Silicon Valley company busted for paying Indian workers $1.21 an hour in America

I found this story through the Huffington Post, with this story also showing up on the Silicon Valley Business Journal, and Yahoo News.  Another source story appears to be the San Jose Mercury News.

I am going to start with the Huffington Post:

A Silicon Valley company that digitizes images said Thursday that an "administrative error" led to it paying eight workers flown in from Bangalore, India just $1.21 an hour to work 120-hour weeks installing computers in the company's headquarters.

Electronics For Imaging paid the workers $40,000 in back wages and overtime and a $3,500 fine after the U.S. Department of Labor investigated the payroll violation based on an anonymous tip, a department official told The Huffington Post.

"These folks were not only not getting time-and-a-half when working extremely long hours, they weren't making the basic minimum wage," Michael Eastwood, assistant district director for the Labor Department's San Francisco division said.

In a statement, the company said it didn't realize it was illegal to pay workers temporarily in the United States the same wages they earn in their home countries. The $1.21 was equivalent to what the employees made in Indian rupees.

“We unintentionally overlooked laws that require even foreign employees to be paid based on local U.S. standards,” the company said in a statement.

Eastwood said the company also failed to keep documentation of the hours worked by the Indian employees. Though the workers were only owed $20,000 in back pay and overtime, regulators doubled that amount to $40,000 in the settlement to compensate for damages..

The company blamed an “administrative error” and said it took steps to ensure it would not occur again.

I'll be honest, I really do not know what to say about this story, except for the extreme disgust I have for Electronics For Imaging.  Huffington Post reports that Electronics For Imaging (EFII, NASDAQ) earned a net income of $109.11 million last year, which increased from $$82.27 million in 2012.  Since January 1, 2008, the California minimum wage law has been set at $8 per hour.  Electronics For Imaging thought that they could scam the system by importing temporary workers from India, work them like dogs in a 120-hour workweek (There are 168 hours total in a week), and pay them a wage rate in rupees rather than dollars?  According to the San Jose Mercury News:

The eight employees were paid to help install the company's computer network and systems in connection with the move of the company's headquarters from Foster City to Fremont.

[....]

Investigators from the division's San Jose office learned that the technicians were flown in from the employer's office in Bangalore, India.

"This was discovered through an anonymous tip, and we need that kind of information to discover these sorts of illegal situations," (District Director of the U.S. Labor Department Wage and Hour Division in San Francisco Susana) Blanco said.

Electronics for Imaging said it brought some IT employees from India temporarily to help its local IT team with the relocation.

"During this assignment, they continued to be paid their regular pay in India, as well as a special bonus for their efforts on this project," said Beverly Rubin, vice president of HR Shared Services with Electronics for Imaging. "During this process we unintentionally overlooked laws that require even foreign employees to be paid based on local U.S. standards."

 I guess Electronics For Imaging thought they could pay their Indian workers an Indian wage rate for work here in California--even better to pay them in Indian rupees instead of dollars for working in the U.S.  Of course the exchange rate is around 61 Indian rupees for one U.S. dollar.  To install computer systems?  You mean Electronics For Imaging could not find eight American workers to help move and install their computers during their company headquarters move?  In the Silicon Valley filled with high technology workers?  Of course not.

And while we're at it, you can bet that Guy Gecht was not paid with Indian rupees for his work as Electronics For Imaging CEO:

Although it is not among Silicon Valley's high-profile companies, Electronics for Imaging is successful. The company earned $109 million last year and awarded CEO Guy Gecht with a pay package valued at nearly $6 million, including more than $1.2 million in salary and bonuses.

Electronics For Imaging thought they could scam the system for bringing Indian workers into the U.S., work them like dogs in a 120-hour work week,  and pay them $1.21 per hour in Indian rupees to perform high tech computer work that no American worker would be willing to accept in pay or working conditions.  Electronics For Imaging thought they could get away with this type of screwing workers.  Instead, they got caught and were forced to pay $40,000 back wages and a paltry $3,500 labor fine.  This is the punishment for labor violation against a company that made $109 million last year.  Do you really think this will stop Electronics For Imaging, or any other Silicon Valley high technology company, from engaging in this type of scam--or any other scam to force their workers into substandard pay or crappy working conditions?   This is just business as usual for these companies--profit over everything else!  Even the company statement shows just how cavalier Electronics For Imaging was in their atrocious behavior:

During this process we unintentionally overlooked laws that require even foreign employees to be paid based on local U.S. standards.

Am I to believe that the Human Resources department in Electronics For Imaging are so incompetently stupid that they "unintentionally overlooked" laws to pay foreign workers the U.S. and California minimum wage?

The only way to stop this type of atrocious wage theft by large companies is to either fine them in a large amount of money--in millions of dollars--or start tossing the CEO and top company officials into jail.  It starts at the top, where the one percenter "job creators" place company profit above everything else--morals, compassion, social justice, and even basic laws to keep a society functioning--such as a minimum wage law to allow workers to survive and live in a given society.  They do not really care at all--how much more money can the company take?  I checked the Electronics For Imaging website, and in their Senior Leadership Team webpage, the Vice President of Human Resources is a Jackie Cimino.  "She develops and executes on the company’s human capital strategy, overseeing all aspects of acquiring, growing, developing and retaining the high-caliber EFI team. Leading EFI’s global HR team since January 2006, Jackie is focused on delivering value to employees and managers."  Apparently this Jackie Cimino joined Electronics For Imaging in 2003, after Electronics For Imaging acquired printCafe Software, where she worked at.  She became Electronics For Imaging Vice President for HR, and has more than 30 years of human resources experience, with a focus in the area of compensation, benefits, and merger/acquisitions.  Am I to believe that this Jackie Cimino did not know that her department had "unintentionally overlooked" the state and federal labor laws for compensation?  Or that she did not bother to check if her lower-level HR executives were following the rules in bringing over these Indian workers?  This is a vice president with over 30 years of human resources experience, with expertise in employee compensation, and she did not know that Electronics For Imaging was in violation of a basic wage law?  And as this Jackie Cimino's profile is still up on the company website, she has not been fired for such a gross incompetence!  I also doubt that her pay has been penalized for the " unintentionally overlooked laws that require even foreign employees to be paid based on local U.S. standards."

Business as usual.

Are we relying too much on apps to do our chores?

This is from Claire Cain Miller at the New York Times:

Near the top of the list of tiresome tasks that the Internet has yet to solve is this one: trekking to the post office.

Enter a San Francisco start-up called Shyp, which is expanding to New York on Monday. For a small fee, it fetches, boxes and mails parcels for you. The other week, I had a get-well package to mail to my cousin. I opened the app, snapped a photo of the items I wanted to send and entered her address. Fifteen minutes later, someone was at my door — and that was it. No boxes, no tape, no weighing, no buying stamps, no standing in line.

Are Shyp and similar tech start-ups for outsourcing chores the realization of the laziness economy? Or are they the opposite — a giant step toward unleashing the human productivity and creativity that technologists have prophesied?

Technology has conditioned us to expect ease, efficiency and speed in almost everything we do. Once it came from sewing machines and dishwashers, later from Google and Kayak, and most recently from start-ups that provide on-demand services like Uber for cars, Instacart for groceries and Munchery for dinner.

[....]

How do we judge whether technology is making us more productive, or just lazy and impatient?

Miller certainly raises an interesting question on the role of technology and labor-saving devices.  The example she gives is this new phone application Shype, where you can open up a phone app and have someone pick up and mail your packages for you.   She raises such outsourcing of chores in the economic terms of opportunity cost--the cost that you could be doing something more productive during that time you spent mailing a package, which could have been a better use of your time.  In a sense, she is right. 

The problem I have here with Miller's Shype example is that she is not distinguishing the technology of labor-saving devices and services.  In regards to the technology of labor-saving devices, I have the choice of either manually washing my clothes by hand in a running stream, or using the technology of a washing machine to automatically wash my clothes.  Either way, I am still performing the chore of washing the clothes myself.  When I think of services, I am paying someone else to perform the chore, rather than doing it myself.  For the chore of washing my clothes,  I could take my clothes to a dry cleaning business and pay them to wash my clothes.  Or I could hire a house-keeper to wash my clothes for me.  I am entering into a contract with another individual or business to pay them money in return for performing a chore, such as washing clothes.

Miller delves into this idea of outsourcing chores:

Outsourcing individual chores to other people, as opposed to machines or software, has been made possible by location-aware mobile phones. Few people can afford a full-time personal assistant, but many more can pay a few dollars to outsource chores here and there. Shyp costs $5 to mail an unlimited number of boxes; you pay the postage.

So perhaps the bigger problem for people using apps like Shyp is becoming too dependent on something that might not be around for long. The mortality rate for start-ups is sky high — and particularly for delivery start-ups. The implosions of Webvan and Kozmo during the dot-com bust taught web entrepreneurs some clear lessons: It’s expensive to build warehouses, hold inventory and hire drivers to go to people’s houses.

Shyp, however, just a year old, is already earning money. That is because most of its revenue comes not from the $5 pickup fee, but from taking advantage of the deeply discounted bulk shipping fees for high-volume mailers. It charges its customers the retail price for the least expensive shipping method — the Postal Service, FedEx, U.P.S. or DHL — and keeps the difference.

Whereas some of the on-demand businesses lose more money the more people that use them, Shyp makes more money when more people use it — the kind of business school basic that much of Silicon Valley seems to have forgotten. Some customers have actually moved from one home to another using Shyp, paying just $5 for messengers to retrieve their belongings and package them. Kevin Gibbon, Shyp’s co-founder and chief executive, said he welcomes that because Shyp makes a lot of money on the difference between the bulk shipping fees it pays and the retail fees customers pay to mail such heavy boxes.

 Welcome to the world of sharing economy.  This is an economy where individuals seek out miscellaneous services from sellers using e-commerce middleman web applications.  This is a world where such individuals seeking work are independent contractors, taking small, one-time gigs on a variety of services.  Such gigs could be anything from driving customers to an appointment, after-school babysitting, picking up groceries or dry-cleaning, organizing a closet or desk, handyman work, or anything else.  The pay on these gigs are minimum wage, and no benefits.  This sharing economy has been growing due to the long-term unemployed not being able to find stable jobs and are using the sharing economy to survive. TaskRabbit, Uber, Lyft and Sidecar are all examples of e-commerce middleman web applications matching the buyers and sellers in this sharing economy. 

The problem with this type of sharing economy, is that these e-commerce middleman companies view their websites as arenas--an eBay for gigs.  They do not assign independent contractors to individual gigs, but rather channel these tasks to either the fastest taker, or lowest bidder, pitting workers in a labor elimination match that lowers wage and pay rates.  There is no minimum wage for these contractors.   There are no employee benefits, unemployment benefits, Social Security, health insurance, or even workers comp.  These companies can pretty much change their pricing and pay structure with impunity, and if the contractors complain, they are "deactivated."

I can't say how Shyp runs their business model, or how they pay their contractors--Shyp calls them "Heros."  But I will guess that Shyp hires independent contractors, and then uses email or cell phone to immediately contact those contractors whenever pickups are required.  Shyp does not say how much they will pay their contractors, however Miller says that Shyp will pay $5 for messengers to retrieve and package a customer's items.  I also doubt that Shyp provides any sort of contractor benefits or protections, but I can not say. 

The more I think about this story, the more I wonder if Shyp is just another example of where the U.S. economy is turning into a servant economy?  Where the wealthy and privilege can log into Shyp or TaskRabbit on their iPhones and have a low-paying servant perform whatever menial task these individuals need at a moment's notice?  When I look at this, I see two people laughing all the way to the bank here.  The first is the rich and privilege, for having to pay a low rate for a servant to perform such menial tasks.  The second is the e-commerce middleman, where the jobless recovery and wage stagnation has created such an over abundance supply of cheap labor, willing to take such menial, low-paying jobs for survival. 

The menial servant get screwed.

One-third of American workforce working freelance

I found this Reason Magazine story through the Washington Monthly, with the final source coming from this report Freelancing in America.  Starting with Reason Magazine:

A new report shows some 53 million Americans—or 34 percent of the U.S. workforce—are now working as freelancers in some capacity. "This is more than an economic change," asserts the report, a joint effort from the Freelancer's Union and freelance markeplaces oDesk and eLance. It's also "a cultural and social shift" that will "have major impacts on how Americans conceive of and organize their lives, their communities, and their economic power."

The first and last time anyone looked at the freelance worker population in the U.S. was 2004, in a report from the Government Accountability Office (GAO). Back then the GAO turned up about 42 million "contingent workers," a group that included folks we would normally think of as freelancers but also all part-time workers. "It was a solid, if not particularly nuanced, effort," as the writers of the new report put it.

The Freelancing in America report defined freelancers at "individuals who have engaged in supplemental, temporary, or project-or-contract-based work in the past 12 months," while breaking this group into five categories:

• Independent Contractors (21 million). Individuals whose work involves a project-to-project basis in the field.  They make up around 40 percent of freelancers.
• Moonlighters (14.3 million).  Individuals who work a regular full-time job, and do some freelance work on the side.  They make up 27 percent of freelancers.
• Diversified workers (9.3 million).  Individuals who pull income from multiple sources, including traditional employment and freelance work.  They make up around 18 percent of freelancers.
• Temp workers (5.5 million).  These individuals work with a single employers, client, job, or project, but on a temporary basis. They may be a temp agency workers, and make up around 10 percent of freelancers.
• Freelance business owners (2.8 million).  These individuals employ between one and five employees, and who consider themselves both freelancers and business owners.  They make up around 5 percent of the freelance workforce.

Reading through the report, I get the impression that the new freelance workforce will have a rosy-cheek future of deciding what multiple, high-paying jobs they can choose from, to fit their own freedom of schedule, creativity, while not having the stress of being controlled by a corporation or someone else, generating a positive impact in this new work and employment.

However, Dave Atkins at the Washington Monthly, sees differently:

Libertarians, of course, tend to get excited about this trend, seeing it as a pure form of free interactive capitalism in line with the much-ballyhooed “sharing economy.”

However, as a proud freelancer myself for over a decade (I fall into the “freelance business owner” category), I can attest that it’s not really a workable model for society. As with all things in unregulated libertarian capitalism, opportunity potential is high but the downside risk is enormous. It’s often difficult to make long-term plans since you aren’t sure if the freelance work is going to keep coming—and the nature of freelance work itself means that it’s hard to even plan a weekend getaway, much less a vacation, because if there’s a project required to happen at a certain time you can’t pass up the opportunity to take it on.

Beyond that, however, not everyone has the personality to deal with the level of uncertainty involved in freelancing. Most people like to know what they can count on, and don’t want to be forced to constantly be doing business development and singing for their supper every night. Also, a freelance economy reduces the necessary commitment of employers to their employees, whom they can increasingly treat as contractors to be discarded at the earliest convenience.

I can agree with David here, having been a "Freelance business owner" / "Independent contractor" for almost nine years.  Once I got out of the desktop publishing and printing industry in 2005, I've been pretty much making a small living as a defined temp workers and independent contractor for a number of low paying, temporary positions, before I was finally forced to accept that I will be in this freelancing position forever.  Since then, I've adapted to become a Freelance business owner / independent contractor for computer and technology work.  You really do have to hustle around and  sing for your supper.  You do not know how long the freelance work will last, or even how long the downtime will be between two projects.  You do not have the long-term weekly paycheck of a permanent position, where you can plan and budget your expenses.  Instead, you have to count your pennies and save for the basic living costs--again during the downtime between your projects.  Even worst, it that you may not even know when projects will come up and what their pay rates could be.  You may accept a lower paying project first--just as a means to pay the bills.  Two days later, a better, higher-paying project may come along.  What do you do?  Dump the first project to accept the second project?  Of course, there are also the endless paperwork and juggling between W-2 contract work, 1099 contract work, and recording business expenses to reduce your tax burden.  It is a lot easier to go into a permanent 9-5 job for a company.

Unfortunately, companies do not see it that way.  This is especially true in the tech sector of Silicon Valley here.  The two technology companies that I've done computer work for this year have outsourced their entire IT departments to independent contractors for staffing firms.  A couple of these technology contractors were working for the same company in the same job for both five years, and 10 years--but they were independent contractors, rather than regular employees.  There were even software designers and programmers that were hired as independent contractors, rather than regular employees.  The second company that I've done computer work for has outsourced not just their IT Department, but also the Help Desk and customer support workers.  Of course, company cafeterias are outsourced to catering companies, who hire their own contractors to work in the said company cafeterias.  Even when I was working in the desktop publishing industry, the printing company did not hire their own permanent employees to perform local delivery services, but instead hired contractors from staffing firms.

Then there are the folks standing outside the Home Depots?  What are they classified as in this freelance economy?

It is pretty much an easy guess as to why companies are ditching permanent employees for contractors and staffing firms of this freelance economy.  When you hire on a permanent employee, you not only have to pay that employee and hourly wage or salary, but also overtime wages, health insurance, Social Security, 401K retirement matching, vacation time, and other benefits.  Regular employees have got it made.  I started working at an estate sale company on a W-2 basis for a couple of months, before the estate sale company changed me over to an independent contractor position.  Why?  So the estate sale company would not have to pay for my health insurance.  You don't get these type of benefits as an independent contractor.  Companies are now cutting back on full-time employees' hours to part time hours as a means to avoid paying for health insurance and benefits to their former full time employees.  You can bet this type of cutback suppresses employee wages even more, generating more profits to the company.  The worry I have here is that as more Americans are seeing their paychecks stagnate, or are pushed into this freelance economy of uncertainty, how will this labor and wage shift affect their own spending patterns?  Are they willing to go out and buy a new house, car, or big ticket items, if they don't know whether they will have a new project job next week....or next month?  Are they willing to buy even more of the goods and services that companies are trying to sell them, even as these same companies are suppressing their wages?

More companies engaged in employee wage theft

I found this New York Times story via the Huffington Post.  Appropriate for Labor Day:

MIRA LOMA, Calif. — Week after week, Guadalupe Rangel worked seven days straight, sometimes 11 hours a day, unloading dining room sets, trampolines, television stands and other imports from Asia that would soon be shipped to Walmart stores.

Even though he often clocked 70 hours a week at the Schneider warehouse here, he was never paid time-and-a-half overtime, he said. And now, having joined a lawsuit involving hundreds of warehouse workers, Mr. Rangel stands to receive more than $20,000 in back pay as part of a recent $21 million legal settlement with Schneider, a national trucking company.

“Sometimes I’d work 60, even 90 days in a row,” said Mr. Rangel, a soft-spoken immigrant from Mexico. “They never paid overtime.”

The lawsuit is part of a flood of recent cases — brought in California and across the nation — that accuse employers of violating minimum wage and overtime laws, erasing work hours and wrongfully taking employees’ tips. Worker advocates call these practices “wage theft,” insisting it has become far too prevalent.

Some federal and state officials agree. They assert that more companies are violating wage laws than ever before, pointing to the record number of enforcement actions they have pursued. They complain that more employers — perhaps motivated by fierce competition or a desire for higher profits — are flouting wage laws.

Many business groups counter that government officials have drummed up a flurry of wage enforcement actions, largely to score points with union allies. If anything, employers have become more scrupulous in complying with wage laws, the groups say, in response to the much publicized lawsuits about so-called off-the-clock work that were filed against Walmart and other large companies a decade ago.

Here in California, a federal appeals court ruled last week that FedEx had in effect committed wage theft by insisting that its drivers were independent contractors rather than employees. FedEx orders many drivers to work 10 hours a day, but does not pay them overtime, which is required only for employees. FedEx said it planned to appeal.

Julie Su, the state labor commissioner, recently ordered a janitorial company in Fremont to pay $332,675 in back pay and penalties to 41 workers who cleaned 17 supermarkets. She found that the company forced employees to sign blank time sheets, which it then used to record inaccurate, minimal hours of work.

David Weil, the director of the federal Labor Department’s wage and hour division, says wage theft is surging because of underlying changes in the nation’s business structure. The increased use of franchise operators, subcontractors and temp agencies leads to more employers being squeezed on costs and more cutting corners, he said. A result, he added, is that the companies on top can deny any knowledge of wage violations.

“We have a change in the structure of work that is then compounded by a falling level of what is viewed as acceptable in the workplace in terms of how you treat people and how you regard the law,” Mr. Weil said.

There certainly is a change in the structure of work in America.  Where once, American companies would hire their own employees to perform company work and pay them wages and benefits, these same companies are now hiring independent contractors to do the same work for less pay, and are able to avoid paying health care costs and benefits.  Case in point--I worked as a subcontractor for a temporary staffing company, which was hired by a big Silicon Valley technology firm to replace computers.  This temporary staffing company paid a lower wage for the job, paid no benefits, and refused to pay over 8 hours per day, or any overtime--although the company did offer "comp time."  The question I would ask here is how many independent contractors even fully understand comp time--especially if the staffing company does not fully explain such compensation before contractor signs the contract?  And if the contractor doesn't understand the comp time and does not take it, well the staffing company just made extra money with free labor.

 The labor laws here have been diluted, weakened, and changed to the benefit of big companies--enticing them to commit such wage theft.  You have the long-term shifting of American workers from W-2 employees to 1099 contractors, the change from overtime pay to comp time, and the relentless suppression of wages.  The staffing company that I worked for replacing computers had a large number of contractors performing computer replacements, help desk support, and customer service.  I know that the Silicon Valley technology company contracts out for running their employee cafeterias and food service, security services, facilities maintenance, and possibly programming work.  Does any company hire their own employees anymore--aside from the CEO and Board of Directors?A previous Silicon Valley company that I contracted for did hire independent contractors to perform programming work.  It is all about endless cost cutting, with employee wages and compensation being a huge factor for companies bottom line--never mind about the employees' moral and benefit.  Both the big Silicon Valley firms and even small start-up businesses have done this--and I've worked in both as a contractor.  This is a trend I've been watching over the last ten years, but have not fully understood it until now.  The American worker is no longer and employee, but a small business contractor who now has to work for himself or herself.  That contractor is forced to negotiate with larger firms and staffing companies that hold all the cards and have all the resources to either offer jobs on their terms.  Here is a temp contractor job offer that requires a bachelors degree, five years experience, with specialized software training, that pays $10 per hour--and you'll be performing the work and responsibilities of what was three full-time positions that were cut last year!   Don't like that the job pays 10-20 percent less than the market rate?  There are ten more workers willing to take that job at that lower pay.  Of course, I haven't gotten into the unpaid intern positions with duties and responsibilities that should be paid positions! Have a complaint against working conditions?  You get fired and ostracized by that company--probably all the companies.  Government budget cuts on Labor Department investigations of wage thefts mean that companies can engage is such wage thefts against their own employees and contractors, and pretty much get away with it.  If such companies are caught, they get a slap on the wrist of paying for back wages--the managers and decision makers who agreed to conduct such wage theft are never thrown in jail!

The sad thing about this endless company cost-cutting, suppression of wages, transfer of employees to independent contractors, and endemic wage theft is that companies are slitting their own throats.  Because it is the employees that are also the consumers for whom these same companies need to sell their products and services.  We have had thirty years of supply-sided economic policies crammed down the American people, with stagnating wages and huge corporate profits being posted.  Are American consumers buying more products and services now?  Am I rushing out to buy more cars, clothes, appliances, and stuff on a stagnated wage that I used to be making 20 years ago--not counting for inflation?  I'm trying to avoid buying things.  We have a lack of demand in this country within the poor, working, and middle class because wages have been suppressed--companies are happy to sell luxury goods to the extreme rich and ubber-rich, who have all the money.  How long will this last?  How long will it be before nobody has any money to buy anything, and the ubber-rich have all the luxury goods they will ever want to buy?  How long will we, as workers and independent contractors, be told by the corporate-paid PR and media firms be endlessly told that we are the company's most valued asset, but then be screwed by the same companies through wage thefts, cost-cutting efforts, and forced to perform work of three jobs for a single minimum wage pay, coming from dysfunctional, narcissistic, and incompetent managers? 

How much longer will this last before everything comes crashing down?

Two stories on net worth loss by the poor, and minimum wage loss from inflation

I found a couple of stories that I wanted to comment on.  The first is this story by Kevin Drum, showing a real eye-opening chart on the Great Recession's impact on the poor:

Graph showing median household net worth from 2000 -- 2011.  From Kevin Drum.

If you look at the chart, Kevin shows that the net worth of the poor has dropped in a ten-year period, from zero to around -$6,000.  In fact, the median net worth has dropped for what is essentially the poor, the working, and possibly the middle class households.  Upper middle class households made some gains in their median net worth, while the extreme rich have taken huge gains in their net worth.  According to the Census Bureau report:

Between 2000 and 2011, experiences of households varied widely depending on their net worth quintile (See Figure 1). Median household net worth decreased by $5,124 for households in the first (bottom) net worth quintile,2 $7,056 (or 49.3 percent) for the second quintile, and $5,072 (or 6.9 percent) for the third quintile. Median household net worth increased by $18,433 (or 9.8 percent) for households in the fourth quintile, and by $61,379 (or 10.8 percent) for households in the highest (top) quintile (See Tables A1-A2 and Figure 2).

The distribution of net worth became more spread out between 2000 and 2011. The ratio of median net worth of the highest quintile to the second quintile increased from 39.8 to 86.8 between 2000 and 2011, and the ratio of the highest quintile to the third quintile increased from 7.7 to 9.2. The ratio of the highest quintile to the fourth quintile was 3.0 in 2000 and showed no statistically significant change over this period (See Figure 3).

Between 2010 and 2011, the ratio of median net worth of the highest quintile to the second quintile decreased by 3.85 percentage points, and the ratio of the highest quintile to the third quintile decreased by 0.25 percentage points.The ratio of the highest quintile to the fourth quintile showed no statistically significant change over this period.

The second story that I found is through The Daily Kos, showing a couple of calculator clocks on how much minimum wage workers have lost in pay due to inflation.  These clocks were created by The Center for Economic and Policy Research:

In a sense, both stories complement each other.  If you think about it, the poor are really the minimum wage workers in this country, living on paycheck-to-paycheck.  With the minimum wage remaining in stagnation for almost 30 years, these workers have lost anywhere between $3 to $6 trillion worth of wages due to inflation--whichever way you measure that loss.  These poor workers are the ones that are going to spend much of their paycheck on the goods and services that power the U.S. economy.  But with inflation eroding the minimum wage over a long period of time, and the double whammy of the Great Recession slamming into the poor, they are no longer living from paycheck-to-paycheck, but are falling behind.  They are no longer purchasing the goods and services that make up the U.S. economic growth.  And that creeping of the loss of household net worth and loss of wages due to inflation is moving up through the working and middle class.  

What we end up having is a lack of demand in the U.S. economy.  The loss of household net worth, coupled with the wage stagnation and loss through inflation, means that nobody has any money to spend on goods and services.  Or they are only spending on the bare necessities, such as food and shelter, but no extra goods, services, or luxuries.  The only group that seems to have the money to spend are the extreme rich, where businesses are catering to their tastes.  But there is only so much goods and services that the rich can buy--the rest of the money will have to be parked into more bank accounts, and invested in the Wall Street gambling casino, to generate even more income inequality for the extreme rich.  The rich get richer, the poor get poorer, and nobody will have any more money to spend--not just on goods and services, but even the basic necessities.  It is a system that is unsustainable.

Sooner or later, that system is going to collapse.

Work scheduling software creates havoc on low wage employees' lives

I found this NY Times story on both Daily Kos, and Kevin Drum:

SAN DIEGO — In a typical last-minute scramble, Jannette Navarro, a 22-year-old Starbucks barista and single mother, scraped together a plan for surviving the month of July without setting off family or financial disaster.

In contrast to the joyless work she had done at a Dollar Tree store and a KFC franchise, the $9-an-hour Starbucks job gave Ms. Navarro, the daughter of a drug addict and an absentee father, the hope of forward motion. She had been hired because she showed up so many times, cheerful and persistent, asking for work, and she had a way of flicking away setbacks — such as a missed bus on her three-hour commute — with the phrase, “I’m over it.”

[....]

But Ms. Navarro’s fluctuating hours, combined with her limited resources, had also turned their lives into a chronic crisis over the clock. She rarely learned her schedule more than three days before the start of a workweek, plunging her into urgent logistical puzzles over who would watch the boy. Months after starting the job she moved out of her aunt’s home, in part because of mounting friction over the erratic schedule, which the aunt felt was also holding her family captive. Ms. Navarro’s degree was on indefinite pause because her shifting hours left her unable to commit to classes. She needed to work all she could, sometimes counting on dimes from the tip jar to make the bus fare home. If she dared ask for more stable hours, she feared, she would get fewer work hours over all.

“You’re waiting on your job to control your life,” she said, with the scheduling software used by her employer dictating everything from “how much sleep Gavin will get to what groceries I’ll be able to buy this month.”

Last month, she was scheduled to work until 11 p.m. on Friday, July 4; report again just hours later, at 4 a.m. on Saturday; and start again at 5 a.m. on Sunday. She braced herself to ask her aunt, Karina Rivera, to watch Gavin, hoping she would not explode in annoyance, or worse, refuse. She vowed to somehow practice for the driving test that she had promised her boyfriend she would pass by the previous month. To stay awake, she would formulate her own behind-the-counter coffee concoctions, pumping in extra shots of espresso.

Like increasing numbers of low-income mothers and fathers, Ms. Navarro is at the center of a new collision that pits sophisticated workplace technology against some fundamental requirements of parenting, with particularly harsh consequences for poor single mothers. Along with virtually every major retail and restaurant chain, Starbucks relies on software that choreographs workers in precise, intricate ballets, using sales patterns and other data to determine which of its 130,000 baristas are needed in its thousands of locations and exactly when. Big-box retailers or mall clothing chains are now capable of bringing in more hands in anticipation of a delivery truck pulling in or the weather changing, and sending workers home when real-time analyses show sales are slowing. Managers are often compensated based on the efficiency of their staffing.

Scheduling is now a powerful tool to bolster profits, allowing businesses to cut labor costs with a few keystrokes. “It’s like magic,” said Charles DeWitt, vice president for business development at Kronos, which supplies the software for Starbucks and many other chains.

Welcome to the world of Just-In-Time-Scheduling.   Just-In-Time is a production strategy where manufacturers reduce inventory, waste, and storage costs by ordering only enough parts to manufacture the product at the right time, right place, and right amount.  This type of manufacturing process started in the 1950s with Japanese car companies, and is pretty much adopted on a world-wide basis by manufacturers today.  Well, the Just-In-Time manufacturing model is now being adopted by companies for creating work schedules of employees in order to wring out even more efficiency.  Employees' work schedules are no longer created by managers, but rather sophisticated computer programs which factor in sales trends, economic indicators, and even weather patterns, to create a company work schedule with the right number of employees for both the day, and the hour.  The problem with these "workforce optimization systems"  is that they reduce the employee to a number that can be plugged in anywhere on a schedule to the benefit of the company's efficiency, while at the same time creating a havoc to the employee's work / life balance.  That employee will not have a regular, stable, weekly shift from they can both plan their life around and budget a stable paycheck.  Again from the NY Times:

Yet those advances are injecting turbulence into parents’ routines and personal relationships, undermining efforts to expand preschool access, driving some mothers out of the work force and redistributing some of the uncertainty of doing business from corporations to families, say parents, child care providers and policy experts.

In Brooklyn, Sandianna Irvine often works “on call” hours at Ashley Stewart, a plus-size clothing store, rushing to make arrangements for her 5-year-old daughter if the store needs her. Before Martha Cadenas was promoted to manager at a Walmart in Apple Valley, Minn., she had to work any time the store needed; her mother “ended up having to move in with me,” she said, because of the unpredictable hours. Maria Trisler is often dismissed early from her shifts at a McDonald’s in Peoria, Ill., when the computers say sales are slow. The same sometimes happens to Ms. Navarro at Starbucks.

By Saturday afternoon of the Fourth of July weekend, Ms. Navarro had made it through “clopening,” closing late at night and opening again just a few hours later. But she had not yet worked up the courage to ask Ms. Rivera and Ms. Rivera’s boyfriend, Oscar Nuñez, for help the next day with Gavin.

In a sense, Ms. Navarro's entire life--both her work life and personal life--has gone under complete control by Starbucks, all in the name of corporate efficiency.  As a minimum wage worker, her paycheck will fluctuate according to how many hours she will be working for each week.  The shift times will vary, according to when Ms. Navarro's Starbucks store will have their coffee rushes, and even the shift times will have an effect on her--Ms. Navarro does not have a car, and needs to take a bus to work, adding even more time to her commute.  This is an even greater hardship if Ms. Navarro is performing a "clopening," forcing her to sleep on the sidewalk before opening the store.  While Starbucks calls Ms. Navarro's fate"an anomaly," saying the company provides a week's notice on the work schedule as well as a stable schedule per employees' requests.  However, the NY Times interviewed current and recent Starbucks workers at 17 Starbucks stores around the country, and only two have confirmed that they received a week's notice on the schedule, with some employees saying they have received their schedule in as little as one day.

While scheduling software can be a useful, productivity tool, such a tool has been taken to extreme by Starbucks and other companies.  An individual human being has been replaced by a number in these software scheduling programs  to be used to maximize efficiency and profit for the company's benefit.  What is more, as these "numbers" are more likely part-time retail workers, who are at the low end of the social and economic scale with little resources and advancement.  They are one paycheck away from disaster, and if they complain to their managers about their erratic, software optimized, work schedule, they can be easily replaced by new hires.  These part-time retail workers are also trapped in this hellish, company optimized work schedule in that they are denied the stability they will need to take college classes and job training programs to improve their skills.   Ms Navarro was only a "few credits shy of an associates degree in business," before having to place her "degree was on indefinite pause because her shifting hours left her unable to commit to classes." 

We have sold our soul to the company store.

UPS fires 250 workers after they protest against a long-time co-worker's firing

I'm not sure how to respond to this NewYork Daily News story, via Think Progress.   From the New York Daily News:

UPS has delivered a special message to 250 of its Queens drivers: You’re fired!

The Atlanta-based company is booting 250 of its unionized drivers from its Maspeth facility because they walked off the job for 90 minutes Feb. 26 to protest the dismissal of a long-time employee, UPS told the Daily News.

Twenty employees were terminated Monday after their shifts — and the remaining 230 notified that they’ll be canned as soon as replacements are trained, a company spokesman said.

“They just called me in ... (and) said, ‘Effective immediately, you are no longer on the payroll,’” said Steve Curcio, 41, a 20-year employee earning $32 an hour.

The mass firing has enraged Tim Sylvester, head of the International Brotherhood of Teamsters Local 804, especially since the company gets some lucrative perks from the city.

Apparently UPS decided to fire a 24-year employee and union activist, Jairo Reyes.  The NY Daily News story does not provide details on why Reyes was fired by UPS.   After Reyes was fired, 250 unionized UPS workers staged an impromptu strike for 90 minutes, in protest of the firing.  UPS escalated in firing those 250 workers.  ThnkProgress is reporting that Reyes was fired over a "complicated saga" regarding hours that senior UPS workers can hold.

The rest of the story is about the city of New York trying to get UPS and the workers into negotiations, due to the fact that UPS has a $43 million city contract to provide delivery services to city and state government agencies, and that UPS participates in a special city program to reduce and expedite parking ticket fines and payments to the city.  Some New York City officials are now wondering whether to threaten UPS in negotiating with the workers, or cancelling these contracts.

I don't want to get into the details on Reyes' dispute with UPS, or whether UPS was justified in its firing of Reyes.  But I will say that UPS has a public relations disaster on their hands.  Do the UPS managers even watch the news stories regarding the labor strikes by fast food workers demanding living wages?  Or the McDonald's workers suing several stores in three states over wage thefts?  Or the stories of WalMart paying their employees so little that they employees are forced to apply for government food stamps?  Let alone, WalMart's own wage theft issues.  Like it or not, there is a battle growing between big Corporate America and their employees.  The employees have watched their own jobs being outsourced, wages stagnate, working conditions deteriorate, pensions and retirement eviscerated, and the endless demands of Corporate America to "do more with less," while not receiving any benefits for their increased productivity.  On the other side is Corporate America, with ever-growing productivity gains, increasing profits, and soaring multimillion paychecks and golden parachutes to their CEOs.  UPS may have been justified in their firing of Reyes, and the 250 employees who went on strike to support Reyes.  However, in this larger narrative, UPS is looking like the cold, uncaring corporation whose only interest is to screw their employees--UPS can always remove higher paying, experienced older workers for cheap, minimum wage scabs and make more profit due to reduced labor costs. 

UPS is projecting itself as being the "bad guy" in this story--rightly or wrongly. 

Target's new, anti-union video

I found this Gawker story, via Daily Kos.  From Gawker.com:

Target is America's third-largest retailer. It is also as staunchly anti-union as they come. In 2011, we showed you the cheesy anti-union video all Target employees were shown. We now bring you the new cheesy anti-union video all Target employees must endure.

The existence of Target's new anti-union employee training video (entitled "Think Hard: Protect Your Signature") was first reported today by Josh Eidelson at Salon. And we have obtained the actual video, which is above. It features Dawn and Ricardo, a cool, knowing, multiracial pair of Target employees who are here to talk to you, the Target team member, about the dangers of unions. "Someday, someone you don't know may approach you at work, or visit you at home, asking you to sign your name to an authorization card, petition, or some other union document," Ricardo warns.

Stranger danger!

"At Target, an open door policy isn't just a catchphrase," clarifies Dawn, in her smirky, Rachel Maddow-esque way. "It's a policy." She's referring to the sort of policy that caused a former Target manager to tell us, of the store's HR policies, "on paper it sounds great but the reality is a horror story."

"Unions want what we have" the video declares. How so? Ricardo explains, as if speaking to a child: "We're a target, because unions are threatened by us. And here's why: when we take business away from retailers that are unionized, those companies may downsize, reducing the number of employees. And that means the union loses members, which is a big problem for the union business. Did you notice how I just called it a business? Because that's what it is."

Target, which posted $73.3 billion in revenues in 2012, is presumably not a "business." Businesses sound bad.

The video can be found on the Gawker website, here.

Listening to this video, I'm struck by how much Target doesn't really trash the unions, but attempts to compare the unions as a business that is only interested in building membership and collecting dues--but not doing anything else.  There was a lot of corporate propaganda Target presented in a fast-paced manner that I had trouble to process, and keep straight.  I would imagine a young, new, Target employee would be instilled with fear that the big, bad unions would take away their wages, their jobs, or even Target's business.  Besides, unions are not needed, because the federal government take care of everything that the unions used to take care of.   So the new Target employee doesn't look into joining the union, or is afraid to be fired by management for talking about unions.  Target continues its successful anti-union crusade. 

Welcome to Just-In-Time Retail--Otherwise known as On-Call Scheduling

I found this Nation story:

A century ago, the misery of New York’s urban poor was embodied by the iconic scene of the morning shape-up at the docks, where rough-hewn longshoremen lined up anxiously to see if the boss would pick them for that day’s crew or turn them back empty-handed. These days, the city has a different kind of shape-up—a less visible mill of workers staffing its bustling boutiques and vendors. Instead of assembling at the waterfront, they call the manager to find out how many hours they can get on a given day—stressing about whether they’ll clock enough hours this month to make rent, or hoping their next workday doesn’t interfere with their school schedule or doctor’s appointment.

This anxiety of living not just paycheck to paycheck but hour to hour is the focus of a new policy brief on the impact of unfair schedules on wage workers. The report, published by the progressive think tank Center for Law and Social Policy and the worker-advocacy groups Retail Action Project (RAP) and Women Employed, reveals the flipside of the “flexibility” and “dynamism” of twenty-first-century retail: the tyranny of the daily schedule.

On top of the economic hardships of working a part-time job that does not pay living wage, retail workers are often further burdened by the stress of the on-call schedule: They have to call in first to see if hours are available, wait for word from the boss and, sometimes, end up with just a four-hour shift. The labor of the whole ordeal might then be offset by the financial costs of commuting and the disruption of their entire day. Ironically, while this scheduling structure brings chaos to workers’ lives, it stems from a hyper-mechanized system of computerized staffing configuration. Under huge employers like Walmart and Jamba Juice, this Tayloristically efficient programming often leaves workers at the mercy of variables like the weather (a hot day demands reinforcements for a lunchtime juice rush) or consumer whims (a slump in sales means temporarily downsizing sales-floor staff). Even full-time workers might get saddled with erratic shifts, or are pressured to work extra hours on short notice.

These strenuous schedules reflect the “Just-in-Time” business model and the parallel “need it now” consumer culture. Ever-fluctuating schedules are designed to react instantly to every fad and seasonal spasm of the market, which ties into a frenetic global manufacturing system, stretching from sweatshops in Bangladesh to Fifth Avenue show floors.

Welcome to "Just-In-Time" Retail Sales--Otherwise known as On-Call Scheduling.

 Just-In-Time is a production process in controlling just the right amount of inventory at the right time and right place to manufacture the right amount of a product for sale.  The system was created in Japan in the 1970s, with American manufacturers starting to adopt the system in the 1980s.  If done right, you can achieve incredible efficiency and reduced costs through the reduction of excessive inventory, and controlling waste--you are only producing enough product to satisfy demand.  The hard part is determining how much demand is needed.

 In a sense, it is not surprising that retailers are looking into the Just-In-Time process.  Brick-and-mortar retail stores will always have higher labor and store costs in selling retail goods over that of online stores.  In order to compete, such brick-and-mortar stores will cut costs as much as they can, in order to sell their goods in the lowest price--and labor is a huge cost.  Employee wages for retail positions are already starting at minimum wages.  Hours are being reduced to part-time, possibly as a means to avoid paying any benefits to employees.  But employee work schedules still need to be created to staff the retail stores--you still need warm bodies to man the fort!  And you need those bodies in the store, irregardless of whether the store gets busy with customers, or slows down for the day.

So in the endless quest for efficiency, the retailers have come up with this variation of Just-In-Time production, only renamed On-Call Scheduling.  The employees have become nothing more than inventory parts, to be used in the last minute of production, when the company needs such inventory parts.  Employees have to call the company to see if they are working on a shift that day, or wait for the employer to call them in.  In a sense, the employee has become a slave to a company's computerized staffing programs, waiting each day to see if they will be needed for work.  The company has complete control over their employees lives--both in the workplace, and away from the workplace.  According to The Nation:

The erratic labor structure robs workers of control over their lives. Being constantly on call, without set hours, makes it extremely hard to budget for basic living expenses, like housing and childcare, and sometimes near-impossible to plan ahead for, say, saving for college. And for the working poor, irregular schedules could undermine access to safety-net programs and benefits, which is, sadly, a key resource for many low-wage retail workers who earn so little that they must rely on public welfare programs. Working too few hours, according to the report, “may limit their eligibility to claim firm-provided benefits like health insurance and sick days.” And paradoxically, if they do cobble together enough hours to pay the bills, they might then wind up earning too much to qualify for Medicaid benefits. 

(....)  

A RAP survey of New York City retail workers found that about 70 percent did not know their schedules more than a week in advance. According to a nationwide workforce survey cited in RAP’s latest report, “approximately 50 percent of low-wage hourly workers reported having limited control over their work hours.” Moreover, millions nationwide have been forced into “underemployment,” working part-time because they cannot secure full-time work. Many join the burgeoning temp-work sector, where a $10-an-hour, no-benefits gig can morph into a long-term, miserable livelihood.

It is more than just the low or erratic pay here for employees.  If employees do not know their work schedule in advance, they may not have the ability to plan for their personal lives--not if they have to keep calling the company each day before they may or may not be working, and may or may not get paid.  The employee's personal life is placed on hold, at the whim of the company.  The budget life is completely at the whim of the company, as the employee may not know if they'll have enough work to make enough money to pay for the monthly living expenses.  

 How much more control can companies get from their employees? 

McDonald's manager tells worker to "Put a bullet" in her head

I found this story through the Daily Kos, which links to an MSNBC story:

 Workers rallied at a Chicago McDonald’s Saturday afternoon after an employee claimed she was told to “put a bullet” in her head after asking to go home following a “diabetic episode.”

Fast food workers, members of the Workers Organizing Committee of Chicago and Aldermen Bob Fioretti, John Arena, Scott Waguespack, and Ricardo Muñoz gathered at the flagship Rock N' Roll McDonald’s around 2 p.m. sporting stickers that read “respect” and “no more verbal abuse."

They also displayed a poster to McDonald’s management that said “You should just put a bullet in your head.”

Carmen Navarrette, a McDonald’s employee for more than nine years at the River North restaurant, claims she was told to “put a bullet” in her head after she asked her manager to go home and recover following a “severe diabetic episode," according to a release from the Workers Organizing Committee of Chicago.

Navarrette reportedly shared her experience with the Organizing Committee of Chicago Women Caucus during a meeting last weekend where other workers shared similar stories, prompting the Saturday rally.

"I'm here on International Women's Day to support my fellow workers, women, and stand with my union,” Adriana Sanchez, an employee of the Rock N' Roll McDonald’s, said in a statement. “We are the heart and soul of McDonald's and it's unacceptable for any worker to be yelled at and insulted."

I will be honest, and say that I don't know if this story is true or not, in that a McDonald's manager told this employee to "put a bullet" in her head.  But it is another example of the contentious fight that has been taking place between fast food workers and the corporate industry.  The work is hard, with long hours and very low pay.  It is about the only jobs left in this country, along with WalMart retail jobs--and both pay a minimum wage that has not kept up with inflation.  It used to be that fast food jobs were first jobs for high school and college kids.  Now the jobs are taken over by middle age, elderly, minorities, and just about anyone who needs a job that doesn't even pay enough to survive on.  I doubt that the McDonald's manager will be fired, or reprimanded for this abuse.  I doubt that McDonald's will do anything, but stay quiet and hope this scandal blows away. 

It will not go away.  As long as jobs are scarce, wages are low, and Americans are desperate for any type of work, companies will get away with this abuse.