The Washington Post - December 5, 2013 - The American Civil Liberties Union has sued the Federal Housing Finance Agency, asking it to disclose efforts to stop municipalities from...
Neel Kashkari Named Next Minneapolis Fed President
Neel Kashkari, a former financier who managed the U.S. Treasury’s $700 billion rescue of banks in the 2008 crisis, was named the next president of the Federal Reserve Bank of Minneapolis.
...Neel Kashkari, a former financier who managed the U.S. Treasury’s $700 billion rescue of banks in the 2008 crisis, was named the next president of the Federal Reserve Bank of Minneapolis.
Kashkari’s resume includes stops at Goldman Sachs Group Inc. and Pacific Investment Management Co., and a failed run for governor of California last year. At the Treasury, he was Secretary Henry Paulson’s key aide in overseeing the Troubled Asset Relief Program, or TARP. Kashkari will take over from Narayana Kocherlakota on January 1, 2016, according to a statement Tuesday from the Minneapolis Fed.
“He has a little bit of all the pieces you’d want in a Fed president,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in Stamford, Connecticut.
As head of one of 12 regional Fed banks, Kashkari will join the Federal Open Market Committee, the central bank’s policy making panel. The Fed is weighing ending a seven-year era of near-zero interest rates, with investors betting it will move next month. Kashkari is not scheduled to vote on policy decisions until 2017. Kocherlakota, as is customary for outgoing FOMC members, will not attend the December meeting.
QE ‘Morphine’
Kocherlakota is one of the Fed’s most dovish policy makers who has argued it should keep rates on hold into next year. Kashkari has offered observations on monetary policy via his twitter feed, without spelling out whether he would favor raising rates or delaying liftoff in the current climate. In an April 2013 comment he likened the Bank of Japan’s asset purchase program to “morphine. makes u feel better but doesn’t cure.”
“I don’t think we know that much” about Kashkari’s views on monetary policy, said Angel Ubide, a senior fellow at the Peterson Institute for International Economics in Washington. “My experience with people who get appointed is whatever they thought before and what they do later doesn’t necessarily correlate.”
Kashkari, 42, earned bachelor’s and master’s degrees in mechanical engineering at the University of Illinois at Urbana-Champaign, and an MBA from the University of Pennsylvania’s Wharton School. He began his career as an aerospace engineer at TRW Inc. in Redondo Beach, California.
Goldman Sachs
Kashkari’s appointment places another ex-Goldman Sachs banker at the helm of a regional Fed bank. Robert Steven Kaplan at the Dallas Fed and New York’s William C. Dudley are Goldman alums. Philadelphia Fed chief Patrick Harker previously served as a trustee at Goldman Sachs Trust and as a member of the board of managers of Goldman Sachs Hedge Fund Partners Registered Fund.
“We’re disappointed that yet another former Goldman Sachs insider has been elevated to a regional president position,” said Jordan Haedtler at the Center for Popular Democracy in Washington.
Such appointments need “more transparency and public input,” said Haedtler, who’s deputy campaign manager at Fed Up, a national coalition that’s calling for changes at the central bank and wants to keep rates low to boost employment.
Kashkari worked at Goldman in the early 2000s before accepting a post at the Treasury in 2006. He joined Pimco, then led by bond fund manager Bill Gross, in 2009 to help oversee an expansion into equities, an attempt to reduce the firm’s heavy dependence on the fixed-income market. When he left in 2013, the company’s equity unit had attracted $10 billion in assets, or less than 1 percent of the firm’s total assets at the time.
Bank Bailout
TARP, approved by Congress in October 2008, remains one of the more controversial measures taken during the financial crisis. It authorized the government to purchase up to $700 billion in troubled assets from financial institutions, in an effort to bolster global credit markets. The government ultimately used $475 billion, including $250 billion to stabilize banks, $82 billion to bail out auto makers and $70 billion to save insurer American International Group Inc., according to the Treasury’s website.
“Mr. Kashkari is an influential leader whose combined experience in the public and private sectors makes him the ideal candidate to head the Minneapolis Fed,” said MayKao Hang, incoming chair of the Minneapolis Fed’s board of directors and co-chair of the search committee.
Kashkari, a Republican, was defeated by incumbent California Governor Jerry Brown in November 2014, getting 43 percent of the vote to Brown’s 57 percent.
Presidents of the 12 regional Fed banks are appointed by a portion of their respective boards of directors, subject to the approval of the Fed Board in Washington. Reserve bank boards typically consist of nine members, including three bankers. The banking members are excluded under Dodd-Frank from participating in the selection of presidents.
Source: Bloomberg Business
Groups launch 'people's filibuster' against GOP health bill
More than a dozen groups opposing the Senate GOP's healthcare bill will hold a "people's filibuster" for two days on the lawn of the Capitol.
Activists and Democratic lawmakers will speak...
More than a dozen groups opposing the Senate GOP's healthcare bill will hold a "people's filibuster" for two days on the lawn of the Capitol.
Activists and Democratic lawmakers will speak out against the ObamaCare repeal bill Monday and Tuesday and possibly later in the week.
Read the full article here.
Advocacy Groups Call for Closer Scrutiny of Charter Schools
Trib Total Media - October 1, 2014, by Megan Harris - Three groups with union affiliations on Wednesday pointed to the criminal case against ousted PA Cyber Charter School founder Nick Trombetta...
Trib Total Media - October 1, 2014, by Megan Harris - Three groups with union affiliations on Wednesday pointed to the criminal case against ousted PA Cyber Charter School founder Nick Trombetta as an example why the state's nearly 180 charter schools need better oversight and stronger accountability.
The Center for Popular Democracy, Integrity in Education, and Action United of Philadelphia and Pittsburgh issued a report that alleges Pennsylvania charter schools defrauded taxpayers out of more than $30 million. That figure is an aggregate of cases brought by whistleblowers and media exposés, according to the authors.
Pennsylvania Coalition of Public Charter Schools executive director Robert Fayfich said in a prepared statement that “the report draws sweeping conclusions about the entire charter sector based on only 11 cited incidents in the course of almost 20 years, while ignoring numerous alleged and actual fraud and fiscal mismanagement in (traditional) districts over that same time period.”
Trombetta, who investigators allege illegally funneled $1 million from school coffers and deferred taxes on an additional $8 million in personal income, pleaded not guilty to 11 counts of mail fraud, bribery, tax conspiracy and filing false tax returns last year. Hearings are ongoing.
Fayfich said, “Fraud and fiscal mismanagement are wrong and cannot be tolerated, but to highlight them in one sector and ignore them in another indicates a motivation to target one type of public school for a political agenda.”
The groups' report urges state officials to temporarily suspend the approval process for new charter schools, investigate existing ones, and shift from standard audits to forensic audits.
School districts paid more than $853 million in tax dollars to charters serving 128,712 students in 2013-14. Almost 4,000 Pittsburgh students attended 33 charter schools the same year.
SourceGroups sue feds over foreclosure fighting tactic
The Washington Post - December 5, 2013 - The American Civil Liberties Union has sued the Federal Housing Finance Agency, asking it to disclose efforts to stop municipalities from using eminent domain to bail out underwater homeowners and make its dealings with the financial industry more transparent.
The ACLU, Center for Popular Democracy and other nonprofits filed a freedom of information lawsuit against the agency Thursday in federal court in San Francisco.Richmond, Calif., was the first city to officially codify the divisive foreclosure fighting plan, which has drawn zealous opposition from Wall Street and Washington. Two lawsuits challenging the use of eminent domain have been thrown out, but will likely be refiled. The city has not yet used eminent domain to seize a mortgage.Irvington, N.J., is moving forward with the strategy, and the city council in Newark took its first steps toward moving forward with a plan Wednesday. Yonkers, N.Y., is considering it, but other places have scrapped the idea because of opposition from banks or legal hurdles.The agency said in August it may initiate legal challenges against municipalities that want to use eminent domain to fight foreclosures and could direct regulated entities to stop doing business in those places. The nonprofits said most of the cities exploring the use of eminent domain have been besieged by foreclosures and have predominantly low-income, minority populations.The nonprofits filed freedom of information requests with the agency in October, seeking communication between agency leadership and representatives of the banking, mortgage and financial industry, and records of meetings between the agency and financiers, among other requests.FHFA acknowledged, but did not complete, the requests, according to the lawsuit, so the groups sued. The nonprofits are asking for the documents to be procured on an expedited basis.“The FHFA has taken an aggressive stance on this issue in a way that has harmed minority communities. The public deserves to know why,” said Linda Lye, a staff attorney with the ACLU of Northern California, in a statement.A FHFA spokeswoman said the agency is not commenting on the lawsuit.By using eminent domain, municipalities can circumvent mortgage contracts, acquire loans from bondholders, write them down and give them back to the bondholders with reduced principals. According to Cornell University law professor Robert C. Hockett, who devised the plan, only government has the power to forcibly sidestep mortgage contracts.The tactic only works with so-called private label security mortgages, or ones that are not backed by the federal government.FHFA oversees government-backed loans owned by Fannie Mae or Freddie Mac. They cannot be seized by eminent domain.The lawsuit said one of the agency’s “statutory mandates is to help the housing market recover,” and threatening to sue municipalities that try to use eminent domain conflicts with that obligation.“By threatening legal action,” the suit said, the agency “effectively blocks the communities hit hardest by the foreclosure crisis from pursuing one potentially effective solution on behalf of their residents.”The suit also said the agency’s threats to deny credit to communities raises Fair Housing Act and Equal Credit Opportunity Act concerns.Members of the financial industry have said they fear using eminent domain could be a slippery slope, and penalizes people who save and invest in mortgage-backed securities.In Washington, Texas Republican Rep. Jeb Hensarling and Calif. Republican Rep. John Campbell proposed legislation that would bar the federal government from backing mortgages in places that use eminent domain to seize mortgages. SIFMA, a group that represents security firms, banks and asset managers and 11 other groups sent a letter to Congress opposing the use of eminent domain.Last month, 10 members of Congress sent a letter asking the head of FHFA to rescind its threat to sue places that use eminent domain.Source
Mpls. Fed chief, activists talk about economic gap
The president of the Federal Reserve Bank of Minneapolis met with activists and northside residents Wednesday over racial and economic disparities.
Neel Kashkari talked with leaders from...
The president of the Federal Reserve Bank of Minneapolis met with activists and northside residents Wednesday over racial and economic disparities.
Neel Kashkari talked with leaders from Neighborhoods Organizing for Change for an hour — an unusual meeting of a banking insider and a group known for street demonstrations and putting political pressure on the powers that be.
"A big part of my job is to get out and understand first hand what is happening, what are the challenges," said Kashkari who has served on the central bank system since January.
In that time, the former head of the federal government's bank bailout program in 2008 has drawn attention for his warning that failure of some big banks could lead to another financial crisis.
Kashkari said that the Fed's monetary policy can have an effect on unemployment, interest rates and inflation, but he said Congress' fiscal policy will also be key in addressing racial disparities.
Anthony Newby, executive director of Neighborhoods Organizing for Change, said they talked about the high unemployment rate among African-Americans.
"Now we can spend more time collaborating, doing a deeper dive and figure out what are the structural barriers and then what can the Fed do to bridge that gap," Newby said. "That's a big deal and big starting point."
Newby added he was pleased to have someone in Kashkari's position listening to real people struggling to make ends meet.
Kashkari agreed to meet with them again.
By PETER COX
Source
[created] | Published by: Reuters in The Washington Post
DACA activists protest at the Capitol: "We shall not be moved"
DACA activists protest at the Capitol: "We shall not be moved"
Demonstrators gathered on Capitol Hill on Feb. 7 to demand a budget deal that includes an alternative for DACA, an Obama-era program that protects roughly 690,000 undocumented immigrants.
...
Demonstrators gathered on Capitol Hill on Feb. 7 to demand a budget deal that includes an alternative for DACA, an Obama-era program that protects roughly 690,000 undocumented immigrants.
Watch the video here.
Charters’ exorbitant fees hinder efforts to obtain public info
Public records requests made to 10 publicly funded Boston charter schools have been thwarted by demands for fees totaling $91,440 from seven of the schools, according to Russ Davis, director of...
Public records requests made to 10 publicly funded Boston charter schools have been thwarted by demands for fees totaling $91,440 from seven of the schools, according to Russ Davis, director of Massachusetts Jobs with Justice and a spokesperson for the Massachusetts Education Justice Alliance.
The requests for information were made on behalf of the MEJA, a coalition of labor, faith and social justice organizations, and concerned whether information on parents of charter school students was provided to two pro-charter advocacy organizations.
“The demands for absurdly high fees to comply with our requests underscore an appalling lack of transparency on the part of these publicly funded Commonwealth charter schools,” said Davis.
This issue underscores problems that would be addressed in a public records access bill that Massachusetts House Speaker Robert DeLeo told the State House News Service may come to the floor for a vote next week.
Kyle Serrette, the director of education justice campaigns at the Center for Popular Democracy, who has issued similar requests to both public school districts and to charter schools in other states, said that schools typically charge very little or no money to respond to public information requests.
“Exorbitant requests for fees like this by large school companies limit transparency and reduce public trust in these schools,” Serrette said.
MATCH Charter Public Middle School demanded the most for the information: $36,015 (click here to see letter). Roxbury Preparatory Charter School quoted the second-highest fee estimate, $12,500. To date, Boston Renaissance Charter Public School and Boston Preparatory Charter Public School have failed to respond.
UP Academy Dorchester, an in-district Horace Mann charter school, was the only one to respond with the information requested, providing its student records policy free of charge and stating that it has not engaged in any of the actions for which information was requested.
“These fee estimates from seven of the eight schools that responded are exorbitant and beyond our capacity to pay,” said Davis. “These charges violate the spirit and letter of our public records law.”
The MEJA requests were made in an attempt to determine the relationship between these Boston charter schools and two charter advocacy organizations —Families for Excellent Schools and the Massachusetts Charter Public School Association. Specifically, the coalition is trying to determine whether the schools had any contracts with these groups, any policies related to providing outside groups with contact information for students’ families, and any record of providing these two outside groups with that contact information.
“We were concerned about reports that the charter schools may have been giving these corporate-backed, pro-charter organizations parent contact information so that parents could be enlisted to lobby on behalf of the charter school agenda,” said Davis. “If that has been going on, we believe the public has a right to know. Charter schools are publicly funded. We do not believe that public funds should be used to persuade parents to lobby on behalf of the private charter school industry.”
Families for Excellent Schools is a New York-based organization that supports Unify Boston and Great Schools Massachusetts, both of which are pro-charter advocacy groups. FES has received millions of dollars from corporate foundation groups, including the Broad Foundations and the Walton Family Foundation.
This chart indicates when the charter schools queried responded to the request for information, which was made in a letter dated Aug. 20, 2015. It also lists the fee estimate from each school and the name of the law firm, if any, that responded to the request.
School Response Date Records Produced Fee Estimate Firm Boston Collegiate Charter 21-Aug-15 $7,250 Krokidas & Bluestein KIPP Academy Boston Elementary and Middle 28-Aug-15 $9,560 Krokidas & Bluestein Brooke Roslindale Charter 28-Aug-15 $7,500 Krokidas & Bluestein Neighborhood House Charter 28-Aug-15 $8,615 Krokidas & Bluestein Excel Academy - East Boston 28-Aug-15 $10,000 Krokidas & Bluestein UP Academy Charter - Horace Mann 01-Sep-15 04-Sep-15 $0 None Roxbury Preparatory Charter 22-Sep-15 $12,500 None Match Charter Public Middle 25-Sep-15 $36,015 Krokidas & Bluestein Boston Renaissance Charter Public Boston Preparatory Charter Public
Excerpts from guidance from the Massachusetts Secretary of State’s office on what fees may be charged for providing public records:
“In the interest of open government, all records custodians are strongly urged to waive the fees associated with access to public records, but are not required to do so under the law.” “A records custodian may charge and recover a fee for the time he or she spends searching, redacting, photocopying and refiling a record. The hourly rate may not be greater than the prorated hourly wage of the lowest paid employee who is capable of performing the task. A records custodian may not recover fees associated with record organization.”Public Records Request made by the service Muckrock on behalf of MEJA on Aug. 20.
Dear Records Officer:
Pursuant to Massachusetts Public Records Act § 66-10 et seq., I am writing to request the following records:
Copies of all communication, including email, between your organization and Families for Excellent Schools, a/k/a Families for Excellent Schools Advocacy, or any agent thereof, inclusive of all attachments and memoranda. For purposes of manageability, you may limit this request to only those communications from the previous 24 months. Copies of all communication, including email, between your organization and Massachusetts Charter Public School Association, or any agent thereof, inclusive of all attachments and memoranda. For purposes of manageability, you may limit this request to only those communications from the previous 24 months. Copies of any contracts between your organization and Families for Excellent Schools, Inc., and/or Families for Excellent Schools Advocacy, Inc., if applicable. Copies of any contracts between your organization and Massachusetts Charter Public School Association, if applicable. Copies of any policies relating to the transmission of student records to a third party, promulgated since 2012, including revisions. Copies of any school policies relating specifically to the disclosure of student “directory information” to third parties promulgated since 2012, including revisions. Copies of any parental notifications regarding transmission of student information to Families for Excellent Schools, Inc., and/or Families for Excellent School Advocacy, Inc., if applicable. Copies of any parental notifications regarding transmission of student information to Massachusetts Charter Public School Association if applicable. Documentation of any payments made to Families for Excellent Schools, Inc. and/or Families for Excellent Schools Advocacy Inc. in the previous two years, if applicable. Documentation of any payments made to Massachusetts Charter Public School Association in the previous two years, if applicable.Source: Massachusetts Teachers Association
Martin Luther King, institutions and power
Jared Bernstein, a former chief economist to Vice President Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of the new book 'The Reconnection Agenda: Reuniting...
Jared Bernstein, a former chief economist to Vice President Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of the new book 'The Reconnection Agenda: Reuniting Growth and Prosperity.'
The Rev. Martin Luther King Jr. gestures during a speech at a Chicago Freedom Movement rally at Soldier Field in Chicago on July 10, 1966. (Afro American Newspapers/Gado/Getty Images)
When the Rev. Martin Luther King Jr. was assassinated in 1968, he was in Memphis, supporting striking sanitation workers. By that time in his crusade for racial justice, he had elevated full employment to a key plank in his platform. The full name of the March on Washington was the March on Washington for Jobs and Freedom. A common placard held up that day read, “Civil Rights Plus Full Employment Equals Freedom,” a powerful economic equation indeed.
In my experience, too few people remember this aspect of King’s movement, instead emphasizing his stirring spiritual commitment to racial inclusion. But King was of course thoroughly versed in the reality of the institutional barriers blocking blacks and his unique genius was to combine deep spiritual awareness with an equally deep understanding of the role of power in economic outcomes. That’s one reason he was in Memphis, supporting the union.
In 1967, King called for “a radical redistribution of economic and political power.” He particularly understood the power, for better or worse, of American institutions, most notably of course, the institution of racism, which so successfully blocked African Americans from decent homes, jobs, schools and opportunities.
But countervailing institutions existed within his vision as well, including the church and the union, and, if it could be forced to live up to its promise, the government. Even the institutions of the consumer economy and the job market could, with the right force and strategy, including boycotts that flexed black consumer muscle and equal opportunity laws, be nudged in the direction of racial justice.
To some readers, this “institutional” framework may be confusing. What do I mean by referencing the consumer or job markets or racism or unions, as “institutions”? This certainly doesn’t square with the classic economic explanation of how the economy works: profit-maximizing individuals achieving optimal social welfare by each individual pursuing their goals.
The institutional framework, with its emphasis on historical, legal and cultural practices (norms) embedded in economic systems, stands in stark contrast to the market forces framework. Surely no one could question whether the legal system or the housing market black people faced in King’s time, not to mention our own, promoted objective, blind justice. Discrimination in schools, the economy, and almost every other walk of life could not and cannot possibly be viewed as a fair or merit-based system.
Honoring King’s vision and legacy thus requires not simply remembering his most well-known dream: a racially inclusive society very different from the one that existed in his, or sadly, our own time. It requires recognizing the need to redistribute the power from the oppressive, exclusionary institutions, many of the same ones — housing, schools, criminal justice, the economy — he fought for until the day he was taken from us.
What does honoring that vision mean today?
Although I certainly don’t advocate giving up on President-elect Donald Trump’s administration before it has started, all signs suggest that it and the Republican-led Congress will hurt, not help, the economically less advantaged. Republican budgets threaten to undermine the safety net, Trump’s proposed tax policy squanders fiscal resources on tax cuts for the rich, undermining opportunities for those stuck in places without adequate educational or employment opportunities. There’s talk among Republicans of trying to get more states to pass “right to work” laws that undermine unions and cut workers’ pay. Listening to Ben Carson’s hearing for secretary of housing and urban development quickly disabuses one of hope that he’ll tackle the legacy of segregated housing that remains a serious problem. As far as reforming the institutionalized racism the remains embedded in our criminal justice and policing systems, again, it’s awfully hard to be hopeful.
There are, however, many levels of institutional norms, laws and practices. The Fight for Fifteen has been immensely successful in raising minimum wages at the state and sub-state levels. I can’t prove this, but I’d bet that without Black Lives Matter, there would be no “blistering report” from the Justice Department on the racial practices of the Chicago Police Department. The activist group “Fed Up” has had great success elevating the issue of economic justice as regards Federal Reserve policy, a policy area that even liberal presidents have avoided getting into.
As I recently wrote regarding “ban the box,” a policy designed to give job-seekers with criminal records a fairer shot at employment:
Nineteen states and over 100 cities and counties have already taken similar action for government employees, and seven states (Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, Oregon and Rhode Island) plus Washington, DC and 26 cities and counties have extended ban the box policies to cover private employers. Some private businesses, including Walmart, Koch Industries, Target, Starbucks, Home Depot, and Bed, Bath & Beyond, have also adopted these policies on their own.
This last part about the private businesses is instructive. The Selma bus boycott was, of course, in no small part an economic action: Black people would not pay for discrimination. Regarding full employment, King realized that at high levels of unemployment, it’s costless to discriminate against a significant swath of potential workers. But when the job market tightens up, discriminating against a needed worker means leaving profit on the table.
Especially in the age of Trump, when so many Americans feel as if representative democracy is seriously on the ropes, it seems a no-brainer to channel King and once again tap the power of boycotts and leaning on businesses to do the right thing. It makes no sense at all to cede this field to Trump as he nonsensically claims (and gets) credit for job creation that already was happening.
My intuition is that many businesses, as in the ban-the-box example, would be willing to help push back on the institutional injustices that persist. Higher and more equal pay scales, implementation of the updated, higher overtime threshold that was wrongly blocked by a Texas judge (in fact, many businesses, to their credit, have gone ahead with this change), not blocking collective bargaining if their workers want to exercise that right, flexible scheduling policies that help parents balance work and family — there’s no reason for progressives not to fight for these ideas at the sub-national level and the private sector.
Although these sub-national fights are more likely where the action is for the next few years, meaningful action is developing at the national level as well. King would have easily recognized the Trump phenomenon as the work of exclusive institutions once again grabbing the power and would have organized accordingly and effectively. As we speak, many of us are trying to block the repeal of health-care reform in this spirit. The Indivisible Movement and the Women’s March would also have been highly familiar to Dr. King.
But on whatever level or in whatever sector the fight takes place, as we celebrate King’s indelible contributions, let us recall his understanding of power, the institutions that power supported and his admonitions to us not to rest until much more of that power lies in the hands of those who still command far too little of it.
By Jared Bernstein
Source
Immigration Advocates on SB 4: We’re Resisting in Texas
Grassroots leaders and local officials wasted little time organizing a coordinated campaign to fight SB 4, a new Texas law that targets cities, towns and sheriffs that don’t cooperate with federal...
Grassroots leaders and local officials wasted little time organizing a coordinated campaign to fight SB 4, a new Texas law that targets cities, towns and sheriffs that don’t cooperate with federal immigration enforcement.
Only nine days after Texas Republican Gov. Greg Abbott signed the legislation, formally known as Senate Bill 4, into law, grassroots advocates announced a “Summer of Resistance” campaign May 16. The statute allows police officers, sheriff deputies and Texas state troopers to ask about a person’s immigration status – whether they are here legally – during a routine stop.
Read the full article here.
Report: $15 Chicago Minimum Wage Would Lift Up Struggling Workers
Progress Illinois - May 27, 2014, by Ellyn Fortino - A proposal to hike Chicago's minimum wage to $15 an hour would not only be a boon for many low-wage workers but also the city's economy,...
Progress Illinois - May 27, 2014, by Ellyn Fortino - A proposal to hike Chicago's minimum wage to $15 an hour would not only be a boon for many low-wage workers but also the city's economy, according to a new report by the Center for Popular Democracy.
"Raising the minimum wage to $15 an hour would promote economic stability among Chicago workers, economic vitality in their neighborhoods and economic growth throughout this city," said Connie Razza, director of strategic research at the center, which works both locally and nationally to build "the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial and economic justice agenda."
The new report comes ahead of Wednesday's Chicago City Council meeting, during which aldermen with the Progressive Reform Caucus plan to introduce an ordinance for a citywide hourly minimum wage of $15 an hour. The ordinance was developed with members of Raise Chicago, a coalition of community and labor groups advocating for a higher hourly wage floor in the city. Chicago's current minimum wage is $8.25 an hour, the same as the base hourly wage in Illinois and $1 more than the federal level.
Under the proposed ordinance, large companies in Chicago making at least $50 million annually would have one year to phase in a $15 minimum hourly wage, including for workers at their subsidiaries and franchise locations, according to Raise Chicago. Small and mid-sized businesses would have slightly more than five years to boost their employees' wages to $15 an hour.
The first phase of the proposed ordinance, which would apply to larger firms, would increase the wages for 22 percent of Chicago workers, or 229,000 people, according to the report. Phase one would generate nearly $1.5 billion in new gross wages annually, or $1.1 billion after deductions. During the first stage of the proposed ordinance, the higher employee wages would mean an estimated $616 million in new economic activity across the region, leading to the creation of 5,350 new jobs, the report showed. A $15 hourly wage for workers employed by large businesses in the city would also provide approximately $45 million in new sales tax revenue.
Increased wages for workers could also lower employee turnover costs for businesses, according to the report. Requiring Chicago employers with annual gross revenues of $50 million or greater to pay their workers at least $15 an hour would reduce labor turnover in the workforce by as much as 80 percent per year.
However, larger firms covered under the proposed ordinance could see their overall employer costs increase by up to 4 percent, according to the report's estimations. As a result, affected firms may raise consumer prices by about 2 percent. Such a price hike would translate into an $0.08 increase for a $4 hamburger, the report noted.
Ald. Roderick Sawyer (6th), who intends to co-sponsor the ordinance, said he expects about 10 out of the 50 Chicago aldermen to initially sign on to the legislation.
"The push then would be to get others to join with us in this cause, because it's important," the alderman said. "We should have talked about this many, many years ago, and had (the minimum wage) kept up with inflation, we might not be having this conversation right now. ... I'm hoping that our colleagues will see that this is not a job killer."
Sawyer said there is no specific date planned for when the proposal could go up for a full city council vote.
It is the alderman's hope that Chicago Mayor Rahm Emanuel's recently-formed minimum wage task force will consider the $15 minimum wage proposal. Emanuel has asked members on the diverse committee, chaired by Ald. Will Burns (4th) and the Sargent Shriver National Center on Poverty Law's President John Bouman, to craft a plan to increase the wages for hourly minimum wage and tipped workers in the city.
"I understand the interest in forming this committee," Sawyer said. "I don't think it's necessary because a proposed ordinance is ready to be submitted tomorrow. But now that the committee has been talked about, this [$15 minimum wage ordinance] is the first thing they can look at."
Sawyer and other backers of a $15 minimum wage are "open to listening to any and all suggestions" about the proposed ordinance, the alderman said. Sawyer also noted that Chicagoans are in favor of a $15 minimum wage.
During the March primary election, Chicago voters overwhelming supported a non-binding ballot referendum to increase the city's minimum wage to $15 an hour for employees of companies with annual revenues over $50 million. The referendum appeared on the ballot in 103 city precincts, garnering support from 87 percent of voters.
Katelyn Johnson, executive director of Action Now, which is involved with the Raise Chicago campaign, said the city's strong public support of a $15 minimum wage is not surprising.
"We know that people in this city are struggling," she stressed. "The current minimum wage in Illinois is only $8.25 an hour, and that's so low that the workers, and certainly those who are supporting families, simply cannot survive, oftentimes working two or three jobs just to make ends meet and make other major personal sacrifices for themselves and their families.
"The $15 an hour wage will correct that," Johnson added. "It will provide a path out of poverty for families and allow (workers) to meet their families' basic needs so they no longer have to rely on food stamps or other public assistance. And in addition, it will stimulate the city's economy."
A total of 900,000 people work in Chicago, and 329,000 of them make less than $15 an hour, according to the report. Blacks and Latinos are disproportionately represented among low-wage workers in the city.
Blacks and Latinos make up 23.6 percent and 26.8 percent of the share of all Chicago workers, respectively. However, 28 percent of low-wage earners in the city are black and 42.4 percent are Latino. Low-wage workers who live in the city are concentrated in the Chicago neighborhoods of Austin, Avondale, Bridgeport and McKinley Park, among other areas.
"This geographic concentration of residents earning low wages means that an increase in the minimum wage will offer larger benefits to certain neighborhoods, while also stimulating the citywide economy," the report reads.
Meanwhile, Chicago aldermen are up for re-election next year, and Sawyer said those who co-sponsor the $15 minimum wage ordinance might see more support from voters at the polls.
"I think in my community, (supporting a $15 an hour minimum wage) plays better. People that try to live off of minimum wage understand that it needs to be raised, so those [aldermen] that have people that can understand that will obviously fare better," Sawyer said. "Maybe some in more affluent wards, it many not play as well, but even those there can understand the economic impact."
People who "have more disposable income, they spend it," the alderman continued. "And if you have more disposable income and you spend it, that means the money is circulating in those individual communities. Sales taxes are paid. That means we can get more revenue to do things: Pay down debt, infrastructure improvements, capital improvements."
Over the next few months, Raise Chicago members and others plan to take part in a number of activities to build community support for a $15 Chicago minimum wage and "put pressure on elected officials to carry out the will of the people," Johnson said.
When asked if Chicagoans can expect to see more public protests concerning the minimum wage, Johnson said, "We'll see."
Be sure to check back with Progress Illinois for our coverage of Wednesday's Chicago City Council meeting.
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