The Report: Key Proposals

Although no single policy change will fix the issues facing our workforce, we have laid out a series of proposals below that will help tip the scales back in favor of American workers. The key proposals are those that will have a more immediate, significant impact and that research almost universally acknowledges as beneficial.

Strengthen Countervailing Forces
The balance of power between workers and their employers has shifted drastically in favor of employers over the last 100 years. This comes after decades of decreasing labor union participation and increasing influence of employers in our economy and our political institutions. Employers are opting to increase profits at the expense of their workforce in an effort to maintain more power over their employees. This trend is exemplified by the fact that worker productivity is skyrocketing while worker wages are stagnant. Employers cut wages, benefits, and misclassify workers all to stay ahead of their competitors.

Finding the right balance of power is crucial for the American people. It allows workers to better assert their rights to safe workplaces and fair compensation, often leading to workers feeling more invested in their work and their employer. This, in turn, can improve worker productivity, spur innovation, and provide pathways for upward mobility. All of this results in a better, cheaper product for consumers.

While Henry Ford is often referenced as a “high road” employer who saw the value of empowering his workers, there are numerous examples in today’s economy that prove that businesses do not have to choose between their bottom line and their employees. One often-cited case is Costco, which was named America’s Best Employer 2017. Among its accolades, the company offers health insurance, dependent care assistance programs, and 401(k) plans to its part-time staff, has starting pay well above minimum wage, and promotes almost exclusively from within. At the same time, Costco has seen its profits increase year-over-year.

As we know, not all employers will make the same kinds of choices that Costco makes and we cannot sit around and wait while more workers are abused through the system of power imbalance. Congress must enact reforms that redistribute power to workers.

Overturn Citizens United

Individuals like the Koch brothers have their voices amplified by the donations they make and what they are seeking is often de-regulation or outright anti-worker policies to line their pockets. That necessarily takes the power away from working people who do not have the financial freedom to pay for the same kind of influence. Reforming our campaign finance system to even the playing field would go a long way toward ensuring that the rules and regulations we pass in government are in the best interest of the American people, not just the top one percent.

The 2016 election cycle was the most expensive election on record, with over $6.9 billion spent on the Presidential and Congressional elections combined, a 120 percent increase over the 2000 elections. The cost of Congressional elections has spiked even further, with over $4.2 billion spent in 2016, a 155 percent increase from the 2000 elections. A major factor for this increase in spending is the Citizens United v. FEC decision in 2012 that led to the creation of Super PACs and the exponential increase in independent expenditures. These contributions inherently lead to undue influence by a select few individuals or industries over politicians, changing the conversation from what is objectively in the best interest of the American people to what is in the best interest of the people and corporations who pay to get officials elected.

To combat this influence, Congress should:

· Overturn the Citizens United decision;

· Pass the Government by the People Act (H.R. 20), which provides citizens with a tax credit for campaign contributions that can be matched by a Freedom From Influence Matching Fund if the candidate agrees to a limit on large donations; and

· Explore public financing of campaigns.

Strengthen Antitrust Enforcement
Since the Department of Justice and the Federal Trade Commission (FTC) limited the scope of antitrust reviews to consider only the impact on consumers as it relates to price, the United States has seen massive corporate consolidation. Increased consolidation reduces the number of jobs as monopolies curb production, but also weakens workers’ bargaining power, and contributes to stagnant wages and an unsafe work environment. This is called monopsony. When the term monopsony is used to describe a labor market, the classic example is of a “company town”: where there is only one main employer, giving the company the power to set wages and rendering the town’s workers powerless to bargain for better wages or working conditions. Labor market monopsony exists when firms are able to wield power over their suppliers — in this case, suppliers of labor, i.e., workers. A raft of new evidence demonstrates U.S. labor markets are highly concentrated, and that this concentration reduces wages.

Focus on the Poultry Industry: Regardless of corporate consolidation, the poultry industry is one of the harshest environments in all American workplaces. Every day, 250,000 men and women stand shoulder to shoulder on both sides of long conveyor belts, most using scissors or knives, in cold, damp, loud conditions, making the same forceful cuts thousands upon thousands of times a day. On a typical line, the average worker handles 40 birds a minute.

Workers in the poultry industry are injured at nearly twice the rate of other workers in private industry, and face seven times the rate of illness compared to the same workers. Making matters worse, GAO released a report last year that said poultry plant owners foster a work environment in which workers are afraid to speak to federal inspectors or other third party advocates. Sadly, poultry has the 11th highest number of work-related amputations and hospitalizations, more than saw mills and the construction industry.

Two companies make almost half of the chickens and chicken products sold in the U.S., and profits are soaring. The consolidation is taking place on both a horizontal and a vertical level. Consider: Tyson Foods, the largest poultry company, owns the breeding company that determines which birds are raised, the slaughterhouses where they are processed, and the trucking lines that deliver the meat to consumers.

Unfortunately, the market shares and efficiency gains enjoyed by the company’s shareholders and executives is not without cost. That cost is borne by workers, since Tysons has the 4th most number of amputations reported nationwide. They are not alone — JBS/Pilgrims Pride, the other large American poultry company, ranks 6th on the same list.

The above example is just one of many, and the list of problematic industries is long. In order to improve antitrust enforcement, we should:

· Ensure that public interest and public service requirements are overseen by the companies’ traditional regulator, i.e. the US Department of Agriculture (USDA) along with Department of Justice and the FTC, in approving or rejecting a proposed merger.

As Roosevelt Institute Fellow Marshall Steinbaum suggests in his recent report, “A Missing Link: The Role of Antitrust Law in Rectifying Employer Power in our High-Profit, Low-Wage Economy,” to deal directly with labor market monospony we should:

· Expand merger review to include analyses of merger effects in labor markets, including an analysis of the “coordinated effects” of a proposed merger;

· Provide new resources for antitrust authorities;

· Expressly include “monopsony” in federal antitrust statutes; and

· Ban non-compete, no-poaching agreements, and other types of restraints on competition in the labor market, as well as mandatory arbitration in employment contracts.

Further, as Brookings Institution’s Bill Galston and Clara Hendrickson suggest in their report, “A policy at peace with itself: Anti-trust Remedies for Our Concentrated, Uncompetitive Economy”, Congress must:

· Reinvigorate the structural presumption and tighten the standards for horizontal mergers;

· Update the non-horizontal merger guidelines;

· Institute an enforcement regime to deal with predatory pricing, both business to business and in relation to labor; and

· Reduce the costs of anti-trust enforcement.

Ban Stock Buybacks and Curb the Shareholder-First Economy
Over the last forty years, tax laws, regulatory changes, and new corporate behaviors have led to the “shareholder-first corporation,” where CEOs and managers focus on share price — directing corporate funds to shareholder payouts. Corporate profits or even corporate debt may have once funded innovative new projects or new hires or worker wages. In the 1960s and 1970s, 40 cents were invested for every dollar a company earned or borrowed — but since the 1980s, less than 10 cents of each borrowed dollar is invested. Instead, executives are using their profits to pay themselves and their wealthy shareholders. Today, payouts to wealthy shareholders account for more than 90 percent of all corporate profits.

This has led to skyrocketing use of stock buybacks — when companies purchase back their own stock from shareholders in an open market and reabsorb the ownership that was previously sold to other investors. The practice was essentially banned except under rare circumstances until 1982, since it can be used as a strategy for companies to artificially raise their open market stock prices and boost earnings per share (EPS).

The increased stock price does not reflect an actual improvement in the processes of the company, and may serve as a cover for financial difficulties. Stock buybacks are an excuse for companies to reward stockholders and increase dividends while avoiding employee compensation or investment. In an investigation of 449 companies listed on S&P from 2003–2012, companies used 54 percent of earnings to buy back its own stock and 37 percent on dividends of their earnings. An analysis of 2017 tax cuts found that company benefits to workers were $6 billion, while shareholder benefits were $171 billion. Rising shareholder payouts are linked with declining employee compensation and increased income inequality. Gains of stock buybacks are also concentrated among the already-wealthy. Less than half of American households own stock, whereas 94 percent of households in the top one percent of income distribution own stock.

In addition, stock buyback programs present a conflict of interest as corporate executives own large shares of company stocks while their compensation also increases with EPS. It is possible for executives to raise their pay by millions of dollars through timely buyback operations. Implementation of buyback programs is solely determined by executives and financial professionals with no board or government oversight. Because reporting on buyback programs is only required in aggregated quarterly reports, there is virtually no data on whether or not a company’s buybacks are within the SEC’s daily safe harbor limits.

Though stock buybacks have been increasing since the 1980s, they have doubled since the passage of the 2017 Republican Tax Cuts and Jobs Act. Companies have authorized more than $200 billion in new stock buyback programs, some that are 30 times more valuable than increases in employee compensation. The SEC must act to regulate stock buyback programs, investigate for market manipulation, and help close the wealth gap between workers and the top one percent.

A report from NELP and the Roosevelt Institute encourages the following remedies to ensure corporate wealth goes to more productive, job creating uses:

· Affirmatively ban open-market stock buybacks;

· Tax wealth at the same rate as work. Taxing capital gains at the same rate as we tax income would reduce the benefit of share buybacks to shareholders looking to sell in the short-term. It would also curb executive pay by making stock options, which have played a large role in driving high levels of CEO pay, less tax advantageous.

· Constrain executive pay. Share buybacks not only inflate stock prices, but also executive pay packages, creating an incentive for CEOs to boost their own earnings. Congress should discourage the exorbitant rates of CEO pay that siphon money from more productive activities. Raising the top marginal tax rate would discourage CEOs from bargaining for ever-higher salaries.

· Pass the Reward Work Act (H.R. 6096 and S. 2605), sponsored by Congressman Keith Ellison and Senator Tammy Baldwin. The bill would eliminate the legal safe harbor for stock buybacks and would for the first time in US history require companies to give workers the right to directly elect one-third of the board of directors.

Restore the Value of Labor Throughout the Economy
Labor, as a component of the U.S. economy, has been systematically downgraded over the last forty years through rules and regulations that favor capital over work. This has led to more and more families falling behind, working twice as hard to make ends meet. In order to build the 21st Century economy we need, we must restore the value of work in our economy. While not a cohesive policy proposal, change must start by putting the American worker first in legislative reforms. We must objectively evaluate the proposals that will increase worker training, wages, retention, and safety and use that data to produce evidence-based solutions to today’s problems. If workers do not succeed, our economy does not succeed in the long-term.

All of the specific proposals laid out in the report would accomplish this goal, but a few that would be particularly impactful are:

· Promote and strengthen labor unions;

· Raise the federal minimum wage;

· Raise the white collar overtime salary threshold to $47,476 — double the current level — as the Obama Administration proposed and tie it to inflation, with Congress retaining the right to increase it under certain circumstances;

· Require employers to allow employees to earn a minimum of seven paid sick days;

· Establish a 12-week paid family and medical leave standard, administered through a national paid leave fund;

· Create stronger penalties for “wage theft,” where an employer denies their workers the wages they are rightfully owed, most commonly by failing to pay overtime or forcing employees to work off-the-clock, paying less than minimum wage, illegally deducting pay or misclassifying employees, or by simply refusing to pay.

Raise the Minimum Wage
The social contract that guided us for generations — that if you work hard and play by the rules you can make it in America — is broken. Hard-working families are being forced to choose rent over clothes, food over medicine, today over tomorrow. This is wrong. No American with a full-time job should struggle to put food on their table or put their child to bed hungry. Until wages rise, this economic anxiety will continue to be the norm. Clearly, America needs a raise.

· The Raise the Wage Act will increase the minimum wage with common-sense predictability over the next seven years to $15 an hour.

· If passed, it will help over 41 million low-wage American workers that are now barely making it paycheck to paycheck, including the parents of 19 million American children, and will raise wages for a third of our nation’s workforce.

A $15 minimum wage in 2024 would undo the erosion of the value of the real minimum wage that began in the 1980s. In fact by 2019, for the first time in over 50 years, the federal minimum wage would exceed its historical inflation-adjusted high point, set in 1968. Gradually raising the minimum wage to $15 by 2024 would directly lift the wages of 22.5 million workers. On average, these low-wage workers would receive a $3.10 increase in their hourly wage, in today’s dollars. For a directly affected worker who works all year, that translates into a $5,100 increase in annual wage income, a raise of 31.3 percent. Another 19 million workers would benefit from a spillover effect as employers raise wages of workers making more than $15 in order to attract and retain their workforces. All told, this proposal would directly or indirectly lift wages for 41.5 million workers, 29.2 percent of the wage-earning workforce.

Over the phase-in period of the increases, the rising wage floor would generate $144 billion in additional wages, which would ripple out to the families of these workers and their communities. Because lower-paid workers spend much of their extra earnings, this injection of wages would help stimulate the economy and spur greater business activity and job growth.

Enhance Worker Freedom
One of the many impediments workers face is that they have no freedom within or between jobs. Without that freedom, workers are forced to accept or reject the terms of their employment — leaving them with an impossible choice of asserting themselves or losing the income they depend on. Two of the foremost improvements for worker freedom are flexible, predictable schedules and eliminating non-compete clauses.

In a survey, 80 percent of hourly workers reported fluctuations in the number of hours they work week to week, which averaged 38 percent of their usual weekly hours, making their schedules inconsistent at best. On top of that, their schedules are also unpredictable. In the same survey, 40 percent of these hourly workers reported knowing their schedule a week or less in advance, with more than a quarter having three days or less notice. This kind of scheduling makes it impossible for people to properly plan their weeks to balance other responsibilities, including child care, school work, caregiving obligations, or other jobs.

In a recent Stable Scheduling Study, evidence suggests that pre-arranged schedules benefitted not only the workers, but also the company. Median sales rose by 7 percent and worker productivity rose by 5 percent when workers had predictable schedules. Following the evidence, Congress should:

· Enact the Schedules that Work Act — legislation that requires that schedules be provided to workers two weeks in advance and that provides a cash incentive to employees if their schedules are changed abruptly or if they are assigned to unpredictable schedules, like split shifts or call-in shifts.

For worker freedom between jobs, labor mobility has been decreasing for many years. According to a Brookings Institution study, since the turn of the century, worker mobility has declined by 25 percent. Labor mobility has fallen across all classes of workers — for women, for men, for the young, and for the old. Diminished mobility applies downward pressure on wages. It has been clearly established that, during normal times, worker mobility accounts for about 1 percent growth in wages each quarter. During economic downturns, this number goes down as workers stay in their jobs for longer, and the labor market becomes less competitive.

One reason for this decrease in mobility is the increased utilization of non-compete clauses by employers. Firms do this under the premise that they are protecting intellectual property and other key investments, but this claim loses muster when considering the widespread use of non-compete clauses in the low-wage fast food industry. Employers are looking to keep training costs low by minimizing turnover and reducing the need for training, and as such, making labor markets less competitive and suppressing wages. To increase worker freedom and fairness, Congress should:

· Ban all non-compete clauses in employment contracts, with exceptions for senior executives who possess trade secrets. In the 114th Congress, Senators Franken and Murphy introduced the MOVE Act, and Reps. Crowley, Ellison, Sanchez, and Pocan introduced the LADDER Act. Both bills banned the use of non-compete clauses for low-wage workers. This approach should be expanded, as stated above.

Increase Labor Union Participation
Since its peak in the mid-1950s at 35 percent saturation, labor union participation is today at only 10.7 percent. That represents a 50 percent decline since 1983, the first year the U.S. Bureau of Labor Statistics began tracking this data. As noted, the decision in Janus and future decisions from a corporate friendly Court could result in union participation falling even further.

· Labor law is more than 80 years old, and was written for an entirely different economy than the one we live in today. These laws must be updated to reflect the current needs of the workforce, one of which is to more easily allow for unions to have recourse to challenge impediments to organizing.

· State by state, so-called “right-to-work” free rider laws and other anti-union legislation is having a chilling effect on collective worker action. We expect corporations and the political right to push the boundaries on this front, and these efforts must be defeated.

· Other proposals would undermine public sector union membership, such as targeting official time and payroll deduction of union dues. Congress must stand united against these clear attempts to further weaken union membership.

· We know that companies are going to extreme measures to interfere in union elections. The National Labor Relations Board has a responsibility to enforce the law and make sure that all elections are fair and are not unduly influenced by “union-busting” firms or misinformation.

Future of Work, Wages, and Labor

Written by

A vision for the American Workforce. An effort launched by Representatives Mark DeSaulnier, Mark Pocan, Donald Norcross, and Debbie Dingell.