Pacific Progressive

A Disaster in the Making Addressing the Vulnerability of Low-Income Communities to Extreme Weather

This article was published by the Center for American Progress.

By Tracey Ross

Endnotes and citations are available in the PDF version of this report.  Download the report: PDF  Download introduction & summary: PDF  Read it in your browser: Scribd

On October 29, 2012, Superstorm Sandy hit the northeastern United States and became the deadliest and largest Atlantic hurricane of the year and the second costliest in U.S. history after Hurricane Katrina. Heeding the lessons that emerged from the blundered response to Katrina in New Orleans in 2005, the federal government was quick to react to Sandy with Federal Emergency Management Agency, or FEMA, officials arriving throughout the region and President Barack Obama surveying the damage from the ground.

Despite the quick response, however, many low-income residents of the region continued to face dire circumstances. Many low-income elderly and disabled residents of New York City’s public housing complexes were stranded in their apartments for weeks after the storm due to elevator outages. Other residents remained in the high rises, despite having no heat or power, because they had nowhere else to go or no means of getting out of their neighborhood. In other parts of the region, low-income people were unable to make it to food stamp centers for assistance. The estimated cost of the destruction wrought by Sandy was $65 billion, with low-income households greatly impacted.

Extreme weather is on the rise, and so-called “storms of the century” are part of the new normal. According to the National Climate Assessment draft, authored by 250 of the nation’s top scientists, academics, and business leaders:

I have a t-shirt that says, “Taxes feed kids.” When I wear it around my Washington, D.C., neighborhood, it barely gets a glance. But just outside of Birmingham, Alabama, a few months ago, those three words not only got glances, they also elicited glar

This article was published by the Center for American Progress.

By Sarah P. Miller

The American fast-food industry fosters remarkable inequality: One fast-food CEO is paid around $11 million per year, while the average cook earns about $9 per hour for an annualsalary of $18,720—that is, if an employee can even secure full-time work. Employee hours are cut, sometimes without notice, so that employers can avoid paying workers during periods when sales are low. These hard-working employees are often forced to work off the clock or are paid via debit cards that charge a fee for transactions. In these instances, employers’ profits are shamelessly put far and above the rights of workers.

Profits are so important to these companies that employees are prevented from accessing basic human needs. Papa John’s millionaire Founder, Chairman, and CEO John Schnatter openly vowed to cut all workers’ hours to avoid having to provide insurance to full-time workers, as required under the Affordable Care Act. McDonald’s also demonstrated a total disregard for employees’ basic needs when it published a sample budget that ostensibly illustrated how workers can get by on their abysmally low wages. The original sample budgeted $20 per month for health care and $0 for heat bills. The budget also included wages from a second job, actually highlighting the fact that one low-wage salary is not enough to support a family.

Modest Minimum Wage Increases Have Little Impact on Employment

This article is from the Center for Economic and Policy Research.

A new paper from the Center for Economic and Policy Research finds that modest increases in the minimum wage – such as the one proposed by President Obama in his State of the Union address - have little impact on employment, due to adjustments by employers and workers. The paper, “Why Does the Minimum Wage Have No Discernible Effect on Employment?” by economistJohn Schmitt reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small. It finds that the strongest evidence suggests the most important adjustments are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases.

“This is one of the most studied topics in economics, and the evidence is clear: modest minimum wage increases don’t have much impact on employment,” Schmitt said. “An increase to $9.00 per hour would be hugely important for the workers getting it, but the idea that this would lead to less employment is just not supported by the evidence.”

President Obama’s call for a minimum wage rise to $9.00 an hour would be a modest increase, and would keep the minimum wage below its peak, when adjusting for inflation. As CEPR’s Dean Baker and Will Kimball noted in a blog post yesterday, “The purchasing power of the minimum wage peaked in the late 1960s at $9.22 an hour in 2012 dollars. That is almost two dollars above the current level of $7.25 an hour.” They also noted that the minimum wage has not kept pace with productivity increases over the past 44 years, as it had from 1947-1969 – a period when economic “[g]rowth averaged 4.0 percent annually” and “the unemployment rate for the year 1969 averaged less than 4.0 percent.” But the link between productivity growth and minimum wage ended in the 1970s.

Baker and Kimball note that “If the minimum wage had kept pace with productivity growth it would be $16.54 in 2012 dollars.”

Schmitt’s paper notes that “two recent meta-studies analyzing [scores of separate studies] conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers.” The paper concludes that the most likely reason for this is that “the cost shock of the minimum wage is small relative to most firms' overall costs and modest relative to the wages paid to low-wage workers.”

The paper notes that employers have many channels of adjustment to a minimum wage increase, including reducing hours, non-wage benefits, or training; shifting the composition toward higher skilled workers; cutting pay to more highly paid workers; taking action to increase worker productivity (from reorganizing production to increasing training); increasing prices for consumers; or firms simply living with a smaller profit margin. 

The paper notes that “Workers may also respond to the higher wage by working harder on the job. But, probably the most important channel of adjustment is through reductions in labor turnover, which yield significant cost savings to employers.”

 

Is the ACA a Jobs Killer?

This article is from the Center for Economic Policy Research.

Opponents of the Affordable Care Act (ACA) of 2010 have claimed the bill is having a negative impact on employment. In doing so, they argue that the sanctions to be applied under the bill to firms who do not provide insurance to their full-time workers are causing employers to change their hiring patterns. One claim is that firms will keep their number of employees under 50 so that the sanctions do not apply to them. Opponents of the bill also claim that employers are cutting workers’ hours to just under 30 hours a week to avoid penalties. A new issue brief from the Center for Economic and Policy Research finds that only 0.6 percent of workers are working just below the 30-hour cutoff and this number was actually lower in the first four months of 2013, when it was thought the sanctions would apply, than the first four months of 2012. (The penalties were scheduled to apply to employers in 2014 based on 2013 employment patterns; however the Obama administration announced earlier this month that the penalties would not be imposed until 2015.)  

Infographic: From the Civil Rights Era to the Present

This article wasp published by the Center for American Progress.

By Joy Moses

Joy Moses is a Senior Policy Analyst with the Poverty and Prosperity program at the Center for American Progress.

Top 10 Numbers that Show Why Pay Equity Matters to Asian American Women and Their Families

This article was published by the Center for American Progress.

By Morriah Kaplan and Jennifer Molina

Each year the United States commemorates Equal Pay Day to illustrate the gap between men’s and women’s wages. Data show that women still earn 77 cents to every dollar a man earns. This gender-based wage gap stubbornly remains despite the passage of the Equal Pay Act in 1963 and a variety of legislation prohibiting employment discrimination.

The wage gap is even greater for most women of color including Asian American women. Asian American women make 87.6 percent of what the average man earns and 73 percent of what Asian American men make. Pay equity is therefore crucial to the economic advancement of Asian American women, as well as their families and communities.

Here are 10 numbers that demonstrate why pay equity is important for Asian American women and their families.

1. $770: The median weekly earnings for Asian American women in 2012. Asian American women might show the smallest gender gap, but it is growing. Asian American women’s earnings dropped from 86.6 percent of all men’s earnings in 2010 to 84.8 percent in 2011.

How Qualified Student Loans Could Protect Borrowers and Taxpayers

This article was published by the Center for American Progress.

By Joe Valenti and David A. Bergeron

Endnotes and citations are available in the PDF version of this issue brief.  Download the report: PDF  Read it in your browser: Scribd

Last year slightly more than 1 million Americans filed for bankruptcy, as did about 40,000 businesses. As has been the case since the founding of the country, bankruptcy has been an alternative of last resort for those facing severe economic hardships, such as a business failure or medical crisis, and hoping to make a fresh start. Bankruptcy protection encourages a healthy level of risk taking and boldness by letting citizens know that their mistakes may not permanently cripple them financially.

This is cold comfort, however, for the millions of Americans and their families struggling with student-loan debt. Over the past few decades, student-loan debt has grown dramatically and now exceeds $1 trillion, including more than $150 billion in private student loans. Since the late 1970s, however, Congress has gradually made it increasingly difficult to discharge student debts in bankruptcy. Only a small number of bankruptcy cases involving student debt succeed due to a rigorous “undue hardship” provision of the bankruptcy code that generally allows these discharges only under the most extremely dire circumstances. Consider the case of Doug Wallace Jr., a graduate of Eastern Kentucky University, who shortly after finishing college became blind due to complications from diabetes. His blindness meant he was unable to work, and as a result was forced to file for bankruptcy protection. While Wallace’s medical debts were readily discharged, some $38,000 in student-loan debt remained in limbo. As of September 2012, after six years of legal wrangling, Wallace was waiting for a federal judge to finally determine whether his employment prospects were sufficiently bleak that repaying his student loans would cause an undue hardship, resulting in a discharge of the loans through bankruptcy. He ultimately withdrew his request after reaching an agreement with his lender.

Growing Occupations Could Help Decrease the Wage Gap if They Were to Pay a Living Wage

This article was published by the Center for American Progress.

By Jane Farrell and Lindsay Rosenthal

Approximately 6.2 cents, or 27 percent, of our nation’s 23-cent gender wage gap can be explained by occupational segregation. This means that women are more likely to be employed in low-wage or minimum-wage service-sector positions such as home health aides, retail salespersons, or food-service workers.

These jobs fill essential functions in our economy, are increasingly in high demand, and represent occupations with the largest projected job growth over the coming years. Unfortunately, they are also undervalued and most of these positions are not currently providing adequate compensation to the people who work in them, predominantly women.

The top 16 occupations with the most expected job growth will create a total of 6.5 million new jobs by 2020.[1] Women made up 70 percent of workers in these occupations in 2010,[2] but the median annual wage for these 16 jobs was just $30,015 (in 2010 dollars). If these trends hold true through 2020, a disproportionately large and growing number of women will continue to occupy these oftentimes low-wage jobs.

The Gender Wage Gap Differs by Occupation

This article was published by the Center for American Progress.

By Sarah Jane Glynn and Nancy Wu |

The median wage gap between genders fell since 2000, but progress is currently stalled. Women still earn less than men in nearly every occupation, though some suffer from greater wage disparities than others. The following is a list of the top 10 occupations with the largest and smallest gender wage gaps.

Predatory Payday Lending Its Effects and How to Stop It

This article was published by the Center for American Progress.

By Alyssa Peterson

Endnotes and citations are available in the PDF version of this issue brief. Download the report:  PDF Read it in your browser: Scribd

Predatory payday and deposit advance lending is a major area of concern for consumers across the country. Although there have been many policy advances in this area over the past decade, predatory lending promotes a vicious economic cycle that especially hurts low-income Americans. There must be a discussion about how predatory lending affects the safety and economic security of some of society’s most vulnerable groups—including domestic violence survivors—and how to stop such practices.

Payday lending undermines economic security

While there is no formal legal definition of predatory lending, the Federal Deposit Insurance Corporation, or FDIC, broadly defines the practice as “imposing unfair and abusive loan terms on borrowers.” These could include underwriting that does not take a borrower’s ability to repay the loan into account and large prepayment penalties. Predatory lending takes many forms, including payday loans and deposit advances—an emerging form of predatory payday loans, this time made by banks. In 2012 payday lending made up approximately $29.8 billion of storefront paydays and $14.3 billion of online lending.

The Effects of Raising the Social Security Payroll Tax Cap

This articleis from the Center for Economic and Policy Research.

On January 1, the Social Security payroll tax cap rose from $110,100 in 2012 to $113,700. This meant that annual income up to $113,700 per year became subject to the 6.2 percent payroll tax but that the tax is not applicable to anything above that. A new issue brief from the Center for Economic and Policy Research demonstrates that the extension or elimination of the cap on the payroll tax would affect only a tiny fraction of workers while strengthening Social Security for all Americans.

The issue brief, “Raising the Social Security Payroll Tax Cap: How Many Workers Would Pay More?” finds that just the wealthiest 1 in 20 workers (the top 5.2 percent) would pay the Social Security tax on their annual income above $113,700 if the payroll tax cap were eliminated in its entirety and only 1 in 75 (the top 1.3 percent) workers would be affected if the cap were applied to yearly earnings over $250,000. In the current system, someone making twice the cap, or $227,400 per year, pays the Social Security tax on only half of their income and someone making $1.1 million per year only pays the tax on about a tenth of their income.

Transitioning to a New System for Multifamily Finance

This article was published by the Center for American Progress.

By The Mortgage Finance Working Group 

As lawmakers weigh options for reforming our housing finance system, financing for rental units often remains an afterthought. In order to ensure that our nation’s renters are adequately served, the Mortgage Finance Working Group—convened by Center for American Progress—proposes a set of concrete steps that would transition us to a new system. This proposal is designed to be compatible with the growing bipartisan consensus over the federal government’s future role in the mortgage market. This consensus envisions the government providing a “catastrophic” or last-resort guarantee on mortgage-backed securities, meaning that private capital would take losses before the government. In most plans, this guarantee is paid for by a fee on securities that receive it and is administered by the federal government through an insurance fund. The fund will also regulate any entities that utilize the government guarantee. The transition steps are as follows:

1. Spin off the current multifamily operations at Fannie Mae and Freddie Mac into two private entities that are initially owned by the federal government.

No Vacation Nation Revisited

This content is from the Center for Economic Policy Research.

The United States is the only advanced economy that does not guarantee its workers any paid vacation time, according to a new review of international labor laws by the Center for Economic and Policy Research (CEPR). As a result, almost 1-in-4 Americans do not receive any paid vacation or paid holidays, trailing far behind most of the rest of the world's rich nations.

The report, No-Vacation Nation Revisited, is a comprehensive review of the latest available data on international standards for paid vacation and paid holidays. 

Workers in the European Union are legally guaranteed at least 20 paid vacation days per year, with 25 and even 30 or more days in some countries. Canada and Japan guarantee at least 10 days of paid vacation per year. U.S. workers have no statutory right to paid vacations.

“The United States is the only advanced economy in the world that does not guarantee its workers paid vacation days and paid holidays,” said John Schmitt, senior economist and co-author of the report. “Relying on businesses to voluntarily provide paid leave just hasn’t worked.”

For-Profit Colleges Face Consumer Backlash, Dwindling Profits

This material was created by Campus Progress.

 by Jen Kalaidis

It seems the for-profit industry—expensive colleges offering low-quality education and employing corrupt recruiting techniques—may finally be meeting its demise.

More aggressive regulations by the federal government and a growing campaign against predatory practices have resulted in steep plunges in student enrollment numbers for the multi-billion dollar industry, with many for-profit institutions seeing numbers drop by more than 45 percent, according to the Wall Street Journal.

Campus Progress has been a driving force in advocating for reform in the for-profit industry, bringing to light many of the troubling practices occurring at for-profit colleges around the country. Most disturbing is the number of students who report leaving such institutions with mounds of debt and few, if any, job prospects.

(Infographic: An Education in For-Profit Education)

Uncle Sam Should Support Built-to-Last Companies, Not Built-to-Loot Enterprises

by: Chuck Collins, Institute for Policy Studies | Op-Ed for Truthout

There's nothing holding back the corporations demanding another tax holiday from investing in America right now.

A powerful coalition of U.S.-based global companies is lobbying hard for a "tax holiday" on offshore profits.

Companies like Google, Apple, Pfizer, and General Electric have parked huge amounts of profits — a stash totaling more than $1.4 trillion —in offshore tax havens. They've stowed those funds abroad primarily to avoid having to pay federal taxes on that income.

But now they want to bring their treasure to the United States, albeit at a steep discount on what they owe the IRS. Instead of paying the statutory corporate income tax rate of 35 percent — or even the "effective rate," which for most global companies, is closer to 11 percent — they're urging Congress to let them do this at a tax rate that's a whisker over 5 percent.

They tell Congress they need a "tax holiday" to free up badly needed capital to invest in right here — creating jobs at a time when the U.S. economy is sputtering.

They've formed a lobby front called the WIN America coalition to make their case, spending over $50 million and hiring over 42 lobbyists that previously worked as staffers on select Congressional tax writing committees. Most GOP members would support any tax cut, even in their sleep, so WIN America has focused its lobbying firepower on Democratic members.