Tapped: The Prospect Group Blog

The Proof Is in the Jobs Report: Minimum-Wage Hikes Work

The first jobs report of 2018 is out, and overall the news is pretty good. President Donald Trump and congressional Republicans will certainly try to take credit for the job growth and higher wages. But it would be more accurate to attribute this uptick to state labor policy—not the superiority of MAGAnomics and massive tax cuts.

The United States added 200,000 jobs in January, making this the 88th straight month of job growth, and the unemployment rate held steady at 4.1 percent (though the black unemployment rate jumped back up to 7.7 percent, just days after Trump boasted about historically low rates in his State of the Union). Meanwhile, average hourly earnings for private-sector workers increased by 0.34 percent this month, and 2.9 percent over the past year.

Wage levels have struggled to gain traction in recent years, even as the labor market has tightened. But for labor economists and workers alike, these most recent increases could be a sign that wages might finally be on the upswing, thanks to progressive state policies. In the new year, 18 states across the country—from Florida to Maine, and from Washington state to Michigan—hiked their minimum wages, bringing $5 billion in additional pay to 4.5 million workers, according to the Economic Policy Institute.

Despite staunch resistance from Republicans and the business lobby, worker-led movements like the Fight for 15 have had a great deal of success in increasing pressure on state and municipal lawmakers to increase minimum pay. The results are now evident in jobs reports, and it’s pretty clear that one of the best ways for the Trump administration to boost pay is to push for a higher minimum wage.

But will Trump and congressional Republicans finally come to accept minimum-wage increases as sound economic policy? Don’t count on it. The federal minimum wage, which is still $7.25 an hour, hasn’t gone up since 2009, and its value has only withered since. The issue has become highly polarized in Congress, with Republicans doubling down on the argument that any increase to the federal minimum wage will kill jobs and hurt business, and that the only way for wages to go up is to ease taxes on corporations and let it all trickle down.

We know how that story goes

Indiana to Join Kentucky in Tying Medicaid to Work

The new Secretary of Health and Human Services, Alex Azar, will announce today that Indiana will follow Kentucky's lead and receive approval to implement work requirements in the state’s Medicaid program, according to a Politico report. Last month, the Trump administration signaled they’d allow requiring work for low-income people seeking health-care assistance, and Kentucky quickly became the first state to receive the greenlight to radically change their Medicaid model.

Indiana actually inspired some parts of Kentucky’s plan, as the state has included aspects of “consumer-driven” health insurance, like premium payments, in its Medicaid program since 2015. Data show that 25,000 Medicaid recipients were dropped from Indiana’s Medicaid program between 2015 and 2017 for failing to pay their premiums.

Now, like Kentucky, Indiana will be adding work requirements to the mix.

But not so fast. Three organizations have brought a lawsuit against the state of Kentucky on behalf of 15 Kentucky Medicaid recipients, alleging that forcing Medicaid recipients to work to continue receiving health care is a violation of federal law. The Kentucky Equal Justice Center, the Southern Poverty Law Center, and the National Health Law Program are arguing that the Trump administration’s willingness to allow work requirements and their approval of Kentucky’s plan to restructure Medicaid “are unauthorized attempts to re-write the Medicaid Act.” As I reported in September, nearly 100,000 Kentuckians are expected to lose Medicaid as a result of the approval to change the state’s program.

The Obama administration resisted allowing work requirements in Medicaid, reasoning that such requirements, which would reduce coverage, were inconsistent with the purpose of the program: to provide health care to low-income people.

As more states add a work requirement to Medicaid receipt, the benefits of Medicaid expansion (more people accessing preventive care and folks getting healthier) will begin to erode. While states with conservative governors may be willing to expand Medicaid if it means they can require poor people to work, this would be a Pyrrhic victory for the left: Work requirements mean that the neediest people won’t receive care, and they reinforce the idea that assistance should be given only to (a harmful assumption of) who is most “deserving.”

Baseball’s Chief Wahoo Is Out on Strike Four (Sort Of)

Under pressure from Major League Baseball, the Cleveland Indians announced this week that beginning in 2019, they’ll retire the Chief Wahoo mascot—the cartoonish, red-faced figure that’s meant to depict a Native American chief—but only from on-field team uniforms.

“We have consistently maintained that we are cognizant and sensitive to both sides of the discussion,” said Paul Dolan, the owner of the team. And in fact, they are trying to please “both sides” by retiring Wahoo on the field, but not from merchandise sold by the Indians organization, allowing it to keep profiting from the logo.

Opponents argue that these depictions “honor” Native Americans, but studies have shown that stereotype-based mascots and related imagery in sports have real, damaging psychological and social consequences for Native Americans—and they especially impact the development and self-esteem of Native youth.

In a statement, MLB, which will no longer be selling Wahoo apparel in its official shop, said the mascot “was no longer appropriate.” Was it ever? Native Americans have been calling for the removal of Wahoo for decades, most recently with the #NotYourMascot campaign. And while this move is a step in the right direction, activists were quick to point out that the team name itself needs changing, too. (There’s a movement in Cleveland to change the name to the Spiders, the name of the city’s baseball team in the late 1800s.)

There’s a certain football team that I’ll only call “the Washington team” that might want to revisit its branding next.

Labor Department Covered Up Evidence That New Tipping Rule Could Lead to Wage Theft

In December, President Trump’s Department of Labor announced that it would roll back an Obama-era rule that limited when tipped restaurant workers would have to share their tips with other employees.

Worker advocates warned that undoing the rule would allow employers to use tips from waiters and bar staff to subsidize the low wages of employees in the kitchen—and that ultimately management could simply keep the tips for themselves. When Trump’s Labor Department proposed its new “tip pooling” rule, which was a top priority for the restaurant industry, it claimed that it couldn’t measure how it would affect workers’ wages.

However, Bloomberg Law now reports that an internal DOL analysis found that workers “could lose out on billions of dollars in gratuities.” But Trump officials tried to alter that analysis and ultimately buried the information entirely.

As the report finds:

Senior department political officials—faced with a government analysis showing that workers could lose billions of dollars in tips as a result of the proposal—ordered staff to revise the data methodology to lessen the expected impact, several of the sources said.

And even when that new methodology seemed to show that tipped workers would lose less money, administration officials remained uneasy. Labor Secretary Alexander Acosta and his team took issue with the DOL’s assumption that managers could simply keep the pooled tips instead of dividing it among the staff as a whole. Ultimately, the DOL and the White House agreed to remove the data entirely.

So just how much did the DOL find the rule would cost workers? It’s unclear. But the Economic Policy Institute came up with an estimate that found that the new tip pooling rule could prompt employers to pocket as much as $5.8 billion in tips earned by restaurant workers each year.

“This shows the lengths to which the Trump administration and Secretary of Labor Alexander Acosta will go to hide the fact that they are taking steps to actively make workers’ lives worse,” Heidi Shierholz, EPI’s senior economist and a former chief economist for Obama’s DOL, said in a statement.

This is just the latest example of how Trump’s Labor Department has become a vehicle for advancing business-friendly deregulation at the expense of workers’ own welfare.

ExxonMobil Plays Trump Like a Fiddle

President Donald Trump—the great dealmaker—has an ego fueled by flattery, which is allowing corporate America to play him like a fiddle. Since the passage of his massive tax cuts, Trump has trumpeted the news of one-time bonuses, wage hikes, capital investment projects, and job creation promises as affirmations of his genius.

His State of the Union Address Wednesday night was no different. As Trump proclaimed:

Since we passed tax cuts, roughly 3 million workers have already gotten tax-cut bonuses—many of them thousands and thousands of dollars per worker, and it’s getting more, every month, every week. Apple has just announced it plans to invest a total of $350 billion in America, and hire another 20,000 workers. And just a little while ago, Exxon Mobil announced a $50 billion investment in the United States. Just a little while ago.

This, in fact, is our new American moment. There has never been a better time to start living the American Dream.

So what about that ExxonMobil investment? ExxonMobil CEO Darren Woods, who took over for Rex Tillerson when he went to work for Trump, announced Monday that the company would be investing $50 billion in capital and exploration investments over the next five years—a move, he said, that is thanks in part to the corporate tax cuts. Trump repeated the news in his address to much applause, as Tillerson looked on from the front row.

It turns out the fossil fuel giant was, in all likelihood, going to make that investment anyway. As Americans for Tax Fairness point out, SEC filings show that ExxonMobil made about $53 billion in domestic investment in the five-year period between 2012-2016. This suggests that the company will continue to invest in capital spending at a similar (or even lower) pace.

The company was already paying an absurdly low rate in corporate taxes—just 13.6 percent on $60 billion in U.S. profits between 2008-2015. Lowering the statutory rate to 21 percent, then, doesn’t do much for its after-tax profits.

Of course, ExxonMobil is an incredibly powerful corporate actor—the third largest company in the world. It has a tremendous interest in currying favor with its regulator, the Trump administration.  Trump’s presidency could prove highly lucrative for the company, enhancing prospects for drilling along the U.S. coasts, in the Arctic National Wildlife Refuge, and potential for new fracking operations on public land.

It’s also absurd to assert that news of these bonuses is anything more than savvy public relations. And that money that Apple is “bringing back” from overseas is merely an accounting move on paper—and an affirmation that it was evading U.S. taxation by shifting its income into foreign accounts. Apple’s move is not any sort of tribute to the brilliance of Trump’s deal making on taxes.

Corporations like ExxonMobil and Apple will continue to misrepresent their typical business operations as all due to the brilliance of Trump. The flattery will work. But that does not mean the Trump tax cuts are working.  

Hudson River Tunnel Supporter Bites the Dust

Democrats do get excited over Republican retirements. As things stand now in New Jersey, full of people incensed by President Trump and recently departed GOP Governor Chris Christie, the 11th Congressional District, a longtime Republican stronghold, may turn blue in the fall.  

But for commuters and travelers wanting to get from New Jersey to New York, it’s tough to be completely enthused about the departure of Republican House Appropriations Chairman Rodney Frelinghuysen, who this week announced he wouldn’t run for re-election in New Jersey’s 11th.

Even with more conservative Republicans accusing Frelinghuysen of flirting with earmarks, the 12-term Republican somehow managed to secure hundreds of millions in funding for the Gateway Program—the $30 billion infrastructure project to replace and upgrade the 19th century cross-Hudson antiques that currently connect the two states.

Doing away with earmarks seemed a good idea to Republicans and some pliable Democrats back in the sands of time (2010 to be exact). But living without earmarks—a convention that forced members of Congress to give in order to get—has pretty much turned the body into a hornets’ nest of aging Republicans refighting sectional battles: sticking it to the so-called coastal elites and steering funds that could build tunnels and bridges between New Jersey and New York (and more than a few other places) into tax cuts for their campaign donors.

Frelinghuysen may have violated Republican orthodoxy by working with Democrats to secure funding for the tunnels and voting against the GOP tax plan (which clearly penalized his New Jersey constituents). But one of the wealthiest men in Congress went wobbly on the Affordable Care Act, which he voted to repeal (despite his initial opposition to the repeal-and-replace effort); earned his constituents’ wrath for not holding town hall meetings; and sparked NJ 11th for Change, a fired-up grassroots movement dedicated to throwing him out of Congress.

In the end, he couldn’t deliver for the Hudson tunnels, either. At the end of December, Frelinghuysen got royally screwed over by the president, who elected not to support the Obama administration’s Gateway funding program after all. It will likely require a Democratic president and a Democratic Congress—which might well include a Democratic successor to Frelinghuysen—to come up with the funds for the tunnels.

The seat has been in the hands of Republican since 1985, and Hillary Clinton lost the district by only one percentage point in 2016. The 11th Congressional District, a wealthy, moderate, suburban area outside New York City, could be a good get for the blue team this fall: Already two Democratic women are in the race to succeed Frelinghuysen. 

More College Students Risk Hunger

Tuition costs are sky-high. According to the College Board, the average yearly cost of attending a two-year community college in 2016 was $11,580. For a public four-year university, the cost was $20,090 per year and the private university sticker price was $45,370. These costs are alarming enough, but what’s even more shocking is that increasing numbers of low-income students try to save money by sacrificing meals. Founded in 2013, the College and University Food Bank Alliance had roughly 600 member schools in mid-January; two years ago, the group had less than 200.

In December, the Wisconsin HOPE Lab, a Madison-based organization that studies ways to produce more equitable outcomes in postsecondary education, published “Going Without: An Exploration of Food and Housing Insecurity Among Undergraduates.” The report found that at least 50 percent of two- and four-year college students struggle with food insecurity.

College students are at a higher risk for food insecurity than the general population. In 2016, the U.S. Department of Agriculture found that just 12.3 percent of households were food insecure, which puts college students well above the national average. In a survey conducted by researchers from Southern Illinois University, 35 percent of students at four public universities reported low or very low food security, while another 23 percent reported marginal food insecurity. Only 42 percent of students were considered food secure.

Food insecurity among community college students is especially alarming: The HOPE Lab found that 20 percent of students had very low food security, meaning they reduced their food intake, sometimes for days at a time, to save money.

Unlike public elementary and secondary schools, which provide low-income students with free and reduced lunches, free transportation, and free (although limited) health screenings, college students often fend for themselves because there are few federal or state assistance programs for nutrition or other necessities “even though,” as HOPE lab researchers concluded in a 2014 report, “policymakers and educators say that college should be viewed as a mere extension of high school, a necessity for a stable life and strong national economy.”

Earlier this month, Democratic New York Governor Andrew Cuomo proposed opening a food pantry at every state college or coming up with another “stigma-free” way students can gain access to food. Sara Goldrick-Rab, a HOPE Lab researcher, told CNN that while this move is a “big deal,” it’s still more like a “Band-Aid” than a solution.

Postsecondary institutions should help make food and other basic necessities available to low-income students by revamping college tuition assistance programs and providing additional financial resources such as discounted or free meal plans. Without decisive action, food insecurity will continue to be a harsh fact of life on America’s college campuses. 

Mick Mulvaney Leads the Race for Worst Cabinet Official

(Gage Skidmore)

 

Mick Mulvaney has been busy—and for those who believe that the federal government can improve Americans’ lives, that’s not a good thing. 

Mulvaney, who is both President Trump’s Office of Management and Budget director and acting director of the Consumer Financial Protection Bureau, introduces himself to others as a right-wing nutjob. And as a South Carolina representative and founder of the House Freedom Caucus, Mulvaney led the far right’s shutdown threats to obtain spending cuts during the Obama presidency. 

In a Trumpian twist of fate, OMB Director Mulvaney found himself in charge of shutting down the government last week, a task he found “kind of cool.” He then proceeded to go on CNN and call Democratic senators’ decision to vote against a continuing resolution because there were no Dreamer protections “pure politics.” This coming from the man who very nearly killed a $50.7 billion Hurricane Sandy relief package by insisting on dollar-for-dollar spending cuts. 

Now that the government is back open, Mulvaney has gotten back to his work of turning the CFPB—which was created through Dodd-Frank as a Wall Street watchdog—into a toothless industry lapdog focused more on deregulating predatory lenders than on consumer protection. 

ProPublica’s Jesse Eisinger obtained a memo Mulvaney sent to CFPB staff outlining his new vision for the agency. In short, he rebuked his predecessor Richard Cordray’s approach to regulation in which, as Mulvaney puts it, the CFPB staffers are the “good guys” out to fight the “bad guys” on Wall Street.

As he wrote: 

We are government employees. We don’t just work for the government, we work for the people. And that means everyone: those who use credit cards, and those who provide those cards; those who take loans, and those who make them; those who buy cars, and those who sell them. All of those people are part of what makes this country great, and all of them deserve to be treated fairly by their government. There is a reason that Lady Justice wears a blindfold and carries a balance, along with her sword. 

In Mulvaney’s eyes, Wall Street bankers and your average consumer are on an entirely equal playing field. 

Since taking over the agency in November (and winning a legal battle for the post), Mulvaney has literally rewritten the agency’s mission as one that protects Americans from “burdensome regulations” and stocked it full with Trump and Wall Street loyalists.  

Under Mulvaney, the agency’s regulatory and enforcement work has ground to a halt. As one of payday lenders’ biggest allies in Congress, Mulvaney is now easing off the industry. He said he will “reconsider” one of Cordray’s hallmark rules that aimed to root out predatory practices in the industry. In just the past week, Mulvaney dropped a CFPB lawsuit against four payday lenders in Kansas and, according to a report from the International Business Times, closed an investigation into a South Carolina payday lender that contributed to his congressional campaigns. 

As both the head of the OMB and the CFPB, Mulvaney is leading Trump’s deregulatory crusade, vying to dismantle the very industry regulations that protect workers and consumers from unscrupulous and profit-hungry corporations. 

The contest for Trump’s worst cabinet official is a close one, but Mulvaney is at the front of the pack. 

Republicans Suddenly Want to CHIP In

As time winds down for Congress to pass a short-term spending bill to avoid a government shutdown, Republicans have another plan in the works—not only to place the blame for a shutdown squarely on Democrats but to blame them for a failure to fund the Children’s Health Insurance Program (CHIP).

Early Friday morning, House Speaker Paul Ryan had this to say:

Republican Representative Martha Roby of Alabama had this to say:

It’s a clever, albeit diabolical, strategy. CHIP is an extremely popular program—88 percent of Americans say it is important to reauthorize the health insurance program. But it couldn’t be clearer that House Republicans are using CHIP’s popularity as leverage against the Democrats, hoping that by including CHIP’s reauthorization in the spending bill that Democrats will be forced to vote for it.

MSNBC’s Chris Hayes recently tweeted,

Given many Republicans’ views on CHIP in the past, one tends to side with Hayes over Ryan and Roby.

While it’s true that the program largely enjoys bipartisan support (Democratic Senator Ted Kennedy of Massachusetts and his good friend Republican Senator Orrin Hatch of Utah sponsored the creation of CHIP in 1997) there are many Republicans who are ambivalent about the program and support it grudgingly. A standalone bill that funds CHIP would easily pass, especially considering CHIP expired in September.

But it’s not as if all Republicans have always supported health care for low-income kids. In 2009, President Obama signed a bill that expanded the program to cover an additional four million low-income children; for the most part, the bill passed on party lines. Republican Representative Steve King of Iowa said the program would be the “foundation stone for socialized medicine in the United States.” President George W. Bush had vetoed two similar expansion bills in 2007, believing, as Bush said, that those measures went too far toward “the federalization of health care.”

Compared to poor adults, most people view poor children as worthier of government assistance. Though CHIP may resemble just another abhorrent entitlement program for some conservatives, the reality is that Americans say that want to support poor kids. (The same often cannot be said about supporting poor children’s care providers, their poor parents or guardians: witness the current state of the Medicaid debate.) That’s why Republicans have moved to use CHIP’s reauthorization as a political football to try to bring the Democrats to heel on other issues, including DACA. How the Democrats respond will be instructive: Will they cave into the pressure in an election year or will they forcefully refuse to compromise on protecting DREAMers? 

Boston’s Amazon HQ2 Fantasies Take Off

Who needs one million square feet of office space in Boston’s Seaport District? Amazon might. The Boston Globe reported Thursday that real-estate industry executives “with knowledge of the talks” dished that Amazon is in the market for one, maybe two office buildings in the bustling and picturesque waterfront neighborhood. (The Boston Business Journal first reported the story Tuesday.)

This latest revelation has set tongues wagging that “the Hub” (a Boston nickname, short for “Hub of the Universe”—yes, seriously) had moved to the front of the pack of more than 200 U.S. cities looking to land “HQ2,” Amazon’s much-discussed second headquarters—even though Amazon had already been in the hunt for more office space (the company has about 1,000 employees in metro Boston) long before company officials announced the new headquarters search.

Predictably, Amazon had nothing to say to the Globe. The company plans to make a decision on an additional Boston site at about the same time that it announces its short list of finalists for its new headquarters. The much-vaunted new HQ would employ about 50,000 people.

Massachusetts officials are salivating over the possibility of adding Amazon to its roster of corporate catches. General Electric has already decided to move its headquarters from Fairfield, Connecticut, to Boston.

City officials have also proposed another location, a former race track in an eastern section of the city. The race track would be better able to provde the 8 million square feet that the company says it needs for a new campus. But emails obtained by the Associated Press indicate that state officials are trying to “pitch the whole state” as a potential site.

A whole-state strategy might be a more attractive option. Massachusetts prides itself on its highly educated workforce and its standing as home to dozens of other technology innovators.

That pitch has the virtue of glossing over some Boston negatives. The Seaport flooded in jaw-dropping fashion during a recent nor’easter. (Also known locally as the “Innovation District,” some locals refer to the area as the “Inundation District.”) Area residents fear that an HQ2 victory would drive up the metro region’s already astronomical housing prices and saddle new workers with a notoriously poor transportation system:

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