Campaign News

The Federal Reserve is facing a significant change in leadership that goes beyond the installation of a new chairman. It is also awaiting the appointment of two other top officials who will play a crucial role in shaping Fed policy.

President Trump, who has already nominated Jerome H. Powell as the Fed’s next chairman, also gets to pick a new vice chairman. But the other open position, the presidency of the Federal Reserve Bank of New York, is not Mr. Trump’s choice to make.

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Adam Galatioto’s loyalty to diesel Volkswagens predates his ability to drive.

The 29-year-old’s parents first bought a Jetta TDI in 1998, and he drove the little sedan through high school, college, and a master’s program before selling it in 2013. Mr. Galatioto and his girlfriend now share a 2011 Jetta TDI SportWagen, which he helped encourage her to buy.

“They get really good mileage,” he says. “Mine got 50 m.p.g. on the highway. By proxy that means you are being environmentally friendly.”

He’s not alone. Volkswagen has long enjoyed a reputation for reliable engineering, cheerful affordability, and, largely thanks to its efforts in clean diesel, sustainability. In Consumer Reports’ 2014 survey on how people perceive leading car brands, the German automaker was singled out (alongside Tesla) for its fuel efficiency.

That made recent revelations that VW had duped environmental regulators for years, installing software on 11 million diesel vehicles worldwide allowing them to run cleaner during emissions tests than they did on the road, all the more unnerving.

“I don’t generally trust corporations on what they say, and this was so intentionally devious it just lumps them in with any other car company for me,” Galatioto says.

This is a worst-nightmare scenario for companies trying to attract customers that increasingly want to make not just quality or affordable purchases, but ethical ones. It’s an impulse nearly every consumer industry is racing to capitalize on, from restaurant chains shifting to cage-free eggs and fair-trade coffee to retailers pledging to raise wages and give workers more predictable scheduling.

But with such promises being made left and right, and especially in the wake of Volkswagen’s fall, conscientious consumers may be wondering: Can any of them really be trusted?

Not always, clearly, but there is some comfort to be had on that front. Brands that fail to deliver risk even greater financial and reputational fallout than ever before (Volkswagen lost a third of its stock value when the scandal broke, and it faces billions in future losses from EPA fines, repairs, and lost sales). Combined with effective third-party oversight, it’s a powerful motivator for companies on the whole to behave better, experts say.

Consumers, particularly younger ones, are armed with easier access to information about what they buy than previous generations, and it’s affecting their choices. Millennials (adults ages 21 to 34) are more than twice as likely as their Gen-X and baby boomer counterparts to be willing to pay extra for products and services billed as environmentally and socially sustainable, according to a 2014 Nielsen survey. They are equally more prone to check product labels for signs of sustainable and ethical production.

“There’s an increased attention to more intangible characteristics of a product,” says Dutch Leonard, a professor who teaches corporate responsibility and risk management at Harvard Business School. “When I buy a shirt, it has a particular color, it’s soft, or wrinkle-free. But now people are also paying attention to where it was made, if the workers are being exploited, and if the company is environmentally conscious or not.”

This makes responsible changes effective marketing tools, which can create domino effects as companies try to keep up with and outdo standards in their particular industries. When Wal-Mart, the biggest retailer in the world, raised its minimum pay rate at the beginning of this year, competitors such as Target and Kohl’s quickly followed suit. The success of Chipotle, which has a carefully detailed food-sourcing policy, has been followed by major supply chain overhauls for McDonald’s, General Mills, and other giants of the corporate food world.

 “Customers want 'food with integrity,' ” Warren Solochek, a restaurant-industry analyst with NPD Group, a market-research firm, told the Monitor in May. “[Companies] that choose locally sourced, fresh ingredients can put that on their website and know that people are looking at it.” 

But especially for major corporations, “when you say you are doing things, you will attract attention from outside business groups," Professor Leonard says. "You can bet some NGO [nongovernmental organization] is going to try and figure out if that’s true or not.”

Indeed, Volkswagen isn’t the first brand to have its positive positioning face pushback, especially as global companies work to strike an operational balance between ethics and profitability. Wal-Mart’s wage hikes were followed by cutbacks in worker hours when the retailer’s earnings suffered, a move that led labor advocacy groups to call the earlier wage hikes “a publicity stunt.” Earlier this week, the Center for Popular Democracyreleased a report showing that Starbucks has so far failed to live up to a much-publicized vow from a year ago to give workers more consistent schedules.

While Volkswagen eluded the Environmental Protection Agency, it was eventually found out by the International Council on Clean Transportation, an independent nonprofit aided by researchers at West Virginia University.

In addition to catching such discrepancies, watchdog groups can be helpful in weeding out credible claims of positive change from the less so. In the mid-2000s, the Unions of Concerned Scientists’ annual environmental consumer guide largely dispelled the idea that washable cloth diapers are significantly better for the environment than disposable ones.

Furthermore, some major corporations and industry groups have partnerships with independent, NGO-like organizations to set ethical industry standards and submit to outside monitoring. Unilever, for example, teamed up with the the World Wide Fund for Nature (WWF) in the 1990s to create the Marine Stewardship Council, a certification program for sustainable fisheries. In 2008, Starbucks embarked on a decade-long project with Conservation International to improve the sustainability of its coffee supply around the world. Home Depot sells lumber certified by an outside organization.

Such collaborations may not catch everything, Leonard says, but they are effective because they are “constructed in such a way that the [certification groups] are not beholden to an industry. We may not be able to get full agreement on the standards, but we might make real progress by creating safe harbors through development of standards that are negotiated in advance.”

Source: The Christian Science Monitor

William Dudley, president of the Federal Reserve Bank of New York, is retiring early, creating another vacancy at a central bank already in a flux of personnel changes. Here’s a suggestion to the the New York Fed’s board of directors, which will select Dudley’s successor: Try to avoid picking another banker.

Read the full article here.

Bloomberg Businessweek - November 13, 2014, by Josh Eidelson - In the midterm elections, four red states—Alaska, Arkansas, Nebraska, and South Dakota—passed minimum wage increases. Those votes mean that, starting next year, a majority of states will have minimum wages higher than the federal rate. The last time that happened, in 2007, Democrats newly in control of Congress used their power to pass the first national increase in a decade, from $5.15 to $7.25 an hour. It’s extremely unlikely the Republicans who took back the Senate in the midterm elections will do the same. “Waiting for Congress to act is frustrating and, at this point, pointless,” says Ed Flanagan, a former Alaska labor commissioner who spent a year campaigning for his state’s new increase, from $7.75 to $9.75.

Already, labor organizers in Oregon are considering a ballot initiative for 2016 that would raise the state minimum to $15 an hour, matching the leap taken this year by Seattle and San Francisco. In Los Angeles, where Mayor Eric Garcetti signed an ordinance mandating a $15.37 wage floor for some hotel workers in October, 6 of the 15 members of the city council have asked for a vote in early 2015 on a proposal to increase the city’s rate to $15.25 across the board by 2019.

Voters in most states shouldn’t expect to see pushes for higher rates than that anytime soon. Labor activists say they want to end the exclusion of tipped workers such as restaurant wait staff from minimum wage laws and add worker protections, like requiring employers to give workers advance notice of schedule changes or offer paid sick days. That approach worked this year in Oakland, where voters approved a referendum on Nov. 4 that lifts wages only to $12.25 but requires employers to offer paid leave above what the state requires. “When you combine them together, it’s actually more popular,” says Brian Kettenring, co-executive director of the Center for Popular Democracy, a union-backed community organizing group. “People appreciate that you are trying to actually solve the problem.”

Not all the coming fights will be put directly to voters. In California, Democratic Governor Jerry Brown signed a compromise bill last year increasing the statewide minimum from $8 to $10 by 2016. Some Democratic state lawmakers say that’s not enough to help workers make ends meet. “It will still allow the legal payment of a poverty wage,” says Mark Leno, the state senator who sponsored a bill that would have increased minimum pay to $13 by 2017 and then indexed future wage levels to inflation. That passed the state senate in May but failed by a single vote in an assembly committee. Leno plans to revive the issue in the next legislative session.

In some cities, Democrats are pitting themselves against the Republicans who control their state governments. Louisville has held hearings about raising wages to $10.10 after a statewide increase died in the Republican-controlled state senate. City officials in other states are hamstrung by laws prohibiting municipal governments from raising minimum wages above state levels. In June, business-friendly Democrats in Rhode Island’s statehouse killed efforts by the Providence city council to raise hotel pay to $15 an hour with a budget rider barring cities from setting their own minimum wages. In New York, where state law denies cities authority over pay rates, Governor Andrew Cuomo agreed to support changing that statute, along with a statewide increase to $10.10, to win the endorsement of the progressive Working Families Party in the November gubernatorial election. “He made a promise on this,” says Bill Lipton, the party’s New York director. “We expect him to fulfill it.”

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