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The fraud called “Free Trade”

In this video, Representative Alan Grayson explains how “free trade” hurts American workers and lowers our standard of living.  We don’t need another NAFTA.  Call or email your congressional representatives and tell them to oppose Fast Track on President Obama’s classified Trans-Pacific Partnership deal.

Pittsburgh employment lawyer Charles A. Lamberton. Representing employees in discrimination, retaliation, sexual harassment and wrongful termination cases for more than 15 years. High end representation for high end cases and clients. Contact us today.

More NLRB violations for UPMC

UPMC workers up in armsIn the ongoing battle between healthcare giant UPMC and workers seeking to unionize, an Administrative Law Judge recently found that UPMC engaged in unfair labor practices in violation of Section 8(a)(1) of the National Labor Relations Act by:

1. Denying non-employee organizers access to its cafeteria by causing the police to remove them while permitting other visitors and guests of hospital personnel to use the cafeteria, 

2. Engaging in the surveillance of conversations and meetings between employees and union organizers,

3. Engaging in the surveillance of employees meeting with union organizers by requiring employees to produce identification,

4. Discriminatorily prohibiting employees from wearing union insignia in patient care areas while permitting employees to wear insignia regarding other entities not related to the hospital in patient care areas,

5. Prohibiting employees from wearing union insignia in non-patient care areas,

6. Discriminatorily prohibiting employees from posting union materials on its bulletin boards while allowing the ESS employee council to post materials on its bulletin boards,

7. Coercively interrogating employees regarding their union activities,

8. Threatening to discipline employees for refusing to participate in an unlawful interrogation,

9. Impliedly threatening an employee with a poor evaluation because of her union activities,

10. Instructing employees they were not allowed to post any union materials on bulletin boards,

11. Coercively requiring employees to write a statement regarding their union activities, and,

12. Demanding employees’ consent to be photographed and photographing employees engaged in union activity without proper justification.

Attack on unions creates two Americas – one rich, one struggling

The level of inequality — which fell during the New Deal but has risen dramatically since the late 1970s — corresponds to the rise and fall of Unions in the United States. Take a look at this graph showing  union membership and the income share claimed by the richest 10 percent of Americans over time. As union membership has fallen to around 1920s levels, economic inequality has worsened substantially.

GraphUnions help workers achieve higher wages. Union members in the United States earn significantly more than non-union workers. Over the four-year period between 2004 and 2007, unionized workers’ wages were on average 11.3 percent higher than non-union workers with similar characteristics. That means that, all else equal, American workers that join a union will earn 11.3 percent more — or $2.26 more per hour in 2008 dollars — than their otherwise identical non-union counterparts.

Unions help ensure that American workers’ wages grow with their productivity. Workers helped the economy grow during this time period by becoming ever more productive, but they received only a small share of the new wealth they helped create. Throughout the middle part of the 20th century when unions were stronger, American workers generated economic growth by increasing their productivity, and they were rewarded with higher wages. But this link between greater productivity and higher wages has broken down.

Prior to the 1980s, productivity gains and workers’ wages moved in tandem: as workers produced more per hour, they saw a commensurate increase in their earnings. Yet wages and productivity growth have decoupled since the late 1970s. Looking from 1980 to 2008, nationwide worker productivity grew by 75.0 percent, while workers’ inflation-adjusted average wages increased by only 22.6 percent, which means that workers were compensated for only 30.2 percent of their productivity gains.

The cost of benefits — especially health insurance — has increased over time and now accounts for a greater share of total compensation than in the past, but this increase is nowhere near enough to account for the discrepancy between wage and productivity growth. For example, according to analysis by the Center for Economic and Policy Research, between 1973 and 2006 the share of labor compensation in the form of benefits rose from 12.6 percent to 19.5 percent.

If American workers were rewarded for 100 percent of their increases in labor productivity between 1980 and 2008 — as they were during the middle part of the 20th century — average wages would be $28.53 per hour —42.7 percent higher than the average real wage in 2008.

Slow wage growth has squeezed the middle class and contributed to rising inequality. But increasing union coverage rates could likely reverse these trends as more Americans would benefit from the union wage premium and receive higher wages. If unionization rates were the same now as they were in 1983 and the current union wage premium remained constant, new union workers would earn an estimated $49.0 billion more in wages and salaries per year. If union coverage rates increased by just 5 percentage points over current levels, newly unionized workers would earn an estimated $25.5 billion more in wages and salaries per year. Non-union workers would also benefit as employers would likely raise wages to match what unions would win in order to avoid unionization.

Celebrating working-class solidarity

The United States doesn’t celebrate May Day as an official national holiday, setting itself apart from the rest of the world’s democracies.  Elsewhere, May 1 is International Workers’ Day, observed with speeches, rallies, and demonstrations. This celebration of working-class solidarity originated in the U.S labor movement in the United States and soon spread around the world, but it never earned official recognition in this country. Since 2006, however, American unions and immigrant rights activists have resurrected May 1 as a day of protest. 

The original May Day was born of the movement for an eight-hour workday. After the Civil War, unregulated capitalism ran rampant in America. It was the Gilded Age, a time of merger mania, increasing concentration of wealth, and growing political influence by corporate power brokers known as Robber Barons. New technologies made possible new industries, which generated great riches for the fortunate few, but at the expense of workers who worked long hours, under dangerous conditions, for little pay.

A flier notifying people of a rally in support of striking workers at Haymarket Square in Chicago. The demonstration is considered the origin of the May 1 labor holiday.

As the gap between the rich and other Americans widened dramatically, workers began to resist in a variety of ways. The first major wave of labor unions pushed employers to limit the workday to ten, then eight, hours. The 1877 strike by tens of thousands of railroad, factory and mine workers—which shut down the nation’s major industries and was brutally suppressed by the corporations and their friends in government—was the first of many mass actions to demand living wages and humane working conditions. By 1884, the campaign had gained enough momentum that the predecessor to the American Federation of Labor adopted a resolution at its annual meeting, “that eight hours shall constitute legal day’s labor from and after May 1, 1886.”

On the appointed date, unions and radical groups orchestrated strikes and large-scale demonstrations in cities across the country. More than 500,000 workers went on strike or marched in solidarity and many more people protested in the streets. In Chicago, a labor stronghold, at least 30,000 workers struck. Rallies and parades across the city more than doubled that number, and the May 1 demonstrations continued for several days. The protests were mostly nonviolent, but they included skirmishes with strikebreakers, company-hired thugs and police. On May 3, at a rally outside the McCormick Harvesting Machine Company factory, police fired on the crowd, killing at least two workers. The next day, at a rally at Haymarket Square to protest the shootings, police moved in to clear the crowd. Someone threw a bomb at the police, killing at least one officer. Another seven policemen were killed during the ensuing riot, and police gunfire killed at least four protesters and injured many others. After a controversial investigation, seven anarchists were sentenced to death for murder, while another was sentenced to fifteen years in prison. The anarchists won global notoriety, being seen as martyrs by many radicals and reformers, who viewed the trial and executions as politically motivated.

In 2001, unions and immigrant rights groups in Los Angeles resurrected May Day as an occasion for protest. The first few years saw rallies with several hundred participants, but in 2006 the numbers skyrocketed. That year, millions of people in over 100 cities, including more than a million in Los Angeles, 200,000 in New York and 300,000 in Chicago, participated in May Day demonstrations. The huge turnout was catalyzed by a bill, sponsored by Representative James Sensenbrenner Jr. (R-Wisconsin) and passed by the House the previous December, that would have classified as a felon anyone who helped undocumented immigrants enter or remain in the United States. In many cities, the protest, which organizers termed the “Great American Boycott,” triggered walkouts by high school students and shut down businesses that depended on immigrant workers. Since then, immigrant workers and their allies have adopted May Day as an occasion for protest.

America is now in the midst of a new Gilded Age with a new group of corporate Robber Barons, many of them operating on a global scale. The top of the income scale has the biggest concentration of income and wealth since 1928. Several decades of corporate-backed assaults on unions have left only 7 percent of private sector employees with union cards. More than half of America’s 15 million union members now work for government (representing 37 percent of all government employees), so business groups and conservative politicians have targeted public sector unions for destruction. The past year’s attacks on teachers, cops, firefighters, human service workers and other public sector workers in Wisconsin, Ohio and elsewhere — the most ferocious anti-union crusade in decades — have catalyzed a tremendous sense of urgency among union workers and millions of other Americans who’ve seen their standard of living plummet while the richest Americans and big business plunder the economy.

This blog was adapted from Peter Dreier, “Occupy Activists Resurrect May Day for Americans,” The Nation, April 27, 2012.

1 CEO = 354 workers

CEO pay was 354 times that of the average worker last year, according to the AFL-CIO’s new Executive PayWatch database. The labor group asserts that this is “by far the largest pay gap in the world.” In 2012, the chief executives of some of the country’s largest companies earned an average of $12.3 million in compensation compared to the average worker who took home a salary of $34,645.  “American chief executives continued to do very well for themselves last year, while workers struggle to make ends meet,” said Richard Trumka, president of the AFL-CIO. “We are calling out the hypocrisy of rich CEOs who have the gall to ask for corporate tax cuts to be paid for by squeezing the retirement security of working America. The American public deserves to know the truth about their self-serving agenda.”

The Executive PayWatch database allows users to not only look up CEO pay, but to also compare their own salaries. Last year, the average worker made $19.77 an hour. In comparison, Richard M. Bracken, CEO of HCA Holdings (HCA), earned $22,288 an hour; David M. Cote, chairman and CEO of Honeywell International (HON), made $15,984 an hour; John C. Plant, chairman, president and CEO of TRW Automotive Holdings (TRW), made $12,597 an hour and Andrew N. Liveris, CEO and chairman of Dow Chemical (DOW), took home $11,052 an hour.  “One of the most important and some would say disturbing trends in the U.S. economy over the last twenty years has been the rise of inequality,” says The Daily Ticker’s Henry Blodget. “The rich are getting richer at an astounding rate and the poor and the middle class are staying where they are and this is creating a huge dichotomy in this society.”

According to the AFL-CIO Web site, CEO pay skyrocketed from 42 times the average blue-collar worker’s pay in 1980 to 343 time in 2010. “Not only is U.S. CEO pay out-of -whack with historical norms, it is off the chart globally,” says Trumka. “For example, in Switzerland, where voters recently imposed new limits on executive pay, the CEO-to-worker pay gap is 148 times. In the United Kingdom, the CEO-to-worker pay gap is one-quarter as large as ours. And in Japan, the gap is even smaller.”

City officials say UPMC profit-lust at odds with charitable status

Pittsburgh Mayor Luke Ravenstahl announces challenge to UPMC’s bogus tax-exempt status and assembles an excellent legal team to do it.  As reported on March 22, 2013, by Sean Hamill of the Pittsburgh Post-Gazette:

When Pittsburgh Mayor Luke Ravenstahl announced Wednesday that he was going to challenge health care giant UPMC’s nonprofit status, he did not plunge in without any legal ammunition.

Starting in January, staff at a longtime Pittsburgh law firm, Strassburger Mckenna Gutnick & Gefsky, researched whether UPMC met the “HUP test,” a five-point test that the state Supreme Court reemphasized in a landmark ruling last year.

The conclusion, firm President E.J. Strassburger wrote in a 13-page letter to city solicitor Daniel D. Regan on March 5: “As we have discussed, waging a legal battle against a behemoth like UPMC will be neither quick nor easy. However, we believe that both challenges are well-justified, because … UPMC appears to fail the constitutional test for qualifying” as an institution of purely public charity.

The legal review concluded that UPMC fails at least three parts of the Supreme Court’s five-point test, and may fail all five.  Among other reasons, the review says UPMC fails to provide sufficient charity care, operates far-flung international operations that are losing money, and has closed operations in poor communities only to open or expand into richer ones.

But it also cites what it terms “excessive” benefits of UPMC executives, including CEO Jeffrey Romoff’s $5.9 million salary; the fact that more than 20 employees are paid more than $1 million; UPMC’s corporate jet; Mr. Romoff’s “lavish” Downtown headquarters (which it claims includes a private chef, chauffeur and private dining room).

UPMC dismissed the review on Thursday in response to emailed questions. And though Mr. Ravenstahl signaled that he’s happy to sit down and negotiate a deal, UPMC implied it is prepared to battle it out in court.

“We think the 13-page memo that a local law firm wrote for the City is very weak and reaches its conclusions entirely based on opinion, not fact,” UPMC spokesman Paul Wood wrote. “Rather than responding to partisan politics and blatant union pandering by the Mayor, UPMC looks forward to demonstrating in a court of law that we meet all five prongs of the HUP test and that our hospitals easily qualify for the tax-exempt status they unquestionably deserve. Interestingly, by hiring an outside law firm the City is prepared to waste millions of dollars of taxpayer funds on an unsuccessful attempt to pursue this case.”

The Supreme Court’s 1985 ruling involving the Hospital Utilization Project (or HUP) set out a test that requires that a purely public charity must fulfill all five of the test’s points that it: advances a charitable purpose; donates or renders gratuitously a substantial portion of its services; benefits a substantial and indefinite class of persons who are legitimate subjects of charity; relieves the government of some of its burden; and operates entirely free from private profit motive.

That ruling was reaffirmed by the Supreme Court in April in a case involving an Orthodox Jewish summer camp in Pike County that was found to not deserve its property tax exemption.

Mr. Strassburger wrote, first and most strongly, that “it seems virtually certain that UPMC would fail to carry its burden of proving that it satisfies the fifth prong of the HUP test by ‘operating entirely free from profit motive.'”

He cited UPMC’s nearly $1 billion surplus over the last two years and $3 billion in reserves as evidence of this, and that UPMC “is carefully structuring its operations to prioritize profits-generation over charity.”

Mr. Wood wrote that “numerous people have tried to distort the meaning of that component to attain a political result.”

“It does not mean a nonprofit shouldn’t strive to have a positive operating margin — organizations that don’t do that go out of business,” he added. “All you have to do is look at West Penn Allegheny as an example of an organization that consistently loses money and is on the verge [of being] bankrupt.”

In addition, Mr. Strassburger wrote that UPMC does not “advance a charitable purpose” in part because UPMC “maintains an ‘open admissions policy’ in name only” and it does not make all of its health care available to everyone, regardless of ability to pay.

And, lastly, Mr. Strassburger wrote that UPMC does render “a substantial portion of its services” for free, though he acknowledges that it depends how you could define those services that are considered charitable care.

Mr. Strassburger cites UPMC’s own documents and officials’ statements that show that UPMC may be providing charity care of anywhere from $204 million, or 3.6 percent of net patient revenues, to $87.2 million, or under 1 percent.

Mr. Wood disagreed with those figures, citing the $238 million in charity care that UPMC claims on its IRS tax forms, and $622 million in total community benefits and other uncompensated care.

If you “compare it to other of the internationally known, highly regarded academic medical centers, it’s clear that there isn’t another that provides more to its region than UPMC provides to Pittsburgh,” Mr. Wood wrote.

Nicholas Cafardi, dean emeritus and professor at Duquesne University’s Law School, said he believes the argument that UPMC is not free from a private profit motive is the strongest one in Mr. Strassburger’s review, in part because of how far-flung UPMC has become.

“The more they do that gets them away from their core purpose, the more they open themselves up to the argument that they aren’t doing charity,” he said.

In addition, Mr. Cafardi said, UPMC’s extensive advertising campaign –sometimes directly against rival Highmark — makes it look like the organization is operating for profit.

“A lot of things like that make them look like they’re operating for a private profit,” he said. “You advertise because you’re in competition. That’s the private profit motive.”

Gary M. Grobman, former head of the nonprofit Pennsylvania Jewish Coalition and author of “The Pennsylvania Nonprofit Handbook,” said UPMC would have a fight on its hands.

“Based on what [Mr. Strassburger] has written, which may or may not be true, it seems some staff at the hospital are paid quite well and some decisions are made based on achieving as much revenue as possible instead of providing as much charity as possible,” he said. “And if all of that is true, they don’t deserve their not-for-profit status.”

Raymond Baum, a Pittsburgh attorney who works with charities, said the city may not be able to challenge UPMC as a whole and may be forced by the courts to challenge individual parcels and UPMC’s subsidiaries.

“I think you have to deal with them one property at a time,” he said.

Mr. Strassburger said in an interview Thursday that he thinks part of the benefit of his review is that even though “it was pretty well known on the street that there were a lot of people making a lot of money at UPMC,” as well as other issues, “when you put it all together I supposed there’s a startling magnitude to it.”

Though he expected UPMC to dispute his findings and for some issues to be obscured for now by UPMC’s size as a complicated, $10 billion corporation, once they get into court, “I think we’re going to be able to peel away the layers and expose what’s really going on.”

War on the middle class

“Right-to-work” laws weaken unions by making them provide services to union and nonunion members alike, without making all beneficiaries pay their fair share. By severely weakening unions, which are vital to strengthening the middle class and improving the economy, “right-to-work” laws have broad negative consequences.  Here are the key facts you need to know about unions’ value for the economy and the middle class.

1. Unionization increases income, not just for union workers but also for the entire middle class. A study conducted by the Center for American Progress Action Fund controlled for a host of other factors that also impact the strength of a state’s middle class—such as education, unemployment, and types of industries—and found that if unionization rates increased by 10 percentage points, the typical middle-class household, unionized or not, would earn $1,501 more each year. To put that figure in perspective, we found that a 10 percentage-point increase in the share of the population with a college degree would increase the average middle-class income by $1,664 a year.

2. In non-“right-to-work” states, workers are more likely to receive employer-provided health insurance and pensions. Workers in “right-to-work” states are significantly less likely to receive employer-provided health insurance and pensions. If benefits coverage in non-“right-to-work” states were lowered to the levels of states with these laws, 2 million fewer workers would receive health insurance and 3.8 million fewer workers would receive pensions nationwide.

3. Unions improve workplace policies and have beneficial policy effects more broadly. Unions advocate for broader worker protections needed for families to make human-capital investments—strong public education, social safety nets, minimum wages, paid leave, and even civil rights and efficient regulation.

4. Unions balance structures of power in the workplace, resulting in greater efficiency. Unions support high-productivity workplaces where information can flow from the bottom-up to improve business performance.

5. “Right-to-work” legislation fails to grow state economies. The laws have failed to increase employment growth in the 23 states that have adopted them, and in states more recently adopting “right-to-work” policies, employment growth and business relocations have reversed their previous expanding trends. In other words, the economic evidence shows that unions and union membership—not “right-to-work” laws—are what are conducive to broad economic growth.

6. Unions strengthen businesses and the economically vital middle class by giving workers a voice in both the workplace and our democracy. Unions do this by pushing for fair wages and good benefits, and also by encouraging citizens to advocate for middle-class-friendly policies such as a strong Social Security system and family-leave benefits.

CONTACT US

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