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When Federal Contracts Turn Into Corporate Welfare

7:30 pm in Uncategorized by Michelle Chen

Image: AFL-CIO’s Executive Paywatch

Originally published at In These Times

Where does the corporate bottom line end and the public interest begin? Through the voodoo economics of federal contracting, Washington’s “partnerships” with private corporations have drained the public trust straight into the pockets of top corporate executives.

The progressive think tank Demos calculates in a new research report that private contractors have funneled up to $24 billion in federal funds into executive salaries. Yet, according to the analysis, the same system of contracted firms—from defense manufacturers to concession stands at national tourist sites—also employs hundreds of thousands of poverty-wage workers at the bottom.

Federal contractors are currently subject to a very loose limit on the amount of an executive’s salary that can come directly from federal subsidies: about $763,000. Extrapolating from survey data on the top contractor executive salaries fromthe Government Accountability Office, Demos estimates the aggregate share of public money that is ultimately funneled into executive pay at $23.9 billion.

Besides taxpayers, those who stand to lose most from these skewed CEO pay schemes may be the low-wage laborers carrying out the actual work of the contract projects, such as repairing a school or building a bridge. These are the workers featured in another recent Demos analysis of contractors, showing that “an estimated 560,000 Americans employed by federal contractors were paid $12 an hour or less.”

Demos points out that the government could save taxpayers a hefty sum by simply shrinking the CEO portion of contractor payments. For example, by capping it at the level of the U.S. vice presidential salary, taxpayers could save “$6.97 to $7.65 billion.” Theoretically, under a more equitable pay distribution, that sum would be enough to significantly lift the lowest tier of worker wages:

If taxpayer-funded payouts for these executives were capped at $230,700—the salary of the U.S. Vice President—the pay of hundreds of thousands of low-wage federal contract workers could be raised by as much as $6.69 per hour or $13,902 per year for a full-time worker, without costing taxpayers an additional dime.

Demos notes that these are “conservative estimates” based on extrapolated data. Researchers based the analysis on a representative sample of defense contractors evaluated by the Government Accountability Office, with some adjustments for civilian contractors. The takeaway is that while legions of workers struggle to survive on the wages paid through federal contracts, the same grants are fattening the wallets of some of the wealthiest executives in the country. Read the rest of this entry →

Filipino Banana Workers Frustrated in Battle Over Dole’s Pesticides

12:28 pm in Uncategorized by Michelle Chen

Aidan Wojtas / Flickr / Creative Commons

Originally posted at In These Times

You might think that neoliberal globalization has replaced the banana republics of the last century. But inside the engines of industrial agriculture, the rot of the old fruit empires still festers. The long struggle of a group of Filipino banana workers to hold Dole accountable for toxic exposures reminds us that international capital still has a lot more clout than international law.

The lawsuit, involving about three thousand Filipino workers, claims that in the 1980s, Dole and other companies damaged the health of banana workers in Davao, a remote region of the Philippines, by using the highly toxic pesticide DBCP. The alleged exposures took place years after DBCP was “banned from general use” by the U.S. Environmental Protection Agency in the late 1970s. The toxin–a product of Dow Chemical–has been linked to various potential health problems, such as asthma, cancer, sterility and miscarriages.

But the Los Angeles Superior Court dismissed the suit, citing technical issues related to California’s statute of limitations rules. Claire Espina, a lawyer for the workers, said the ruling was an unfair application of state law.

Espina tells In These Times that the goal was simply to force Dole to take responsibility for a mass assault on workers’ health. “To know that it was banned, and to push for it anyway and to knowingly use it [in the Philippines]–I think that conduct like that merits punitive damages,” she says. Read the rest of this entry →

The Boss Man Cometh: Through State Tax Breaks, Employers Pilfer Workers’ Earnings

6:46 pm in Uncategorized by Michelle Chen

Cross-posted from In These Times.

As you file your taxes this week, before complaining about how much you’re forking over to Uncle Sam, bear in mind that the tax man might not be the only one you’re writing a check to: Your boss might be getting a big cut, too.

Thanks to arcane state tax subsidies, thousands of companies have fattened their profit margins by poaching from workers’ paychecks. According to a report by the watchdog group Good Jobs First, nearly $700 million in taxpayer money is being siphoned off by corporations annually through clever deals with state governments that are supposedly aimed at “job creation.”

According to the report, the tax breaks allow companies to effectively skim money from workers’ state income tax withholdings “to provide lavish subsidies to corporations rather than paying for vital public services.” The beneficiaries include “more than 2,700 companies, including major firms such as Sears, Goldman Sachs and General Electric.”

These programs feature glowingly euphemistic names: Indiana’s Economic Development for a Growing Economy (EDGE) Tax Credit, the Mississippi Advantage Jobs Incentive Program, and, to emphasize that these aren’t just any old jobs we’re talking about, New Mexico’s High Wage Jobs Tax Credit. Read the rest of this entry →

Trans-Pacific Trade Deal Opens Eastern Front for Neoliberalism

8:49 am in Uncategorized by Michelle Chen

Image: Citizens Trade Campaign

Cross-posted from In These Times.

With the U.S. economy stuck in a constant rut and Europe going into a tailspin, President Obama is looking to escape to the East. While the nations of the Asian Pacific rim face strains of their own, from massive inequality to climate change, their growth rates look positively zen compared to the stagnant economies that used to run the world.

So for the past several days President Obama has been charming Asia-Pacific officialdom, hoping these “emerging” economies can prop up the West’s sagging empires. At home, the White House has sold its vision for the “Pacific Century” as a boon for U.S. jobs, and abroad, he’s looking to consolidate influence over Asian leaders with subtle overtures toward checking China’s regional power.

The centerpiece of this program is the Trans-Pacific Partnership, a trade agreement that would involve Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, in addition to the U.S. While it would build on existing trade ties in the region, critics see it as an unprecedented supersized neoliberal agenda repackaged with the bow of modernization and “development.”

But according to fair trade activists, the deal may end up not only failing to bring significant job opportunities, but laying the groundwork for an economic regime built on offshoring, deregulation and the swapping of national sovereignty for corporatocracy. Read the rest of this entry →

Washington’s Anti-Regulatory Crusade, and Why Your Job Hasn’t Killed You Yet

12:42 pm in Uncategorized by Michelle Chen

Carol Simpson Cartoonwork

Cross-posted from In These Times

On the campaign trail, Republican presidential hopeful Rick Perry is spreading the gospel of Perrynomics—a magical job-creation formula based on minimal government regulation of industry, combined with tiny tax rates and tight controls on lawsuits. In a state that seems inclined to cannibalize its own government, this agenda plays well. But a closer look reveals the high price of low regulation.

In recent months, politicians in both parties, including the White House, have claimed that scaling back regulations would unleash economic growth, suggesting that businesses should be liberated from rules that protect the environment, occupational health and other public interests. But a new analysis by Public Citizen presents a few unsung gems of federal bureaucracy that help keep us happy, healthy and sane. Several of these regulatory chart-toppers, not surprisingly, were enacted in defiance of heavy political pushback:

Clearing the Air. Since the days of the Lowell mills, so-called “brown lung” has been a hallmark of the miserable toil of poorly ventilated, dust-clogged textile factories. The disease, also known as Byssinosis, has historically hit women especially hard, spreading its signature coughing and lung scarring to thousands of workers around the world. The epidemic was virtually ignored until the 1960s and 1970s. Then came OSHA’s 1978 rule requiring more lung-friendly machinery, and within a few years the prevalence of brown lung in the industry fell by an estimated 97 percent. And employers’ grumbling about the “costs” of the rule faded when it became clear that the reforms improved the industry’s efficiency as well. Read the rest of this entry →