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Screen Shot 2014-09-04 at 1.13.15 PMUrban Shield, a law enforcement conference that includes SWAT competitions, training exercises, briefings, and a large vendors show, is underway again in Oakland this year. The downtown Marriott hotel and conference center is packed with police officers and police-industrial contractors selling everything from machine guns to drones. Alyssa Figueroa of Alternet has a good story about Urban Shield and the protests against it this year, and Ali Winston and I wrote about the event last year.

I briefly walked through the conference this morning. What’s different this year is the size of the event. It feels bigger, and attendees said they thought there were more participants and vendors.

Here’s some photos from the vendors show.

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Guns are a big deal at Urban Shield. Salesmen from Sig Sauer chat about rifles and pistols. Sig Sauer’s gun factory is located in New Hampshire.

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A company named Execushield which claims to have been founded on September 11, 2001 shows off a video of its paramilitary security forces operating in Columbia. Based in San Francisco, Execushield specializes in providing security to high net worth individuals and Fortune 500 companies. A salesman manning Execushield’s booth said he could not talk specifics about clients.

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Members of the Brazilian Police are attending Urban Shield this year. Here the Brazilians get a demonstration of a portable explosives detection device.

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Drones are still in demand among law enforcement agencies, even though there has been significant public backlash. Here representatives of HaloDrop show off their drone aircraft which the company rents out as a service to government agencies.

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The .50 caliber AW50, manufactured by Accuracy International, a British weapons maker that specializes in military sniper rifles. Mile High Shooting Accessories, a vendor attending Urban Shield and distributing these weapons, says the rifles are increasingly popular with U.S. police agencies. The Alameda County Sheriff has bought several of these AW50s (for about $5,000 a piece), and the Livermore police have bought other models made by Accuracy International.

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A sales rep for Mile High Shooting Accessories of Colorado shows off various models of Accuracy International’s sniper rifles to Bay Area police.

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Participating in this year’s Urban Shield tactical competitions, the U.S. Marines.

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Arizona gun maker Patriot Ordnance Factory shows off its weapons at Urban Shield. Patriot sells weapons to the California Highway Patrol.

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Patriot Ordnance Factory’s weapons include the words “God Bless America” inscribed below the chamber.

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Berkeley and Richmond recently upped their minimum wages, and Oakland and San Francisco are also considering significant lifts for their lowest-wage workers. But each city’s minimum wage plan differs in significant ways. These differences reflect the balances of power between workers and employers, unions and business leagues, in each city.

In Oakland, labor and community organizations banded together as a coalition last year and decided to place an initiative directly on the ballot in time for the elections this November. That decision to circumvent the city council prevented what happened in Richmond and Berkeley. In Oakland’s neighbors to the north initial calls by grassroots activists for a $15 minimum wage were translated into a much smaller increase. Final legislation in these two cities was further watered down. Business lobbyists successfully argued that an immediate and significant hike in the minimum wage for all workers would cause unemployment, business closures, and a drain economic activity from these cities.

Berkeley’s minimum wage therefore isn’t very large, and it isn’t indexed to inflation, so it loses value quickly.

Richmond’s minimum wage, while larger on paper, may not impact very many workers in the city because of complicated exemptions that allow lots of employers to simply not pay the new municipal minimum wage, or to pay a lower “intermediate” amount.

In San Francisco the process has been legislative, like Richmond and Berkeley. But instead of starting from $15 and cutting downward, San Francisco’s board of supervisors appear headed toward $15 by 2018. If they pass the minimum wage legislation that was considered at today’s rules committee, San Francisco’s minimum wage will rise from it’s current $10.75 to $12.25 next year.

That would match the proposed increase that Oakland voters will consider in November. But then San Francisco’s minimum wage would jump another 75 cents in 2016, and then a dollar in 2017 and another dollar in 2018. Those increases significantly outpace the rate of inflation.

Here’s what the different enacted and proposed minimum wage increases in the Bay Area look like compared to one another.

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In Oakland the “Lift Up Oakland” ballot initiative would raise the minimum wage for all employees in March 2015 to $12.25 and then increase this wage each year to prevent it from losing value from inflation. The Oakland Chamber of Commerce is attempting to place a competing measure on the ballot that would phase in a minimum wage increase, but the increases charted below for this proposal would not benefit all workers as the Chamber’s proposal carves out certain categories of employers and employees.

 

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San Francisco’s proposed minimum wage would rise to $15 in 2018, possibly bringing pay just above the bare minimum considered a living wage.

 

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Differences between Berkeley and Richmond’s recently passed minimum wage laws, and San Francisco and Oakland’s proposed minimum wages are larger than this graph would imply. In Richmond the number of workers excluded from the new minimum wage of $13 by 2018 is probably very large due to exemption of “small businesses” from having to comply, and a complicated provision that establishes an “intermediate” minimum wage halfway between the city and state minimum wages, allowing employers who obtain half their income from sales or services provided outside the city to pay this lesser wage.

 

 

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A luxury house along “Billionaire’s Row” in San Francisco.

The failed economic policies of the Obama administration have been evident in measures of every important fundamental for six years now. Dismal job growth. High unemployment. Weak consumer demand, and so on. The biggest failure of the Obama administration was arguably the refusal to write down mortgage debt and force the top one percent of wealth holders to share some of the losses sustained during the housing market crash. While monetary policies pursued by the Fed, and a bailout of the secondary housing market with taxpayer dollars, temporarily provided a shot in the arm for housing prices, these gains were artificial. They weren’t based on genuine demand for housing by the majority of Americans. The result is that the top one percent of the U.S. housing market, the luxury segment, is booming, while the rest of Americans are having trouble affording homes. Now the housing market appears to be stalling out, except for luxury purchases by the elite whose wealth was protected by virtually every economic policy advanced through the financial crisis.

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A single family home in Oakland.

Let’s review the problem. In the 2000s the U.S. housing market was flooded with cheap credit. Lenders extended giant loans, many of them sub-prime, and the prices of houses shot upward in a bubble. But stagnating wages for American workers meant that the prices of real estate diverged from the reality of the ability of the average household to safely repay these loans. When the financial system imploded, the price of housing collapsed, and it was the borrowers who sustained the brunt of losses in the form of equity. The debt remained to be repaid, however, because Obama and his economic advisers chose to protect the wealth of the top one percent.

As economists Atif Mian and Amir Sufi have pointed out in their book House of Debt, the federal government could have taken over as the servicer of mortgage-backed securities and renegotiated millions of loans, dropping interests rates and principal balances. Or the government could have allowed bankruptcy judges to reduce mortgage debt burdens. The few principal reduction programs there were, like the Home Affordable Modification Program, could have been pushed much further. As is, programs like HAMP served only a small fraction of distressed borrowers with underwater loans. HAMP and other loan modification programs did not meet their original numerical goals.

By not making creditors share the pain of the collapse of real estate prices, the Obama administration enforced a giant wealth transfer from the majority of Americans to a small minority, literally the one percent who own the majority of stocks and bonds, particularly stocks in banks and mortgage servicing companies, and bonds backed by residential mortgage debt.

But the wealthy also cache their fortunes in non-housing related stocks and bonds, and the Obama administration’s quantitative easing program has been good for supporting the value of these securities. So the wealthy never took the same kind of hit the average American did with housing price dips and job losses. Then the wealthy benefited from federal programs that jacked up asset prices.

Should we be surprised then to learn that the top one percent of the residential housing market is booming while sales of literally every home priced below a luxury-grade are dropping? This is one consequence of the Obama administration’s housing and economic policies.

A new batch of numbers from the real estate research firm Redfin illustrates the consequences of the Obama administration’s economic policies by comparing the very top of the American real estate market to everything else. “Sales of the priciest 1 percent of homes are up 21.1 percent so far this year, following a gain of 35.7 percent in 2013,” writes Troy Martin of Refin. “Meanwhile, in the other 99 percent of the market, home sales have fallen 7.6 percent in 2014.”

“For the top 1 percent, the housing market is still booming. But for the rest of the market, the recovery is running out of gas,” concludes Martin. “As home prices have risen, wage and job growth have failed to keep up.”

Redfin’s research shows that in virtually every major metropolitan region the luxury segment of the housing market, the top one percent of homes in price terms, are selling fast and at higher prices. Not surprisingly, there’s considerable regional variation, but it’s a nation-wide phenomenon.

The real estate market in the San Francisco Bay Area is perhaps the most unequal and driven by sales to the super-rich. Luxury home purchases are way up in Oakland, San Jose and San Francisco, with Oakland and San Jose experiencing a virtual doubling of the luxury market over the past year. The top one percent of the market for Oakland, San Jose and San Francisco combined is priced at an average of $3.7 million, but San Francisco has pulled ahead of the rest of the nation with an average home price of $5.35 million for the top one percent of its market. Some of this is likely due to the booming tech sector which is creating thousands of millionaires in the region.

Screen Shot 2014-05-30 at 10.43.54 PMFor the majority of Americans the problem boils down to household debt. There’s still too much debt for the average household to sustain purchasing power that would drive an economic recovery, including a recovery in the housing market. From 2003 to the peak of the housing bubble in the third quarter of 2008, total household debt shot upward by about $5.4 trillion, according to data compiled by the Federal Reserve Bank of New York. From the peak of the housing bubble to the present, total household debt only decreased by $1.5 trillion. That means that about $3.9 trillion in debt piled onto U.S. households during the housing bubble is still weighing down family budgets. Most of this debt, about $2.89 trillion, was mortgage debt.

Over the same time period wages remained flat for most Americans. The median household incomes in the year 2000 was approximately $42,000. In 2012 it was about $51,000. Accounting for inflation, the real value of household income actually declined over this period by $5,000.

The income and wealth gains at the top of America’s economic pyramid over this same time frame should be familiar by now, as they have been extensively explained in recent research. What’s important to point out, however, is that the the average household, the median Americans whose incomes dropped by $5,000, took on significant mortgage debt during the 2000s, altogether in the trillions of dollars, and the lenders of this capital, ultimately, are the top one percent households.

So that’s why we see the luxury housing market booming while virtually 99 percent, the rest of America is stagnating.

townhellaneedsaraise-blThe 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.

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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?

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.”

Picture 1To 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.

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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.

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Gavin Ames said he broke his leg on Oakland’s pothole filled Jackson Street. The health problem cost him his job, leading to homelessness. The city forced him to leave his camp site next to the Kaiser Auditorium today and trashed some of his belongings.

The city of Oakland ordered several dozen homeless residents to vacate their camp sites around the Henry J. Kaiser Convention Center today. A large crew of public works employees were ordered to dispose of tents, blankets, luggage, and other possessions. At least ten Oakland police officers were on scene also.

Pastor Preston Walker has lived in a tent under a buckeye tree near the Kaiser building for several months. He shared the spot with several other men. Their campsite is decorated with a flag of the United States, the words “no justice, no peace” written on it. An Oakland Athletics Baseball Club pennant hangs next to a sign reading “Occupy the Hood.”

Scrawled on the sign is a date; “January 28, 2012,” the day hundreds of Oaklanders attempted to take over the Kaiser building as a “community center.” Oakland’s mayor and city council authorized the police to use all means necessary to repel the march. Oakland police fired tear gas, rubber bullets, and threw stun grenades at the protesters. The building has sit empty since then.

“People are just gonna come right back here cause where are they going to go?,” said Walker. “Otherwise they’ll just squat somewhere else.”

Seven Oakland police officers chatted among themselves nearby, watching ducks and geese and a stray rooster pecking at the grass. The officers looked bored.

“I don’t think they want to be doing this, out here when there’s better things they should be doing,” said Walker.

On the other side of the building Gavin Ames is trying to figure out how to move his belongings before the city’s workers throw them away.

“I used to be a cashier at a Chevron station. I was living paycheck to paycheck,” said Ames. “Then this happened,” he said, pointing to the cast on his leg and foot.

“I fell in a hole in the street on Jackson, right here, downtown Oakland, broke my leg.”

Ames said he finds it ironic the city of Oakland’s public works employees are being told to remove him and other homeless residents. “They should be fixing the streets.”

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City of Oakland staff, non-profit outreach workers, and Oakland police at the “clean up” of Kaiser Auditorium.

Joe Devries, a neighborhood services supervisor with the city of Oakland, said the city had reached out to those camped around the Kaiser building offering services since September. “This has been a long slow process, but we made it abundantly clear that people could not be camping here.”

Devries mentioned also that last week the building was broken into and copper was stolen. It’s not clear how that related to the homeless persons camped out nearby. Several of the homeless men called it just another excuse to remove them.

“People want to use this space as a park. The city has invested millions around the Lake here,” said Devries. “This is an area want to keep making beautiful.”

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A large number of Oakland police officers watched over a public works crew as they removed a homeless encampment around the Kaiser Auditorium.