Tag Archives: Class and economics

Fixing the Foreclosure Problem

One of the sad legacies of the housing and mortgage securitization bubble and the subsequent collapse of the economy over the past two years is the virtual devastation of working-class neighborhoods throughout the United States.  Thousands of homes sit vacant and deteriorating after foreclosure or are listed for sale at a price half or less than their value just 18 months ago.

Foreclosures aren’t hitting just the working class, but The New York Times reports that workers in the manufacturing and distribution sectors were keeping up mortgage payments until they found themselves unemployed and unable to pay for their homes, complicating efforts to stem foreclosures.

Even as the Treasury Department appears poised today to announce efforts to force more banks to modify loans, increasing evidence suggests that the federal government’s efforts are floundering.

Rather than focusing their efforts on the complicated Homeowner Affordable Modification Program (HAMP), or on bailing out banks in the hope that they will loan more money to homeowners and small businesses, federal policymakers can accomplish more  for those facing foreclosure, not to mention their neighbors and American taxpayers, by making relatively modest changes to the business practices of the Federal Housing Administration and HUD.

The story of an Ohio worker and homeowner illustrates how the federal government is missing easy opportunities to play a meaningful role in reducing the impact of the foreclosure crisis and the recession on real people.

In 2007, Bob was employed by DHL as a driver earning over $20 per hour. He bought a modest house in a middle-class suburb of Cleveland for a fair market price of $90,000 to live in with his son.  When DHL shut down its U.S. operations in 2008, Bob, along with thousands of others nationally, was laid off.

Meanwhile, back on Bob’s street, for sale signs proliferated and one of six homes in his community is in foreclosure.  As a result, the market value of Bob’s home has dropped to less than half of what he paid for it.

Bob and his son were able to survive on his unemployment benefits but couldn’t pay the monthly mortgage.  Bob recently took a job with FedEx paying less than half of what he earned at DHL and less than his unemployment benefits, because he simply couldn’t stand “not working any more.”

His mortgage, which was insured by the FHA, is being foreclosed. With the costs of foreclosure and 18 months of late fees included, the lender claims to be owed $120,000 on a house optimistically worth $50,000.

Bob requested that his foreclosure case be sent to mediation, and he provided the lender with extensive documentation of his income and expenses and the current value of his home during the course of those negotiations. The loan servicer has refused to agree to a modification of the terms that makes any sense to Bob. They are completely unwilling to consider any modification that reduces the principal balance at all, let alone bring the figure anywhere close to the current value of the home.

Bob does not qualify for the H.A.M.P program, the centerpiece of the Obama Administration’s effort to assist homeowners in default and foreclosure, because his loan (like the loans of most people in foreclosure) is more than one year behind. That program actually pays cash to lenders and mortgage services who agree to modify loans.

During the course of the negotiations it became increasingly clear that the lender or loan servicers have no incentive to enter into any kind of meaningful modification.


Because after foreclosure, FHA stands ready to pay the lender 100 percent of its loss on the loan, including the cost of foreclosure. If the lender were to agree to modify the loan, it would be paid far less.

Here is the outrage. If the lender proceeds to foreclosure, Bob and his son will be thrown out of their home and the lender will be made whole at the cost to FHA — and ultimately the taxpayers — of $80,000 or more.

This scenario is repeating itself in mortgage foreclosure cases throughout the country, putting the solvency of the FHA at risk while throwing thousands of working people out of their homes. The New York Times recently reported that FHA itself might be in need of an infusion of cash.

If FHA were included in the negotiation and would agree to pay lenders some amount –say half of what they are likely to lose, $40,000 — to allow the principal to be reduced, Bob could refinance at competitive interest rates and stay in his home, the federal Ggvernment and ultimately the taxpayers would save $40,000, and the lender would have an interest-paying borrower (who can afford the lower payment) and earn profits from the interest.

Everybody wins under this scenario.

Another problem that could be fixed by a more realistic approach by HUD and the FHA was detailed in a recent Cleveland Plain Dealer Story about problems created by HUD’s failure to demolish or fix homes they own (mostly as a result of FHA insured foreclosures) in greater Cleveland.  Dilapidated houses drive down housing values for entire neighborhoods.  Making it tougher for guys like Bob to sell or refinance their homes and making community problems worse. Local communities are struggling to maintain housing stock in aging neighborhoods, and HUD’s failure as a homeowner has devastating effects on entire communities.

The Federal Government has a chance to raise the bar for responsible homeownership, yet instead they appear to be lowering it. HUD should be a model community citizen, collaborating with local housing officials on neighborhood wide efforts to improve home values.  The agency should hire local consultants or even contract with local governments and empower them to make quick and honest assessments of the likelihood of selling any particular piece of real estate with an eye toward the best community use for the property.  For houses that will not realistically sell in a reasonable timeframe, HUD should require that the houses be demolished within 30 days.

Increasing evidence suggests that the new programs being created by Congress and the Obama administration are not having a significant impact on the foreclosure problem. Only 1711 homeowners nationally had completed a modification by September 1, 2009 under the HAMP Program.

Bob’s story suggests that a better approach may be to find ways to make the existing machinery of the federal government’s mortgage programs work in the interests of homeowners and taxpayers.

Marc Dann

Marc Dann is a Cleveland lawyer who represents homeowners in foreclosure.

Bending the Cost Curve on Health Care

After a summer of “lying Muslim, socialist Hitler” vitriol, a recent Pew Research Center poll shows that two-thirds of Americans think President Obama is “a strong leader” who is “trustworthy” and is “someone who cares about people like me.”  Though the President does not score as high on general approval or for his “handling of health care reform” (and for good reason), his character numbers are a major asset as we finally get into the substance of what kind of health care we are going to have in this country.

On the substance of reform, the details are devilishly complex not only because several variations are still being debated in Congress, but also because the economics of health care are actually just a little less complicated than brain science.  Fortunately, as public debate moves toward real issues of substance, we are all likely to go rapidly up a learning curve on something that is as morally and economically important to us as individuals as it is for us as a nation.

For example, after this summer’s now thoroughly debunked charge that Obama was proposing “government death panels,” there should be more interest in a study that will be published this December in The American Journal of Public Health.  The study calculates that each year about 45,000 Americans die because they lack health insurance coverage.  As lead author Dr. Andrew Wilper explains:

The uninsured have a higher risk of death when compared to the privately  insured, even after taking into account socioeconomics, health behaviors and           baseline health. We doctors have many new ways to prevent deaths from     hypertension, diabetes and heart disease – but only if patients can get into our        offices and afford their medications.

45,000 of what the study calls “excess deaths” (meaning people died unnecessarily) is a small percentage of all U.S. deaths in a year, but think of it this way:  It’s five times the number of American deaths caused by the terrorist attack on 9-11 and the subsequent wars in Afghanistan and Iraq over the past eight years.  Or, it’s equivalent to four towns the size of Wasilla, Alaska.  Even in the best of systems, accidents happen, mistakes are made, but about 45,000 Americans die needlessly every year because we choose as a nation to make access to health care a lottery game.

Likewise, though eyes glaze over when the President talks about “bending the cost curve on health care,” recent news coverage of the Kaiser Family Foundation’s annual report on health care costs helps illustrate why that bending is so important.   The average annual cost for family coverage more than doubled from about $6,000 to $13,500 in the past ten years, and it’s projected to nearly double to $24,000 in the next ten.  Employers typically pay about 73 percent of the total cost – which will be about $17,500 by 2019, or an increase of $7,700 a year over what they are paying now.  If this were a tax increase, conservative Republicans would call it a Giant Job Killer that will undermine economic growth, but though it appears as an increase in labor costs on employer balance sheets, these increases have exactly the same effect as tax increases would – fewer jobs, slower economic growth, and in this case, fewer employers providing health insurance for their workers.  Likewise, those workers who still have jobs with health insurance in 2019 will see their premiums increase from $3,500 a year now to more than $6,000 a year then.  This is what will happen if nothing is done.

“Bending the cost curve” is not about government budgets.  It’s about reducing the rate of increase of both health insurance and health delivery costs.  By 2019, according to Kaiser, the average worker will be paying at least $500 a month for family coverage, versus about $300 now.  If Obamacare can “bend the cost curve,” it will not mean that average insurance costs will actually go down, but that they would increase to only, say, $400 a month – $100 a month more than now, but a savings of $100 a month from what will happen if nothing is done.

What’s more, under Obamacare tens of millions of families will have some part of their premiums paid by federal government tax credits – 100 percent for families earning less than $29,000 and smaller percentages for families earning as much as $88,000.  When you add it all up, most working-class families should eventually see a real increase in their disposable incomes.

These tax credit subsidies need to be paid for, however, and that’s why the debate on health reform may initiate a sensible discussion about increasing taxes.  As I’ve documented in my last three blogs, progressive think tanks are finally starting to do the math on how to raise taxes on the top 5 percent of taxpayers.   The leading progressive outfit on this topic, Citizens for Tax Justice (CTJ), recently did a Review and Comparison of Six Progressive Options to Finance Health Care Reform.  CTJ provides three “moderate” options, which together would produce about $70 billion a year, more than enough to pay for the health insurance tax credits and all other aspects of Obamacare.  The increased taxes would fall almost exclusively on the top 1 percent of taxpayers whose average annual income is $1.5 million, and it would cost those folks an average of $45,000 a piece.  The next 4 percent from the top, with average incomes of about $280,000, would see their taxes increase by about $700 a year.

If I made $1.5 million a year, I’d be glad to pay an extra $45,000 in taxes just to live in a country where nobody died because they lacked health insurance.  But I’d also probably be economically savvy enough to know that a substantial increase in working-class incomes is good for business and that the President is right when he claims that the future of our economy is riding on bending that cost curve.

Jack Metzgar

Stop Stealing from Workers

Late last year I sat in the office of an Ohio County Prosecutor and provided her and the County Sherriff thick notebooks documenting a systematic theft of workers’ wages by a local construction contractor by means of misclassification under Ohio Prevailing Wage Law and systematic underpayment. The theft was compounded by the fact that company officials signed false verifications of compliance with state prevailing wage laws under penalty of perjury.   To add insult to injury, the job on which the wage theft took place was being paid for with tax dollars from that same county.

I asked the Prosecutor what would happen if a local construction contractor had brought evidence that one of their workers, perhaps a bookkeeper, had fraudulently written herself tens of thousands of dollars in checks from funds belonging to the company and then lied about the theft on government mandated reports signed under penalty of perjury. The Prosecutor, Sherriff, and their assistants and deputies all assured me that the culprit would be prosecuted to the fullest extent of the law.

I smiled, certain that  these law enforcement officials, ethical office holders, and civil servants would be as anxious to arrest and prosecute the owners of the construction company for stealing wages from their employees and lying about it under penalty of perjury as they would be to prosecute that bookkeeper.

I couldn’t have been more wrong.

They flatly refused to treat the wage theft as a criminal offense.  Instead, the company’s conduct was treated as a “mistake,” blamed on failure to understand the law.

Enforcement was left to the Ohio Department of Commerce, which could only require the company to pay back wages.  While more than $40,000 was ordered to be paid to the 9 employees and a 100 percent civil penalty assessed, the company owners were spared the life changing consequences of a criminal prosecution.

My experience was put into disturbing context by Kim Bobo’s new book, Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid—and What We Can Do about It (New York: The New Press, 2009) .  Bobo documents a wage theft crime wave across the United States. The victims range from illegal immigrants who fear deportation if they report violations to skilled construction workers who are forced to kick back parts of their paycheck on government projects, and includes childcare and home healthcare workers, sales clerks, and many others.  Bobo makes a compelling case that wage theft is far more pervasive than most of us understand or would like to admit.

Bobo draws her analysis primarily from her experience in running Interfaith Worker Justice Center in Chicago and cases handled by other worker centers throughout the country, and  a recent study of over 4000 low wage workers dramatically verified Bobo’s conclusions.  The study, “Broken Laws: Unprotected Workers,” makes stunning discoveries of the rampant nature of wage theft in America. Here are a few of the conclusions:

  • 26 % of respondents had been paid less than the minimum wage in the previous workweek.
  • 25% of the respondents had worked more than 40 hours in the previous week but a  whopping 76% of them were not paid overtime.
  • 70% of workers who arrived early or stayed late at their employer’s request were not paid for the extra time.
  • 69 % of workers entitled to meal breaks didn’t get them.

Wages are stolen from tens if not hundreds of thousands of American workers every day.  If employers were stealing from customers in such a systematic way, law enforcement at all levels would be forming task forces and putting thousands in jail.

Why should theft of wages from American workers be different?  Bobo suggests that most instances of wage theft can be traced to old-fashioned greed.  Greed is sometimes dressed up with rational sounding names like “pressure from competitors in low wage countries” or “innovative” compensation schemes.  But at the end of the day employers steal from those who work for them in order to make more money.

Bobo correctly points out that wage theft is also driven by the greed of consumers who demand low prices.   That demand leads some companies to indirectly encourage wage theft.    Bobo quotes the Congressional Testimony of MIT Professor Thomas Kochan, regarding the poster child for wage theft in America: “Wal-Mart executives have established corporate policies that are ethical and appear to conform to legal requirements. However Wal-Mart has also established financial and business objectives that managers find difficult to achieve without circumventing those rules.”  This is a scenario not unique to Wal-Mart. Despite ethical, legal policies, many companies repeatedly steal from their employees in order to reduce labor costs.

But perhaps the biggest factor is the lack of consequences.  Wage thieves are only rarely caught, and those who are face almost no legal, financial, or societal consequences.  Often the worst penalty for a wage theft is being forced to pay workers what they should have been paid to begin with and then only for the period of time allowed under the statute of limitations (often as little as two years).   Weak enforcement of relatively weak laws is as much to blame for the widespread practice of wage theft as employer or consumer greed.

Wage Theft in America proposes a variety of potential solutions to the problem.  Bobo’s proposals range from creating more worker centers to dramatically beefing up the enforcement capacity of Federal and State Wage and Hour Enforcement Agencies to policies that increase the number of workers represented by labor unions.  While her proposals would work, much of what she suggests would require legislation and appropriations that are politically unattainable even with Democratic control of all three branches of the federal government. (See the recent collapse of card check provision of the Employee Free Choice Act, if you have any doubt about this).

However, some less controversial and inexpensive strategies can help.   Congress needs to simplify economic protection laws and make it easier for employees to report wage theft offenses.  In particular, workers need reliable protection against retaliation for reporting violations.  Workers currently risk of termination or other workplace punishment if they report wage theft.

But ending wage theft may not require new laws.  Instead, government agencies should simply enforce existing regulations.  It won’t take many well-publicized arrests to persuade employers to stop cheating workers.

Making that happen will require political pressure.  Activists, religious organizations, and labor unions need to reignite the kind of moral outrage that brought about our current labor laws almost a century ago.  Rooting discussions of wage theft in religion can help.  Bobo argues that religious teachings from the Old Testament to the Quran demand that workers receive their fair day’s pay.  Because of this, religious organizations can be fertile ground for generating moral outrage against those who exploit the least among us.

Labor Unions and political activists should educate elected prosecutors and sheriffs about wage theft and how it undermines local citizens and the community.  And they should pressure law enforcement officials to do their jobs.  Local business communities should also support such efforts, since cheating competitors have an unfair advantage over ethical businesses that follow the law.  And since Bobo’s book demonstrates that companies with labor unions are less likely to commit wage fraud than their competitors, union leaders should engage their counterparts across the bargaining table to join in efforts to encourage more serious enforcement.

Unions and their lawyers can devote resources to investigating and documenting wage theft, providing overburdened state and federal officials the evidence they need to bring cases.  Efforts by construction unions to promote “fair contracting” have forced non-union competitors to comply with prevailing wage laws. Organized labor should embrace these efforts as tools to strengthen unionized competitors in every industry and for organizing more companies in the future.  Such efforts also show management and potential members the added value that having a union can bring to a company and its workers.

Wage Theft in America frames the debate as about not just the value of labor unions in the workplace, but also the value of workers themselves.  Reframing wage and hour violations as crime, reclaiming the moral high ground, and refusing to tolerate wage theft not only discourages cheating of workers but also reminds companies that operate ethically, as most do, that wage theft cuts into their bottom lines.  Such changes in the public debate would certainly have changed the outcome of my efforts to prosecute the cheating contractor in Ohio.

Marc Dann is a lawyer in Cleveland who represents labor unions and workers seeking fair wages and contracting practices and has been a community affiliate of the Center for Working-Class Studies for four years .

Taxing Only the Rich CAN Pay for Everything

It’s time for everybody who wants to say anything about “Obamacare” and taxes to tell the rest of us their income class.  I live in one of the 13.5 million households with a six-figure income between $100,000 and $200,000.  I could afford to give back the annual $2,500 tax cut George Bush gave me in 2001 and 2003, but our current president has pledged that he won’t allow my taxes to increase by a single dime.

I thought this was foolish and unfair when candidate Obama promised it, but now I understand why he put himself in this trick box.  My income class serves as a sort of buffer zone to protect the working class from being attacked with taxes on their health insurance and soda pop.  The only way to ever have a discussion about what to do about our rapidly growing income inequality is to leave us, the vast majority of middle-class professionals, harmless.

In the first week of August, the national punditry declared with something like unanimity that, as the New York Times headlined, “Obama’s Pledge to Tax Only the Rich Can’t Pay for Everything, Analysts Say.”  Unanimity among cable news pundits is bad for business, so their agreement on this is particularly striking.  And this leads me to ask: Do the pundits and the “analysts” they cite really not know the numbers or are they consciously or semi-consciously trying to avoid an increase in their taxes?  It would help to know whether they are “rich” by President Obama’s standard – above $200,000 for individuals, $250,000 for families.

One of the few national pundits who routinely admits he’s “a rich guy” is Bill O’Reilly of Fox News, but with a $10 million-a-year salary (not counting his book sales and speaking fees), he’s more like the super-rich – as is Charlie Gibson of ABC News.  I’m wondering what Bill Bennett, Campbell Brown, David Gergen, Gloria Borger, and all the other talking heads who play such an important role in shaping national debates make these days.

And do they have assistants who actually check out what their “analysts” tell them?  I don’t.  I’m a humanities professor who cannot now and never has been able to do algebra, but I use the Statistical Abstract of the United States in teaching numeracy in undergraduate critical-thinking courses.  Table 470 provides interesting information on Adjusted Gross Income (AGI) and taxes by income-class.  An Internal Revenue Service spreadsheet gives more detailed AGI information on taxpayers in 2007.  AGI is income after certain tax deductions(Wikipedia nicely explains what is and is not included). Using these sources, here’s what I learned in about two hours earlier this week.

Of the 143 million U.S. taxpayers (individuals and households), about 4.5 million have AGIs of more than $200,000 a year.  Though only 3% of all taxpayers, this group claims 32% of all AGI – or $2.8 trillion.  They already pay about $600 billion in federal income tax, or about 22% of their incomes.  If this group paid a graduated average of 35% instead, that would add $400 billion to federal revenues every year.  This would leave them with about $1.8 trillion after taxes, which is roughly what two-thirds of all taxpayers (with AGIs of less than $50,000) have before they pay taxes.

All that is being asked of the rich so far is an increase of $97 billion a year — $43 billion by reverting to the pre-Bush top two marginal tax rates, and $54 billion in surtaxes on incomes over $280,000 to pay for health care.  Both these tax increases directly redistribute income from the rich to the working class.  The $43 billion a year is slated to permanently pay for Obama’s Making-Work-Pay tax credit (introduced but not paid for in the two-year stimulus package).  The $54 billion is mostly slated to help low-income workers pay for health insurance.

More will be needed for long-term government investment in green jobs, infrastructure, and education, all of which (along with health care reform) should lead to stronger, more sustained economic growth, which will do more than any other single thing to bring down government deficits and to increase working-class (and middle-class) incomes.  Taxing the rich can provide all that’s needed for even the most ambitious programs proposed so far. The rich are not an inexhaustible source of government tax revenue, but they have a lot to give before the “middle class” will need to be tapped.

That’s the theory, and it deserves to be debated, but it’s hard to believe that the pundits don’t know that there has been a radical redistribution of income from the working class to the rich over the past quarter century.  So in the interests of “transparency” (a middle-class professional term for fessing up), all commentary on paying for Obamacare should include full disclosure of whether the commentator is rich – possibly as a tagline at the bottom of the screen.

What’s more, since the proposed surtax on the rich is especially easy to figure, rich commentators should tell us how much the surtax will cost them.  For example, as currently proposed, Bill O’Reilly will pay an additional $500,000 in income taxes and Charlie Gibson, an extra $380,000.  It would be good to know how lesser pundits would fare, too, as this might help explain why they keep suggesting that President Obama must break his promise not to increase middle-class taxes.

The President won’t break that promise because he is in a trick box of his own crafting.  And there are many analysts out there – all of whom can do algebra and most of whom make less than $200,000 — who would be glad to help reporters and pundits dig into the facts on income and taxes, if they should ever want to.

Jack Metzgar

Obama’s DeLorean?

I know I’ve used the déjà vu/time machine analogy before,  but if Michael J. Fox can make three Back to the Future movies, then I can make a sequel, too.  Every time I read about how the Democrats first pandered to and are now ignoring the needs of the working class, I feel like I just landed back in 1993 after taking a wild ride in Doc Brown’s beat up DeLorean.

Back then, the Clinton administration lost control of the health care reform debate, abandoned its number one promise to labor, and screwed a whole bunch of Mahoning Valley residents who worked for Packard Electric. Clinton’s approval numbers tanked, and Republicans, once thought to be an endangered species, regained power.

Sound eerily familiar?  Today, the Obama administration has lost control of the health care reform debate, abandoned its number one promise to labor, and apparently screwed a whole bunch of Valley residents who used to work for Packard Electric.  The president’s once-phenomenal approval ratings are tanking, and Republicans, pronounced dead less than eight months ago, have risen Lazarus-like from their crypt.

Let’s take a closer look at what’s going on just to make sure we aren’t really caught in a time warp.  On health care, Mr. Obama is being beaten into the ground by the same right-wing liars who crushed reform in ‘93: Pat Buchanan, Newt Gingrich, Rush Limbaugh, the insurance industry, and the AMA.

These guys, along with some new crazies, are recycling the lies they told 16 years ago.  They say we’re headed toward the kind of socialized medicine that (they claim) doesn’t work in Canada, that bureaucrats will interfere with the doctor-patient relationship, that care will be rationed, and that a government worker sitting in a cubicle will decide whether your elderly mother lives or dies.

The fact that none of this is true doesn’t seem to matter any more today than it did in the Clinton era.  Like then, the liars are using paid advertising and talk radio to propagate their fables.  And, like then, people are listening.

The President has responded by conducting town hall meetings where he spends most of his time refuting tall tales.  But that won’t get the job done.  It’s time for the president and the Democratic Party to spend some of the millions in their campaign accounts to mount a counterattack.

The TV and radio ads will be easy to make—just tell people the truth.  Tell them your plan won’t require them to abandon their coverage or their doctor, that bureaucrats working for the profit-hungry insurance industry are already making decisions about their health care, that care’s already rationed, especially if you’re one of the tens of millions of Americans who are under or uninsured, and  that we already have socialized medicine.  It’s called Medicare, and it’s kept untold millions of elderly mothers alive since 1965.

Tell the American people all that and do it right now, before members of Congress head home and are verbally assaulted by constituents who haven’t heard the truth.  If you don’t, the reps and senators will return to Washington scared sh—well, we all know how scared they’ll be—and health care reform will be dead.

Now let’s talk about unions.  In another Back to the Future moment, Mr. Obama, like Clinton in ’93, recently abandoned his promise to fight for the enactment of organized labor’s number one priority.  Sixteen years ago the issue was scabs.  During his campaign Clinton had promised to do everything possible to ban the use of permanent replacement workers during labor disputes.  He didn’t.

In 2008, labor’s priority was passage of the Employee Freedom of Choice Act (EFCA) a rewrite of the National Labor Relations Act that would, among other provisions, make card check recognition the law of the land.  This would prevent employers from engaging in the coercion and intimidation that have crippled countless organizing drives over the past two decades.  Obama repeatedly promised to do whatever was necessary to get it done:

We need to stand up to the business lobby that’s been getting their friends in Congress and in the White House to block card check. That’s why I was one of the leaders fighting to pass the Employee Free Choice Act. That’s why I’m fighting for it in the Senate. And that’s why we’ll make it the law of the land when I’m President.

But they haven’t.  In yet another Democratic betrayal of the working class, the card check provision was stripped from the EFCA before it came to a vote in either house.  The president expended zero political capital on the issue.

Which brings us to Delphi-Packard.  At one time approximately 14,000 people worked in the company’s plants in Mahoning and Trumbull counties.  Then Clinton won the NAFTA battle and thousands of Valley residents saw their good-paying jobs head to Mexico.  Thousands of employees agreed to retire early in exchange for enhanced pensions and guaranteed health care benefits.

Guess what happened next.  First, Delphi-Packard went bankrupt.  Then salaried retirees lost their health care.  Then the company dumped its pension obligations on the Pension Benefit Guaranty Corporation.  As a result salaried employees will lose the enhanced benefits they were promised, as will thousands of retired hourly employees who had the misfortune of belonging to the IUE, including  most of the company’s workers in the Mahoning Valley.  They will also lose health care benefits.

Ironically, one group of hourly retirees will not face similar cuts: those from the UAW.  In a move designed to facilitate GM’s emergence from bankruptcy by gaining the union’s support for a concession package, Packard workers who were UAW members of  won’t lose a penny of their pensions or their health care benefits.  The IUE asked Mr. Obama’s auto task force to order GM to provide its members with the same supplemental pension and benefit package given to the UAW.  That request was summarily rejected.

It should come as little or no surprise then, that when retirees gathered to protest their fate, many carried signs castigating Obama and told reporters that they would do everything they could to deny him a second term.  Of course, these same workers had made a similar threat about Clinton in ’93.  Maybe Rahm Emanuel and the crew in the West Wing are confident history will repeat itself?  After all, they know that Democratic leaders keep getting away with disrespecting working families and their unions.  And maybe that’s why they were so willing to pit one union against another in order to protect GM?.

By the way, Mr. Obama’s approval numbers: 64% in February, 54% in July.  Was that whoosh I just heard the sound of the air rushing out of his presidency or the whirr of an old DeLorean flying by?

Leo Jennings

Religion, Workers, and the Economy: Caritas in Veritate

Since the publication of Rerum Novarum in 1891, Catholic social teachings have provided moral and ethical guideposts for economic behavior.  Of particular importance, have been the Papal Encyclicals on the economy that have sought to protect the working class and their institutions in the face of unfettered capitalism.   In Pope Benedict XVI’s recent encyclical, Caritas in Veritate, the Church goes a step further by providing a critical analysis of neoliberal economic thought and the problems of globalization while reiterating the need for basic protections for workers and unions.

Caritas in Veritate calls us to avoid the pursuit of narrow, short-term economic interests and practice genuine love founded on truth, beginning with justice and pursuing the common good in our economic choices.  The pontiff points to “badly managed and largely speculative financial dealing, large-scale migration of peoples . . . [and] the unregulated exploitation of the earth’s resources.” Benedict writes: “the economy needs ethics in order to function correctly — not any ethics whatsoever, but an ethics which is people-centered.”

Benedict laments that “The global market has stimulated .  .  .  a search for areas in which to outsource production at low cost with a view to reducing the prices of many goods . . . Consequently, the market has prompted new forms of competition between States . . . by means of a variety of instruments, including . . . deregulation of the labour market.”  This has, in effect, “led to a downsizing of social security systems . . . with consequent grave danger for the rights of workers, for fundamental human rights and for the solidarity associated with the traditional forms of the social State.”

The pope writes explicitly that justice abhors great disparities in wealth and that societies need “to prioritize the goal of access to steady employment for everyone.”   Employment, however, needs to be “decent work.”  Benedict writes that  such work  “expresses the essential dignity of every man and woman; work that is freely chosen, effectively associating workers, both men and women, with the development of their community; work that enables the worker to be respected and free from any form of discrimination; work that makes it possible for families to meet their needs and provide schooling for their children, without the children themselves being forced into labour; work that permits the workers to organize themselves freely, and to make their voices heard; work that leaves enough room for rediscovering one’s roots at a personal, familial and spiritual level; work that guarantees those who have retired a decent standard of living.”

The encyclical notes that the current market/state logics have constrained union work: “budgetary policies, with cuts in social spending  . . . can leave citizens powerless in the face of old and new risks; such powerlessness is increased by the lack of effective protection on the part of . . .  trade union organizations (who) experience greater difficulty in carrying out their task of representing the interests of workers, partly because Governments . . . limit the freedom or the negotiating capacity of labour unions. Hence traditional networks of solidarity have more and more obstacles to overcome.”

He affirms the moral importance of unions as an organized voice for the working class.  Benedict XVI challenges workers and unions, however, to change the way they “do business” and model ethical agency.  The message proclaims that the world desires a new way of thinking and working which goes beyond minor regulatory reform.  Solidarity, justice, and the common good must replace the worn out binary logics of markets and States.

Further, labor unions must be more than economic self-interested units caught in the logic of exchange. Benedict dares unions to be in solidarity with workers in developing countries.  This role includes advocating for appropriate foreign aid and re-thinking positions on immigration and migrant workers.  Benedict exhorts trade unions to re-evaluate their political activities as a quasi-interest group and focus more on “defending . . . exploited and unrepresented workers, whose woeful condition is often ignored by the distracted eye of society.”

This encyclical renews the Church’s commitment to labor unions and worker associations.  These working-class organizations, however, do not get off the hook from their responsibility for the current crisis in thinking and action.  Worker associations must be engaged in the work of “caritas,” which inherently includes a passion for justice that advances the common good.  Put differently, labor organizations must be more involved in social justice unionism rather than just economic self-interest.

Labor associations provide key assets for working people to be heard, respected, and engaged in this new world order of post-financial/industrial capitalism at a critical moment in its trajectory.  The current global crisis cries out for a radical new vision.  Working people, the very agents of creating wealth and community, like managers and financiers, are called to choose a lifestyle that is wholly ethical and life-giving.  This moral way of living is not just about individual choices.  Organizational structures and systems must be integrated moral agents.  For unions, I wonder if it is time to let the business-unionism model wither away and allow working-class people to re-invent their associations based on “caritas”?

What is the essence of this “caritas?”  “Solidarity is clearly a specific and profound form of economic democracy,” the pope writes. “Solidarity is first and foremost a sense of responsibility on the part of everyone with regard to everyone.”  Solidarity is both the end and the means.  We are gifts to each other.  Working-class persons and labor unions must be leaders in weaving “networks of charity.”  Labor movements have to be models of a “caritas” called justice.  The world can’t wait much longer.

Brian R. Corbin

Brian R. Corbin is Executive Director of Catholic Charities Services & Health Affairs, Diocese of Youngstown, and a community affiliate of the YSU Center for Working-Class Studies   His blog can be followed at brianrcorbin.com.

Budget Cuts Threaten the Working Class

Last fall, I drove to Columbus for a one-day unconference with library technologists. We each took turns writing topics on the board about which we wanted to learn or to share. The attendees separated into small groups according to interests: open-source content management systems, blogging and social media (Facebook, Twitter, etc.).

It turns out that librarians are passionate about technology, and for good reason. Since card catalogs gave way to searchable online directories, everything about information has become digitized. Government has likewise been turning everything over to the Internet: any and all forms that can be filled out and submitted digitally must be submitted online. From unemployment to workers’ compensation, the process begins with and is fed by virtual forms.

The connection of all this to working-class issues may not be immediately apparent, but think for a moment about the effect of these changes on access to information and to basic services. In order to apply for unemployment benefits, one completes online forms. Not only does this require some level of computer savvy, it also requires Internet access. How many unemployed working-class families can afford Internet access?

The Pew Internet & American Life Project reports that of the 25% of adults who do not use the Internet at home: 13% can’t get access, 7% can’t afford it and 4% don’t have a computer. Pew Internet further cites 43% of Americans in households earning less than $30,000 per year and 23% of Americans in households earning less than $50,000 per year as non-Internet users at home. The most obvious points of access for these and other users are public libraries.

I spoke with Diane Vicarel, Digital Services Manager at the Public Library of Youngstown and Mahoning County. I asked about the popularity of public Internet access and whether she could provide any statistics on how much their computers were used throughout the day. She wasn’t sure such statistics existed, but that’s only because the computers are always in use from when the doors are opened in the morning until the last user leaves. She said the sight of lines of people outside waiting to use the computers is common.

The library also provides a number of databases to support adult education, resources for job searches, audio-visual assets and links to additional information across the Web. Of course, libraries still serve the fundamental purpose for which they began: massive catalogs of books on every topic, for recreation or reference.

Ohio has made news in the last month by proposing to slash hundreds of millions of dollars in library funding from its annual budget. Funding for Ohio’s libraries is determined by a formula that ties a percentage of the state’s general revenues. Revenues have plunged in the current economy, leaving libraries wondering what lies ahead. Compared with 2008 funding levels, 20% of state revenue has been lost since January of 2009. Another 30% cut has been proposed on top of that for this year, with further expected cuts of 47% in 2010 and 45% in 2011. As state revenues fall nationwide, Ohio is certainly not the only state whose libraries are facing crippling cuts at a critical time.

This double whammy is the sad story facing American workers today. Economic decline means lost jobs and fewer state dollars to support libraries where the unemployed can both get temporary assistance through unemployment benefits and access to tools to hopefully get another job.

The success of the stimulus package, as has been discussed several times on this blog, will be determined in part by the foresight to continue providing a safety net of tools and services for those who have fallen. The strain our society will face if those with temporary financial setbacks lack the resources necessary to get back on a road to recovery will be far greater than if we identify and continue to financially support those resources, such as libraries, that are needed as a critical link between workers and the government.

-Tyler Clark

Tyler Clark is a technology and Web marketing consultant who writes about Youngstown .