Toys 'R' Us employees demand severance pay for 33,000 workers
Toys 'R' Us employees demand severance pay for 33,000 workers
The push comes as a part of a campaign supported by the advocacy group Center for Popular Democracy. The campaign will host a series of events at Toys "R" Us headquarters and the offices of...
The push comes as a part of a campaign supported by the advocacy group Center for Popular Democracy. The campaign will host a series of events at Toys "R" Us headquarters and the offices of private-equity owners. More than 50,000 people have already signed a petition calling for Toys "R" Us workers to receive severance pay.
Hillary Clinton wants to shake up the Fed
Hillary Clinton wants the Federal Reserve to look a lot different.
The Democratic candidate's campaign said Thursday that it supports a plan presented by Democratic lawmakers calling for...
Hillary Clinton wants the Federal Reserve to look a lot different.
The Democratic candidate's campaign said Thursday that it supports a plan presented by Democratic lawmakers calling for more diversity at the Federal Reserve and removing bankers from the boards of regional branches.
A statement from Clinton campaign spokesperson Jesse Ferguson argued that the changes were necessary in order to make the central bank more representative of the American people (emphasis ours):
The Federal Reserve is a vital institution for our economy and the well-being of our middle class, and the American people should have no doubt that the Fed is serving the public interest. That's why Secretary Clinton believes that the Fed needs to be more representative of America as a whole and that commonsense reforms -- like getting bankers off the boards of regional Federal Reserve banks -- are long overdue. Secretary Clinton will also defend the Fed's so-called dual mandate -- the legal requirement that it focus on full employment as well as inflation -- and will appoint Fed governors who share this commitment and who will carry out unwavering oversight of the financial industry.
The biggest issue raised in Secretary Clinton's statement is that employees of banks make up a considerable portion of the boards of the twelve regional Federal Reserve banks.
The original letter, signed by Congressional Democrats such as Massachusetts Sen. Elizabeth Warren and presidential candidate Vermont Sen. Bernie Sanders, was sent to Federal Reserve Chair Janet Yellen on Thursday morning. It cited some gains made by the Fed, but said there is more work to be done.
"However, despite these gains, we remain deeply concerned that the Federal Reserve has not yet fulfilled its statutory and moral obligation to ensure that its leadership reflects the composition of our diverse nation in terms of gender, race and ethnicity, economic background, and occupation, and we call on you to take steps to promptly begin to remedy this issue," said the letter.
The Democrats' letter also cited statistics that showed that 92% of regional bank presidents are white; 100% of the current voting members of the Federal Open Markets Committee are white, and 75% of the regional bank directorships are male.
The Fed's leadership is made of three levels. The lowest level is made up of the 12 regional banks' boards of directors. Those elect the next level, the presidents of the regional branches. At the top level are the seven members of the Fed's Board of Governors appointed by the US president, including the chair.
The seven governors and the regional presidents make up the Federal Open Markets Committee, which determines monetary policy for the US.
The letter from Democrats also advocated for caution in monetary-policy decision-making at upcoming meetings, taking into consideration how policy would affect average Americans.
"Moreover, as you make crucial monetary policy decisions in 2016, we urge you to give due consideration to the interests and priorities of the millions of people around the country who still have not benefited from this recovery," said the letter.
"We share the vision that you laid out in Chicago two years ago: an economy in which all working families 'get the chance they deserve to build better lives'."
There has been a push among Democrats in Congress urging the Fed to keep interest rates near their historically low levels in order to allow more workers to find jobs and increase wages.
Chair Yellen said in her regular testimony before Congress that she is sympathetic to the position.
By Bob Bryan
Source
Under scrutiny, New York Fed sets short list for Dudley successor
“Community and labor activists led by the Fed Up coalition demonstrate and call for the selection of a Federal Reserve Bank of New York president independent from Wall Street, outside the Fed bank...
“Community and labor activists led by the Fed Up coalition demonstrate and call for the selection of a Federal Reserve Bank of New York president independent from Wall Street, outside the Fed bank in New York, March 12, 2018.”
Read the full article here.
Newark, NJ Passes Earned Sick Days Bill by 5-0
FOR IMMEDIATE RELEASE: January 28, 2014
NEWARK CITY COUNCIL PASSES PAID SICK DAYS BILL
...
FOR IMMEDIATE RELEASE: January 28, 2014
NEWARK CITY COUNCIL PASSES PAID SICK DAYS BILL
IN 5-0 VOTE, NEWARK BECOMES 2ND CITY IN NJ TO GUARANTEE SICK DAYS
Passage of sick day laws in NJ’s two largest cities back to back spells major momentum for the issue statewide
The following statement can be attributed to Andrew Friedman, Co-Executive Director of the Center for Popular Democracy:
“The rapid spread of paid sick days from city to city across the country shows that the public is strongly supportive of policy that improves the lives of working families. Progressive coalitions are leading the way, hand-in-hand with elected officials who are committed to a robust economy that creates good jobs and expands our country’s middle class.”
Contact:
TJ Helmstetter, the Center for Popular Democracy 973.464.9224, tjhelm@populardemocracy.org
Rob Duffey, NJ Working Families Alliance (973) 273-3363, rob@njworkingfamilies.org
Background:
In a move to protect Newark’s public health and bolster its economy the City Council adopted an ordinance that would allow all private-sector workers to earn paid sick days. The legislation passed by a vote of 5-0, and if signed by Mayor Luis Quintana the ordinance will make Newark the 2nd city in New Jersey and the 7th city in the nation to enact an earned sick days law.
“Tonight is a tremendous victory for 38,000 workers who will never again have to choose between their paycheck and their health or the health of their family,” said Kevin Brown, State Director of SEIU 32BJ. “By extending the right to earn sick days to every single worker in the city, Newark’s earned sick days law will be one of the most comprehensive in the nation. Lawmakers in Trenton and around the state should take notice.”
The Newark bill will allow private-sector workers to earn 1 hour of sick time for every 30 hours worked. Those that work in businesses with 10 or more employees can earn 5 paid sick days per year; workers in businesses with nine or fewer employees would be eligible to earn 3 paid sick days per year. In addition, employees directly in contact with the public would be eligible to earn 5 sick days regardless of company size, and the days can be used to care for themselves or family members.
“When I caught the flu last winter I knew I couldn’t go to work and risk infecting my clients,” said Tamika Hawkins a professional home health care provider who lives in Newark and a member of New Jersey Communities United. “But without pay I fell behind on my bills and even received a shutdown notice from the electric company. This law will make a big difference for me and other hard-working people in Newark, and I’m proud that our city is now a leader in this fight.”
Nearly one quarter of adults in the US have been fired or threatened with job loss for taking time off to recover from illness or care for a sick loved one, and the absence of paid sick days disproportionately affects low-income individuals. For a low-income family without paid sick days, going just 3.5 days without wages is the equivalent to losing a month’s groceries.
As of 2010 Newark's poverty rate exceeds 30%.
“Through our community organizing work we are actively engaging residents on the issues they care most about and workplace issues frequently rise to the top of community concerns,” said Trina Scordo, executive director of NJ Communities United. “We have found that low-wage workers in particular fear losing their jobs if they call in sick to take care of themselves or their children. Passing earned sick days is especially important for residents working in direct care, retail, fast food, or any other industry where workers are in frequent contact with the public. There’s no question that paid sick days improves the lives of working families and the fabric of our communities.”
Health professionals praised the legislation for including special public health protections, including ensuring that workers in regular contact with the public are able to earn a full five sick days.
“By passing this legislation, Newark will join Jersey City as a city in our state that looks to protect workers, consumers, families, and the community as a whole from the spread of contagious illness and from ensuing health care costs,” said Elmer, RN and President of the Health Professional and Allied Employees Local 5089. “Providing earned sick days is a modest policy that will have a big impact."
Advocates also touted the economic benefits of the legislation. Last week the Time to Care Coalition delivered a letter from over 20 New Jersey economists to the Newark Council urging them to support the law, saying it will bring tangible benefits to the local economy. On Tuesday a report from the Institute for Women’s Policy Research confirmed that the city and local businesses will actually save money because of the legislation. Studies of earned sick days laws passed in San Francisco and Seattle showed no negative impact from earned sick days on local economies, and both cities outpaced neighbors that lacked earned sick time protection.
“Workers coming to work sick actually costs our nation $160 billion annually, far more than the cost of workers staying at home to recover,” said Karen White, Director of the Working Families Program at the Rutgers Center for Women and Work. “When sick workers stay home, the spread of disease slows and workplaces are healthier and more productive. And by letting workers earn sick days businesses put money in the pockets of low-income workers who go out into the marketplace and spend it on goods and services. It’s a win-win for workers, employers, and local economies.”
Support for the law has been overwhelming. The New Jersey Working Families Alliance delivered 10,000 postcards from Newark voters urging the City Council to pass the law, and earlier today New Jersey Citizen Action delivered a letter from over 60 organizations around New Jersey in support of the legislation. A September poll from Rutgers-Eagleton showed a commanding 82% of Essex County residents supported the policy.
“Working families are looking to their elected officials to show leadership in this fight for what should be a basic worker’s right, and today the Newark City Council stepped up,” said Bill Holland, executive director of the New Jersey Working Families Alliance. “After tonight’s vote there’s no denying it: the national momentum for earned sick days laws has broken through to New Jersey in a big way.”
The legislation comes just two months after Jersey City passed the first earned sick days law in New Jersey. Five other cities – Washington, D.C.; San Francisco; Seattle; New York City; and Portland, Oregon – have taken action to help boost the economy by making sure workers can hang on to critical income when ill. On Tuesday Washington, D.C. expanded their existing paid sick days laws to cover all workers. In New York City, paid sick days legislation was a powerful determinant in the outcome of this month’s Democratic primary for mayor, as voters were less likely to vote for Speaker Christine Quinn after she blocked action on paid sick days for three years. Campaigns for statewide sick days laws are moving forward in Vermont, Massachusetts, Oregon and elsewhere.
Looking forward, advocates pointed to a statewide bill introduced this spring by Assemblywoman Pamela Lampitt and Senator Loretta Weinberg that would cover all of New Jersey’s 1.5 million workers who currently lack paid sick days. The bill is being championed by the statewide Time to Care Coalition.
“While tonight’s vote is a huge victory for working families, there are still over a million New Jerseyans who lack the basic security that earned sick days provide,” said Phyllis Salowe-Kaye, Executive Director of New Jersey Citizen and spokesperson for the Time to Care Coalition. “In the coming year we’re going to build on the momentum from our victories in Jersey City and Newark and make New Jersey a leader in this nationwide fight for fairer, healthier, and more prosperous communities.”
Coalition members that supported earned sick days in Newark and Jersey City include the Time to Care Coalition, Center for Popular Democracy, SEIU 32BJ, the New Jersey Working Families Alliance, New Jersey Communities United, the ACLU of New Jersey, the Committee of Interns and Residents SEIU, the New Jersey NAACP, Health Professionals and Allied Employees, AFT, New Jersey Citizen Action, CWA District 1, and AFSCME Council 1.
Additional reaction to Earned Sick Days Passage:
"A healthier and more productive workforce benefits everyone. This Newark ordinance is a win -win for employees, businesses, and our whole economy," said Corinne Horrowitz, business representative of the New Jersey Main Street Alliance.
"Paid sick days is a human rights issue. Families must be able to take care of their love ones without thinking about how they will pay their bills for taking a sick day off," said Virgilio Oscar Aran, Executive Director of Laundry Workers Center.
"This is a proud day for Newark," said Udi Ofer, executive director of the ACLU of New Jersey. "No one should be forced to choose between protecting their health and their job. This new requirement of paid sick days will give Newarkers fundamental protections to keep their families healthy and their jobs secure. We commend Councilman Anibal Ramos for his leadership and the Newark Municipal Council for its passage of this critically important policy. We look forward to continuing to work with allies and lawmakers across the state to ensure all New Jerseyans have the basic protections Newark workers will now have."
“Low income workers should have the same worker benefits as others," said Raymond Ocasio, executive director of La Casa de Don Pedro. "We all can get sick, and having sick days through the Newark Earned Sick Days Ordinance and access to health care under the Affordable Care Act will only make us all better off.”
“This is a great day for Newark and for its working caregivers. We know that nearly 2 out of 3 workers ages 45 to 74 have caregiving responsibilities for an aging or other adult relative. And caregivers without earned sick days have historically been forced to make some really hard choices. Now, as a result of this measure, if they or one of their close family members get sick, they won’t have to choose between keeping their jobs or taking the time to get well or care for loved ones,” said Dave Mollen, AARP New Jersey State President.
"This Earned Sick Time ordinance is designed for my patients who must choose between taking care of themselves and preventing the spread of viruses or making sure they don't lose a day's wages or even their job," said Dr. Ahmed Yousaf, Vice President for the Committee of Interns and Residents-SEIU. "Because of the realities of urban life, the health of one can very quickly affect the health of all of us. By moving this bill forward, the Council is standing up for the health of all Newarkers."
"Newark's passage of paid sick days reflects a turning point for these policies in this country," said Ellen Bravo, executive director of Family Values @ Work, the national network of 21 city and state coalitions, including the Time to Care Coalition in New Jersey, working on these issues. "In 2013 alone, the number of cities who have passed paid sick days has more than doubled, underscoring the overwhelming public support and momentum for common-sense policies that value families at work. We applaud our member coalition in Newark, which moved quickly to implement legislation that will grant 38,000 workers with access to paid sick days, including 'carving in' workers involved in direct service food, home care and child care, and which will pave the way for similar victories in Trenton and beyond."
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How Walmart Persuades Its Workers Not to Unionize
One former Walmart store manager tells the story that after discovering a pro-union flyer in his store’s men’s room, he informed company...
One former Walmart store manager tells the story that after discovering a pro-union flyer in his store’s men’s room, he informed company headquarters and within 24 hours, an anti-union SWAT team flew to his store in a corporate jet. And when the meat department of a Walmart store in Texas became the retailer’s only operation in the United States to unionize, back in 2000, Walmart announced plans two weeks later to use prepackaged meat and eliminate butchers at that store and 179 others.
With 1.3 million U.S. employees—more than the population of Vermont and Wyoming combined—Walmart is by far the nation’s largest private-sector employer. It’s also one of the nation’s most aggressive anti-union companies, with a long history of trying to squelch unionization efforts. “People are scared to vote for a union because they’re scared their store will be closed,” said Barbara Gertz, an overnight Walmart stocker in Denver.
Walmart maintains a steady drumbeat of anti-union information at its more than 4,000 U.S. stores, requiring new hires—there are hundreds of thousands each year—to watch a video that derides organized labor. Indeed, Walmart’s anti-union campaign goes back decades: There was “Labor Relations and You at the Wal-Mart Distribution Center,” a 1991 guide aimed at beating back the Teamsters at its warehouses, and then in 1997 came “A Manager’s Toolbox to Remaining Union Free.” The first half of a statement in that toolbox has been repeatedly snickered at for being so egregiously false: “We are not anti-union; we are pro-associate.”
Early last year, Anonymous, a network of hacker activists, leaked two internal Walmart PowerPoint slideshows. One was a “Labor Relations Training” presentation for store managers that echoed the “Manager’s Toolbox” in suggesting that unions were money-grubbing outfits caring little about workers’ welfare. “Unions are a business, not a club or social organization—they want associates’ money,” the PowerPoint read. (Walmart confirmed the PowerPoints’ authenticity.) “Unions spend members’ dues money on things other than representing them,” it added.
Walmart is perfectly within its rights to communicate its stance to employees. While employers are legally barred from threatening store closures, layoffs, or loss of benefits because of unionization, they are free to tell workers why they oppose unions.
Walmart has battled for years against the United Food and Commercial Workers Union, which represents employees at many grocery stores and retailers, and its offshoot, OUR Walmart, an association of Walmart employees. Walmart insists that the UFCW is out to damage Walmart’s business. The second PowerPoint that Anonymous leaked last year attacked OUR Walmart, asking, “Is OUR Walmart/UFCW here to help you? Answer: NO.”
Tensions have risen between the retailer and OUR Walmart in recent years, with the labor group organizing nationwide protests outside hundreds of stores each Black Friday. The National Labor Relations Board issued a complaint in January of last year, accusing Walmart of illegally firing 19 OUR Walmart members and illegally disciplining more than 40 others after strikes and protests demanding higher pay. Walmart maintains that the firings and disciplining were legal and not in retaliation for protesting.
Getting a glimpse of Walmart’s internal PowerPoints and training manuals is rare, but one of Walmart’s orientation videos was leaked recently, and it again revealed Walmart’s anti-union efforts. Labor experts and Walmart employees say they were surprised at the blatant untruths in many of the video’s pro-company and anti-union statements.
Walmart confirmed the video’s authenticity and said the company showed it to new hires from 2009 through last year. Early on in the course of the video’s nine minutes, an actor dressed as a Walmart employee says, “You’re just beginning your career with us. It’s hard to grasp everything that’s available to you, like great benefits.”
Ken Jacobs, the chairman of the University of California, Berkeley’s Labor Center, suggested that this was essentially propaganda. “Walmart's benefits are well below the standard for union groceries,” he said. “They are not ‘great benefits’ by any standard.” A discounter like Walmart certainly doesn’t have the generous pensions or Cadillac health plans offered by some companies. Gertz, the overnight stocker in Denver, says her health plan is so stingy that she often doesn’t see a doctor when she’s sick because the deductible requires her to pay the first few thousand dollars out of pocket. Gertz said that when workers call in sick, their first day off comes out of their vacation days or personal days, not their paid sick days.
A spokesperson for Walmart says it will soon revamp its policy so that employees can use paid sick days starting on their first day out. The spokesperson added that its bonuses, 401(k) plan, and health plan are considerably better than at most other discounters—its 401(k) plan gives a dollar-for-dollar match for the first six percent of pay and the premium for its most popular health plan is just $21.90 every two weeks. That said, part-time workers, who represent nearly half its work force, don’t qualify for many of these benefits.
The leaked video also boasts, “There’s no retail company that offers more advancement and job security than Walmart.” Considering that some retailers are unionized with strong job-security provisions in their union contracts, some labor advocates wondered how Walmart could begin to assert that its job security is as strong as any other retailer’s.
“That’s patently false,” said Stuart Appelbaum, the president of the Retail, Wholesale and Department Store Union, a division of the UFCW. “At Walmart you can be fired for any reason at all or no reason.” He contrasted Walmart, one of the nation’s many “at-will” employers, with retailers that are unionized or partly unionized, including Costco, Macy’s, H&M and Modell’s. At unionized stores, workers can only be fired “for cause,” meaning managers need a strong reason to fire someone—for example, stealing from a store or arriving 30 minutes late five days in a row. Moreover, workers in those unionized stores can usually challenge their dismissal by bringing in an impartial arbitrator who helps determine whether a firing was justified.
Walmart, in its orientation video, makes other attempts at belittling unions. It features an actor who says, “I was a union member at my last job. Everyone actually had to join the union . . . The thing I remember most about the union is that they took dues money out of my paycheck before I ever saw it, just like taxes.” The character’s assertion that he “had to join the union” diverges from the truth. The Supreme Court ruled in 1963 that workers cannot be required to join the union at a unionized workplace—although they can be required to pay union dues or fees (unless they live in one of the 25 states with “right to work” laws).
In the video, an actress standing in front of a rack of produce continues to hammer the message. “I always thought that unions were kind of like clubs or charities that were out to help workers,” she says. “Well, I found out that wasn’t exactly the case. The truth is unions are businesses, multimillion-dollar businesses that make their money by convincing people like you and me to give them a part of our paychecks.”
Although some union leaders have generous salaries, Benjamin Sachs, a labor law professor at Harvard, said that unions aren’t for-profit businesses. “If unions are businesses, they’re the best example of the sharing economy we’ve seen,” Sachs said. “Here’s the business model: By sharing their resources, including their financial resources, workers make better lives for themselves and their families.” Thomas Kochan, an MIT professor of management, said that the phrase the actor uses—“clubs and charities”—“insults any new hire’s intelligence.” “Most people know what unions are and what they try to do,” Kochan said.
Indeed, one might ask, if unions are doing as little for workers as Walmart maintains, why then does Walmart bother to battle unions so aggressively? Walmart takes a far more jaundiced view of unions than do many Americans—for instance the nation’s Roman Catholic bishops. “The Church fully supports the right of workers to form unions or other associations to secure their rights to fair wages and working conditions,” the bishops once wrote in a pastoral letter, Economic Justice for All. And Pope John Paul II, never known as a raging liberal, called unions, “an indispensable element of social life.”
Brian Nick, a Walmart spokesman, explained why the company made the video. “The core reason to have the training and information on video, in and of itself, is we know that third-party groups often reach out to our associates,” he said. “This is an opportunity for us to provide accurate information that gives our associates knowledge about their work environment and their own rights as associates.”
In boasting about Walmart, the video says, “Walmart jobs are flexible jobs, giving associates the opportunity to balance our personal life with our worklife.” But Carrie Gleason, director of the Fair Workweek Initiative at the Center for Popular Democracy, an advocacy group, strongly disagreed. “I’ve spoken with countless Walmart associates who talk about how erratic their work schedules are, about how managers regularly disregard their requests for basic accommodations so they can go to school or take care of their families,” she said. Some Walmart workers say their stores slashed their hours when they asked managers to accommodate their college schedule or their efforts to hold a second job to make ends meet.
Brian Nick, the Walmart spokesman, said the company was improving its scheduling practices. Beginning next year, it will offer some employees fixed schedules each week—many employees complain that their work schedules change vastly week-to-week.
In urging workers to shun unions, the Walmart video says, “In recent years, union organizers have spent a lot of time, effort and money trying to convince Walmart associates to join a union, all without any success.” But that’s not quite true. The UFCW hasn’t sought to persuade Walmart employees to join a union in recent years, although it did help form OUR Walmart to push for better wages and working conditions. OUR Walmart claimed a victory in February when Walmart announced it would raise its base pay to $9 this year and $10 next year. A spokesperson for Walmart said it was responding to a tighter labor market and boasted that the move would mean raises for 500,000 workers.
The Walmart video is correct about at least one thing: Most of the recent unionization votes at Walmart stores in the U.S. were unsuccessful. For example, the tire and lube workers at two Walmart stores, in Colorado and Pennsylvania, voted overwhelmingly in 2005 against unionizing. But the UFCW had a big success in 2004, when it unionized a Walmart in Jonquiere, Quebec—a first in North America. Walmart closed that store shortly afterward, and Canada’s Supreme Court ultimately ruled that the shutdown was an illegal ploy to avoid having a union. Walmart has long argued that it closed the Jonquiere store because it was unprofitable and that the closing had nothing to do with the union. As for Walmart’s decision to suddenly begin using prepackaged meat after that meat department in Texas unionized in 2000, the company said that the timing was just a coincidence and that the decision had nothing to do with unionization.
This past April, Walmart abruptly announced it was closing its store in Pico Rivera, California, along with four other stores, for six months. Many workers saw that as a daunting anti-union statement—the Pico Rivera store has the nation’s most militant OUR Walmart chapter, having staged a sit-in and numerous other protests. Walmart, however, insisted that the closing was necessitated by “ongoing plumbing issues.”
Source: The Atlantic
Obscure Fed Tool Used to Hammer Yellen for Enriching Banks
Source: Bloomberg Business
...
Source: Bloomberg Business
A tool Congress gave the Federal Reserve to control interest rates has become a hammer for lawmakers to bash the central bank.
Fed Chair Janet Yellen withstood bipartisan criticism at a congressional hearing on Wednesday over the policy of paying the largest financial institutions to keep more funds than required on deposit at the central bank. The Fed doled out $1.7 billion in interest on excess reserves -- known as IOER for short -- to banks in the third quarter.
Congress, which gave the Fed authority in 2008 to pay interest on excess reserves, may be having second thoughts. While the tool helps the Fed raise its benchmark interest rate and simultaneously maintain a $4.5 trillion balance sheet that policy makers say supports the economy, several lawmakers complained to Yellen that IOER is enriching Wall Street.
California Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, labeled the IOER payments a “massive transfer of wealth from the Federal Reserve to private-sector banks.” Committee Chairman Jeb Hensarling, a Texas Republican, called it a “subsidy.”
In a election year, Yellen was grilled on campaign issues ranging from income inequality to high rates of minority unemployment. Candidates such as Senator Bernie Sanders, a socialist from Vermont who won the New Hampshire Democratic primary Tuesday, are finding that Wall Street-bashing resonates with voters struggling with slow wage increases.
The Center for Popular Democracy, part of a coalition known as Fed Up, said it met with Waters in September and discussed why paying banks interest on excess reserves is troublesome.
‘Anti-Consumer’
“It was a tool that was given to the Fed without ever envisioning an environment of multi-trillion dollar excess reserves,” said Jordan Haedtler, campaign manager for the group. “It’s a pretty crude, anti-consumer tool that rewards big banks.”
Yellen defended the tool, noting that the flip side of the excess reserves are the Fed’s large asset holdings, which generated many more billions of dollars in remittances to the Treasury. She also warned that extinguishing reserves through asset sales could cause more volatility in financial markets and hurt growth.
“The Federal Reserve has transferred, since 2008 through 2015, roughly $615 billion back to Congress, to the taxpayers, to the Treasury, funds that have contributed importantly to financing the government,” Yellen said.
The Fed created hundreds of billions of excess reserves in the financial crisis as it began to rescue financial institutions such as Bear Stearns Cos. and conduct quantitative easing through direct bond purchases.
Normally, banks would try to dump some of the $2.3 trillion in excess reserves they now hold into overnight lending markets to try earning a return. That would swamp attempts by the Fed to control the federal funds rate and make raising rates difficult.
Bullard’s Warning
By paying a rate above its target rate for federal funds, the Fed can keep those funds out of the market and exert more control over its policy rate. To mop up other excess cash coming from sources other than commercial banks, the Fed uses another tool called reverse repurchase agreements where it uses securities as collateral for short-term loans of cash, thus removing it from the money markets.
The political liability of paying large sums of interest to private banks hasn’t been lost on Fed officials. St. Louis Fed President James Bullard said in August that the strategy would benefit from bipartisan support.
“It’s going to mean fairly large payments to the largest banks in the U.S. and to some foreign banks,” Bullard said in an August interview with Wharton Business Radio’s ”Behind the Markets” program on Sirius XM Radio. “If Congress is not comfortable with that, they should definitely tell us right now.”
Addressing Yellen during the hearing, Waters said, "It looks like we’re about to have some bipartisan concern on this issue."
The Fed chief responded, "I hear that."
New Website IDs Corporations Profiting From the Abuse of Communities of Color
New Website IDs Corporations Profiting From the Abuse of Communities of Color
BackersOfHate.org documents Wells Fargo, Goldman Sachs, Uber and more companies' ties to the Trump Administration and policies that negatively impact poor people of color...
...
BackersOfHate.org documents Wells Fargo, Goldman Sachs, Uber and more companies' ties to the Trump Administration and policies that negatively impact poor people of color...
Read full article here.
Starbucks vows to do more to ease barista schedules
An internal memo from a Starbucks executive this week urged store managers to "go the extra mile" to improve workers' schedules.
The letter was distributed on...
An internal memo from a Starbucks executive this week urged store managers to "go the extra mile" to improve workers' schedules.
The letter was distributed on Tuesday and refers to a New York Times story that was set to be published the following day titled, "Starbucks falls short after pledging better labor practices."
The Times story referred to a survey by the nonprofit advocacy group Center for Popular Democracy.
Based on interviews with 200 baristas in 37 states, the survey says Starbucks "is not living up to its commitment to provide predictable, sustainable schedules to its workforce."
In 2014, Starbucks said it was changing its policies telling managers to post schedules at least a week in advance and not make store employees work an opening and closing shift back-to-back.
In this week's memo, Cliff Burrows, Starbucks (SBUX) group president of the U.S. and Americas, said the findings of the new survey "suggest" that neither commitment was being met -- "contrary to the expectations we have in place."
In his letter, Burrows urges managers to improve scheduling for coffee baristas, who the company calls partners.
"To our store managers, I want to stress that as we continue to evolve and improve the usability of our system, we have to go the extra mile to ensure partners have a consistent schedule -- free of back-to-back close and open shifts that are less than 8 hours apart -- that is posted 2 weeks in advance," he wrote.
Source: CNN Money
Fed official explains why he stopped trying to predict the future
Fed official explains why he stopped trying to predict the future
JACKSON HOLE, WYO. -- The world's economic elite gathered here for an annual symposium sponsored by the Federal Reserve Bank of Kansas City last week to debate the strategies central banks should...
JACKSON HOLE, WYO. -- The world's economic elite gathered here for an annual symposium sponsored by the Federal Reserve Bank of Kansas City last week to debate the strategies central banks should employ to safeguard the global economy. We sat down with St. Louis Fed President James Bullard to chat about when he might be ready for a rate hike, the limits of his powers and why predicting the future is futile.
The transcript below has been edited for length and clarity.
Wonkblog: Let’s start with the question of the day: Which month looks good to you for a rate hike?
Bullard: Actually, I’m agnostic on this. Our new framework calls for one, and only one, and then we go on pause for a bit. It’s not critical to me exactly when we make that move, so we wouldn’t have to go at any particular meeting.
I do like to move on good news, so if we have good information, and we’re at a meeting, it might be a good opportunity to go ahead and make that move. But what’s different about what I’m saying is I’ve got a real flat interest rate path — much closer to the markets’ interest rate path. I don’t have this march upward of 200 or 250 basis points.
If only one more rate hike is really needed to get to the Fed’s neutral stance, why does it matter if you move in September, December or next year? You would be willing to wait until 2017?
Certainly, I just don’t feel that there’s any urgency when you’ve got the framework I’m talking about.
[The Federal Reserve is debating how to fight the next recession]
So explain your framework for us.
What we wanted to do is break down this idea that we’re really certain about where the economy is going in the medium- and long-run. What most models do is they have something called a steady state, which is really an average of all the variables in the past: You look at the unemployment rate, and you take the average unemployment rate. You look at interest rates and take the average past interest rate. You look at inflation, growth — you take averages of the past, and you call those your normal values.
As you go along, you expect all your variables to go back to their normal values. That’s what we’ve been doing. That’s the old framework. And what we’re saying is we don’t like that framework anymore because it suggests we have a lot more certainty about where the economy is going than we really do.
These averages of these variables from the past — they can sometimes be high and sometime be low. You can be in a configuration where these things are low, and then you can switch to another configuration when they’re high. Then they’re high for a while, and you switch back to low. What you have to do is make policy given whatever regime you’re in.
We think that the regime that is dominant right now is a slow-growth regime that is characterized by low productivity growth and very low real returns on short-term government debt around the world. We think these regimes are persistent. These things aren’t changing any time soon. And because of that, we just have to take them as given, for now anyway.
Given that in this framework, it’s difficult to tell when the regime is shifted, how do you know that you’re not setting monetary policy for a regime that’s already expired?
You’re gonna know when the regime switches. These very low real rates of return on government debt, if you look at the ex-post return on one-year Treasurys, it’s about -135 basis points right now. If that starts to go up rapidly, we’re gonna know and we’re going to take note of it. We’re gonna say, “Aha! Our regime has changed, and we’re going to have to change monetary policy accordingly.”
But for forecasting purposes, I wouldn’t say that I’m expecting that to happen all of a sudden. It’s been that way for at least the last three years, and if you look at real rates of return, they’ve declined for the last 30 years. It’s also very clear that we’re in a very low productivity environment.
It’s not that you go to sleep. You stay alert to the possibility that the regime can change in the future, and probably will change at some point in the future. It’s just not good to be predicting that it’s going to change.
Federal Reserve Chair Janet Yellen's speech here laid out the argument that the Fed is not out of ammunition to fight the next recession. Do you agree with that?
I loved the speech. She made the case that we still have quite a bit of bandwidth to handle problems if they arise in the next couple of years, and I very much agree with that. But at the same time, it’s always good to be studying other possibilities. I actually have papers on nominal GDP targeting, so I think that’s an interesting topic. It's probably not ready for prime time, but I’m a believer in research.
What led you to the support for this regime-based framework. Can you talk about the evolution of your thinking?
Maybe some frustration with the dot plot. We were saying we were going to have to raise rates fairly aggressively over the forecast horizon in order to keep the economy on track, and that wasn’t materializing. We had that forecast for several years, and it wasn’t really working. For that reason, I wanted to get a different way to think about what we were doing.
We’ve only moved once on the policy rate, and markets are saying maybe one more move this year. That would only be one move per year — that’s really not normalization. If you’re going to say it’s going to take 10 years to get back to a normal value, you’re really saying we’re not going back there. That’s way longer than any sort of business cycle than you can reasonably talk about.
How do you feel about the division between monetary and fiscal policy currently? Do you feel it’s time to pass the baton here?
I do think that. And I think the regime framework is good for laying that out for people. Part of the story is that the recession has been over for seven years. The unemployment rate has gone down below 5 percent. Inflation is low, but we don’t think it’s that low, and it’s kind of coming up to target.
So the cyclical dynamics are all done. The dust has settled, I guess is the way I would put it.
You might say the dust has settled, and I don’t like what I see. But for that, you can’t solve that with monetary policy. You’ve got to have things that are going to increase productivity in the economy. You’ve got to make the economy more efficient. New ideas, better technology, better diffusion of technology, better human capital, better skills match — I think it’s a lot of small things that you have to do right to get an economy humming. The story of let’s keep interest rates low and that will help us, that’s kind of over for now.
Related to that are the demonstrations by Fed Up and the Center for Popular Democracy that were held Thursday. Any additional thoughts on their point of view, that there’s still more that the Fed can do?
I love the people that come here. I think they’re a really great slice of the American workforce. It’s really nice that they’re willing to take time out of their lives to come out here and talk to us boring central bankers.
They want to talk about low nominal interest rates as solving difficult problems of how our labor markets operate and how our labor markets are unfair to many people. I would like them to think about the German labor market reforms that were done over the last decade. Germany had very high unemployment for a long time. It was an endemic problem, and then they did these reforms and got their unemployment rate cut in half — even though Europe went through a double-dip recession during that period.
It showed to me that there are ways to attack these problems, and I think we could do that in the U.S. I think they should refocus their efforts on the labor secretary, so we could get those kinds of reforms going. People aren’t even talking about that.
By Ylan Q. Mui
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Banks on the Run (Continued)
The Nation - April 30, 2013 - You can’t talk about poverty without talking about the practices of the big banks, including their continuing refusal to stem the foreclosure crisis through mortgage...
The Nation - April 30, 2013 - You can’t talk about poverty without talking about the practices of the big banks, including their continuing refusal to stem the foreclosure crisis through mortgage principal reductions.
Consider this: Latinos lost 66 percent of their household wealth after the housing bubble burst, and African-American households lost 53 percent. Nearly 12 million families—disproportionately people of color—have either lost their homes or are currently in foreclosure, and another 16 million are underwater, owing more on their mortgages than their homes are worth.
Communities are decimated by boarded up houses and vacant lots, declining property values and the consequent loss of state and local revenues, and fewer opportunities to weather and recover from financial hardship. A new study from the Urban Institute indicates that white families now average six times the wealth of African-American and Latino families.
So when US Bank executives fled Minneapolis two weeks ago to hold their annual shareholders meeting in what they believed would be friendlier confines in Boise, it was important that activists from Minnesota and Oregon traveled to join Idahoans in an effort to hold the bank accountable. Then last week, Wells Fargo bankers traveled from San Francisco to Salt Lake City for their shareholders meeting, and activists again weren’t deterred—they came from California, Colorado and New York to stand with local groups and protest the bank’s practices.
“Wells Fargo moved the shareholders meeting to Salt Lake because last year there were 3,000 people in the streets in San Francisco,” said Maurice Weeks, campaign coordinator for the Alliance of Californians for Community Empowerment (ACCE), which had fifteen members make the eleven-hour trip to Utah. “We wanted them to know that they can’t hide from us.”
ACCE members attended the shareholders meeting as legal proxies. They were joined by members of the Neighborhood Economic Development Advocacy Project (NEDAP) from New York, the Colorado Student Power Alliance and local groups from Salt Lake City that were focused on Wells Fargo’s investments in private prisons and the impact on communities of color.
Several ACCE members in attendance were facing immediate foreclosures and welcomed the opportunity to tell Wells Fargo CEO John Stumpf—who was paid $22.87 million last year, more than any other banker—that they hadn’t been given a fair shake.
“We’re talking about folks who could pay their mortgages and stay in their houses with a modification, and Wells refuses,” said Weeks. “We’ve had situations where a HUD counselor tells our members that they qualify and Wells still denies a modification.”
More broadly, ACCE was there to demand that Wells commit to pursuing principal reductions—reducing the amount owed on a mortgage so that it reflects the fair market value of the property—wherever they are legally able to do so. A recent report from ACCE, the Center for Popular Democracy and the Home Defenders League suggests that foreclosing on the more than 11,600 California homes currently in Wells’s foreclosure pipeline—which are concentrated in poor and non-white communities—would cost the state approximately $3.3 billion due to the decreased value of the foreclosed properties, decreased value of homes in the surrounding communities and lost tax revenues. In contrast, a comprehensive program of principal reduction would stabilize households, increase tax revenues and boost the economic vitality of distressed communities. (Modifications also happen to be better for the investors who hold the mortgage, but unfortunately banks that service the mortgages—like Wells Fargo—can often make more money by foreclosing.)
A second key demand by ACCE members was that Wells Fargo report its data on principal reductions, short sales and foreclosures by race, income and zip code. Last year, the bank reached a $175 million settlement with the Department of Justice for allegedly charging African-American and Latino borrowers higher rates and fees and steering them into subprime loans when they should have qualified for regular loans.
“Our members want to make sure Wells isn’t still preying on communities of color,” said Weeks.
NEDAC presented a resolution for an independent investigation of Wells Fargo’s business practices in order to ensure that they don’t violate any fair lending or fair mortgage laws. Although the resolution was voted down, Weeks said it received more discussion than any other resolution presented to the shareholders.
“ACCE members—but also people we didn’t know—were all voicing concerns about Wells Fargo’s mortgage practices,” said Weeks.
According to Weeks, when Stumpf tried to move onto “business as usual,” Makayla Major, an ACCE member from East Oakland, stood up and shouted, “John Stumpf, you’re a liar and a crook. You are stealing too many homes in my neighborhood!” Weeks said that the room was lined with “forty or fifty” security guards and that “six or seven” immediately moved in to “make her be quiet.”
Then ACCE member Manuela Alvarez—who has been trying unsuccessfully to modify her subprime loan since her husband was injured on the job—said, “You are trying to steal my home, like you’ve stolen the homes of tens of thousands of other hard-working families. It’s time for you to be held accountable!”
She, too, was quickly surrounded by security.
ACCE member Melvin Willis then began reading a “Citizens Arrest Warrant” for Stumpf for “the following crimes: illegally foreclosing on millions of homeowners nationwide; intentionally targeting communities of color with predatory, high-cost loans; and gouging students with predatory student loans—usury.”
“He was immediately swarmed and at that point we were all escorted out of the room and the hotel,” said Weeks. “But John Stumpf and the shareholders definitely heard our message, and we made it clear that they can’t ignore these issues.”
Wells Fargo made $19 billion in profits last year and record profits last quarter. None of this would have been possible without the bank bailout and continued borrowing of taxpayer money at zero percent interest from the Federal Reserve (which Wells Fargo and the other big banks then turn around and loan to state and local governments at much higher rates).
ACCE and its allies showed up in Salt Lake City to take a stand against a wealth-stripping machine. There will be more actions ahead against Bank of America (May 9), Sallie Mae (May 30) and Walmart (June 7). Sign up to stay informed here.
“The message from the banks is that the foreclosure crisis is over, and a lot of the general public is hearing that,” said Weeks. “But we see on the ground that that’s far from true, and that Wells Fargo continues to profit at the expense of our communities. That’s why we’re keeping up the pressure of this campaign. We’re going to fight for our communities as hard as we possibly can.”
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