What’s the Difference Between a $12.25 and $10.20 Minimum Wage?

The Oakland City Council has the power to raise the minimum wage paid by employers in the city. However, after years of not using this power to raise wages, a coalition of community organizations and labor unions is proposing to “lift up” Oakland’s minimum wage to $12.25 per hour through a popular vote.

In response to this coalition’s campaign, vice mayor Larry Reid is now also sponsoring a minimum wage ordinance to boost the bottom of Oakland’s wage scale to $10.20 an hour starting in 2015.

There are several key differences between Reid’s wage proposal and what the coalition is seeking at the ballot box.

Not surprisingly it’s the $2.05 difference between the two minimum wage proposals that creates the most contrast.

Consider the fact that there are currently very few occupations in Oakland that pay less than $10.20 an hour, but there are numerous jobs in the city that pay less than $12.25. The impact that Reid’s minimum wage would have on Oakland’s lowest paid workers would be incredibly small because few employees fall below his minimum mandated amount. Add just $2.05 more and the number of workers who will benefit leaps upward by perhaps an order of magnitude.

According to the Bureau of Labor Statistics’ most recent data for the Oakland-Fremont-Hayward metropolitan region only 0.6% of the workforce currently earns on average less than $10.20 an hour. But 6% of workers in the region earn less than $12.25 an hour.

That’s a major jump upward from a virtually insignificant number of workers to a small chunk of the total labor force. (I should note that the BLS statistics are for all of Alameda and Contra Costa counties, and here I’m assuming that Oakland roughly reflects the broader jobs picture in both counties.)

For the East Bay region, the BLS lists only 8 occupational categories in which the average worker earns below Reid’s wage proposal, but there are 39 occupational categories where average pay is below $12.25.

In other words, Reid’s minimum wage, if adopted, wouldn’t benefit most short order cooks, sewing machine operators, laundry and dry cleaning workers, child care workers, desk clerks, food preparation workers, personal care aides, waiters, and dishwashers.

Dianne Feinstein Mixes Money With Oakland Foreclosure Investor

Richard C. Blum and Dianne Feinstein enjoying a chuckle.

Last month I published an investigation examining the big corporate investors that have bought up the East Bay’s foreclosed homes, turning thousands of them into rental properties. Featured in the story was Cheri King, an Oakland resident who lost her house due to predatory bank lending and the foreclosure crisis. Now her home in East Oakland is owned by Colony Capital, a private equity firm from Santa Monica run by billionaire Thomas Barrack, Jr.

Last Friday it was announced that a hotel chain owned by Barrack, FRHI Hotels & Resorts, purchased Oakland’s Claremont Hotel. Joining Barrack in buying the Claremont is Richard Blum, husband of U.S. Senator Dianne Feinstein.

Here’s what the company’s press release said:

“FRHI Hotels & Resorts (FRHI), the parent company of luxury and upper upscale hotel brands Raffles Hotels & Resorts, Fairmont Hotels & Resorts and Swissôtel Hotels & Resorts, together with California financier Richard C. Blum and his family, have purchased the historic Claremont Hotel Club & Spa in Berkeley, California, it was announced today. FRHI and the Blum family are equal partners and terms were not disclosed.”

Whatever the specific terms were, the general gist is that Blum and Feinstein are now business partners with Barrack.

What does this mean for victims of the foreclosure crisis like Cheri King, and homeowners currently fighting to stop foreclosure? In her effort to stave off foreclosure by Wells Fargo, and win back her home from Colony Capital, King wrote to Senator Feinstein’s office last year. According to King, Feinstein’s staff were responsive and helpful, but ultimately nothing has come of her attempt to bring the California Senator’s attention to the problem of continuing bank foreclosures, dual tracking, and the investors like Colony Capital taking advantage of this situation.

Now that Feinstein is a business partner with one of the largest foreclosure investors in the nation, Colony Capital, will there be a push for more meaningful oversight of the banks that are creating the inventory of empty homes for buyers like Barrack to buy up?

What’s the Real Impact of a Minimum Wage?

In a recent profile story for the East Bay Express my colleagues Ali Winston, Elly Schmidt-Hopper, and I noted that Oakland mayoral candidate Bryan Parker doesn’t support a minimum wage measure that’s picking up lots of signatures, and which will likely be on the city’s ballot this fall. The measure would require all employers in the city of Oakland to pay their workers at least $12.25 per hour.

When we asked Parker about the minimum wage measure in an interview we weren’t surprised by his non-supportive answer. Parker is a business executive who ran a division of DaVita, a Fortune 500 healthcare company that pays many of its workers very low wages. Previously Parker worked at several investment banks, the sorts of places where conservative, anti-labor economic opinions are dominant.

But a few days ago on Twitter Parker claimed we misunderstood and mischaracterized his position on wages. He tweeted that he supports a “living wage.”

To clear up the record, here’s what Parker actually told us. We asked him, “do you support a $12.25 an hour minimum wage such as the ballot measure that will likely be put to voters?”

Parker didn’t respond with a “yes.” Parker told us that he supports the idea of a “living wage,” but that he isn’t sure “what the right number is.”

He then said something rather dismissive of the entire idea of using government to raise wages for the working poor. “What I want to think about instead [of a minimum wage] is more full employment,” concluded Parker.

The real value of the federal minimum wage has been made to decline since about 1968. This is one of the major causes of rising household income inequality in America. Ronald Reagan’s term in office coincided with the most consistent and effective attack on the minimum wage.

That’s supply-side economics at its most pure, and it’s also a talking point that has been used by opponents of minimum wages for decades. So to be really clear, when we asked about a minimum wage, we got an answer that wasn’t supportive, and that instead pointed towards a “rising tide lifts all boats” sort of plan.

Here’s the reason we likened Parker’s economic thinking to Ronald Reagan (see 1:33 mins in).

To be fair to Parker there’s some theoretical logic behind the full employment goal. In labor markets with lower unemployment rates companies have a harder time recruiting workers, even for the most unskilled of jobs. Tighter labor markets lead to rising wages as employers scramble to hire employees and retain them. Workers don’t fear quitting or losing jobs as they can just take another one. Wages tend to rise slightly during periods of low unemployment as workers have a smidgen of bargaining power.

Parker also told us he’s cautious about minimum wages because he believes they actually cause unemployment. “Employment would decrease,” said Parker. “Employers wont be able to afford as many employees. There’s extensive studies by economist showing that every time a minimum wage has been raised there’s been a deflationary impact on the overall jobs market.”

Again, that’s a very Reaganesque sort of statement. (See the above video link.)

Switching back into his business executive mode, Parker then told us that he’s a “data driven person.” This is why he doesn’t support a minimum wage and instead offers up the goal of growing jobs.

Problem is, a lot of the economic studies that claim to show a causal link between rising minimum wages and job losses are conducted by researchers working directly for pro-business, corporate-funded think tanks. When your paycheck comes from business interests who will profit from driving down wages, is it any surprise your findings are that higher wages for the lowest-paid workers are bad for the economy, even bad for those very workers?

For a recent example of this logic see Mark Wilson’s “The Negative Effects of Minimum Wage Laws.” Wilson’s consulting firm Applied Economic Strategies, LLC writes economic propaganda for the wealthy elite, attacking higher wages for workers, arguing that unions are obsolete, promoting tax cuts for the wealthy, among other policies that redistribute income and wealthy upward. Wilson was once employed by the Heritage Foundation, a think tank funded by ultra-conservatives like the Koch brothers and he served in George W. Bush’s administration. Oaklanders can probably expect some studies along these lines to be offered up this election season by local opponents of the minimum wage campaign.

The actual academic, peer-reviewed studies on the minimum wage don’t support Parker’s “data driven” opinions. Whether a higher minimum wage causes unemployment to rise at the bottom of the labor market is a controversial question that has been debated since Congress passed the first minimum wage law in the aftermath of the Great Depression, 1938. (It’s been debated alongside child labor laws — those opposing restrictions on using kids as workers in mines and factories were the same people opposed to mandated minimum wages.)

In fact, some studies show minimum wage increases actually bumped up employment rates.

Other state-level studies have shown that minimum wage hikes have led to job losses for low wage workers, but that the overall impact was still to redistribute hundreds of millions of dollars in income downward, even after accounting for lost income from fewer jobs, thereby improving the economic conditions of low-wage households.

A reason for the contradictory results, however, is that the minimum wage is an obviously political issue. It’s at the center of a power struggle between workers and businesses over the distribution of income from economic activity. Enacting minimum wage laws, or raising them on a statewide levels, or even in large metropolitan areas, causes the direct redistribution of millions in income from the top earners to the lowest paid workers. The net effect is probably to redistribute income from wealthy and middle class households to the poor, thereby lifting up the workers with the greatest needs. Many researchers who attempt to gauge the impact of the minimum wage on employment levels are already out to prove either the good or the bad in the policy. When researchers pick their methodological tools, data sets, and statistical formulas, it’s often the case that they’ve already subtly biased the outcome. The kinds of studies you trot out in support of your argument are just that; ammunition to support whether or not you’re for redistributing aggregate income downward via the minimum wage.

But overall the research —not just economic studies, also sociology, history, and not least the actual experiences of working poor families— is pretty clear. Minimum wages increase the overall share of income claimed by the bottom quartile or so of the workforce.

URS Corp: Chasing Profits from Bush’s Bombs to Obama’s Oil Sands

Page 139 of URS Corp’s 2013 SEC 10-K report shows the slight decline of the company’s U.S. military and nuclear weapons contract revenue, and the dramatic rise of its oil and gas division as a cash generator.

One of the biggest developments in Canada’s tar sands is happening on the 26th floor of the Transamerica Building in San Francisco.

It’s there that URS Corp has its headquarters, and its there that the company is building a formidable engineering and construction empire aimed at exploiting oil and gas reserves in North America.

As recently as three years ago URS Corp was mostly concentrated on pursuing engineering and construction projects not directly related to the oil and gas industry. During George W. Bush’s bellicose presidency URS Corp bought up several military-industrial contractors and then went on to win big contracts to “rebuild” Iraq and Afghanistan. URS also won plum contracts to manage nuclear weapons labs and handle radioactive waste for the United States. Warfare was the booming business back then.

Today’s big business is oil and gas, especially Canada’s tar sands, and in the hard to access geologic formations that produce hydrocarbons only through fracking. That’s why URS Corp is fast transforming into a giant oil and gas engineering firm. The company, along with many investors, seems to be taking the position that development of the Canadian tar sands stands a good chance of proceeding, as does the profusion of fracked oil and gas wells across America.

Today URS obtains 30 percent of its total revenue from oil and gas related work. They design and help build mining and refining facilities for tar sands oil. They build giant pipelines to transport oil and gas across continents. Back in 2011 URS Corp didn’t even have an oil and gas segment in its corporate structure.

As URS Corp’s managers describe in their most recent annual report, they purchased Canada’s largest oil and gas services company, Flint Engineering, to “significantly increasing our oil and gas services in North America, particularly to the unconventional segments of this market.” Unconventional oil means the black gooey stuff refined from tar sands and sucked from wells made productive through hydrological fracturing.

URS Corp specifically singles out the Keystone XL Pipeline as being crucial to the future profitability of their oil and gas business. “[S]hould the proposed Keystone XL or other similar proposed pipeline project applications be denied or further delayed by the federal government,” the company’s management explain, “then there may be a slowing of spending in the development of the Canadian oil sands.”

In another section of their annual report to shareholders, URS executives admit that “we may continue to be affected by a slowdown in project activity due to continued low natural gas prices and limited pipeline capacity for oil produced in the Canadian oil sands.”

It appears that URS Corp’s big bet on Keystone XL, the tar sands, and fracking, has attracted some other gamblers to the table. Two hedge funds have recently taken long positions in URS Corp stock. Two New York City hedge funds, both with offices in the GM Building on 5th Avenue, now hold about 17 percent of URS Corp stock. Glenview Capital Management and Jana Partners both ranked among the top earning hedge funds in 2013.

As I wrote last year, URS Corp is hardly alone among California companies with an interest in Canada’s tar sands, and the fracking boom. The Bay Area is an epicenter of firms, from Chevron to Bechtel, with multi-billion dollar interests in exploiting the last and dirtiest drops of oil.