How the American Worker Got Fleeced

Happy 4th of July (observed) as we enter this very hot holiday weekend.  So I thought I'd share a pretty hot article here from the blog site of my favorite financial guru, Barry Ritholtz and his Big Picture.  Here is an article from yesterday's Business Week about how the American laborer has been manipulated and exploited since the 19th century and how COVID-19 may very well prove the catalyst for changing all that.  But what I especially like about this piece is that not only does it come from the relatively conservative and pro-business Business Week (not the first place I'd expect to see journalism like this) but it also serves as a very good, very concise history of the labor movement in the U.S.  I have pasted just the text of the article below.  This 55 page piece is now just 11 pages but was very heavily supported by graphics and data which certainly should be viewed and can be by using the link below. Happy 4th of July (the real one) tomorrow!


7-3-20 How Companies Fleeced American Workers Out of Wages and Benefits

How the American Worker Got Fleeced

Over the years, bosses have held down wages, cut benefits, and stomped on employees’ rights. Covid-19 may change that.

Story by Josh Eidelson
Data analysis and graphics by Christopher Cannon

 July 2, 2020  Business Week

Amazon.com Inc. fired Emily Cunningham a little before the end of Good Friday, though the human resources rep put it a little differently. “You have ended your relationship with Amazon,” Cunningham recalls being told an hour after her company email account stopped working. She’d been a software engineer at the Seattle headquarters for seven years. The HR rep didn’t cite any deficiencies in her work but said she’d violated company policies. According to Amazon, she’d been breaking its rule against “solicitations.” Cunningham says that’s a policy ignored on a daily basis when it comes to things like selling Girl Scout Cookies in the office.

Neither Cunningham nor fellow software engineer Maren Costa, a 15-year Amazon employee fired the same day, were big in the Thin Mints game. But both had been challenging the company’s Covid-19 safety policies and mobilizing others to join them. They’d urged their white-­collar colleagues to rally behind Amazon warehouse workers who’d gone on strike to demand stronger protective measures. Cunningham had just sent an email to an internal listserv condemning the treatment of worker Chris Smalls, fired the day he led a strike over safety in his New York City warehouse. In the email, Cunningham noted that U.S. law and Amazon’s own policies recognize employees’ right to communicate about conditions at their workplaces, which very much included precautions against the coronavirus pandemic sweeping through the country.

“We support every employee’s right to criticize their employer’s working conditions, but that does not come with blanket immunity against any and all internal policies,” Amazon said in a statement. Cunningham says identifying bugs and fixes for them is just part of working at a tech company. “If you don’t listen to the workers,” she says, “you’re going to miss some very simple things.”

These terminations fit a pattern that goes beyond Amazon. A few months before Cunningham got the HR call, Google fired four software engineers who’d been organizing to change things like its work for the Pentagon and its handling of harassment on YouTube. (Google has said it fired them for violating data security rules.) In the corona era, medical staff who’ve spoken out about problems have been axed, too. A Washington state emergency room doctor who posted about his safety concerns on Facebook was terminated swiftly by his hospital’s staffing agency, according to a lawsuit he’s since filed. (The staffing agency said it offered to place him at a different hospital instead.)

For Americans with a less fancy résumé than the typical physician or Google engineer, the coronavirus has exacerbated an already dire lack of employment security. A great many essential workers have been growing, picking, tending, slaughtering, packing, preparing, and delivering food throughout the country without paid sick days. While other countries moved quickly to backstop payrolls and freeze their economies more or less in place, the U.S. let 40 million people go unemployed and has kept many of them waiting months for temporary assistance.

Long before the pandemic, U.S. workers’ productivity and their median pay, which once rose in tandem, went through an acrimonious divorce. Compensation, especially in some of the country’s fastest-growing industries, has stagnated, while the costs of housing, health care, and education decidedly have not. The federal minimum wage, stuck at $7.25 since 2009, is worth 70% of what it was in 1968, and about a third of what it would be had it kept pace with productivity.

Covid helps clarify just how much employers have chipped away at the labor rights and bargaining power that came with the New Deal. Legislation and court rulings have outlawed key organizing and protest tactics, legalized aggressive anti- union efforts, and radically shrunk the range of occupations granted basic labor rights. Companies looking for a short-term jolt to their profit margin have more incentives than ever to hire workers indirectly, keeping payroll and liability off their own books. The pandemic certainly could give employers even more power to set the rules. Or it could give workers a chance to end a heist on a nationwide scale.

In theory, the National Labor Relations Act of 1935 protects people against retaliation for the kinds of organizing the fired Amazon workers were doing, much as the 1964 Civil Rights Act protects them against discrimination on the basis of race or sex. In practice, the threshold for firings in the U.S. is so low that it tends to be difficult to prove an employer has crossed such a line. Employers can and do terminate employees for having the wrong political candidate’s bumper sticker on their car or volunteering on the weekends at a local AIDS Foundation. And unlike the Civil Rights Act, the NLRA offers legal recourse only through the National Labor Relations Board, where the worst thing employers generally have to fear is that they’ll someday have to dole out back pay, reinstate fired workers, and promise to change their behavior, without any punitive damages or personal liability.

Two years ago the NLRB ruled against a group of nonunion janitors who alleged they’d been terminated in retaliation for protesting abuses, which included a boss telling one of them that the way to get paid more was to have sex with him. The three Trump appointees said the workers erred in asking for help from the radio station whose offices they cleaned, because it wasn’t their direct employer. Last year the founder of the Barstool Sports blog empire posted tweets threatening to fire anyone who talked to union activists, after which the site sold T-shirts celebrating the controversy. Barstool, which didn’t respond to requests for comment, settled with the NLRB by agreeing to delete tweets and post a temporary notice saying it wouldn’t threaten employees.

The threat of retaliation helps transmute all sorts of requests into offers workers can’t refuse, whether it’s smiling through abusive tirades, working overtime without extra pay, or showing up for a shift in the middle of a pandemic. As lockdowns began this spring, Daniel Stone, a market analyst for Dollar General Corp., sent emails to managers and executives urging them to implement better safety measures and hazard pay for the essential workers in the company’s 16,000 U.S. stores. “I think Dollar General had an opportunity, and I asked them to take it in March, to be a leader,” says Stone, who worked at the company’s headquarters near Nashville.

Beyond some boilerplate responses, the higher-ups ignored him, he says, so he solicited input from retail workers on Reddit, and created a private Facebook group where workers could talk about organizing and swap horror stories about the masks they were being given, made from T-shirt scraps. He also reached out to the United Food & Commercial Workers International Union for support.

For reasons that soon became obvious to Stone, the UFCW has had little success unionizing Dollar General workers over the years. (Instead of negotiating a contract with workers who voted to organize at one store, the company contested the vote in court for years, then shut down the store.) In mid-April, Stone was warned by a co-worker that his pseudonymous Reddit profile linked to a SoundCloud account with his real name and that other people in the corporate office were reading the subreddit where he was collecting complaints. But Stone continued, and by the end of the month, the company had fired him over the phone, framing it more as an opportunity for mutual growth.

 “It’s come to management’s attention that there’s been some negative emails and posts and other things like that about the company, and there’s been a little bit of, kind of, it sounds like bad blood,” senior director of market planning Jason Reese told Stone during the call, which Stone recorded and shared with Bloomberg Businessweek. Stone stayed polite and signed off with “hopefully the workers will get taken care of” and “see you around.” To get his three months’ severance of about $15,000, Dollar General said, he’d have to sign a nondisclosure agreement. He refused.

Dollar General said in a statement that it has “a zero tolerance policy for unlawful retaliation” and that it’s mounted a “thoughtful and comprehensive” Covid plan. The company said Stone “did not, and does not, possess the information or broader context to understand the many decisions that formed the foundation of the Company’s response to this health crisis, and it is unfortunate that he chose to conduct himself in a manner that was not in keeping with values and expectations.”

One thing that frequently unites U.S. employers of all kinds is fierce opposition toward collective organizing. Two years ago, after managers at software startup Lanetix discouraged employees from discussing workplace problems and implied their jobs could be shipped to Eastern Europe, the programmers started circulating union cards, according to employees. A week after they handed in the cards, the company laid off every U.S. programmer outside of the management team. Lanetix, which has since settled an NLRB complaint and renamed itself Winmore, didn’t respond to requests for comment.

Unions scare employers in part because unions can strike, and strikes work. (Just ask the 40-hour workweek.) But employers have spent decades striking back. Ronald Reagan embodied and emboldened a wave of U.S. union-­busting when, in 1981, he axed striking air traffic controllers. Capital mobility also made it easier for companies to take advantage of old court rulings and legislation that enabled the “permanent replacement” of striking workers, stripped unions of key protest tactics, defunded them through “right-to-work” laws that banned mandatory fees, and facilitated aggressive anti-­organizing campaigns.

Given the NLRB’s wrist-slap approach to enforcement, firing employees who try to organize a union is one of the most effective short-term investments a company can make. Labor relations consultants who help companies talk workers out of organizing or keep tabs on them during disputes are thriving. Such firms don’t have to disclose their full client lists, but a Businessweek review of annual federal disclosures reveals a who’s-who of America’s boldface names, from Pepsi to PetSmart. Companies have numerous ways to not-so-subtly talk workers out of organizing. They can exercise their legal right to hold mandatory meetings about the dangers of forming a union or hire consultants who specialize in union busting to sow discord within the staff. Or they can, of course, simply fire everyone.

The past decade’s disputes at Boeing Co., once a union stronghold, show how effective these tactics can be. In 2010, after a series of successful strikes in the company’s home base of Washington state, an executive cited the work stoppages as cause for the company to build its new line of airplanes in South Carolina. By 2014, Boeing’s threat to shift more production out of Washington led the International Association of Machinists to cut a deal that froze its pension plan instead. And the union has struggled to make inroads at the South Carolina plant, facing ferocious opposition from ­management as well as from then-Governor Nikki Haley, who later joined Boeing’s board.

During a union drive at the South Carolina plant in 2017, workers say, Boeing took out anti-union ads on local TV stations and billboards and held mandatory anti-union meetings warning about the possible costs. Trump’s NLRB appointees overturned a successful 2018 vote among a smaller group at the plant, and Boeing fired five vocal union advocates. The union’s NLRB complaint about that is still pending. Boeing denies retaliation and says the five workers violated “well-publicized, longstanding, and objectively reasonable safety and conduct policies.”

All this has left the South Carolina staffers hesitant to speak up about workplace problems, says IAM activist Chris Jones, who’s worked at the plant since 2011. That’s been especially true during the pandemic, because Boeing recently announced plans to cut companywide head count by 10%. The company said in a statement that it makes layoff decisions carefully and fairly.

In Washington, the union ­contract dictates that layoffs be conducted based on seniority, and the union says it’s in daily contact with Boeing to hash out Covid safety procedures. In South Carolina, “people are afraid to raise issues or concerns because they feel like that could affect how they’re graded for the layoff,” Jones says. “There’s really no rules other than your manager giving you a score.”

From the beginning, workplace laws in the U.S. have left out a lot of workers. The NLRA’s organizing rights explicitly excluded farm and domestic workers, a carve-out soaked through with racism and sexism. Other laws include exceptions for workforces of fewer than 15 people, disabled workers, tipped workers, prisoners, movie theater attendants, and teenagers. The NLRA doesn’t apply to supervisors, a category in which employers have placed many nurses and university professors, or to independent contractors, a category into which companies have tried to shove drivers, cooks, teachers, mixed martial artists, video game developers, house cleaners, cable installers, strippers, and lacrosse officiators.

That includes people like Kym Thornton, who went door to door for Homefix Custom Remodeling, pointing out mold at people’s houses and cajoling them to agree to meet a sales rep. Thornton says Homefix, which had first caught his eye with a Washington, D.C., subway ad promising full-time pay for part-time work, eventually turned out to be the opposite: While working there full time, he sometimes didn’t get paid at all, supposedly because none of the homeowners he’d hit up ended up making a purchase. Thornton and other ex-staffers are suing the company for paying below minimum wage and for discriminating against workers of color by sending them to poorer neighborhoods.

Homefix, which classified the workers as independent contractors without minimum wage protections, has denied the allegations. The plaintiffs say the company exerted some very employer-­like control, including mandatory uniforms, regular (unpaid) training sessions, a noncompete policy, and surprisingly inflexible schedules. Thornton left the company in 2018, after his boss reprimanded him for missing work to attend a meeting about whether he could qualify for charity assistance for cataract surgery.

The NLRA’s blind spots have stretched wider as some of the industries lacking basic worker protections have become more central to the U.S. economy. The number of in-home-care workers more than doubled from 2008 to 2018, to about 2.3 million, and it’s projected to expand by an additional 1.3 million by 2028, as baby boomers grow more sedentary.

 “They do not see us as important,” says June Barrett, who spent 18 years caring for children and the elderly in their homes in Florida and New Jersey after fleeing homophobic harassment in Jamaica. “They’re still in plantation mode—they still own our bodies.” Before becoming a full-time organizer last year with the National Domestic Workers Alliance, Barrett endured years of workplace harassment, including groping, shoving, and racist taunts.

U.S. courts have offered workers ­little relief. Supreme Court rulings over the past couple decades have allowed companies to make warehouse workers wait in line for security checks ­without pay, even if it takes an hour a day; compel employees to sign away their rights to join class-action lawsuits; and refuse to pay undocumented workers who were illegally fired. The Sherman Antitrust Act, meant to protect against “unlawful restraints and monopolies,” now gets used to swat down so-called contractors’ efforts to set pay floors. In 2018 a federal appeals court doomed a Seattle rule meant to help Uber ­drivers organize, signaling that it conflicted with the Sherman prohibition on price fixing.

Companies such as Uber Tech­nologies Inc. and Lyft Inc. are the best-known beneficiaries of this sort of thing. When California lawmakers decided last year that workers can’t be considered contractors if their duties fall within a company’s usual course of business, Uber said its drivers should still be contractors because its business is technology, an app, not transpor­tation. Never mind that the app acts as an aggressive central dispatcher, that a number of drivers work full-time hours, or that Uber has tried to block the public release of its drivers’ names by declaring them trade secrets. But the arm’s-length nature of such supposedly not-employer-­employee relationships has spread through just about every U.S. industry in one form or another. They allow companies to add layers of distance between themselves and the responsibilities of a formal employer even if, in practice, the name-brand company remains the ­ultimate boss.

Subcontractors have been doing everything from hauling goods in Walmart and Amazon warehouses to fact-checking the New Yorker. Even among America’s most valuable businesses, contract labor has expanded from supply closets and kitchens to programming jobs at the heart of the operation. At Google parent Alphabet Inc., which counts more than 110,000 employees, the contract workers have overtaken the direct workforce.

The umbrella term here is “­fissuring,” as in cracks in the workforce. In the interest of short-term rewards to shareholders, executives have incentives to offload as much of their day-to-day operations as possible to outside vendors, reducing liability and payrolls on their balance sheets and challenging contract staffing com­panies to underbid one another. Paying these workers indirectly also makes it easier to pay them much less than their direct co-workers, according to David Weil, the dean of Brandeis University’s Heller School for Social Policy & Management. When workers are subcontracted out of a company’s average pay statistics and benefits ­packages, there’s less pressure to improve their compensation.

At Google these workers include people managing teams and testing self-­driving cars. At Apple Inc. they work on the Maps app and on translating material to different regions. At Microsoft Corp. they develop graphic design and test bugs. When a few dozen Microsoft bug testers in the state of Washington unionized in 2014, they learned how difficult it was to bargain without Microsoft itself at the table. Their direct employer, the temp agency Lionbridge Technologies Inc., laid off their entire team two years later, and in 2018 the tiny union agreed to settle its NLRB complaint in exchange for some financial relief. “Crumbs,” says Philippe Boucher, the union’s founder. For Microsoft, he says, the union was just “a pebble in their shoe.”

Microsoft has denied the union’s claims that it was legally responsible for the alleged retaliatory layoffs. “This was a matter between Lionbridge and its employees,” the company said in a statement. Lionbridge didn’t respond to requests for comment.

Contract labor has also been a prominent face of the coronavirus era. Many Americans sheltering in place have become much better acquainted with Instacart, the grocery delivery app maker, which expanded the ranks of its shoppers from 180,000 to 500,000 within two months. On June 26, Seattle’s mayor signed a law requiring food delivery companies to pay drivers an extra $2.50 per delivery. Instacart immediately sued, complaining that the law forces them to provide services without due consideration to profits.

This past Mother’s Day, Gloria Machuca couldn’t hug her six kids. She’d been sent home from one of the two Houston McDonald’s restaurants where she puts in a combined 60-plus hours a week because a co-worker had tested positive for Covid-19. She says both franchises made her stay home for two weeks in case she had it, too, but neither agreed to cover her pay—$9.25 an hour at one, $8.25 at the other—while she was stuck at home. Managers from both said “McDonald’s doesn’t pay sick days,” says Machuca, who’s worked for Golden Arches outposts for 20 years.

Like many McDonald’s workers who’ve filed complaints or mounted protests around the country, Machuca says her restaurants fell short on basic safety measures, such as providing ­personal protective equipment early on or facilitating social distancing. She says that before and during the ­pandemic her bosses amplified health risks by refusing to provide paid sick days, forcing employees to either spread the virus or forfeit needed income. The franchise owners only agreed to pay for her quarantine in late May, after she joined a streaming protest on Facebook with New York Senator Kirsten Gillibrand. “What I’ve learned about McDonald’s and the manager and the store owners is that they don’t care about us,” she says. “They treat you as if you don’t matter.”

“We’re confident the vast majority of restaurant employees impacted by Covid-19 are getting paid sick leave,” McDonald’s said in a statement, citing a mix of corporate and franchisee policies and federal, state, and local measures. The company said it has “enhanced over 50 processes in restaurants” to boost safety and distributed more than 100 million masks. It also provided statements from Machuca’s franchise owners that say they offer masks, gloves, effective social distancing policies, and paid sick days.

In the U.S., companies can and often do legally refuse to provide paid sick days to staff. When the pandemic placed this problem in stark relief, Congress rushed to kind of fix it. The Families First Coronavirus Response Act, passed in March, promises Covid-specific paid sick leave to U.S. employees, as long as they don’t work for large companies, or small companies, or in health care, or as first responders. In other words, it doesn’t apply to a lot of the essential workers who need it most.

Even where there are laws meant to protect some aspect of a worker’s life and livelihood, enforcement is all too often weak. Employees lose an estimated $15 billion a year because companies simply don’t pay them the minimum wage they’re owed—“wage theft” that rivals the total value of property crime the FBI tracks. In most cases when enforcers determine a worker’s wages have been stolen, the victim doesn’t get compensated, the UCLA Labor Center and the National Employment Law Project found in a 2013 study of California data. Bosses can evade liability through tactics such as reconstituting their company under a different name.

The federal Occupational Safety and Health Administration started the year with only 862 inspectors, fewer than it’s had in decades. (One inspection of each workplace that falls under its purview would take 165 years.) On April 13, OSHA announced it would generally try to deal with employees’ coronavirus-related complaints informally, by asking employers to investigate themselves. OSHA and its state-level equivalents have received more than 20,000 Covid-centric complaints this year, including a number about medical facilities that banned protective masks.

OSHA has closed thousands of Covid-related complaints and announced a citation against only one company, for being slow to report a series of staff hospitalizations. In the absence of serious penalties, meat-processing workers at Cargill Inc. say supervisors told them not to discuss infections; a Safeway Inc. warehouse discouraged employees from using masks or gloves, according to a lawsuit filed by the family of an employee who died in April; and state attorneys general say Walmart Inc. managers allegedly pressured workers with Covid-19 symptoms to put on their vests.

Cargill says it considers health information private. Safeway has said employee health is its top priority. Walmart said in a statement that it’s following the “evolving guidance” of public-­health experts.

It could all still get worse. As states rushed to reopen, many unemployment agencies were urging employers to report staff who refuse invitations to come back to work. So more U.S. workers will soon find themselves involuntarily tractor-beamed back into a working environment that’s proved itself inhospitable even when there’s no pandemic.

America doesn’t have to be like this. For all their faults, other rich countries aren’t.

In the U.S., the subject of labor-law reform tends to arise whenever Democrats see a shot at retaking the White House and Congress, though the party rarely makes good on its promises. In February, the Democratic-controlled U.S. House passed a bill, backed by presumptive presidential nominee Joe Biden, aimed at ending right-to-work laws, forced class-action waivers, mandatory anti-union meetings, and so-called permanent replacement of strikers; legalizing a slew of strike tactics; expanding the definition of “employee” to encompass far more fissured staff; and giving the NLRB the power to strongly penalize companies and hold executives personally liable for breaking the law.

In January, Harvard Law School’s Labor & Worklife Program, following a year of discussions among ­working groups of activists and scholars, released a sweeping proposal to reboot labor law from a “clean slate,” including by ending at-will employment, installing elected “workplace monitors” in every U.S. workplace, and establishing a “sectoral bargaining” process à la Europe. Advocates say such a system, in which labor and management hash out industry­wide standards, would help fix one of the flaws baked into the NLRA: As long as collective bargaining rights are limited to the individual companies where workers have won a unionization election, executives have an overwhelming incentive to fight like hell to stop that from happening, and they have cause to fear they’ll be outcompeted by lower-cost rivals if they don’t.

Labor activists have notched the occasional impressive victory. “Comprehensive campaigns”—intensive, often yearslong efforts where rather than relying on the NLRB, unions hammer a company with a mix of workplace disruption; legal, regulatory, and political assault; and reputational ­warfare—have proven potent enough to secure deals that made unionization possible at firms such as Smithfield Foods Inc.

Pro-labor state and local governments, though generally preempted from passing laws to directly boost private-­sector organizing, have been successfully squeezed by labor to take those steps they can, such as easing the unionization of government-funded home health care and airport service workers. Public school teachers, by tying their workplace struggles to the needs of their communities and striking in defiance of lawmakers (and sometimes even their own union leaders), have forced concessions from Democratic mayors and Republican governors alike.

None of that has reversed labor’s overall decline. Each step forward depends on a certain amount of luck and is vulnerable to being banned by hostile courts and politicians. But the odds are also stacked against transformative legislation, which has repeatedly eluded labor. Under President Jimmy Carter, amid one of many doomed efforts to change U.S. labor laws, the AFL-CIO resorted to purchasing a plaintive ad in the Wall Street Journal, posing to “American Business” the question, “Do you want to destroy American trade unionism?” They did, and to a large extent, they have. (Some union leaders’ passivity, corruption, and bigotry played a part, too.)

And so, strategy debates among union activists often take the form of people who say it’s hopeless to expect the legal regime to change without first having a resurgence of labor activism vs. people who say it’s hopeless to expect a resurgence of organizing without first ­overhauling the legal regime that crushes it. Each side has a pretty good point.

That Catch-22 helps explain why labor is desperate for an opening. The corona­virus, which is remaking U.S. workplaces in real time, just might qualify. While immiserating workers and devastating many of their employers, it’s also forged an upsurge in workplace activism, as people who would otherwise be too afraid of retaliation to take ­collective action decide they’re too afraid of employer-­created hazards not to.

Their strikes and protests, which have spread through warehouses, meatpacking plants, fast-food restaurants, and hospitals, are buoyed by the public recognition that often-forgotten workers are actually essential. They’re also elevated by partial or temporary ­pandemic-inspired precedents that raise some larger questions.

Why should Congress guarantee Covid-specific paid days off for some months in 2020 at some medium-size companies and not for everyone else all the time? Why should workers get protection against being purged for alerting the public about safety issues in New York City and Philadelphia—as will happen if local bills proposed there become law—and not just shielded against capricious terminations across the board and across the nation? If the pandemic spurs a wave of much more ambitious local lawmaking and a mass refusal by more workers to remain on or return to the job, all sorts of things could happen.

Possibly even at corporate hyper­powers such as Amazon, where management seems to be having a harder time than usual shoving its recent controversies out of the spotlight. In April, white-collar Amazon tech workers held a daylong sickout and virtual rally to protest the alleged retaliatory firings in its warehouses and offices. A week later a senior engineer and vice president named Tim Bray announced he was resigning in dismay—likely forfeiting more than a million dollars in unvested stock and other ­compensation—because of its dismissal of activists he described as whistleblowers, including Emily Cunningham.

“I think there are a lot more people like me waiting to be pushed,” Bray told a group of union activists on a June Zoom call, saying he’s received ample private encouragement from his peers. By then, state attorneys general were calling Amazon’s sick leave inadequate, and U.S. senators were demanding answers about retaliation.

Cunningham says the backlash against terminating her and the others only deepened the resolve of Amazon’s activists. Ultimately, she says, the retaliation will backfire. “You cut off one head, and then five grow in its place.”

Editor: Jeff Muskus

With assistance from David Ingold, Phil Kuntz and Alexander McIntyre