplicably obsessed with my statement, during a class discussion, that I owned an armoire. She was concerned enough about my furniture to talk to my mother about it at a parent-teacher conference: “Loryn claims she has an armoire, but I really think she was trying to fit in with the wealthier kids,” she said.

The class gap started to steer entire curriculums

Those moments were embarrassing, and that embarrassment kept me in my place (which is to say, quiet). Then the class gap started to steer entire curriculums. Like a lot of students, I struggled with math. But while other students had access to expensive tutors, I had to rely on the lessons in school or my parents helping me whenever they could. I often got answers wrong when I was called on, which led to the other kids teasing me. It got to a point where I didn’t even bother raising my hand to speak—I didn’t want to feel that embarrassment again.

In the classroom, we acted according to our status: The rich kids asked for attention, while I tried to be obedient. Research shows that’s typical: An Indiana University study concluded that social class leads to differences in how parents tell their kids to navigate school. More affluent parents tell their kids to ask questions and actively seek attention, while working class parents tell their kids that asking for extra help is disrespectful. And so, the divide between the haves and have-nots is multiplied.

This divide makes the current administration’s emphasis on “school choice” a hard sell. President Trump’s budget called for a $250 million increase in voucher programs, which would pay for more students to attend private schools. Education Secretary Betsy DeVos has not provided many additional details, but she is an outspoken advocate for school choice programs, arguing that it focuses on the needs of the individual child. But more often than not, sending students to schools with more resources simply means they’re attending schools that are whiter and wealthier. And that comes with a culture shock.

A study by the Department of Education showed that test scores fell when students moved from public to private schools. Though there are a number of potential causes for the drop in performance, researchers suspect that the different behavioral expectations—just like the ones that plagued me—play the biggest role. And it doesn’t help that teachers have lower expectations for students of color and students from disadvantaged backgrounds—those expectations actually play a bigger role in student outcomes than a student’s own motivation or effort.

If you are convinced that private school vouchers are the answer to the country’s education woes, you will also need to be ready to prepare students who do not come from wealthy families for the classism and class differences they will face. This means training teachers and other faculty to be sensitive to how these differences affect the way kids learn—and yes, how to unlearn the assumptions they may make about poor students.

Related

Analysis

The Administration’s New Tipping Rule Could Make Sexual Harassment Worse

| Rachel West, Katherine Gallagher Robbins & Kaitlin Holmes
AP Photo/Bebeto Matthews

Months into our national reckoning with sexual harassment, media coverage shifted this week from the abuses taking place in elite circles—like Hollywood and Capitol Hill—to the restaurant industry, where prominent restaurateurs like Mario Batali, John Besh, and Ken Friedman face allegations of misconduct toward their staff.

These allegations inch the media coverage closer to the reality many women face, in part because many of the people reporting are ordinary restaurant employees rather than high-profile actresses or news anchors. There’s also the matter of the industry they work in: Low-paid working women are often at the greatest risk for abuse, particularly if they are in service professions.

At the same moment, the Trump administration is pushing a rule that could make tipped workers even more vulnerable to harassment. In early December, the Labor Department—urged on by the restaurant lobby—announced a plan that could allow employers to steal tips from their workers. Under the new rule, employers could pool all tips and distribute this money to other workers, including non-tipped workers—or keep it for themselves. The Economic Policy Institute estimates that the rule could allow employers to pocket $5.8 billion in workers’ tips each year, in an industry where 66 percent of workers are women and 25 percent of workers are women of color.

The rule could allow employers to pocket $5.8 billion in workers’ tips each year

This could result not only in the theft of tipped workers’ wages—even though they are already nearly twice as likely to live in poverty as other workers—but it could also increase their likelihood of being sexually harassed. Tipped workers are often at the mercy of customers to make ends meet financially, and the new rule would add additional pressure from employers and managers who would control the distribution of tips. That could drive conditions from bad—accommodations and food service workers already account for 1 out of 7 sexual harassment charges filed with the U.S. Equal Employment Opportunity Commission—to worse.

And the proposal’s effects don’t stop with tipped workers. If employers choose to redistribute the tips to other non-tipped employees, they could classify them as tipped workers and knock their base wage down to $2.13 per hour. This could raise their risk for sexual harassment as well as wage theft because, while employers are legally required to ensure tipped workers are paid the minimum wage, evidence shows employers often don’t.

There is, of course, another option: Instead of rushing through a rule that will lower wages and increase vulnerability to harassment for tipped workers—all with a very limited period for public feedback—the Trump administration could focus on paying tipped workers fair wages. That means eliminating their separate minimum wage, which is something the minimum wage bill before Congress would do. Evidence shows this would work: In the seven states that have abolished the separate tipped minimum wage—where employers are now required to pay their workers at least minimum wage—tipped workers take home higher pay and are less likely to experience harassment. Pair that with solutions to reduce sexual harassment in the workplace, and you’re poised to make progress not only on economic security but also on reducing the number of workers who have to say #MeToo.

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