In VW Vote, Republicans Fight the Really Radical Idea that Workers Should Have a Voice in Business

Feb 18, 2014Richard Kirsch

When a company is not fighting against a union, why do that union's efforts fail - and what does that say about the U.S. model for labor?

When a company is not fighting against a union, why do that union's efforts fail - and what does that say about the U.S. model for labor?

Current management theory recognizes that businesses do better when employees are involved in decision-making. But that trend ran smack into the paternalistic view that workers are replaceable parts in the narrow vote by workers at Volkswagen (VW) in Chattanooga, Tennessee to reject the United Auto Workers (UAW). Here was a case where right-wing politicians, who usually worship at the alter of business, decided that a business that actually valued its employees’ ideas was un-American.

In many ways what is remarkable about the vote of workers at a VW plant in Tennessee to reject the UAW was how close it was. Despite an aggressive campaign against the union by the state’s Republican leadership, if just 43 workers out of 1,338 had switched their votes, the union would have been voted in. The 626 workers who voted yes stood up to a campaign of intimidation by elected officials and right wing organizations that threaten not just their jobs, but harm to communities in the rest of the State. When it is so much safer to say no, we should recognize the guts of the hundreds of workers who by voting yes, declared that they deserved respect at their workplace.

The main motivation for even having the union vote in Tennessee was not what most people assume, which would be to increase wages and benefits. While wages at the VW plant are far from enough to put workers comfortably in the middle-class, they are in line with wages paid to newly hired employees at plants represented by the UAW. In today’s era of diminished expectations by workers (and heightened ones by shareholders), VW workers in Tennessee were not organizing for a raise. Instead, they were calling for the establishment of European style works councils, which give workers a role in key decision-making at the factory.

Works councils are common throughout Western Europe, and are often legally required at businesses with as few as five employees. Typically elected by all the workers at a business, including union and non-union members, the works councils join management in a range of decisions, including: monitoring and enforcement of employment and occupational safety and health laws, setting work and production schedules, introducing new technology, and downsizing the plant. To facilitate their role, the members of the works council have the right to information about financial and business matters, employment levels and structural changes to the work environment.

Clearly, works councils would be a lot more revolutionary in U.S. businesses than voting in a union, because works councils establish a right to what was called in the early days of union organizing “industrial democracy.” They give workers a real voice at work. Companies like VW have found, in line with modern management theory, that giving workers a voice is good for business.

Organizing the southern auto plants established by foreign auto companies over the past two decades is a top priority of the United Auto Workers. The auto companies were attracted to the South by a combination of low wages, workers with manufacturing experience, both laws and a political climate that discourage unionization, access to growing markets, and huge state-government tax incentives.  In 2008, Tennessee awarded VW a package worth $577 million to build the plant in Chattanooga, the richest package ever awarded to a foreign auto manufacturer at the time.

The UAW decided to try a new strategy in its organizing effort at VW in Chattanooga, based on establishing a works council. The councils operate at every VW plant in the world, except those in China and the U.S. However, under American labor law, VW cannot establish a works council on its own. When the National Labor Relations Act was enacted in 1935, it was common for employers to set up unions they controlled, as a way to block unions that would really represent the workers. To prevent company-controlled unions, the NLRA prohibited the kind of joint management-worker decision-making bodies envisioned by a works council. For the UAW, VW’s openness to a works council presented a new avenue for organizing.

While much has been made in the press about VW signing a neutrality agreement with the UAW, that act does not mean that VW’s American managers welcomed the union. Under the neutrality accord, VW rejected common anti-union practices among U.S. employers, like refusing to allow the union to speak with workers on site, requiring workers to attend anti-union meetings and harassing union supporters. However, the UAW too made concessions, including agreeing not to meet with workers in their homes, which is one of the most powerful ways of building support and leadership for unions.

The main visible opposition at the factory came from salaried workers and low-level supervisors, who are not part of management but also were not eligible to vote in the union election, another barrier in American labor law. Mike Elk, who covered the vote for In These Times, reports many of these employees adopted the traditional view of American managers, that the union has no interest in producing quality cars and would interfere with corporate decisions. In the hierarchical American work culture, it is not surprising that workers who have been given some authority might be resentful of ceding some of their new power to a council that included hourly workers.

Still, the close vote made it absolutely clear that deciding factor was the strident opposition of Republican U.S. Senator Bob Corker, Republican Governor Bill Haslam and Republican legislative leaders, who said that a vote for the UAW would scare other auto manufacturers away from Tennessee and dry up any more state support for expanding production at the factory. They made these threats even though GM announced this summer that it will add 1,800 jobs to a UAW organized factory in Spring Hills, Tennessee.

The vote in Chattanooga should be seen as another skirmish in the growing debate about the role of workers in driving the 21st century economy. Southern politicians’ strong anti-union stance has roots in racist opposition to unions, which gave African-Americans a voice at work and better wages. Their virulent anti-union stance today continues the suppression of wages that has impeded the southern economy from the days of slavery. But today, the southern low-wage strategy has become a national model, led by the behemoth of southern companies, today’s largest employer, Walmart.

The vote at VW highlights how the U.S.’s antiquated labor laws block economic progress. If the law allowed the establishment of works councils without the requirement that a union win a majority vote, it would provide a new vehicle to improve the performance and competitiveness of U.S. firms. The continued strength of many European manufacturers, even facing global competition from firms in lower-wage countries, demonstrates that giving workers a voice strengthens business. That lesson, a foundational assumption in the high-tech sector, makes sense for American manufacturers too. If our goal is to build an economy of broadly shared prosperity, giving workers a real voice in business decisions is a far better way to compete than slashing wages.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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Daily Digest - February 18: Escape from Hooverville

Feb 18, 2014Rachel Goldfarb

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Worst. President. Ever. (All In With Chris Hayes)

Click here to receive the Daily Digest via email.

Worst. President. Ever. (All In With Chris Hayes)

In honor of Presidents' Day, Chris Hayes invites Roosevelt Institute Fellow Dorian Warren to discuss his pick for the worst: Herbert Hoover, Franklin D. Roosevelt's predecessor during the Great Depression.

The Silicon Valley Labor Scandals Prove Minimum Wage Hikes Don't Cost Jobs (TNR)

Roosevelt Institute Fellow Mike Konczal uses the coordinated efforts of Silicon Valley giants to control labor markets to demonstrate why raising the minimum wage will reduce job vacancies, not jobs.

Barons of Broadband (NYT)

Paul Krugman argues against the Comcast-Time Warner Cable merger, using Roosevelt Institute Fellow Susan Crawford's work to point out how the telecommunications industry already stifles innovation.

How Big Banks Are Cashing In On Food Stamps (TAP)

Electronic benefits transfer cards may be easier for the government, writes Virginia Eubanks, but they allow banks to make profits from the country's most unfortunate with fees galore.

The Stimulus Act was a Success — and We Need Another (WaPo)

George Zornick points out that the stimulus did its job – providing the economy with a temporary bump – just fine. Republicans who denounce it are ignoring the bill's intended purpose.

After Rejecting UAW, VW Workers May Still Get Works Council (Reuters)

Bernie Woodall and Amanda Becker report that Volkswagen is looking into whether a works council, elected workers who help set workplace rules, could be permitted at its Chattanooga plant under U.S. labor law, in lieu of a union.

New on Next New Deal

AOL's CEO Proves Women and Children Make Easy Scapegoats in the Workplace

Tim Armstrong's comments about "distressed babies" show that some companies still treat maternity care as an extravagance, even during times of profit, says Roosevelt Institute Fellow Andrea Flynn.

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Daily Digest - February 14: America Loses When Cable Giants Play Monopoly

Feb 14, 2014Rachel Goldfarb

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There will not be a new Daily Digest on Monday, February 17, in observance of Presidents' Day. The Daily Digest will return on Tuesday, February 18.

Comcast's Time Warner Deal Is Bad for America (Bloomberg Businessweek)

Click here to receive the Daily Digest via email.

There will not be a new Daily Digest on Monday, February 17, in observance of Presidents' Day. The Daily Digest will return on Tuesday, February 18.

Comcast's Time Warner Deal Is Bad for America (Bloomberg Businessweek)

A Comcast-Time Warner Cable monopoly won't just limit choice for consumers, says Roosevelt Institute Fellow Susan Crawford. The combined company will have no reason to upgrade infrastructure.

Just How Much Do Republicans Hate Unions? (TAP)

Volkswagen seems to be supportive of a union at its Chattanooga, TN plant. That means the GOP pushback is just about opposing organized labor in general, writes Paul Waldman.

It's Time to Kill the Debt Limit (The Daily Beast)

Jamelle Bouie says that the easiest way to stop the cycle of debt ceiling crises of the past few years would be to abolish it altogether, since it's a pointless and redundant concept anyway.

Should We Place A Tax On All College Graduates? (Forbes)

Josh Freedman considers this alternative model of funding for public higher education. He quotes Roosevelt Institute Fellow Mike Konczal to express concern about whether such taxes would lead to class-segregated schools.

How Credit-Card Debt Can Help the Poor (NYT)

Since good credit affects so many aspects of life in the U.S., Shaila Dewan writes that special loans that build credit alongside savings could make a big difference.

New on Next New Deal

Conservatives Concerned About the CBO and the Dignity of Work Should Consider a Higher Minimum Wage

Roosevelt Institute Fellow Mike Konczal suggests that a higher minimum wage could solve Republican concerns about people who choose to work less due to the Affordable Care Act and means-tested programs.

A New Medicare Penalty Puts the Focus on Community Health

Anisha Hegde, Roosevelt Institute | Campus Network Senior Fellow for Health Care, says that expanding community health resources and workers will help patients and reduce costs in the health care system.

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Conservatives Concerned About the CBO and the Dignity of Work Should Consider a Higher Minimum Wage

Feb 13, 2014Mike Konczal

It’s a shame that Ron Unz’s conservative case for a higher minimum wage gets caught up in the debate over immigration politics, because the arguments are broader and more fascinating, and incredibly important to have as part of the debate. This is especially true in light of last week’s CBO report, which has sent conservatives running to the barricades over the impact of Obamacare on waged work in this country. The conservative case for a minimum wage would address the two main concerns the right has displayed on this topic.

Broadly speaking, as summarized by Josh Barro here, there are two separate elements of the conservative take on Obamacare and the CBO’s findings. The first is that it allows people to break “job lock” and leave the labor market. This means there are fewer people working, which concerns conservatives because, as Ross Douthat put it, paid wage labor is “essential to dignity, mobility and social equality,” and they “see its decline as something to be fiercely resisted.” [1]

The second is that, because of the subsidies that are given to low-wage workers, these workers face a higher marginal tax rate. If there are subsidies for low-wage workers, as those workers make more money those subsidies are phased out. The fact that they are losing money while earning more money, or that a higher income means a smaller subsidy, functions like a tax. And this means that workers will work a bit less. Liberals in general don’t like this (though they do like that both effects will increase wages, as well they should), but understand it is going to be part of any type of means-tested income support.

Where does the minimum wage come in?

To address the first complaint, it’s important to keep in mind that the “dignity of work” isn’t a static concept, but tied directly to the conditions of work itself. If you ask the people striking against their low-wage job right now, you’ll find that things like working unpaid hours or erratic scheduling are also part of their complaints. As a result of these conditions, the work is socially tagged as undignified, degrading, erratic, and unpredictable. [2]

So driving the wages straight up can help counteract this. As Ron Unz writes, “consider the impact of a sharp rise in the minimum wage, sufficient to remove the taint of poverty overhanging so many of our lower-tier jobs.” This would, in turn, make lower-tier service jobs more attractive from a social perspective, increasing the level of dignity for those who hold them. This would in turn make people much more likely to seek out and hold said jobs. As I’ve argued elsewhere, by reducing vacancies, encouraging job searches and tightening the low-wage labor market, a higher minimum wage would also de facto give low-wage workers more power in the workplace, which would help reduce the petty tyrannies that come with low-wage work.

The second issue comes from effective marginal tax rates, or the burden low-wage workers face as income support is phased out. And the common bipartisan alternative to the minimum wage, increasing the earned-income tax credit (EITC), doubles down on this. There are ways to manage it and make the effective tax rate have less of a bite. But it’s essential to the DNA of means-tested income support that it’ll eventually phase out, and as a result impose some higher marginal tax rate. Conservatives who support a higher earned-income tax credit play into this as well.

The minimum wage, however, poses no such higher effective tax rate. If you work more hours at the minimum wage, there’s no effective tax because the minimum wage doesn't phase out. So if the slight effect of higher effective tax rates of Obamacare is driving you up the wall, perhaps now is a good time to consider this positive side of the minimum wage.

Additional:

I’ve seen many people point out that there’s an administrative simplicity and cost-effectiveness to the minimum wage over the EITC, amplifying the case for them to act as complements to each other instead of substitutes. But I had no idea that, according to the IRS and Treasury, the EITC’s improper payment rate is between 21 and 25 percent. This includes overpayments as well as underpayments.

That simply doesn’t happen with the minimum wage. And if you are a conservative who wants to “simplify” government, or if bringing the impact of government as close as possible to those who need help - say directly in the workplace rather than in the complicated and confusing tax code administered by a faraway IRS - is important to your subsidiarity view of policy, a bigger role for the minimum wage is essential.

[1] This will sound snarky, but I genuinely mean it: I want to see a conservative take on Nickel and Dimed, where maids cleaning bathrooms experience “social equality” with the people paying them.

[2] Remember that Dave Chappelle comedy skit about the person who gets a fast food job to impress his community, and finds that it isn’t quite as dignified as he thought?

Follow or contact the Rortybomb blog:

  

It’s a shame that Ron Unz’s conservative case for a higher minimum wage gets caught up in the debate over immigration politics, because the arguments are broader and more fascinating, and incredibly important to have as part of the debate. This is especially true in light of last week’s CBO report, which has sent conservatives running to the barricades over the impact of Obamacare on waged work in this country. The conservative case for a minimum wage would address the two main concerns the right has displayed on this topic.

Broadly speaking, as summarized by Josh Barro here, there are two separate elements of the conservative take on Obamacare and the CBO’s findings. The first is that it allows people to break “job lock” and leave the labor market. This means there are fewer people working, which concerns conservatives because, as Ross Douthat put it, paid wage labor is “essential to dignity, mobility and social equality,” and they “see its decline as something to be fiercely resisted.” [1]

The second is that, because of the subsidies that are given to low-wage workers, these workers face a higher marginal tax rate. If there are subsidies for low-wage workers, as those workers make more money those subsidies are phased out. The fact that they are losing money while earning more money, or that a higher income means a smaller subsidy, functions like a tax. And this means that workers will work a bit less. Liberals in general don’t like this (though they do like that both effects will increase wages, as well they should), but understand it is going to be part of any type of means-tested income support.

Where does the minimum wage come in?

To address the first complaint, it’s important to keep in mind that the “dignity of work” isn’t a static concept, but tied directly to the conditions of work itself. If you ask the people striking against their low-wage job right now, you’ll find that things like working unpaid hours or erratic scheduling are also part of their complaints. As a result of these conditions, the work is socially tagged as undignified, degrading, erratic, and unpredictable. [2]

So driving the wages straight up can help counteract this. As Ron Unz writes, “consider the impact of a sharp rise in the minimum wage, sufficient to remove the taint of poverty overhanging so many of our lower-tier jobs.” This would, in turn, make lower-tier service jobs more attractive from a social perspective, increasing the level of dignity for those who hold them. This would in turn make people much more likely to seek out and hold said jobs. As I’ve argued elsewhere, by reducing vacancies, encouraging job searches and tightening the low-wage labor market, a higher minimum wage would also de facto give low-wage workers more power in the workplace, which would help reduce the petty tyrannies that come with low-wage work.

The second issue comes from effective marginal tax rates, or the burden low-wage workers face as income support is phased out. And the common bipartisan alternative to the minimum wage, increasing the earned-income tax credit (EITC), doubles down on this. There are ways to manage it and make the effective tax rate have less of a bite. But it’s essential to the DNA of means-tested income support that it’ll eventually phase out, and as a result impose some higher marginal tax rate. Conservatives who support a higher earned-income tax credit play into this as well.

The minimum wage, however, poses no such higher effective tax rate. If you work more hours at the minimum wage, there’s no effective tax because the minimum wage doesn't phase out. So if the slight effect of higher effective tax rates of Obamacare is driving you up the wall, perhaps now is a good time to consider this positive side of the minimum wage.

Additional:

I’ve seen many people point out that there’s an administrative simplicity and cost-effectiveness to the minimum wage over the EITC, amplifying the case for them to act as complements to each other instead of substitutes. But I had no idea that, according to the IRS and Treasury, the EITC’s improper payment rate is between 21 and 25 percent. This includes overpayments as well as underpayments.

That simply doesn’t happen with the minimum wage. And if you are a conservative who wants to “simplify” government, or if bringing the impact of government as close as possible to those who need help - say directly in the workplace rather than in the complicated and confusing tax code administered by a faraway IRS - is important to your subsidiarity view of policy, a bigger role for the minimum wage is essential.

[1] This will sound snarky, but I genuinely mean it: I want to see a conservative take on Nickel and Dimed, where maids cleaning bathrooms experience “social equality” with the people paying them.

[2] Remember that Dave Chappelle comedy skit about the person who gets a fast food job to impress his community, and finds that it isn’t quite as dignified as he thought?

Follow or contact the Rortybomb blog:

  

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Daily Digest - February 12: Higher Pay Won't Hurt Workers

Feb 12, 2014Rachel Goldfarb

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Who Would Benefit From a Minimum Wage Hike? (Your Call Radio)

The aggregate effects of a minimum wage increase wouldn't lead to job losses, says Roosevelt Institute Fellow Mike Konczal, and it's the easiest way to boost our economy.

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Who Would Benefit From a Minimum Wage Hike? (Your Call Radio)

The aggregate effects of a minimum wage increase wouldn't lead to job losses, says Roosevelt Institute Fellow Mike Konczal, and it's the easiest way to boost our economy.

Now That Boehner Has Backed Down, Let's Fix The Debt Ceiling For Good (TNR)

Since the House GOP has approved a clean debt limit increase, Eric Posner argues it's time to pass legislation that would end this game of chicken over the national debt forever.

Yellen Sets a Familiar Direction for the Fed (NYT)

Binyamin Appelbaum reports that the new Fed chair's testimony to the House Financial Services Committee emphasized that many policies will remain the same under her leadership.

What Do the Jobless Do When the Benefits End? (WaPo)

Ylan Mui interviews people about how they're getting by, and since none of her subjects have full-time work, the GOP theory that benefits keep people from taking jobs seems unlikely.

Why Democrats Will Win on Unemployment Insurance (The Atlantic)

Sarah Mimms writes that the Democrats will come out on top whether they get an extension on unemployment insurance or not. No extension? Then there's the campaign message for 2014.

Responsible Contractors Only: How to Ensure Obama’s Minimum Wage Order Is Enforced (PolicyShop)

Building a "responsible contractor" enforcement mechanism into his executive order will help the president to ensure workers actually get the raise he called for, writes Amy Traub.

Anatomy of a Hunger Crisis (MSNBC)

New York City's food pantries are already unable to handle the needs of the city's hungry, according to Ned Resnikoff, and the president has just signed another round of cuts to food stamps.

New on Next New Deal

The Three Big Questions Janet Yellen Should Answer in Today's Testimony

With the new Fed chair delivering her first testimony to Congress this week, Roosevelt Institute Fellow Mike Konczal lays out what we need to know about her views on the taper, financial reform, and unemployment.

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Daily Digest - February 11: Raising Wages from Coast to Coast

Feb 11, 2014Rachel Goldfarb

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The Minimum Wage Fight: From San Francisco to de Blasio’s New York (Reuters)

Mayor de Blasio and others should learn from San Francisco's example when it comes to lifting standards for low-wage workers, write Ken Jacobs and Michael Reich.

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The Minimum Wage Fight: From San Francisco to de Blasio’s New York (Reuters)

Mayor de Blasio and others should learn from San Francisco's example when it comes to lifting standards for low-wage workers, write Ken Jacobs and Michael Reich.

Horrible Bosses (TAP)

Paul Waldman writes that some employers are blaming the President and his health care policies for benefit cuts and stagnant wages. But workers should know: their bosses are lying.

Labor Battle at Kellogg Plant in Memphis Drags On (NYT)

As the lockout approaches four months, Steven Greenhouse says these workers are determined not to accept a contract that could replace them all with "casuals," or lower-paid temps.

New York AG To Put Heat On Banks for Foreclosed Properties (WSJ)

Eric Schneiderman wants to require banks to take better care of so-called "zombie properties" they've foreclosed on, reports Andrew R. Johnson, and his proposed bill would reduce neighborhood blight.

Obama's Partly to Blame for the Postal Service's Backward Ways (TNR)

Progressive reform, including postal banking, is in reach for the USPS, says David Dayen, if only the president would step up and fill the five empty seats on its Board of Governors.

Support the Student Loan Borrower Bill of Rights (Blog of the Century)

Jill Silos-Rooney says Senator Warren's proposal bets that college grads who have fewer struggles with debt will be better for the economy than government profits on student loans.

House GOP Rolls Dice on Debt Limit (Politico)

Jake Sherman and Ginger Gibson report on the GOP's plan to pass a debt ceiling increase by tying it to fixing military benefit cuts. That probably won't sway Democrats from a clean bill.

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Daily Digest - February 10: When the Personal Becomes Political

Feb 10, 2014Rachel Goldfarb

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Turning Personal Tragedy Into Activism (Melissa Harris-Perry)

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Turning Personal Tragedy Into Activism (Melissa Harris-Perry)

Roosevelt Institute Fellow Dorian Warren discusses how tragedies like the deaths of Trayvon Martin and Jordan Davis have pushed so many to take part in activism. He uses the public pressure to cancel George Zimmerman's celebrity boxing match as a prime example.

Sex Workers' Rights are Just Workers Rights (WaPo)

Roosevelt Institute Fellow Mike Konczal considers the policy arguments on sex work presented in Melissa Gira Grant's new book, Playing the Whore. He sees the need to conceptualize sex work as labor as the most important takeaway, regardless of individual opinions on that labor.

Liberals Should Question Obama’s ‘Opportunity Agenda’ (AJAM)

Mike Konczal argues that shifting the discussion from inequality to opportunity could leave out key items on the progressive agenda. If opportunity isn't defined beyond legal equality of opportunity, or if acceptable policy outcomes aren't made clear, the progressive agenda won't advance.

The Case for a Higher Minimum Wage (NYT)

The New York Times editorial board calls for an increased minimum wage, emphasizing its purpose in reducing power imbalances between workers and employers. The accompanying interactive graphic from Jeremy Ashkenas and Bill Marsh shows the insufficiency of $7.25 per hour.

January Jobs Report: Hard to Read (MoJo)

Erika Eichelberger says that the jobs report released on Friday is hard to interpret. Unemployment is at its lowest point in five years, and the labor force participation rate increased slightly, but that could change without an extension of unemployment benefits from Congress.

The Spectacular Myth of Obama's Part-Time America—in 5 Graphs (The Atlantic)

Derek Thompson pulls data on part-time job growth, part-time workers as a share of the labor force, and part-time work for non-economic reasons to demonstrate just how wrong certain slices of the financial media are when they insist that the president is creating a part-time economy.

Obamacare: It's a Net Gain for the Economy (LA Times)

Jonathan Gruber writes that the Congressional Budget Office report shows that the Affordable Care Act in fact creates a more efficient job market in the U.S., by allowing people leave jobs when they want to and increasing job mobility.

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Daily Digest - February 6: Putting the Brakes on the High-Tech Economy

Feb 6, 2014Rachel Goldfarb

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Cable Cabal Tries to Block Future in Kansas (Bloomberg View)

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Cable Cabal Tries to Block Future in Kansas (Bloomberg View)

Roosevelt Institute Fellow Susan Crawford explains why a proposed law barring municipal fiber-optic networks in Kansas, like similar bills passed in 19 other states, would put the U.S. further behind on building the infrastructure needed for high-tech industries of the future.

Breaking: Union Rule Despised by Right-Wingers Now Roaring Back to Life (Salon)

Josh Eidelson reports on the return of a rule requiring speedier union elections, quoting Roosevelt Institute Fellow Dorian Warren to point out that the rule isn't exactly radical. But employers are unhappy, because it allows less time to convince employees to reject organized labor.

  • Roosevelt Take: Bryce Covert interviewed Dorian about his research on workplace anti-union campaigns and the original version of this National Labor Relations Board rule from 2011.

On Jobs, Conservatives are Completely Full of It (WaPo)

Ryan Cooper calls out Republicans for distorting the Congressional Budget Office's prediction that Obamacare will lead to people choosing to work less. Reducing labor supply will decrease unemployment and raise wages, and the GOP hasn't offered many alternatives.

A Report’s Real Message: It Wasn’t About Health Care (NYT)

Jared Bernstein asks why it seems that the only thing anyone is talking about after the release of the CBO's "Budget and Economic Outlook" report is health care, when the report is really a warning about our disturbingly slow economic growth.

What to Watch on Jobs Day: Yes, We Should Still Be Worried About the Labor Force Participation Rate (Working Economics)

Heidi Shierholz writes that beating December's job growth is a low bar for the January jobs report, which will come out Friday morning. She's more concerned about the potential drop in the labor force participation rate due to the end of extended unemployment insurance.

Is This the End of America’s Debt Ceiling Wars? (Quartz)

Tim Fernholz suggests that with Republicans unable to agree on a demand in this round of debt ceiling battles, it's possible that they've just ceded the war. He thinks it's likely that there will just be a clean debt ceiling increase in the coming weeks.

Bipartisanship is Ruining America (The Daily Beast)

Jamelle Bouie points to the new farm bill as an example of everything that can go wrong with bipartisan governance. Hundreds of thousands of families will face painful food stamp cuts, and it isn't even clear who they can vote for or against for a better outcome.

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Daily Digest - February 5: What the CBO Really Said About Health Care Reform

Feb 5, 2014Rachel Goldfarb

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‘Obamacare Bailout’ Does Not Exist, Confirms Government; House Republicans Demand Its Repeal Anyway (NY Mag)

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‘Obamacare Bailout’ Does Not Exist, Confirms Government; House Republicans Demand Its Repeal Anyway (NY Mag)

Jonathan Chait writes that the GOP insists that an Affordable Care Act provision that taxes and reimburses insurers based on the health of their customers must be another big government bailout, but the Congressional Budget Office and Roosevelt Institute Fellow Mike Konczal's definition of bailouts contradict them.

Obamacare Is Not a Job Killer (TNR)

Jonathan Cohn notes that while the CBO's analysis shows the Affordable Care Act will cause a decrease in labor output, that is actually a good thing. The reduction in hours won't be due to fewer jobs, but will primarily be people who are choosing to work less, retire earlier, or start their own businesses.

Can Marriage Cure Poverty? (NYT)

Annie Lowrey writes that Republicans like Marco Rubio have it backwards when they suggest that pushing marriage would solve all other social ills. In fact, she says, it's poverty that is getting in the way of stable, lasting marriages.

Congress Passes $8.7 Billion Food Stamp Cut (MSNBC)

Ned Resnikoff reports that the Senate has joined the House in passing a version of the Farm Bill that makes significant cuts to food stamps. The president is expected to sign this bill, which will cut about $90 a month in benefits for 850,000 households.

AOL is Leading the Way to Make 401(k)s Worse for Everyone (WaPo)

Jia Lynn Yang explains that by changing 401(k) matches to lump sums at the end of each year, AOL punishes employees who leave their job mid-year. That saves the company plenty of money, and if implemented more broadly, would be a major financial loss for workers.

New on Next New Deal

In 'Nuestro Texas,' A Call for Human Rights in Reproductive Health Care

Roosevelt Institute Fellow Andrea Flynn looks at a new report on access to reproductive health care in the Rio Grande Valley. New laws have turned circumstances in that region so dire that according to international standards, its a human rights violation.

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The Rise of 'Insourcing' Gives Internet Companies a New Way to Exploit Workers

Jan 30, 2014Lydia Bowers

Services like Uber and Taskrabbit may offer convenience to their customers, but they don't provide essential protections to their workers.

Services like Uber and Taskrabbit may offer convenience to their customers, but they don't provide essential protections to their workers.

It’s about time we talked about pay. The disparity between the top and bottom wage-earners combined with the inability for most minimum-wage workers to earn a livable income is one of the largest causes of economic stagnation and social justice concern of our time. I couldn’t be more thrilled that it appears we are making moves to raise the national minimum wage to be more in line with a living wage. This raise would have a direct impact on the 3.6 million workers with wages at or below the federal minimum and would have far-reaching positive consequences for our economy and society.

But there is a new, fast-growing class of low-wage workers that would not see the benefit of this decision. These new “insourced” workers are individuals who contract with large Internet-based companies like Uber and Taskrabbit to perform services here in the United States, either at a rate set by the larger company or in a free-for-all bidding war. As contractors, these workers receive very little protection in terms of minimum wage laws or unions, let alone benefits or insurance for the work they do. And their ranks are growing fast.

Taskrabbit, founded in 2008, outsources household errands and skilled tasks so you can find time to do what you love, according to its website.  Members of the site, or “taskrabbits,” place bids to perform services for “task posters.” Need your laundry done or someone to paint your apartment? Post it on Taskrabbit.

While this may at first seem like a modern-day update of the community bulletin board for odd jobs, it is in fact a much more insidious shift in how individuals find work, as many who are unemployed due to the recession turn to the website as a primary form of income. With little in the way of health insurance or other protections in work environments that are frequently dangerous (painting, carpentry, factory packing, and bike delivery) and a stream of work that is impossible to guarantee or even estimate, taskrabbits have it rough. Add that to the “lowest bidder almost always wins” formula for Taskrabbit services and the workers in this emerging industry face a bleak picture for economic stability. I briefly worked as a taskrabbit in 2013 as a way to gain additional income, and while it was a fun side-gig for someone employed full-time, I can’t imagine sporadic $15 delivery tasks becoming a viable way to support myself. But this is the emerging reality for many Americans.

Car service giant Uber is also part of this new group of employers. An article published last week in the New York Times , while focusing on Uber’s legal troubles, also outlined the lack of protection or support for its drivers. Uber maintains its drivers are “partners” – or freelancers – who typically drive their own vehicles. The insurance Uber is required to carry only take effect if an Uber driver is found legally at fault for an accident, and many personal insurance polices do not cover commercial activity. “If another driver is liable, the passenger would have to rely on that other driver’s insurance, assuming there is any.” And while Uber’s supply/demand pricing allows drivers to make significant cash during peak times, one driver estimated that he’s worse off than he was without it. “Peter Ashlock drove a cab in San Francisco for 10 years in the 1970s and early ’80s, bringing home about $500 a week. Two years ago he started driving for Uber. After gas and the company’s commission — usually 20 percent — he makes about $1,000 a week. Factor in inflation, and he has lost ground.” There is no union or wage protection in this line of work, giving Uber drivers no avenue to advocate for themselves.

And perhaps more alarmingly, Uber is making strides, at least in New York City, to replace the cab-driving industry, which has a strong union presence. While many taxi drivers in New York still struggle to earn a living wage, their union power gives them the ability to fight for fare increases, as they did in 2012. If we allow Internet companies with insourcing practices and no accountability to replace long-standing industries with organized worker power, low-wage workers will only suffer.

What can be done? Potential responses to this problem include regulating and mandating fair employment practices for these emerging companies or extending minimum wage protection to abstract “partner” employees. Cities in particular could lead the way in regulating these businesses, which would benefit their citizens by ensuring living wages and compassionate employer practices, and strengthen their economies. Whatever the answer, we must address it now. These companies are growing fast: Uber is believed to be growing at a faster pace than eBay in the '90s, and is now valued at $3.4 billion. We can’t let insourced workers be the modern-day agricultural and domestic workers, who were originally excluded from National Labor Relations Act protections and still fight to this day for many rights guaranteed to other workers. In short, while we debate a living wage on the national stage, we have to consider how to address the emergence of the unprotected, underpaid, exploited insourced workers. 

Lydia Bowers is the Roosevelt Institute | Campus Network's National Operations Strategist.

Photo via ThinkStock.

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