Labor

The Department of Labor Buried Evidence Showing It’s Set to Steal Billions in Workers’ Wages

Last week, President Trump’s Department of Labor (DOL) hid an internal analysis that showed that its so-called tip-pooling rule would allow employers to pocket billions in workers’ tips. They claimed that they were “unable to quantify” the rule’s effects. But we now know that they did, in fact, conduct an analysis—they just didn’t want the American public to see the result, so they buried it.

I discussed what happened and what this policy is all about with Heidi Shierholz, senior economist at the Economic Policy Institute and former chief economist at the Department of Labor under President Obama.

Rebecca Vallas: Heidi, what is this policy that the Trump administration is advancing and what are they hiding?

Heidi Shierholz: In December, the Trump administration released a proposed rule to try to make it legal for employers to take workers’ tips. There were regulations on the books from 2011—it was a long-standing practice at DOL that tips cannot be taken by employers. But the Trump administration is trying to rescind those regulations, and it’s really bad for workers.

But now the Department of Labor is bending over backwards to try to make it seem like it’s not terrible for workers. For instance, they talk about how theoretically employers who take tips could share some of those tips with the back of the house workers or other untipped workers. But there is nothing in this rule that says they are required to do so. So, what’s going to happen is employers will end up just pocketing a lot of those tips themselves.

The controversy that broke is that the DOL claimed that they could not do a quantitative analysis of how much in wages and tips would be transferred from workers to employers as a result of this rule. But what was revealed today is that that was all untrue. They actually did the analysis, and it showed billions of dollars being transferred from workers to employers. They actually took it to the Secretary of Labor who said something to the effect of, “Okay, we can’t publish something that shows this because this will make us look terrible. Take this back to the drawing board and see if you can bring me back smaller numbers.” They did that, but they never got it down as small as was comfortable for Secretary Acosta, so they just got approval from the White House to remove the analysis entirely. So this proposal was released without any quantitative economic analysis about the impact the proposed rule would have on workers, even though they are legally required to quantify the economic impact to the extent possible.

RV: So not only did they try to figure out a methodology to get a number they were comfortable with—in terms of how much employers were going to end up pocketing in the way of workers’ tips and wages—but they decided because they couldn’t get the number down they were just going to pretend they’d never done it at all? Is that what we’ve learned?

HS: Yes, that’s what we’ve learned. They said in their proposal that they were—quote—“unable to quantify how customers would respond to the proposed regulatory change” and that the department “currently lacks the data to quantify possible reallocation of tips.” So they just said in a bunch of different ways, “We can’t do this.” But we know they did do it. The numbers looked bad for them, so they buried it. This is real malpractice. The public deserves to have those numbers. They make the department look like it is not living up to its mission of actually protecting workers—in fact, it’s just going to transfer a whole bunch of money from workers to employers and they wanted to hide that fact.

They did an analysis, buried it, and then claimed that they couldn’t do it.

RV: When they went to crunch the numbers on this policy it looks like they found something similar to what you guys at the Economic Policy Institute had already been telling people for a while. You did some analysis finding that if this rule goes into effect, workers will lose billions in lost tips and wages.

HS: So we don’t know exactly what the DOL estimate was. We know it’s in the billions but no one knows the actual number. I worked at the Department of Labor. I worked on many, many analyses like this. I have full confidence that the analysis that we did at EPI likely used the same data that DOL used for their analysis. And when we did it we came up with an estimate that $5.8 billion would be shifted from workers to employers as a result of the rule and that nearly 80% of that, or $4.6 billion, would be taken from the pockets for women who work for tips, and that’s primarily because women are much more likely to work in tipped jobs.

RV: It’s not just tipped workers who are actually at risk of being hurt here, correct?

HS: One of the interesting things that’s the backdrop to this is that the DOL has been trying to sell this rule as something that will make restaurants more egalitarian, because now we’ll have this sharing between better-paid tipped workers and lower-paid back of the house workers like dishwashers and cooks. But it is very unlikely that they will do that. The rule does not require them to do it. They would be no more likely to share tips with back of the house workers than they would be to make any other choice about what to do with that shiny new revenue stream, which is what being able to confiscate tips would mean to them. They could increase executive pay. They could make capital improvements to their establishment. They could just line their own pockets. Under basic economic logic, those back of the house workers are not going to get more pay.

RV: This is hardly the first time that the Trump administration has been caught either lying or hiding evidence about the policies they’re looking to advance or the Obama-era policies they’re looking to roll back. You mentioned that because there are very specific rules governing how rule-making is supposed to happen in this country—rules that it appears that the Trump administration has clearly broken here by withholding and lying about evidence in their possession about this rule during a [public] comment period—can you explain a little bit about how that works?

HS: In this particular case, they are simply required as part of the rule-making process to quantify to the extent possible the economic impact so that the public has that information in hand in order to comment on the purposed rule.

The rule-making process in general is really basic in some sense: The agency puts out a proposed rule, anyone can comment on it. The public, advocates, business groups, anyone has the right to tell that agency what they think about their rule. The agency is actually required to read [the comments] and to take them into account as they’re crafting their final rule. So it’s absolutely crucial the public is given all the information so it can understand the impact of the rule and comment on it.

DOL claimed it wasn’t possible for them to do this quantification. But we produced an estimate in less than two weeks. It wasn’t rocket science. And now we know that they did do an analysis, buried it, and then claimed that they couldn’t do it.

Given all that has happened, they need to withdraw this rule, re-do the economic analysis, and let the public comment with all the information at hand.

This interview was conducted for Off-Kilter and aired as part of a complete episode on February 2. It was edited for length and clarity.

Related

Media and Politics

Paul Ryan’s Push for Workforce Development Is a Wolf in Sheep’s Clothing

Earlier today, Politico reported that House Speaker Paul Ryan (R-OH) appears to be attempting to repackage cuts to Medicaid, food assistance, and affordable housing as “workforce development.” If it were a sincere effort, the idea of offering more workforce development would make sense: It’s good for workers, and it’s actually a popular idea (Ryan himself has acknowledged that openly calling for Medicaid cuts was “not a great buzz phrase.”)  However, it seems that this is the latest rebrand of the same old proposals to slash essential benefits for struggling families that Ryan has touted for years.

It’s especially insincere, given the Trump administration’s proposal to gut existing workforce development programs. Its 2018 budget cut funding for the Workforce Innovation and Opportunity Act by 43 percent, which would cause 571,000 workers to lose job training and job search assistance. President Trump is also in the process of advancing an apprenticeship proposal that would lead to a proliferation of low-quality programs that don’t offer job-relevant skills or decent wages.

For his part, Ryan seems to be confused about what workforce development actually entails. He told his caucus last night that it needs to “focus on closing the skills gap” by training unemployed workers to take currently open jobs. This incorrectly assumes that a lack of skills is the only thing that’s keeping workers out of the labor market—it’s possible that workers are struggling to find good jobs that pay decent wages. Indeed, 2017 saw the slowest job growth since 2010, and the weakest wage growth in 4 years. Trump and congressional Republicans have also fought to make work worse by advancing policies to weaken workplace protections, make it harder for workers to collectively bargain, make it easier for employers to steal wages from tipped employees, and make it easier for employers to discriminate against workers.

If Speaker Ryan and congressional Republicans truly cared about helping people transition into the labor market, they would support policies like raising the federal minimum wage, strengthening collective bargaining rights, and advancing policies like paid leave and universal child care, which actually help improve the quality of work.

This is the latest rebrand of the same old proposals

Instead, participants at the GOP retreat where Ryan initially floated this idea reported that his proposal would impose work requirements on Medicaid recipients – of whom more than 7 in 10 are caregivers or in school. The move would put at least 6.3 million people at risk of losing their health care outright, and force others into low-quality, low-paying jobs that are more harmful than helpful.

Ultimately, this workforce development push, like welfare reform before it, is about kicking struggling workers while they’re down, and taking away essential benefits from families when they need them most. And while Ryan may have ditched the racially-coded welfare rhetoric for now, his policies are still ripped right from Trump’s divisive handbook.

 

Related

Media and Politics

Trump Has Already Broken All of the Promises He Made to Workers During the State of the Union

Last night, President Donald Trump gave his first official State of the Union speech. The script was as expected: He bragged about his tax bill, repeated some promises about infrastructure, and promoted his administration’s latest wish list of anti-immigrant policies. He even claimed to be concerned for “America’s struggling workers.” But a lot was conspicuously absent from the speech—including all the ways his administration has harmed those very workers.

When he was a candidate, Trump pledged to turn the Republican Party into a “worker’s party.” He claimed that each of his policy decisions would hinge on whether it creates “more jobs and better wages for Americans” and promised to side with workers instead of “special interests” and the “financial elite.” But throughout his first year, he sided with corporations and the wealthy instead.

In 2017, Trump used his executive authority to pare down worker safety protections, make it harder for workers to receive the pay they earned, and hamstring their ability to collectively bargain for decent wages and benefits. His administration took action to weaken mine inspection rules, undermine the quality and pay of apprenticeship programs, and delay and roll back rules that will prevent construction and agricultural workers from being exposed to toxic chemicals.

Under Trump’s watch, the Department of Labor has signaled that it will use its regulatory power to roll back overtime coverage and protections for millions of workers and allow companies to legally confiscate employees’ tips. It withdrew guidance that held corporations accountable for wage theft. And the National Labor Relations Board is trying to slow the process for workers to request a union election.

Already, Trump’s agency appointees overturned a 2015 precedent that protected workers’ rights to bargain with companies that influence their workplaces. These so-called “joint-employer” protections are increasingly important since large corporations are more often relying on temporary staffing agencies, labor subcontractors, and franchises to supply their labor force. Now corporate interests are pushing even more extreme legislation: A bill to roll back protections for minimum wage, overtime, and child labor violations by joint employers has already passed the House. A president who cares about the rights of workers would fight hard against such a proposal.

Trump’s war on workers extends to the public sector as well. The Trump administration has backed union opponents that want to eliminate fair-share fees in the public sector, attempting to overturn a 40-year-old Supreme Court precedent and weaken public sector unions. And last night, he promised to make it easier for political appointees to fire federal public sector employees.

Just like last year’s joint address to Congress, the president promised last night to create jobs with a new infrastructure program. However, his fiscal year 2018 budget shows that this “new plan” is a shell game, since it would be paid for in part by cutting $138 billion from the Highway Trust Fund, which currently funds highway and public transportation projects across the United States, and eliminating existing job-creating infrastructure programs like TIGER and New Starts grants.

And while Trump touted his infrastructure plan, he didn’t guarantee that the jobs created will actually support a family. While the federal government has upheld Davis-Bacon prevailing wage standards for nearly 90 years to ensure that construction jobs funded through federal spending provide decent wages, many on the right are pressuring the administration to leave out these protections. Trump failed to mention them last night. If the president really wants to help workers, he should guarantee that all jobs created by the infrastructure package include the prevailing wage protections and pay at least $15 per hour, and expand contracting job quality protections broadly to ensure that all government spending creates well-paying jobs for workers.

The president also boasted about the performance of the U.S. stock market and the benefits of his tax cut bill. Yet neither today’s market performance nor the tax bill will make substantial, long-term improvements in the lives of everyday Americans. The run-up in stock market value predominantly benefits the rich, as 80 percent of U.S. stock value is held by the wealthiest 10 percent of households. Meanwhile, despite Trump’s false claim that “we are finally seeing rising wages,” the average wage of production and non-supervisory workers rose by only four cents in 2017 when adjusted for inflation—a growth rate of just 0.17 percent, below the last four years of wage growth.  And the tax bill—which Trump previously justified by saying working- and middle-class taxpayers would “receive the biggest benefit – it won’t even be close”—in fact gives the most to the richest taxpayers. This year, taxpayers making over $1 million will bring home a tax cut 100 times larger than the average tax cut for families in the bottom 80 percent by income. And in 2027, once individual tax cuts expire, nearly 92 million families making less than $200,000 annually will be paying more in taxes.

Viewers also heard Trump boast about one-time bonuses from companies seeking favor with the administration. However, the fact that some of these companies laid off thousands of workers as they were announcing the bonuses failed to make it to the presidential teleprompter.

Trump’s claims during last night’s speech can’t hide the truth: Month after month, the Trump administration took action to benefit wealthy donors instead of working people. From denying overtime protections for millions of Americans, to raising health insurance premiums, to weakening safety protections for workers, he has continually failed to stand up for those he claims to support. His pledge to lead a new “worker’s party” was a bait-and-switch, and he should be held accountable for this failure.

Related

Safety Net

Why People Love ‘Assistance to the Poor’ But Hate ‘Welfare’

Last Spring, in a highly publicized meeting with members of the Congressional Black Caucus, President Donald Trump received some startling news. One of the members mentioned to Trump that pushing forward with “welfare reform” would be hurtful to her constituents, “not all of whom are black.”

“Really?” Trump replied. “Then what are they?”

Statistically, they were probably white. But given the United States’ history with the word “welfare,” it’s not all that surprising that Trump was confused.

Despite the fact that white Americans benefit more from government assistance than people of color, means-tested aid is primarily associated with black people and other people of color—particularly when the term welfare is used. For many Americans, the word welfare conjures up a host of disparaging stereotypes so strongly linked to stigmatized beliefs about racial groups that—along with crime—it is arguably one of the most racialized terms in the country.

White people's racial attitudes are the single most important influence on their views on welfare

Martin Gilens, a professor of political science at Princeton University, has studied the relationship between whites’ racial attitudes and their opinion on welfare extensively. In one study, he finds that white people’s racial attitudes are the single most important influence on their views on welfare. In other words, white people who are more prejudiced toward black people are also significantly more opposed to welfare. Numerous studies in the social sciences have substantiated this claim.

That has tremendous consequences for the types of policies that are proposed and passed. Public support for programs associated with the term welfare are generally weaker than support for other programs, like unemployment insurance, primarily because welfare is so strongly linked to the negative attitudes white people possess about black people. However, the public is willing to support redistributive benefits generally when they are not called welfare. For example, in 2014, 58 percent of white people thought that we are spending too much on welfare, whereas only 16 percent reported that we are spending too much on the poor.

Picture1
Source: Author’s analysis of 2014 General Social Survey data.

These same racial attitudes also structure the way policies are designed. They inform which groups we think are deserving of assistance, and which are not. Nicholas Winter, for instance, notes that part of why Social Security is so relatively popular compared to welfare is because of how both policies are racialized. Social Security, he argues, has been framed as a policy that is both universal—that is, it benefits all groups—and as one that has been contrasted with welfare as an earned reward for hard work (stereotypes associated with white people), rather than a handout for the lazy and dependent (stereotypes associated with black people).

In contrast, negative beliefs about the beneficiaries of programs we think of as welfare have arguably lead to a system of surveillance and sanctions. After Reagan popularized the disparaging stereotype of the ‘welfare queen’ In 1974, the Chicago Tribune began covering the case of Linda Taylor, who was charged with defrauding Illinois welfare programs. (Initial coverage claimed she had hundreds of aliases, defrauded the state of $200,000, and was responsible for kidnappings and working as a “voodoo doctor.” Later investigation found she had four aliases and defrauded the state of $8,000). Local journalists dubbed her the “welfare queen” during the first flurry of coverage. Instead of treating the case as an anomaly, Ronald Reagan used his 1976 run for president to turn Taylor into a caricature, arguing that everyone who received welfare was similarly likely to commit fraud. He leaned heavily on racist stereotypes of black women in his retelling of the story during campaign stops. Over the next decade, media outlets and fellow politicians seized on the idea that welfare was rife with fraud, and referred to all recipients with the racially charged language originally aimed at Taylor. in the 1980s, Bill Clinton passed welfare reform policies that restricted access to benefits to satisfy racist attitudes. In addition to placing significant and often unfair burdens on the individuals seeking assistance, these restrictions—like required drug-testing of program applicants, restrictions on where benefits can be spent, and specifications on what types of work count toward required hours—relied on stereotypes and reinforced the belief that beneficiaries of these programs are undeserving. According to work by Joe Soss and Sanford F. Schram, more people believed that welfare benefits lead to dependency in 2003 than in 1989.

The media have played a significant role in establishing the link between poverty, welfare, and race in the public mind. According to Gilens, these trends were forged in the 1960s, when race riots drew the nation’s attention to the black urban poor. In just three years—from 1964 to 1967—the percentage of poverty news stories that featured images of black people grew from 27 percent to 72 percent. These trends have persisted in the present day.

But both Gilens’ and Winters’ work suggests that the media can also help promote anti-poverty legislation by avoiding racialized terms, like welfare, to talk about public assistance. But if they keep leaning specifically on the term welfare—as they have during Speaker Ryan’s recent push to cut anti-poverty programs by referring to them as “welfare reform”—then otherwise popular policies may be dragged down with the word’s racialized history.

Related

Culture

In the First Year of Trump’s Presidency, We Stopped Being Invisible

Every day when I walk out of my door, I take a deep breath and prepare myself to be stared at. Strangers examine me from head to toe to determine what I am: a dark-haired, androgynous lady with a penchant for leather boots and knit sweaters. I don’t engage, out of fear that a feminine voice coming from a masculine-looking person will turn their confusion into anger. I lower my head when I go into public bathrooms or locker rooms, knowing that my presence will put people on edge. Sometimes people will draw their children in close as if I’m a danger, and other times women will confront me and ask if I know that I’m in the women’s room. I can’t decide which is worse.

I try to make myself small. I fold into myself hoping that if I don’t make eye contact, if I just don’t look up, no one will notice I’m there. I pack away my loud laugh and hunch my broad shoulders.

My mom mentioned the same thing to me in a phone call last week. On her daily walk during her lunch break, she asked me if she could share something that had been weighing on her recently. Her whole life, she said, she has tried to make herself invisible. As a child, she tried to make herself invisible as a means of survival. As a teenager who was undocumented, she tried to make herself invisible so that she wouldn’t be detained by INS. And as a single mother, she tried to make herself invisible so that she could raise me in an environment that was safe. Recently, people have been cutting her in lines, as if she isn’t there.

“I’m starting to think I got too good at making myself invisible. Do you know what I mean?”

“Yeah,” I said. “I think I do.”

The concept of shrinking one’s self down to navigate the world safely is not at all new. When what you have learned in life is that self-preservation may be your only means of survival, invisibility is a refuge. But over the past year—a year in which our country has been led by a man who won the White House by being sexist, racist, and violently anti-immigrant—invisible people have stepped into the light.

When being seen is dangerous, choosing to be visible is an act of resistance and radical love.

When being seen is dangerous, choosing to be visible is an act of resistance and radical love.

We see this with young undocumented activists who are protesting at the Capitol: seeking out the elected officials who would deprive them of their home, knowing fully well that they could be arrested and detained. We see this with the members of ADAPT who fought to take down Trumpcare, through arrests in front of the White House, in the Capitol Rotunda, and Mitch McConnell’s office. We see this in the survivors of sexual harassment and sexual assault, ranging from movie stars to domestic workers, who are speaking their assaulters’ names.

We are done making ourselves small, and we are done staying quiet out of fear.

There is no asking for access anymore, or asking to be listened to. Instead, there is truth telling and a demand for acknowledgment. We are showing up, in record numbers, and we are not losing energy.

We have realized that our seat at the table will not be given to us if it requires someone who has privilege to relinquish it. So we are doing what Shirley Chisholm taught us, and bringing our own folding chairs. And in doing so, we have stepped out of our invisibility and into the light.

Related