Why We Need to Raise the Minimum Wage

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When the federal minimum wage law was signed by Franklin Delano Roosevelt in 1938, it was meant to keep America’s workers out of poverty and increase consumer spending in order to stimulate the economy. Since then the federal minimum wage has been increased 22 times with its current value at $7.25 an hour. However, it is a poverty wage which doesn’t keep people from being poor nor has it kept up with the US cost of living. In fact, it’s said a full time job on $7.25 an hour can’t even support even the basic living essentials in all 50 states. Nevertheless, campaigns to raise the minimum wage have recently been gaining momentum across the country ranging from ballot initiatives to grass organizing to major legislative efforts in states and localities. Many have achieved some degree of success. Yet, at Capitol Hill, proposals to raise the minimum wage have gone nowhere, despite widespread popular support across party lines as well as economists. As for me, I feel that not only should the federal minimum wage be increased, it should also be adjust automatically to keep pace with cost of living that doesn’t exempt tipped workers and the disabled. While I do not believe raising the minimum wage would relieve poverty even at $15 an hour, I feel that it’s good responsible policy as well as the right thing to do.

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This graph from the Department of Labor illustrates how the minimum wage has fallen by a third since 1968. If it was automatically adjusted for inflation from that time on, the minimum wage today would at least be $11 an hour.

  1. The Minimum Wage Is an Arbitrary Value-The only good explanation as to why the minimum wage is a poverty wage is mostly due to increases requiring approval by Congress and it doesn’t keep pace with inflation or rising costs of living. This is why the new minimum wage value usually falls from the moment it’s set. The federal minimum wage today is $7.25 per hour. Does it mean it’s higher than it used to be? In terms of real dollars, yes. But in terms of buying power, no. When adjusted for inflation, the current federal minimum wage would need to be more than $8 per hour to equal its buying power in the early 1980s and nearly more than $11 per hour to equal its buying power of the late 1960s. For tipped workers, it’s $2.13 an hour which has remained unchanged for over 25 years. In other words, why the current minimum wage is $7.25 per hour has nothing to do with inflation adjustments. Because despite minimum wage increases, its buying power has dropped and keeps falling. Though President Obama has argued for the minimum wage to increase automatically with inflation which can eliminate requirements for formal congressional action, reduce time between increases, and better help low-income families keep up with rising prices. There’s even a bill called The Raise the Wage Act proposed by Senator Patty Murray and Representative Bobby C. Scott proposing to do just that along with raising the wage to $12 an hour by 2020 as well as set automatic increases starting in 2021 and eliminate the unfair subminimum tipped wage of $2.13 an hour. It’s a policy that makes far better sense the current one. Some states have also enacted rules to do the same thing. So why is the federal minimum wage a paltry $7.25 per hour? Well, since increasing it requires congressional approval, I think it has more to do with politics and employer preference for cheap labor. In other words, it’s an arbitrary value.

2. Most Minimum Wage Jobs Can’t Be Outsourced – While conservatives often argue that raising the minimum wage will lead many people to lose their jobs, we need to understand that most minimum wage jobs are in the service industry. Unlike jobs in manufacturing, it’s unlikely most of them could ever be outsourced overseas with globalization. Besides, when we’re talking about minimum wage employees, their pay has nothing to do with international competition. Because they’re not engaged in the export sector. Competition in the service industry is mostly domestic and localized as well as staffed by local workers and serving a local customer base. In other words, service jobs be in a specific location. The biggest threats to pay in service sectors aren’t foreign countries known for human rights violations but large multinational corporate chains who treat their employees like shit.

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Recent trends show that most job creation has taken place in low wage industries. So it’s no surprise that a higher share of millennials work in low wage industries while lower shares work in mid or higher wage industries.

3. New Job Growth Has Been Concentrated in Disproportionately Low Wage Industries– Today more families than ever rely on low wage and minimum wage jobs to make ends meet especially since job losses during the Great Recession have hit higher wage sectors like construction, manufacturing, and finance hard. And according to a 2012 report by the National Employment Law Project, 58% of all jobs created post-recession were low wage occupations. This isn’t a short term trend either since 6 of the top ten growth occupations projected by the US Bureau of Labor Statistics for the next decade are low wage jobs, such as home health aides, customer service representatives, food preparation and service workers, personal and home care aides, retail salespersons, and office clerks. Raising the minimum wage would boost pay scales in these jobs where millions of Americans spend their careers today. And for many it’s getting harder for many workers to move beyond a low wage job. Thus, raising the minimum wage right now is more important than ever.

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Here’s a picture on the hazards of domestic labor. Now people in these jobs usually earn minimum wage or less. Some of them earn more. But what this chart tells you that it’s anything but easy. In fact, it’s hard and thankless work. The same can go for many low wage jobs.

4. Most Minimum Wage Jobs Aren’t Easy– Those opposed to minimum wage increases argue that anyone could do a minimum wage job which doesn’t require a lot of responsibility. But that has no bearing on reality whatsoever. Service industry workers often have stressful work days as well as unpredictable work schedules. A lot of them don’t have nice work environments either. Not to mention, a lot of these jobs lack health benefits, paid leave, opportunities for advancement, and job security. Many minimum wage employees work on weekends and holidays. A lot of them work 8-hour days while some can work even more. Some even have more than one job if they work part-time. Some may even experience workplace injury or illness. A lot require constant human interaction, time management, and multitasking. Let’s just say there’s a very good reason why a lot of minimum wage jobs have high turnover rates. These aren’t easy jobs anyone can do. They’re thankless, stressful, and grueling jobs while these workers receive little respect for all the crap they put up with on a regular basis. I spent a Christmas season working at Macy’s which paid $8 an hour. I spent hours on my feet that I had a lot of aches and pains. I also had to deal with hours of Christmas music in the background. By the end of my shift I was exhausted. I have often seen ads for many of these jobs which have a long list of duties and responsibilities as well as skills like patience, knowledge, care, and communication. There are plenty of caregiving jobs with educational requirements that pay minimum wage like home healthcare and childcare. Hell, even hairdressers and manicurists can earn low wages and they have to go through cosmetology school. Some low wage jobs can require at least an associate’s degree or even a 4-year college education. Building services may also require special skills. For instance, janitors may have a wide range of duties besides indoor cleaning like maintenance, security, and yard work. The cleaning industry is known for hiring 17-23% of undocumented immigrants as well as posts a median pay of $10.68 an hour (though many school janitors get paid more than the teachers so it’s not always a low wage job). Bank tellers, data entry keyers, cooks, pharmacy assistants, clerks, hotel receptionists, and security guards can also be paid minimum wage. In many ways, I think the terms “low-skilled” or “unskilled labor” just refers to jobs with shitty pay.

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Many people argue that low wage work is such because they don’t require a lot of skills, education, and lack social value. If that were true, then explain to me why Cesar Chavez became so famous for organizing farm workers for better conditions. Yeah, that doesn’t hold up.

5. Most Minimum Wage Jobs Don’t Lack Social Value– When most people think of jobs paying minimum wage, they tend to think about people working at fast food restaurants which only consist of 5% of low wage jobs. In fact, most low income jobs pay poor may have little to do with their value in society. Or if they do, then it might be a reason they’re paid so poorly in the first place. At any rate, they’re all around us which include security guards, nurse’s aides and home healthcare aides, child-care workers, educational assistants, maids and porters, janitors, call center workers, bank tellers, data entry keyers, food preparation workers, waiters and waitresses, cooks, pharmacy assistants, hairdressers, manicurists, fish and meat processors, sewing machine operators, laundry and dry cleaning operators, ambulance drivers, parking lot attendants, and farm workers. Sure there may be people in these jobs who make good money like a janitor at a public school or hairdressers. But we’re talking about general trends. We’re not necessarily talking about people who make no contribution to society. In fact, we’re talking about people in jobs that don’t get much respect. If you don’t believe me, then think about how Caesar Chavez became so famous for organizing California farm workers in the 1960s. Or why so many workplaces and corporations in the service industry take major steps to keep their low wage workers from unionizing.

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This is a graph from the Economic Policy Institute illustrating how a minimum wage increase would affect American families. After all, low wage workers are usually responsible for half of their family’s earnings. Not to mention, 1 out of 5 kids has a parent who’d be helped.

6. Raising the Minimum Wage Will Benefit Workers and Their Families– Even if you work full-time at $7.25 an hour, you’re lucky to retain $225 a week or $12,000 a year after taxes and deductions. This is precisely threshold of poverty for a single person. Not enough to pay rent or take care of dependent children. In fact, it’s barely surviving. In no state can a minimum wage worker afford a 2 bedroom unit at a fair market rent, working a standard 40 hour work week. Or at least without paying more than 30% of their income. But a lot of minimum wage workers are trying to pay rent and have dependent children to support sometimes by themselves, which is why many are on welfare and food stamps. In addition to the 1.3 million people working at minimum wage, raising it to $10 per hour would help 1.7 million working below it, and 21 million working above the minimum but below that amount. So you’re talking about a third of the workforce. 17.5 million children will also benefit since at least one of their parents will get a raise. Raising the minimum wage to $12 or $15 an hour could benefit even more. Not to mention since women and minorities are disproportionately represented in low wage jobs, raising the minimum wage could help close significant gender and racial pay gaps.

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Here’s a snapshot on how many hours a person would have to work a week on $7.25 an hour to afford rent in the country. As you see, all the values are above 40 hours.

7. Raising the Minimum Wage Benefits the Economy– When workers are paid more, they’re more likely to spend more, especially when it comes to their own companies or hometowns. This explains why Henry Ford decided to pay his workers high wages to make and later buy his cars. Now Ford wasn’t a nice guy. But even he knew that workers are customers and the better a worker’s ability to participate in the economy as a consumer, the better off businesses and the economy will be as a whole. Though businesses might experience a dip in their profits, they’re able to pay higher wages without reducing employment because the savings can be substantial even if greater productivity and lower turnover may not fully pay for the minimum wage increase. Workers earning low wages are less committed to their jobs and less likely to stay for long. Employee turnover forces businesses to constantly find and train new workers, costing them significant money and time. Most of the time the new recruits may not be as optimally efficient during their training period as the experienced and productive workers they replaced. This can incur indirect costs to businesses from lost sales and imperfect customer service as new workers learn on the job. Add to that the fact a lot large retail companies like QuikTrip, Mercadona, Trader Joe’s, and Costco not only invest heavily in their employees, but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors. They also have better reputations, more work satisfaction, and less employee theft. 89% of small businesses in the country also pay their employees more than the federal minimum wage. Many small business owners believe higher wages level the playing field by preventing larger and less scrupulous firms from gaining a competitive advantage through very low labor costs. A strategy adopted by large corporations such as retail giants like T.J. Maxx, Walmart, Gap, and Ikea which have enjoyed record profits for years as well as employ 2/3 of all low wage workers. It’s no surprise why most small businesses support increasing the minimum wage to at least $12 an hour, some to even $15. In many ways, this makes a lot of sense since these large retail giants see workers as expendable while small businesses need to hold onto their best employees for as long as they can. Small businesses and large companies have proven that the key to their success is a combination of investment in the workforce and operational practices benefiting employees, customers, and the company.

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This map show the lot of tipped workers many of whom can earn below minimum wage at a rate as low as $2.13 an hour + tips. But the system in paying tipped workers is so complex that these workers are subject to manipulation and abuse. Many have had their tips stolen by their bosses. And many live in poverty.

8. Current Tipped Minimum Wage Laws Are Terrible– According to the National Employment Law Project, an estimated 4.3 million people work in predominantly tipped occupations in the US. Employees classified as tipped workers if they receive at least $30 per month in tips and the current federal tipped worker minimum wage is $2.13 an hour, which is less than a third of the current federal minimum wage and has remained unchanged since the 1990s. While most tipped workers are in the restaurant industry, these include car wash workers, nail salon workers, valets, and airport attendants among others. Two thirds of tipped workers are women which makes the subminimum tipped wage a form of legislated pay inequity. Many tipped workers use these tips to support their families and to pay for higher education like student loans. Labor movements have called to eliminate the tipped minimum wage. 7 states already have and their tipped workers earn full minimum wage + tips which I strongly think is how tipped workers should be paid anyway. New York’s tipped minimum wage is $7.50 which is more than 83% its full minimum wage. And in Hawaii, tipped workers only earn less than half minimum wage if they receive more than generous tips. Other states and D.C. have also increased their tipped minimum wage above $2.13 an hour. But these rates aren’t equal and aren’t always fair. And personally, I find the idea of a subminimum tipped wage as absolutely unfair and ridiculous. Add to that the fact employers are required to make up the difference if a tipped worker’s base wage and tips doesn’t add to the full minimum wage. But this is a complex system that’s both difficult to comply with and largely unenforceable for these reasons:

  1. It requires extensive tracking and accounting tip flows which even law-abiding employers find burdensome and difficult. This also allows less ethical employers to take advantage of this notorious complex system to illegally keep a portion of tips for themselves. Thus, this results in many tipped employees failing to receive the tips which they’re entitled to as well as have their income prone to manipulation and abuse.
  2. Employers are allowed to average tips over the course of the work week and required to “top up” only if an employee’s average hourly earnings are less than the full minimum wage. They’re also allowed to estimate their workers’ tips in order to determine how much tax to withhold. Though this estimation approach isn’t sufficient for federal minimum wage compliance, many employers use this anyway though they don’t actually verify that their workers really do receive enough tips to bring them up to the full minimum wage. One southern New Jersey waitress told NELP, “They just take our total sales for the day—say it’s [a couple] hundred dollars—and they just [estimate] 15% of that.” Under the federal minimum wage law, this is illegal as well as overstates tips since many customers tip less than 15% and “a few times a week” a customer leaves no tip at all.
  3. Tips are allowed to be pooled among various types of restaurant employees, giving a portion of those tips a server receives to legitimately be reallocated to other workers. This is a frequent and sometimes legally dubious practice at many businesses across the country as well as creates other opportunities for unethical employers to illegally skin off a portion of these tips for themselves or use to pay other employees whether they’re tipped or not.
  4. Tipped workers who’ve experienced tip-stealing or other forms of wage theft are often reluctant to demand what they’re owed in fear of reprisal. Many of rely on their supervisors to schedule their shifts and make more or less in tips depending on what shifts they’re given. So complaining about being ripped off might lead to being scheduled on a less profitable shift or simply fired.
  5. Tip stealing is rampant in industries that employ tipped workers who are often victims. Tip violations can take various forms but ultimately, they all result in tipped workers losing some of their tips to improve the employer’s bottom line. Some employers simply pocket a portion for tip pools while others can be less direct such as including non-tipped workers in the tip pool so they can be paid the lower minimum wage for tipped workers. Sometimes restaurants can take advantage of communication barriers among workers. The National Employment Law Project mentioned a waitress setting aside 15% of her tips for bussers but was expected to pay upfront and didn’t know whether they got it. They also discuss how waiters and waitresses in an upstate New York town exposed that managers had simply pocketed a portion of their tips they deducted, supposedly to share with the bussers. Additionally, they also talked about a Maryland waitress who already shared her tips with a captain, bussers, and host who finally contacted a union for help when the restaurant’s managers tried to take a portion of her tips for themselves as well. Several high profile lawsuits have recently been filed in response to these practices.
  6. According to a 2014 report by the White House Economic Council and the Department of Labor, 1 in 10 surveyed tipped workers reported hourly wages below the federal minimum wage, tips included. This compared to 4% of all workers reporting earnings below minimum wage.
  7. Compliance and enforcement challenges aside, despite requiring employers to make up the difference between tips and statutory minimum wage, it remains the case that customers are directly responsible for paying a portion of workers’ wages under this system. Thus, instead of being a gratuity for good service, having a subminimum tipped wage renders tips a customer-funded wage replacement and lowers labor costs for employers in a few select industries.
  8. Work for tipped employees is inherently uneven and often unpredictable with most making substantial amounts on Friday and Saturday nights and much less other days of the week. In addition, bad weather, a bad economy, seasonal change, and a host of other factors can cause sudden drops in tipped income and economic insecurity. Also, tips can fluctuate widely and are often paid in cash.
  9. Nationwide, the median tipped wage for servers is $10.11 per hour and $9.89 for waitresses. This despite claims from the restaurant industry that servers make a median between $16 and $22 per hour. The median wage for all workers nationwide is $16.48 per hour. Median wages for tipped workers in general are nearly 40% lower than overall median hourly wages.
  10. 46% of tipped workers depend on public assistance from the federal government which is well over the rate of 35.9% for all workers. 12.8% of tipped workers in the US live in poverty, including 15% of restaurant servers. In fact, servers experience poverty at well over twice the rate of the overall US workforce. They’re also only a quarter as likely as the workforce as a whole to receive employer-provided health insurance and are twice as likely to be uninsured. In states the federal tipped minimum of $2.13 per hour is implemented, 14% of tipped workers and 18% of servers live in poverty. In states where tipped workers are paid full minimum wage + tips, the poverty rate for them is 10.8% and 10.2% for servers.
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Despite fierce contention in the media and in Congress, raising minimum wage has wide support among Americans. This NELP graph illustrates this.

9. Raising the Minimum Wage Has Wide Support– Most Americans feel the minimum wage is too low and are concerned about rising inequality. A 2014 Public Policy Polling shows that 80% of respondents don’t believe they could support themselves or their families on minimum wage. Other polls show that 7 in 10 Americans believe that income inequality is getting worse and nearly as many believe the government has a role to play in reducing the gap between rich and poor. A 2013 Washington Post/ABC News poll found that 57% of Americans want lawmakers to address income inequality. The Hart Research Associates shows that 75% of Americans support raising the minimum wage to $12.50 or more by 2020, including 92% of Democrats, 53% of Republicans, 73% of Independents, 80% of women, and 72% of non-college whites. On the small business front, support for increasing the minimum wage is 61% or 3 in 5. 63% of Americans support a $15.00 minimum wage. 71% of Americans favor eliminating the subminimum tipped waged to ensure tipped employees the same minimum wage as other workers. 82% support automatic annual minimum wage increases to ensure it keeps up with the annual costs of living. There is no reason why Congress should be unable to pass The Raise the Wage law right now, even with a Republican majority. At least as far as the American people are concerned.

10. Minimum Wage Laws Unfairly Exempt Disabled People– Under the current federal law, the Secretary of Labor can issue special wage certificates to employers allowing them to pay disabled workers a subminimum wage, sometimes just a few cents per hour and in segregated work environments where they often perform mundane tasks that don’t use their existing skills, interests, and talents. Yet, this exemption is based on an antiquated notion that encourages disabled workers to rely on Social Security Income, Medicaid, food stamps, or other government programs in order to get by. There are also current training and employment strategies to assist those with even the most significant disabilities to obtain integrated and meaningful work. And when paired with the right rehabilitative tools, training, and expectations, employees with disabilities can be as productive as their nondisabled peers. It’s also discriminatory since nobody should be paid below the minimum wage, disabled or not. And I say that even if the minimum wage is too low.

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During the Gilded Age, those in blue collar professions worked in terrible working conditions with long hours and shitty pay. Many of these workers were children, some of them as old as kindergartners, mostly because their parents worked in the same place and didn’t earn enough to support a family. Still, we should also acknowledge that once workplace regulations and protections were in place, these large companies still earned money and lost nothing.

11. Blue Collar Jobs Used to Have Shitty Pay– Yes, I’m well aware that a lot of jobs in the service industry pay minimum wage or even less than that. And yes, I know many argue low wages are a cost-driven necessity for these jobs. On the other hand, you have a lot of blue collar jobs in mining and manufacturing which many people see as good paying jobs that many working class people lament leaving their hometowns or being outsourced. However, we should also acknowledge that blue collar jobs were the shit jobs of 19th and early 20th century industrialization with dangerous conditions, long hours, and very low pay. And I mean like working in the mine for 14 hour days on a wage that can’t support your family. So now your eight year old has to drop out of school and go to work with you. It wasn’t unusual for whole families to work in a factory, including the kids who could be as young as four years old. Now we’re talking about a time when there were no workplace safety protections, no minimum wage, no workers’ rights, and institutionalized child labor. So what changed? Well, these workers organized into unions and went on strike for their rights, not just risking getting fired but also getting killed. And they faced staunch opposition from their robber baron bosses. Yet, once they got what they wanted, these blue-collar jobs were no longer seen as shit jobs by later generations. In fact, they were seen as jobs that could support a family and local economies benefitted just the same. But this shows us that the existence of shit jobs has more to do with an employer’s desire for cheap and expendable labor than what the job entails. Also, keeping workers dependent on them that they’ll put up with any abuse they give them. Not to mention, it supports the argument that low wages are a choice and not a cost-driven necessity. This is why a lot of corporations don’t want to raise the minimum wage or have their workers unionize. Not only that, but also that the shit jobs of today don’t have to be the shit jobs of tomorrow if we invest more in our workers. Raising the minimum wage is a good place to start.

12. Raising the Minimum Wage Saves Taxpayer Money– With wages being what they are, many low income workers have relied on public assistance because their paycheck can’t cover basic expenses. Even if they work for companies that could certainly afford to pay them a raise and benefits. American taxpayers spend an annual $153 billion in taxpayer money helping low wage earning families get by. This includes food stamps, Medicaid, CHIP, TANF as well as childcare subsidies and reduced-free school lunch programs. These programs help Americans meet a basic standard of living despite being targets for cuts and reductions. But having workers rely on public assistance has more to do with their employers paying them nothing more than poverty wages. Therefore, the government is indirectly subsidizing these companies that refuse to pay more. In fact, some companies like McDonald’s doesn’t even hide that half their workforce is on welfare and even encourage their employees to seek public assistance. Higher wages at work save taxpayer money since they lift more people out of poverty and produce more tax revenue. Sorry, libertarians, but cheap labor doesn’t come cheap.

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This is a graph from the Economic Policy Institute that shows what the average minimum wage worker. Despite the stereotype of a teenage working after school, most minimum wage earners are adults who work full time as well as earn more than half of their family’s total income.

13. Low Wages Don’t Relieve Poverty– Contrary to what conservatives said about minimum wage jobs being for teens trying to earn extra money and experience, 89% of minimum wage workers are 20 years old or over while many are women and people of color. 37% of them have at least some college education. A third of them are over 30. Not to mention, 57% of minimum wage jobs are full-time and are unlikely filled by teens anyway. Some low wage industries don’t hire teens at all. That being said, statistics show a lot of low wage workers make nearly to over half their family’s income and 28% of them are parents. Sometimes they could be the family’s chief breadwinner, especially in single parent households. In every state working the minimum wage leaves a full-time worker with two kids below the poverty line. Not to mention, low-income wage earners may work multiple jobs which gives them even less time to spend with their kids as well as take care of themselves. At worst this could lead to a case like Maria Fernandes who worked so hard to make ends meet that she died from gas fumes in her car while napping between shifts. Fernandes was said to work 4 jobs and sometimes didn’t sleep for nearly a week. There were a couple occasions when single mothers were busted for leaving their kids unsupervised due to working 3 jobs and lack of available childcare options. Many low income workers have also experienced a considerable toll on their health while their children suffer in school and in life. No one who works for a living should have to live in or near poverty, especially full-time.

14. Raising the Minimum Wage Has Expert Support– In January 2014, over 600 economists across the country sent a letter to President Obama and congressional leaders arguing for a minimum wage raise to $10.10 by 2016 and then indexed to protect it against inflation. 7 of these were Nobel Prize winners. Even the Department of Labor supports this measure and think it’s a better idea than the current minimum wage laws we have now.

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Here’s a map from the Wall Street Journal showing the minimum wage increases within each state. Of course, some pay below or have no minimum wage laws at all.

15. The Minimum Wage Has Been Raised in Localities and States– As of 2016, 29 states, D. C., as well as countless localities have raised the minimum wage, many in recent years. Some have even enacted measures to increase the minimum wage automatically with inflation and the costs of living. Not only that, but despite congressional Republican opposition, raising the wage in these states, D.C., and other jurisdictions weren’t just mere liberals pushing for it. Sure Washington State, Oregon, California, New York, Illinois, and Massachusetts voted for minimum wage increases. But so have red states like West Virginia, Arkansas, South Dakota, Nebraska, Alaska, Missouri, and Montana. Swing states like Florida, Michigan, Arizona, and Ohio have also raised their minimum wage. The fact minimum wage increases have passed in states of various political leanings should emphasize its widespread support among party lines.

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Despite that many opponents of minimum wage increases argue that raising it would kill jobs or raise prices, keep in mind that none of them bring up this argument when it comes to skyrocketing CEO pay while regular wages remain stagnant. Seriously if your company can afford to give a CEO a generous severance package of a few million bucks, they can raise wages on their lowest paying workers. It’s not hard to see.

16. Opposition to Minimum Wage Increases Has More to Do with Self-Interest and Ideology– I know there are people who argue that raising the minimum wage would hurt the economy as well as kill jobs and raise prices. However, we need to understand that despite bipartisan and expert support, raising the minimum wage is still seen as a mainly liberal issue in the halls of Congress. Why? Because a lot of Republican politicians are bankrolled by big corporate lobbies who would rather use cheap labor, many of whom boast record profits and very much can afford to pay their workers more. There are a lot of libertarian and conservative economists and think tanks to back them up, some of whom want to abolish minimum wage which just makes workers even more prone to further exploitation. Believers in free market and trickle down economics usually see low wage jobs as a cost-driven necessity for economic prosperity. But employers often use this argument to justify not giving their impoverished employees a raise for decades, including your Gilded Age robber barons. Besides, no Fortune 500 CEO uses this argument when it comes to their own pay, which has skyrocketed dramatically. I mean the median CEO to worker pay ratio has risen from 20-to-1 in 1965 to 204-to-1 in 2015. Some of the highest paid CEOs make 300 times more than their typical employees. There are plenty of CEOs with million dollar salaries as well as stock options/grants, bonuses, benefits, and other perks. Hell, even bad CEOs receive generous severance packages whenever they left their companies in worse shape than when they took over. Yet, no libertarian or conservative argues that raising their pay will contribute to higher prices, job loss, or worse economies. Or why people end up paying higher prices and lose their jobs while worker wages remain stagnant. Yes, I know that a CEO’s job may require more skills, education, and talent than a lot of minimum wage occupations and that we’ve been through a recession. But it doesn’t convince me why conservatives and libertarians think raising the minimum wage will lead to economic ruin while raising CEO compensation won’t. Surely a company that can generously compensate its own CEO can pay its lowest earning workers $15 an hour, which is just small potatoes. So I think it’s more of a matter of corporate greed and self-interest.

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This quote by Chris Rock perfectly explains why we need the federal government should raise the minimum wage. Most companies will not give their employees a raise by themselves. They need to be mandated to do it.

17. Large Employers Are Unlikely to Increase Wages on Their Own– While many conservatives and libertarians might tell us that workers would be better paid if it weren’t for all those pesky taxes regulations, it is not the case. The robber barons during the Gilded Age didn’t pay federal income taxes until the 16th Amendment passed in 1916 and none of their tax dollars went to benefit their impoverished, overworked, and underpaid employees. Not to mention, their workplace policies are the reason why we have so many regulations and agencies to protect workers today. Besides, there are plenty of large corporations exploit federal tax loopholes so they don’t have to pay at all. And yet, conservatives and libertarians claim that if we get rid of the tax burden with social welfare programs and regulations, the “free market” will provide and take care of workers. Uh, excuse me but during the Gilded Age, those tax supported social programs didn’t exist and I’m pretty sure the free market didn’t take care of those low wage workers. Unions and the government policies they lobbied for while facing staunch opposition from these large companies. Besides, corporations lobby at all levels of government like crazy for direct and indirect public assistance like bailouts, subsidies, special tax breaks, deductions, tax and policy loopholes specifically designed for them, so-called “right to work” laws, and more. Say what you want about welfare, but I’d rather have my tax dollars go to assisting poor people than to a $3 billion a year corporate jet subsidy, a $200 billion Wall Street bailout, special tax breaks to hedge fund managers allowing them to pay a 15% tax rate, or a $70 billion a year home mortgage deduction with 77% going to people earning over $100,000. Sure corporations may like lower taxes and less regulations but even if they get what they want from their political lackeys, they will not give workers a raise unless they’re pressured to either by unions, government policy, or both. But wait, what about companies that pay workers better wages like Costco? Yes, there are big businesses that treat their workers generously like Costco but the Costcos in this world are the exception to the rule, especially in sectors that hire low wage workers. Therefore, federal government action to raise the minimum wage is necessary.

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By raising the federal minimum wage to at least $10.10 an hour, corporations will only have to spend just 1/3 cent of every dollar spent on wages, according the the Congressional Budget office. So I’m confident these large companies with minimum wage labor can totally afford it.

18. Raising the Minimum Wage Is the Right Thing to Do– Economics aside, we should consider the fact that as earnings from corporations and the top 1% increased to dramatic new high, wages have stagnated or lost value even as productivity also rose. This could never be more true for low income workers. Raising the minimum wage will protect the most powerless in our workforce. Now could anyone say whether it’s fair for businesses to boast big profits while paying their employees poverty wages? Of course not. Is it fair for someone to live in poverty despite working a full-time job? Hell no. And if raising the minimum wage hurts their profits, why should I care? I mean a big company like McDonald’s is unlikely to lose business if they pay their workers $15 an hour since they’ll usually make a big profit anyway. Besides, most small businesses pay their staff more than minimum wage anyway since they can’t afford replacing them while retaining a competitive edge against their larger counterparts. As for price increases, well, they usually rise whether wages increase or not. And studies show that the increases won’t be much. What about jobs? If raising the wage results in reduced hiring and hours and more job loss by big companies, it won’t be due to economics. It would be more or less because of greedy executives who’d use just about any excuse to cut their workforces. Small businesses, on the other hand, are more worried about poor sales than being trounced by their big business counterparts than anything. Even if raising the minimum wage does hurt the economy like its critics have predicted, what about the concept of economic justice? I think that should matter. After all, labor is critical to a business’s success and workers who dedicate their time and effort into that company should get a bigger cut in that. Look, from how I see it, there’s no good reason to not raise the minimum wage. And above all, no one working a full time job should live in poverty. Even though I know that raising the wage won’t cure poverty any time soon, at least it can show a good example by making businesses invest more in their workforce. It’s about time.

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As FDR said himself, nobody should work a full time job and still live in poverty. Workers have a right for a decent living wage which has been denied to many in the name of profit. So raising the minimum wage is the right thing to do. Besides, what’s wrong with economic justice for God’s sake?

Policing for Profit: The High Price of Low Taxation

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Nobody likes taxes. In fact, that’s why politicians always campaign on lowering them to lessen burdens on families. But we have to admit, if we didn’t pay them our governments couldn’t govern and provide services we need as a society. Believe me, our Founding Fathers found this out the hard way with the Articles of Confederation. The truth is, governments to raise money somehow and taxation is a fair way to do so. And I think a progressive tax system in which the rich are taxed more than the poor is sufficient since the rich earn more money. Yet, no matter what your tax bracket is, you still benefit from government services in some way. Still, if taxes are either too low or don’t provide enough revenue, then governments could be in trouble and sometimes cutting programs and staff may could lead to catastrophic results. Some local governments may find ways to enrich their coffers during times of financial pressure when other forms of revenue decline.

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Guys, if you want to know why pot isn’t legal in California. Remember that its state police have funded efforts opposing marijuana legalization. And here we have two cops gloating over their booty.

In recent years, thousands of American cities and towns have relied on judicial fines and forfeiture to fund their governments, which is unhealthy for our democracy. Serious revenue declines, anti-tax popularity, local budget pressures have led municipalities to expand their use of revenue-generating law enforcement practices such as red light and speed cameras. However, public awareness hasn’t hit the national spotlight until the Department of Justice’s 2014 investigation into Ferguson, Missouri. We all know that the DOJ was looking into Ferguson due the police shooting of Michael Brown. But the racism and injustice in Ferguson was far worse. Between 2011 and 2013, the city collected 80% more fines and forfeitures by which point it raised 20% of its budget through this. Before the killing of Michael Brown, Ferguson anticipated that they’d collect an extra million through 2014 through police activity, raising a total of 25% through fines. This despite being home to a Fortune 500 company Edison Electric, a successfully revitalized commercial district, and an office park filled with corporate tenants that Ferguson could’ve taxed for all their worth. Well, if it weren’t for an amendment from the 1980s requiring citywide referendum approval on local tax increases, licenses, or fees. Even then, it wouldn’t be difficult since I think Ferguson’s 67% black population would’ve approved since they pay most city taxes anyway while the wealthy are barely taxed at all. Seriously, Ferguson’s tax system is incredibly unfair. Cities and their police departments may see increasing their dependence on fines as a viable strategy for funding their governments but it corrupts the justice system and brings great harm to the people it serves.

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So far, John Oliver has been among the only people in the mainstream media to show the problem with profit policing. This one pertains to municipal violations which can screw the poor and minorities.

  1. Profit Policing Is Not Normal nor Financially Healthy – For economically healthy municipalities, even when the absolute dollar total of fines and forfeitures may be large, they still represent a small proportion local revenue. Places like New York City, Washington D.C. and San Francisco only raise about 1-2% of their budget through civil penalties, which is about the norm. And that’s how it should be. Because most cities run on progressive tax revenue like income and property taxes. Ferguson doesn’t. In their budget, regressive taxes like sales and utilities account for almost 60% of the city’s revenue followed by municipal fines at 20%. By contrast, progressive taxes account for just under 12%. This means that Ferguson extracted more revenue from African American renters than from those owning the homes themselves. This is not how a local government should generate revenue and it’s no wonder that Ferguson has had trouble paying its bills since it incurred a debt of $3.7 trillion. And it had its credit rating downgraded to junk status by Moody’s in 2015. Even worse towns around Ferguson relied on fines for over 30% of their revenue. 3 towns in Louisiana reported collecting more from fines than from taxes with Henderson collecting $3.73 in fines for every tax dollar. Relying on fines to keep municipalities afloat isn’t normal because relying on bad behavior to balance local budgets isn’t financially viable. Making even less sense is jailing people who owe less money than it cost to incarcerate them, leading to bigger deficits as well as a cycle of dependency. As the Brennan Center’s Justice Center put it, “Having taxpayers foot a bill of $4,000 to incarcerate a man who owes the state $745 or a woman who owes a predatory lender $425 and removing them from the job force makes sense in no reasonable world.”
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When law enforcement is most concerned with creating revenue from citations, protecting and serving the community is no longer a priority. Instead, the community is exploited with very harmful results. This is why for profit policing is bad.

2. Profit Policing Undermines Justice– Fines and civil forfeitures were set as disciplinary measures, not as a municipal fundraiser. They were never meant to contribute significant revenue to local governments. But this is exactly what happened in Ferguson that the city manager and police chief discussed using tickets to meet revenue benchmarks. Not to mention, police were encouraged to issue traffic tickets who were evaluated and promoted on how much cash they could gin up. In Saint Louis County, half the judges had incentives to find people guilty and coerce payment through threat of jail. Not to mention, civil asset forfeiture becomes big which results in prosecutors and police departments to adjust budgets and tactics in order to prioritize fundraising over public safety and justice. Often this could lead to police being better trained to pursue seizures and take advantage of lax standards for the department’s benefit. It’s very clear that whenever law enforcement is a fundraising tool, the justice system is severely compromised. Because when you use law enforcement to raise funds, then it’s not about promoting safety or justice. It’s about making money through people breaking the law which can hurt the nation’s most vulnerable people.

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When it comes to policing for profit, racial minorities are often the victims and are disproportionately targeted. Here is Valerie Whitner from Pagedale, Missouri who along with her husband, accumulated $2,800 in fines for issues on their modest home. These include having chipping paint on a downspout, not having a screen door on the rear entrance of their home, and having weeds growing in their vegetable garden. Sometimes they were even issued fines for not having their home “up to code” without explanation. They were even threatened with demolition and were forced to take out pay day loans to keep their head above water and make mandated repairs.

3. Profit Policing Discriminates Against Minorities– While Ferguson had a cash-starved municipal government, they were hardly a poor city. Its government could’ve easily solved their money problems by taxing local businesses, one of which is a Fortune 500 company that makes $24 billion a year. The fact Ferguson relied on cops and courts to extract fines and fees to generate revenue was the result of more than a century of public policy choices designed to protect largely white business and property owners while passing the bills along to disproportionately black renters and local residents. Given Ferguson’s extraordinary climate of police harassment, you can guess who got slapped with the fines. Despite that Ferguson is only 67% black and sees plenty of white commuters, 85% of all traffic stops involved black motorists and were twice as likely to be searched and arrested than their white counterparts. This despite when searched, whites were 2/3 more likely to be caught with some sort of contraband. Municipal violations for not mowing the lawn or putting out trash in the wrong place at the wrong time were overwhelmingly issued to blacks. 95% of citations for jaywalking and 93% if arrests were issued to blacks. We should also account that Ferguson’s mayor, city manager, and police chief were white. Minorities are more likely to live below the poverty line. And it’s not just in Ferguson, but in a lot of communities with white leaders and a large minority population. You might know the case of Philando Castile who was shot by a cop in St. Anthony, Minnesota. But you may not know was that this guy had been pulled over by police 52 times within the last 14 years of his life and accrued over $6,000 in fines. Now he must’ve been an epically bad driver or racially profiled on an average of once every 3 months. It’s very clear that St. Anthony relied on Castile’s and his black neighbors’ money to balance their budget. Brennan Center estimates that 10 million people owe more than $50 billion in debt due to their involvement in the criminal justice system. 60% of this total is owed by blacks and Latinos with average totals around $7,000. That said, when police need money, it’s usually minorities who suffer.

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This woman is Harriet Cleveland who couldn’t afford to pay her $152 fine in traffic violations that she ended up spending jail time. This despite that she tried all she can to pay for it, even going without food and utilities. Her story illustrates what happens when poor people can’t afford to pay their fines right away. It’s sad and very exploitative.

4. Profit Policing Screws the Poor– Whenever cities use municipal fines and fees to generate local revenue, the poorest residents usually suffer the most. Not only are often targeted by police like in Ferguson (since many are minorities), but they’re among the least likely to afford the fines. In 2014, 75% of all Ferguson residents had active outstanding arrest warrants. Most of these involved people who couldn’t afford to pay. According to Arch City Defenders, citizens failing to appear or pay fines that were “frequently triple their monthly income” were liable to be jailed, sometimes for as long as 3 weeks. Those with outstanding warrants were rendered ineligible for most forms of public assistance and government-provided social services. This combined with public housing exclusion, often send residents out on the streets. Municipalities can also compound financial hazards for those fined by contracting with private probation collectors who can add additional, legally enforceable fees and interest to the amount the court has required. It doesn’t help those who can’t pay fines, can lose their licenses along with their jobs.

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While running into a stop sign in California results in a $35 fine, the violator could end up paying up to $238 in Riverside County. This graph breaks it down.

5. Profit Policing Results in Higher Payments– This means that municipalities relying on fines to sustain their budgets might result in violators paying more money than originally owed. Even for a seemingly minor offense. This could happen in a number of ways:

  • Initially starting with a reasonable fine but tacking on surcharges and fees-For instance, a $35 fine for running a California stop sign can balloon into $238.00. San Diego is notorious for this since they could tack on as many as 10 surcharges with a $35 speeding ticket like a $40 state penalty assessment, $36 court penalty assessment, a $20 court construction fee, a $8 state surcharge, a $16 DNA identification, a $35 criminal conviction fee, a $40 court operations fee, a $4 emergency medical air transportation penalty, and $1 night court fee. All adding to $235.
  • Charging outrageous fines from the get go– Examples include charging $255.000 for driving over less than 25 miles over the speed limit, $500 for party noise, and $1000 on parents for juvenile graffiti. Some can consist of outrageous fines like $450 for stealing $5 of food.
  • Payment Plans– Those who can’t afford traffic tickets the first time may take this route in some states. But they can make paying off tickets more difficult and more expensive. In Illinois, people falling behind in payments can get hit with a 30% fee. And New Orleans charges $100 to start one.
  • Probation Fees– 44 states charge people various fees for being on probation. Many of these are handled by companies like Judicial Correction Services which charge a $10 set up fee and $140 per month. Those who couldn’t bring the entire amount had to report to JCS offices more frequently, sometimes multiple times a week. When people fell behind, JCS continued to collect its own fees which effectively extended their probations and guarantee the company more money. When people couldn’t pay, employees threatened to revoke their probation which resulted in jail time. It’s an unconscionable practice that should be outlawed.
  • Private Collectors– Not only they can collect on tickets but can add additional legally-enforceable fees and surcharges. They can also threaten people who don’t pay with jail. Sure they may charge the courts nothing. But they can charge people on probation a fortune.
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The town of Pagedale, Missouri is a notorious example on how profit policing can lead to ordinances allowing fines be issued for very ridiculous reasons. Its police force has aggressively targeted its citizens for harmless conditions like screen door holes, chipped paint, weeds in garden, mismatched drapes, high grass, and you name it. Let’s just say we know Pagedale issued ticketing on these ridiculous rules in order to fill its coffers. Basically its motto would be, “If you can’t ticket violations, invent them.”

6. Profit Policing Results in More Oppression and Hostility– Those who live in municipalities that depend on fines to balance budgets are more likely to be stopped by police and fined. Sometimes this could be for the usual traffic violation. But sometimes it could be for things people really shouldn’t be fined for. For instance, in Pagedale, Missouri, residents can be ticketed and fined for having mismatched curtains, walking on the left-hand side of a crosswalk, wearing pants below one’s waist, having holes in window screens, having a barbecue in front of the house, and more ridiculous ordinances that you can find in a wacky law listing. In Ferguson, 75% of its residents have outstanding arrest records. Municipalities with profit policing are more likely to have a more militarized force as well as higher police brutality against minorities.

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Policing for profit often creates distrust between law enforcement and communities. Because citizens being sponged are more likely to think that the system no longer works for them. And in a way, they’re right.

7. Profit Policing Leads to More Community Distrust- While trust between law enforcement and the public may be difficult without profit-driven policing practices, using fines to fund municipal governments erodes it even further. Police are sworn to protect the public and work with local communities to solve problems pertaining to crime and disorder. It’s one thing for cops to use excessive force on unarmed black people and get away with it due to systematic racism. But it’s even more unconscionable for cops to harass residents with absurd systems of fines and penalties on mostly extremely minor offenses. Making police revenue generators for cities and towns diverts them from their traditional role of community guardians and protectors. Not to mention, people have been taught to believe that local governments and police are supposed to work for them, not the other way around. Ferguson isn’t a feudal domain where police vassals can harass the peasantry as they please. Such actions lead to a growing distrust between the police and the community, especially among poor and minority citizens. And that’s not good.

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Here’s a diagram from Arch City Defenders on Ferguson’s terrible court system to its African American residents. Notice how it’s a vicious cycle and how the people in charge seem to be white. I think imprisonment for debt isn’t even legal.

8. Profit Policing May Not Be Legal– For many people below the poverty line, facing for being unable to pay a speeding ticket can be a very real possibility. Municipalities significantly funded through fines rely on judges to find people guilty and force them to pay or serve jail time. However, the federal government has already established that judges can’t send people to jail for being too poor to pay fine through a 1983 Supreme Court case. Furthermore, debtors’ prisons were outlawed nearly 200 years ago.

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Civil asset forfeiture is when police take your stuff on suspicion that it was used in a crime, which they can do whatever the hell they want with it. Though seen as a crime fighting tool, there have been so many cases where innocent people have had their stuff taken away from them. And many had a hell of a time getting it back through the court system. Here’s how hard it is to fight civil forfeiture.

9. Profit Policing Leads to Civil Forfeiture Abuse– Civil forfeiture is when police take people’s money and property without making an arrest. Under this, police don’t have to formally charge owners with a crime, just suspect their assets are tied in some way to illicit activity. And forfeiture is mostly approved without definitive proof of alleged criminal ties. Such property can include cars, homes, and even businesses. Yet, once government takes control of the person’s property, it’s typically sold off sending proceeds back to police departments and legal offices working the case. It’s regularly touted as a crime fighting tool like targeting wealthy criminal finances who may not carry all their cash in the same car. But since there’s a lot of booty potential for cops through civil forfeiture seizures, there’s a strong incentive to pursue this process aggressively and abuse these laws and exploit innocent owners’ lack of safeguards. This is especially true when a police department’s aim is the bottom line. Sometimes they could use it as a slush fund. In 2014, the Departments of Justice and Treasury deposited more than $5 billion into forfeiture funds, up from less than a $1 billion within the last decade. There are countless horror stories of law-abiding citizens who’ve gotten hopelessly entangled in the process. In a couple Texas border towns, it wasn’t unusual for police to pull over minority drivers before seizing whatever money and valuables in their possession. After that, they’d coerce them to sign their possessions over under forfeiture laws by threatening jail on trumped up charges or taking their children. And many must go through a complex legal maze to get it back. But due to lack of transparency and public reporting there’s not a lot of data to tell exactly how lucrative or common civil asset forfeiture is in each state. This has to be fairly common in places like Ferguson. Guess who ends up being victimized by this. Still, civil forfeiture is basically state sponsored theft and should be banned.

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Civil asset forfeiture has been frequently abused by police in recent years. The DOJ in 2014 lists money taken from civil asset forfeiture at $5 billion up from nearly $1 billion in 2004.

10. Profit Policing May Not Be Constitutional– The 8th Amendment bans cruel and unusual punishment as well as excessive bail and fines. Since profit policing can lead to higher fines and fees that people are unable to pay, it’s most likely unconstitutional. Since profit policing happens in minority communities, you can say it violates the Equal Protection Clause that bans discriminatory punishment as well as the Due Process Clause that requires neutral administration of criminal law. Then there’s civil forfeiture which I think is also unconstitutional under the 4th Amendment that protects citizens against unreasonable searches and seizures. So expect it in the Supreme Court.

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When police departments are more directed to raising municipal revenue, law enforcement accountability goes out the window. Not only that, but leaves bad cops on the streets free to extort money from poor minority citizens as they please. Or confiscate people’s stuff if they think it’s involved in a crime. Like this guy.

11. Profit Policing Hurts Police Accountability– I am aware that police accountability hasn’t been very good lately due to how cops who use excessive force against unarmed black people get away scot free. And I know every police force has its bad apples who make the good cops look bad. However, when budgetary whims replace peacekeeping as law enforcement’s central motivation, then you can forget about police accountability altogether. Because when a police department’s main aim is profit, bad cops are more likely to get away with bad behavior. Not just “bad” as in morally corrupt and racist, but also in a job performance sense. For instance, Ferguson’s Darren Wilson who shot Michael Brown was fired from a previous job. Actually the whole police force Jennings, Missouri was disbanded for being awful. Not to mention, in Ferguson police were even encouraged to ticket and collect fines as well as were rewarded for it in career advancement. The demands were so intense that the police department had little concern with how officers did this, just that they do it a lot. Didn’t matter if their stops had little relation to public safety or questionable legal basis. Didn’t matter if the cops in question were menaces to public safety. Only cops who failed to issue an average of 28 tickets a month were disciplined. I’m sure Darren Wilson wasn’t one of them. At the same time, white police officers frequently fixed parking tickets for friends. Let’s just say it leaves so much room for corruption. After the Brown shooting, the DOJ found the Ferguson Police Department to be an abysmal failure. They reported, ““Ferguson’s law enforcement practices are shaped by the City’s focus on revenue rather than by public safety needs. This emphasis on revenue has compromised the institutional character of Ferguson’s police department, contributing to a pattern of unconstitutional policing, and has also shaped its municipal court, leading to procedures that raise due process concerns and inflict unnecessary harm on members of the Ferguson community.”

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These are charts of St. Louis County municipalities with the biggest increases in non-traffic cases since 2010. Those who can’t afford to pay fines often have the system stacked against them. Meanwhile, the judges may often let their friends off easy.

12. Profit Policing Hurts Judicial Accountability– As we all know in scandals involving privatized prisons, whenever the courts’ aims is to increase revenue, the justice system is severely compromised. It is the same when it comes to municipal fines as well as “Cash for Kids.” Prior to the Michael Brown shooting, the city of Ferguson’s court system was ranged in the top 8 in Saint Louis County by generating more than $1 million in revenue during 2010. Their courts exceeded over $2 million in 2012. At the same time Ferguson Judge Ronald J. Brockmeyer owed $172,646 in back taxes and let his white friends off easy while extracting fees from Ferguson’s poor and black population. And many had the system rigged against them since they couldn’t afford a lawyer or pay a fine. Some even faced jail time. He’s had since been removed.

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What happened in Ferguson after Darren Wilson got off on shooting Michael Brown is a good example what could happen if a town has been under profit policing for far too long. This protest wasn’t just about police brutality they’ve put up for years but also on how often African Americans were exploited through other means. It was a disaster waiting to happen.

13. Profit Policing Hurts Public Safety– When revenue is the bottom line in profit policing, police departments focus more on issuing fines on petty offenses for municipal revenue than keeping people safe. It should surprise no one that some well-known police brutality victims were initially stopped for something preposterously minor. This illustrates how profit policing and law enforcement use of excessive force are clearly linked. North Charleston’s Walter Scott was stopped for a busted taillight before Michael Slager gunned him down. Having a busted taillight isn’t even in a crime in South Carolina. And this guy had a record for gratuitously using a taser. Sandra Bland and Samuel DuBose were stopped for minor traffic violations in Texas and Cincinnati like failing to use a turn signal or missing a front license plate. Philando Castile was also stopped for traffic violations for a whopping 53rd time. Wilson stopped Michael Brown for shoplifting and jaywalking. The thing is, when profit policing is in place, abuse is rampant while public safety is compromised. Communities distrust the police who they don’t think work for them. Some may even show a lack of respect for the law and may refuse to cooperate with police. Bad police are allowed to patrol on the streets with guns and may even get away with police brutality. Minorities and poor people are continuously screwed and preyed upon. It is no wonder that Ferguson, Missouri was one police shooting away from civil unrest. We have to accept that public safety depends on the community’s relationship with law enforcement. Municipalities can’t protect their populace if they’re using police to fleece from them since it creates a toxic environment.

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Here’s a letter from Ferguson’s mayor to one of the city’s policemen for his service. This pertains to him issuing tickets. Notice how they emphasized how he contributed to the city’s budget.

14. Profit Policing Corrupts Governments– Look, I know that many municipal governments use their police departments to enhance their coffers because they’re financially struggling and don’t want to raise taxes, especially when taxes would make more financial sense. However, when a government backs profit policing, they’re clearly not acting in the people’s best interests. This was certainly the case with Ferguson but other communities in Saint Louis County were demonstrably worse. Then there’s the fact many of these towns enacted ordinances just for the sake of generating more revenue through fines, especially if they’re unrelated to traffic and not technically illegal elsewhere. Ferguson’s were also skewed since their city manager congratulated the police chief for record citation revenue. While Ferguson’s cops held anti-black views so did their municipal employees as the DOJ found out through various e-mails mocking blacks through speech and familiar stereotypes. Most of Ferguson’s decisionmakers believed African Americans lacked personal responsibility despite that black residents made incredible efforts to pay their fines disproportionately handed out to them. White city officials meanwhile, condoned a striking lack of personal responsibility as the cause.

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Stolen Pay: Why We Need to Know About Wage Theft

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Republican presidential candidate Donald Trump often likes to cast himself as a protector of workers and jobs as well as a great businessman. However, recently he’s come under considerable scrutiny as it’s been recently revealed that he’s been involved in more than 3,500 lawsuits over the past 3 decades. A large number of these pertain to ordinary Americans who say that Trump and his companies have refused to pay them for their work. According to USA Today, these include a Florida dishwasher, a New Jersey glass company, a plumber, a carpet company, painters, 48 waiters, dozens of bartenders and other hourly workers at his resorts and clubs all over the country, real estate brokers who sold his properties, and even several law firms that once represented him in these suits and others. Trump and co. have also been cited for 24 violations under the Fair Labor Standards Act since 2005 for failing to pay overtime or minimum wage, according to the US Department of Labor data. In addition to the lawsuits, there were more than 200 mechanic’s liens filed by contractors and employees against Trump, claiming that they were owed money for their work since the 1980s. These range from a $75,000 from a Plainview, NY, heating and air conditioning company to a $1 million claim from a New York City real estate banking firm. On his Taj Mahal casino in Atlantic City, the New Jersey Casino Commission in 1990 show that at least 253 subcontractors weren’t paid in full or on time, included workers who installed chandeliers, walls, and plumbing.

All of these actions described above paint Trump and his sprawling organization frequently failing to pay small businesses and individuals, then sometimes tying them up in court and other negotiations for years. In some cases, Trump’s team financially overpowers and outlasts much smaller opponents, sometimes draining their resources. Some just give up the fight, settle for less, end up in bankruptcy, or out of business altogether. Such actions described above are well-known cases of wage theft. Donald Trump has been a long practitioner of this but he’s hardly the only one. In recent years, workers ranging from NFL cheerleaders, Senate cafeteria workers, fast food workers, retail workers, high tech engineers, nail salon workers, and computer animators have found themselves victimized by this very real and very heinous act by their employers. Often, employees find themselves powerless to do anything about it. And if they do, they often have to act through the court system and risk losing almost everything. But since people rely on their job so much to make a living, this is a very important issue with it becoming the fastest growing crime wave in the United States. But it’s not often reported and it’s tough to see how widespread this problem is. However, at any rate, wage theft is a problem we need to discuss and need to demand action on because it affects so many people’s lives. And here I have this handy FAQ guide to show you.

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Yes, this is what wage theft actually is. Unfortunately, Mr. Orange Nuclear Meltdown doesn’t understand this. Because he’s been a constant violator according to the lawsuits former employees subject him to.

What Is Wage Theft?

Wage theft is when an employer denies pay and/or benefits that are rightfully owed to an employee. Wage theft can be conducted through various means such as failure to pay overtime, minimum wage violations, employee misclassification, illegal deductions in pay, working off the clock, having tips stolen, or not being paid at all. In short, the boss is not paying workers for all of their work. Or not paying for the work at the rate they said they would or what the employees are entitled to by law.

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If you experience any of these at work, you might be a victim of wage theft. Because these are common signs like being paid under the table, kept working despite clocking out early, having tips stolen, and not receiving meal or rest breaks.

Types of Wage Theft:

Overtime– This is the most common form of wage theft. The US Fair Labor Standards Act dictates that employees are entitled to receive overtime pay calculated at least 1.5 the regular rate for all time worked past 40 hours a week. Some exemptions only apply to public service agencies or employees who meet certain requirements in accordance to their job duties along with no less than a $455 weekly salary (or $23,660 a year). So unless employees meet the exemption criteria, they’re usually entitled to overtime if they work over 40 hours a week period. Employers can’t change overtime laws and can’t avoid paying overtime by enacting a no-overtime policy or getting employees to agree on special deals. Unfortunately, it’s common for employers to treat overtime as a personal choice when it’s not. And despite regulations, many employees aren’t being paid overtime due to them. Common overtime violations include:

  • Improperly Calculated Overtime Pay– Employers must calculate overtime on the actual 40-hour workweek regardless of pay period whether it be weekly, bi-weekly, or monthly. Many employers are said to average hours over 2 or more weeks, not including all payments in calculating overtime pay rate, not paying employees for all hours worked over a 40 hour work week, not including time spent preparing for work (donning and doffing), and requiring employees to wort through unpaid meal breaks. Such errors may not always be accidental.
  • Comp Time Instead of Overtime Pay– Compensatory time is paid time off for extra hours worked that’s generally granted to hourly employees instead of overtime wages. It can sometimes be legal (though it’s often not due to fear of employer abuse) but employers must pay it at 150%, the same rate as overtime wages. To give employees to take compensatory time or extra paid time off in lieu of overtime pay is illegal under federal law. Furthermore, those who do take the compensatory time option aren’t always guaranteed time off whether they want it or need it.
  • Employees Not Allowed to Report Work over 40 Hours Per Week– Many employers have rules that no overtime work will be permitted or paid for unless authorized in advance. Some employers choose to ignore when hourly employees work overtime or don’t allow employees to work overtime hours. This violates overtime rules.
  • Misclassification of Employees as Exempt Workers– Exempt employees are by law workers not entitled to receive overtime pay. Whether an employee is exempt or not can be confusing. However, it has nothing to do with one’s job or job description or whether one is paid a salary or hourly. It depends on what an employee actually does on their job on a daily basis that determines whether or not they’re legally entitled to overtime pay.

Not Paying for Meals and Rest Period Pay – Meals need not be counted as work time if they are at least 30 minutes long and the employee is relieved from active duty during the meal period even if they must remain available. An employee who works through lunch is working and that time must be counted. An employee who eats a sandwich at the desk or is required to monitor a machine is working through lunch. However, many employers who have their employees work through lunch are guilty of this.

Not Paying for Off the Clock Work– Many FLSA lawsuits involve employers failing to include time spent by employees performing work activities outside their normal shifts. Some may come early and start working before the official start time of their shifts. Such time is work time and must be included in FLSA pay computations, provided only that the employer knew or should’ve known that the employee was beginning work early (and to the extent that the employee spent pre-shift time performing work activities). Pre-shift roll calls are work time. Time spent setting up equipment before the official start of a shift is work time. Some employees may similarly stay late after shifts performing works which should be counted as work time as well. Travel time and on-call time is work time. Time spent by an employee cleaning equipment after the close of a shift is work time. Post shift work time can also include time spent by an employee performing job related activities on the way home like a secretary dropping off the day’s mail at the post office or delivering some paperwork to a customer or supplier. Some employees take work home. That time may well be work time. Similarly if an employee is contacted at home by phone for work related reasons, the time spent is work time (as well as when an employee is called back to work, the time counts as work time). This is a very common wage violation by employers.

Minimum Wage– The federal minimum wage is $7.25 an hour. It’s a poverty wage that’s not able to support a family but that’s beside the point. For tipped workers, it’s $2.13 an hour as long as it’s fixed and the tips add up to be at the federal or above the federal minimum wage which I think is stupid. Some states also have legislation that sets a state minimum wage as well. Depending on the state, the employee is always entitled to the higher standard of compensation. A common form of wage theft for tipped employees is to receive no standard pay and stealing tips. The Wage and Hour Division is said to be generally contacted by 25,000 people a year in regards to concerns and violations of minimum wage pay. Paying employees less than minimum wage is a very common wage theft practice.

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Missclassification is a common method of wage theft in which employers try to pass their workers off as independent contractors. The difference between employee and independent contractor is in this infographic.

Misclassification– One of the more extensive and insidious forms of wage theft which leaves workers especially vulnerable. Under the FLSA, independent contractors aren’t covered by tax and wage laws that apply to regular employees. Nor do they receive the same protection as employees for certain benefits. Thus, independent contractors aren’t entitled to a minimum wage, overtime, insurance, protection, or other employee rights. Nor do employers pay Social Security, Medicare, payroll taxes, or federal unemployment insurance on contract employees. Independent contractors also have to pay payroll taxes to the IRS. The difference between the two classifications depends on the permanency of employment, opportunity for profit and loss, as well as the worker’s level of self-employment along with their degree of control. Nevertheless, employers are strongly motivated to classify regular employees as contract workers to save costs, a practice known as pay roll fraud. A 2007 study in New York state found that 704,785 workers or 10.3% of the state’s private sector workforce was misclassified each year. For industries covered in this study, average unemployment insurance taxable wages underreported due to misclassification was on average $4.3 billion for the year while the unemployment insurance tax underreported in these industries was $176 million.

Illegal Deductions– Employees are subject to forms of wage theft through this method. Trivial to sometimes fabricated workplace violations are used to validate deductions. Any deduction that brings an employee to a level of compensation less than the minimum wage is also illegal. In many states, employers are required to issue employees documentation of deductions along with earnings. Failure to issue such documentation is generally prevalent in workplaces subject to wage theft.

Full Wage Theft– Employers are legally obligated to pay employees. However, this doesn’t always happen and is the most blatant and extreme form of wage theft.

Other– These may include putting pressure on injured workers not to file for workers’ compensation, being denied time off or vacation time they have required, being denied pay for sick leave or vacation time, not paying final paycheck to workers who’ve left, delaying payments (not paying on scheduled paydays or on a timely basis), bounced paychecks, stealing and pooling tips, unpaid internships, not reimbursing expenses, not keeping or fabricating records of hours worked, not paying for training, and under staffing. These could depend on state and local jurisdictions.

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According to the FBI, more money is lost to wage theft than in any other property crimes including robbery, auto theft, burglary, and larceny. And money number is only from the reported cases.

How Common Is Wage Theft?

Wage theft is widespread in the United States existing in all professions and affecting all workers regardless of race, gender, or legal status. When it comes to ripping employees off, employers don’t discriminate. But low-income workers and immigrants tend to be the most vulnerable. Yet, this could happen to higher income employees as well such as in high tech companies. So don’t think you can’t become a victim of wage theft because you can. While no one knows exactly how big this problem is, federal and state agencies have recovered $933 million for wage theft victims in 2012 while property taken in all thefts and robberies amounted to under $341 million. Research suggests that American workers are getting screwed out of $20 billion to $50 billion annually. The odds of you becoming a victim of wage theft are likely but some workers are more vulnerable than others.

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Undocumented immigrants are the most vulnerable to wage theft due to their precarious legal status that leaves them unable to speak up without risking deportation. Many employers take full advantage of this by paying them under the table and threatening to call immigration on them if they get out of line.

Who Are Most Vulnerable to Wage Theft?

Low income workers are the most vulnerable to wage theft, particularly in fields that employ women, people of color, and foreign born populations. Foreign-born women are at a much greater risk for wage violations than their male counterparts. Undocumented immigrants stood at the highest risk levels. Education, longer tenured employment, union membership, and English proficiency proved to be influential factors in reducing wage theft for the aforementioned demographics. Wage theft is more common in small businesses with less than 100 employees than larger companies. Workplaces with flat rate compensation or cash under the table payments also reported a higher instance in wage theft. We should also take into account that while low income workers are most vulnerable to wage theft, they’re the least likely to report it as well as suffer the most devastating consequences. When a worker only earns a minimum wage ($290 for a 40 hour workweek), shaving a mere half hour of the day from the paycheck could mean a loss of more than $1,400 a year, including overtime premiums. That could be nearly 10% of a minimum wage employee’s earnings which could be the difference between paying the rent and utilities or risking eviction and the loss of gas, water, or electric service.

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This infographic illustrates the real costs of wage theft which consist of less income, time poverty, and a poor workplace environment. Wage theft is wrong, it hurts families, it hurts people’s well being, and leads to further worker abuse.

Why Is Wage Theft Bad?

Think of it this way, if you spend several hours working your ass off and your boss doesn’t pay you the money or benefits you should be receiving, you would surely feel very upset about it. After all, you worked for it, you earned it. Therefore, your employer is required to pay you for all the work you did for them. This is how the employer-employee relationship is supposed to work. If your boss doesn’t pay what you deserve, then it’s obviously unfair. Your boss is ripping you off. Wage theft costs workers billions of dollars a year, a transfer from low income employees to business owners that worsens income inequality, hurts workers and their families, and damages the sense of fairness and justice that a democracy needs to survive. And when low wage workers are underpaid, taxpayers face the burden of supporting workers whose employers haven’t paid into Social Security taxes and other funds. Plus the millions of dollars lost in tax revenue. Not only that, but the money your average low income worker loses in unpaid wages is not reinvested in the economy. Meanwhile businesses who do pay their employees without resorting to wage theft find it hard to compete in a market with their additional employee-related expenses.

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Employers resort to wage theft because it keeps their costs down, saves them money, and easily get away with it. In other words, when it comes to profit margins, wage theft is good business despite being illegal.

Why Would Employers Commit Wage Theft?

Many businesses violate wage and hour laws for 3 reasons. First, paying employees less gives them a competitive advantage or higher profit and have little fear of getting caught or punished. If a business can get away with illegally paying its employees a below minimum wage with no overtime, it will be able to sell its products more cheaply than one who complies with the laws and pays their workers time-and-a-half for overtime work. If a business pays its “interns” nothing while its competitors all pay interns the minimum wage, it will be able to charge clients less and steal business away from its competitors. Second, even if a business doesn’t lower prices to undercut competitors, it still pockets the difference between the wage owed and the wage paid. Thus, the employee’s loss is the owner’s extra point. Third, there’s a very low chance the employer will be caught cheating on wages so most don’t usually think twice about the consequences. After all, employers usually can afford the better legal defense and the fact wage theft laws are typically weak and insufficiently enforced. As of 2014, there are only 1,000 to 1,100 federal Wage and Hour Division investigators for the whole country who are responsible for investigating over 7 million businesses and protecting over 100-135 million employees. In 2012, they only conducted fewer than 35,000 investigations and recovered about $280 million in unpaid wages to 308,000 workers. State labor departments and attorneys general combined recovered even less. Not to mention, many federal wage theft cases are thrown out because the Department of Labor couldn’t resolve them within two years. At the state and local level, it’s often even worse since few local governments have the resources to combat wage theft and several states have cut their labor department’s. Even if businesses do get caught, they’re rarely punished. Consequences for violations found are often no more than an order to pay back the wages owed or even a fraction of the total amount. This despite that the FLSA makes the employer liable for the full amount as well as additional equal amount for liquidated damages. But at any rate, the FLSA’s civil penalties for willful and repeat violations are too small to deter offenders from engaging in similar violations in the future. For instance the maximum penalty for failure to pay overtime and minimum wage being $1,100 whether the culprit be some local ice cream shop or a giant multinational corporation like Walmart. Yet, Wage and Hour failed even to seek a penalty in most of its cases for many years. And despite that the FLSA makes repeated willful pay violations a misdemeanor punishable by up to 6 months in jail, criminal penalties are rarely if ever used. At state and local levels, wage theft laws can be even weaker while enforcement is even more insufficient.

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Wage theft often goes underreported mostly because the party with the power and resources is often the perpetrator or the employer. Victims who decide to take action often face uphill battles, lost savings, lost careers, and possibly very little back pay and justice if they win. It’s a very sad situation.

Why Does No One Talk About Wage Theft?

Because unlike your typical property crimes, wage theft usually happens behind closed doors and is not easily detectable. It’s also conducted by more powerful people typically stealing from those with few resources to do anything about it. In fact, many workers may not realize their employers are stealing from them for years into their job. Or may not know that their boss may be doing anything illegal or violating their rights under the law. But if they do, they may not report the incident anyway if calling out their employer means losing their job or other forms of retaliation like shorter hours, less pay, or increased workloads. Many immigrants are often confronted with threats of calls to immigration services if they complain or seek to redress, especially if they’re undocumented. Some employees in white collar professions are even threatened with criminal prosecution or possibly blackmail to keep them from leaving. Even if they do sue and win, they often end up losing their careers and possibly their life savings to litigation fees. As for settlement, most workers who win their wage theft case usually don’t see a dime. Not to mention, it rarely makes front page news unless the case pertains to a class action lawsuit against a large corporation. So wage theft remains vastly under reported though cases filed in federal court have been on the rise.

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In 2009-2011, warehouse workers sued Walmart for paying them less than minimum wage as well as denying the paid vacations they were promised. Walmart denied this because wage theft is one of the ways the retail giant does to ensure you save more, live better, and contribute to their profits.

What Are Effective Measures to Deter Wage Theft?

The US FSLA requires employers to keep detailed records regarding workers’ identities and hours worked for all who are protected under the minimum wage law. Most states require that employers also provide each worker with documentation every paid period detailing that worker’s hours, wages, and deductions. As of 2011, Arkansas, Florida, Louisiana, Mississippi, Nebraska, South Dakota, Tennessee and Virginia didn’t require such documentation. A 2008 survey of wage theft from workers in Illinois, New York, and California found that 57% of low wage workers didn’t receive this required documentation and that workers who were paid in cash or on a weekly rate were more likely to experience wage theft. So making employer documentation legally mandatory is an effective measure though not so much when it comes to tip theft. As for other enforcement measures, while willful violators can fines up to $10,000 upon their first conviction to jail time resulting from repeat offenses. However, since the WHD is so underfunded and so understaffed (which isn’t an accident), very few wage theft cases are investigated and fewer employers are brought to justice.

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Most of the wage theft awareness campaigns usually tend to be localized and statewide. But wage theft is so widespread that Americans need to have a nationwide conversation about this. Wage theft is a very insidious crime that’s happening everywhere. We need to demand action to deter this behavior. We need to show that wage theft is an unacceptable way of doing business.

What Steps Can Be Done to Prevent and Stop Wage Theft?

First, wage theft needs to be addressed as a national issue in the national spotlight because there are stories that are barely heard on TV unless they pertain to Trump’s business shenanigans or NFL cheerleaders. Second, raise funding for the WHD so they could hire more staff to investigate (which should be doubled) as well as better laws that put stiffer penalties on employers. Third, protect victims filing complaints with government agencies from retaliation and allow them to access the back pay they’ve been so long denied if they decide to sue.There must be ways for wage theft victims to complain and stick up to their employers so they won’t have to worry about losing their jobs or their life savings. Fourth, fix the statute of limitations on wage claims for more than two years. Fifth, mandate that employers give workers pay stubs so they could accurately calculate their hours and have a record to prove they were cheated, which most states do anyway as well has been a proven deterrent. Sixth, have the DOL engage in targeted investigations of industries and employers where wage theft is rampant in partnership with community organizations workers trust and know who the criminal employers are. Seventh, instill stiffer penalties on wage theft violators which includes creating mandatory minimums for employers repeatedly breaking the law as well as make sure that wage theft judgments are enforced so workers could collect what they’ve been denied for years. And finally, provide resources to community organizations with the Department of Labor to eliminate wage theft and win back wages.

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Remember, wage theft can be prevented and stopped. The time is now to make unscrupulous employers pay. And I hope the Burger King goes directly to jail and isn’t allowed to collect $200.

Money Is Not Speech: Why We Must Get Rid of Citizens United

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As it’s become apparent that the 2016 US presidential election campaigns are in full swing, I would like to devote a post to the issue of campaign finance. As 2016 draws upon us, we should expect to see more political ads in the media featuring candidates asking us to cast their votes. Now discussing campaign campaign finance may not be as interesting as other issues the media and the populace like to talk about. But in our day in age, it’s apparent that money has a profound influence in political policy in the United States. Wait a minute, money has a profound influence in pretty much everything. It’s just money has a higher influence in politics than most walks of life. While political candidates may act like prima donnas now and then, we need to note that it’s through elections that we choose our government leaders. Whoever’s in government usually shapes social policy. And social policies affect our lives in more ways that we’d like to admit. So yes, money does play a crucial role in politics, especially when it pertains to who’s giving it.

Yes, elections are decided by voters. But if you want to run for office, you will need to promote yourself and convince voters to go for you. That costs money. So this is where campaign financing comes in.

Yes, elections are decided by voters. But if you want to run for office, you will need to promote yourself and convince voters to go for you. That costs money. So this is where campaign financing, fundraising, and donations come in.

But aren’t elections decided by votes? Absolutely. And doesn’t everyone have only one vote? Sure. However, if you want to run for elected office, you need to promote yourself as a candidate in your constituency. To do that, you need to tell voters who you are and why they should choose you some time before the election actually takes place. In our mass media culture, it’s best you start early. Now candidates promote themselves in a variety of different ways like personal appearances, endorsements, and advertising through signs, mailings, social media, newspapers, radio, television, the works. All that costs money. So how will get it? From anyone willing to give it to you which is the reason why candidates hold fundraisers as well as have mass mailings to solicit donations.

This chart shows who received the most campaign funds in the 2010 midterm elections. Since donors tend to have some relationship with elected officials, it's no surprise that most donations go to incumbents. And it's no wonder that incumbents usually win. Even in Congress which has a 90% reelection rate.

This chart shows who received the most campaign funds in the 2010 midterm elections. Since donors tend to have some relationship with elected officials, it’s no surprise that most donations go to incumbents. And it’s no wonder that incumbents usually win. Even in Congress which has a 90% reelection rate.

However, although every US voter is equal in electoral value, they are not all equal financially nor as willing to give money to a political candidate. In fact, more than 90% voters don’t since well, they either can’t afford to or don’t have much interest to. Giving money to a political candidate isn’t like giving to a church, charity, PBS station, non-profit, college, or cultural establishment. You aren’t giving money because you have an affinity for it or want to do something good. No, people give money to political candidates because they want them to win so they can put forth social policy that they want. Still, even among those who contribute to political campaigns, most will contribute no more than $200, while some will donate hundreds or thousands. If you’re a political candidate, chances are you’re going to actively seek political donations from the entities who contribute the most campaign cash. In 2010, small donors only contributed to 13% to congressional candidate funds (which doesn’t include PACs that make up 23%). Large donors contributed to 48% of campaign donations. But here’s the thing, most big money donors won’t just hand you a large chunk of cash right off the bat. No, for before they give you the money, they want to know where you stand on the issues and what you’d be willing to do for their interests. And you’ll have to curry to their good graces by promising them that you will do everything you can to please them once elected. If you think it’s a form of bribery, you’re probably right. Yet, as far as I know it’s perfectly legal. Nevertheless, the more big money donations you have, the more you can spend on campaign advertising. And the more you can spend on advertising, the more likely people will vote for you. So everything’s fine, right?

Here's an infographic on the 2012 presidential election between Barack Obama and Mitt Romney showing where the money came from in their campaigns. However, while Romney managed to raise more money, Obama still won reelection.

Here’s an infographic on the 2012 presidential election between Barack Obama and Mitt Romney showing where the money came from in their campaigns. However, while Romney managed to raise more money, Obama still won reelection.

Well, not really. While government officials are elected to represent the people and fulfill campaign promises, we all know all too well that it’s not exactly the case. Yes, candidates make promises on the trail to get them to vote for you. But that doesn’t mean all will be fulfilled, given the realities of the political landscape. But since these rich donors give money to these candidates, then they believe in the issues they stand for, right? Actually it depends on the contributor. Sure there are donors who do contribute money to those who share their views or party affiliation. But there are plenty of other donors who just want to gain political influence and will contribute to any candidates regardless of party or issue stance (even in the same race). All they care about is having friendly access the candidate so they could support measures they want, even if their wishes contradict the campaign promises and party platform. They may even contribute money because you oppose their interests and just want you to keep quiet. Hell, they don’t care if their wishes works against the candidate’s conscience or their constituents. And sometimes not even the laws. Of course, while this may put some politicians in a dilemma, many tend to follow the wishes of these big contributors to keep their cash flowing. After all, they need the money for reelection and don’t want the other guy to have more influence and capital than them. But do these political money deals benefit the American people?

During the 2010 elections, the biggest sources of campaign funds came from large individual donations consisting of 48%. Small donations from individuals only consisted of 13% of funds. PACs contributed 23%.

During the 2010 elections, the biggest sources of campaign funds came from large individual donations consisting of 48%. Small donations from individuals only consisted of 13% of funds. PACs contributed 23%.

Actually no. The fact that politicians are more likely to listen to large donors than their constituents suggests that there’s something very wrong in our political system. Yes, people elect their government officials but since they depend on campaign contributions to promote themselves, they usually tend to side with their backers who tend to have their very own lobbyists. After all, most incumbents usually get reelected so those voters aren’t going anywhere. Besides, the biggest incumbent supporters are usually long term donors they’ve had a relationship with every election year. To them, giving is a way of life and a cost of doing business all for the sake of having access to a politician, which leads to more power and influence on policy. But some of these donors can be fickle and might shift their money to the politicians in the majority party whenever the balance of power changes. And it doesn’t help that the fundraising never stops since an successful US Congressional campaign costs $1.4 million on average. But US Congressmen are elected every 2 years so it’s a rather short time window. And US Senate campaigns cost more than 6 times as much. But as money becomes more important in politics, the politicians seem more like a lackey to their rich overlords than the constituents who they’re supposed to represent. This leads to most of the American people having a considerable less political influence in politics, less access to lawmakers, and less of a chance of having their interests heard. More often than not, they become nothing but mere pawns who tend to cast their vote against candidates who may not represent their best interests for various reasons. But it’s mostly because they either know the guy, party line, or that they have no other choice. Thus, as big donors tend to have more access to politicians, American citizens lose out.

While the Federal Election Commission is supposed to oversee campaign regulations, it was designed as an ineffective organization from day one. The fact our system can't create agencies without congressional approval kind of explains why. Because  Congressman have to be elected.

While the Federal Election Commission is supposed to oversee campaign regulations, it was designed as an ineffective organization from day one. The fact our system can’t create agencies without congressional approval kind of explains why. Because Congressman have to be elected.

But don’t they have rules and regulations on campaign finance? We have a Federal Election Commission (FEC) that’s supposed to enforce and oversee campaign finance laws, it’s notoriously ineffective. However, as an organization that’s supposed to monitor lawmaker behavior, it’s no surprise that it was designed this way even if it was created in response to Watergate. And being the elected politicians they were, lawmakers made sure that the campaign watchdog would have a very tight leash and interfere as little in their campaigns as possible. I mean they set the FEC up as a 6 member body so no ruling can go into effect without a 4 vote majority. This is often impossible since the FEC is evenly split with 3 Republican as well as 3 Democratic commissioners, each nominated by their respective parties. Tie votes are often commonplace on some of the most important campaign finance issues which make the system riddled with loopholes. Because of this, the agency often takes years to resolve complaints and political operatives have learned that they can live on the edge of the law with little fear or interference from the FEC. And judging by the political culture these days, I’m sure the people behind the FEC knew what they were doing.

In 2010, the Supreme Court ruled in favor of Citizens United which stated since money is speech, then corporations and unions should contribute as much as they want to political campaigns. Unfortunately, not everyone has money and such notions basically keep many Americans from having a political voice. And it's apparent that most Americans don't like it.

In 2010, the Supreme Court ruled in favor of Citizens United which stated since money is speech, then corporations and unions should contribute as much as they want to political campaigns. Unfortunately, not everyone has money and such notions basically keep many Americans from having a political voice. And it’s apparent that most Americans don’t like it.

Still, despite it’s reputation, the FEC is quite effective with improving disclosure for campaign contributions for the most part. But even this has its limitations. And then there’s the matter with the Citizens United Supreme Court case in 2010, which did away with many campaign finance laws already on the books as well as opened up unlimited spending by corporations, unions, and other independent groups. This led to the 2010 elections seeing an unprecedented flood of outside money flowing into congressional races all over the country. Tens of millions of dollars came from secret donors whose identities will never be known. Much of this campaign spending goes to funding political advertisements to elect (or defeat) candidates running for office. However, the money in question can only be used for independent expenditures (not direct contributions to the candidates’ campaigns). And whatever ads are produced can’t be coordinated with the candidates. Of course, it’s no small stretch to say that such measures aren’t always enforced. Thus, rich donors didn’t particularly give a shit since they want to contribute as much money as they want with little or no consequence. However, they didn’t win when it came to disclosing political contributions on account that their right to privacy isn’t as important as the public’s right to know who’s funding who if amount is over $200. The Supreme Court has also said that disclosing campaign contributions is the best way to guard against political corruption. Of course, this brings me to the outside political organizations created to raise campaign funds for elections:

This is the logo for a realtors' political action committee or PAC. It's supposed to pool contributions from members to contribute to political purposes. According to federal law, an organization becomes a PAC when it receives or spends more than $2,600.

This is the logo for a realtors’ political action committee or PAC. It’s supposed to pool contributions from members to contribute to political purposes. According to federal law, an organization becomes a PAC when it receives or spends more than $2,600.

PAC (political action committee)- an organization designed to specifically pool campaign contributions from members to donate for political purposes whether it’s to campaigns for or against a candidates, ballot initiatives, or legislation. According to the Federal Election Campaign Act (FECA), at the US federal level, an organization becomes a PAC when it receives or spends more than $2,600 for the purpose of influencing a federal election. As for state level, the money pertaining to state elections in PAC designation varies. There are many types depending on political purposes and how each one spends their money. Still, you’d see at least one in almost every type of political advocacy organization you could think of. However, PACs have to follow certain criteria which includes:

  1. Though corporations and labor unions may sponsor a PAC as well as provide financial support through administration and fundraising, they can’t contribute through their own treasuries.
  2. Union-affiliated PACs may only solicit contributions from members.
  3. Independent PACs may solicit contributions from the general public and must pay their own costs from those funds.
  4. Federal multi-candidate PACs may contribute to candidates as follows:
  • $5,000 to a candidate committee for each election (primary and general elections count as separate elections)
  • $15,000 to a political party per year
  • $5,000 to another PAC per year
  • PACs may makes unlimited expenditures independently of a candidate or political party

The types of PACs consist of the following:

This is the United Steelworkers PAC which is an example of a connected PAC. These are sponsored by corporations and unions. These can only raise money from a

This is the United Steelworkers PAC which is an example of a connected PAC. These are sponsored by corporations and unions. These can only raise money from a “restricted class” of donors though the entities can pay for the administrative costs and fundraisers. For instance since the United Steelworkers is a union, it can only receive money from its own members.

Connected PACs- designated as “separate segregated fund” (SSF), these are sponsored by labor unions and corporations. These PACs may only raise money from a “restricted class” generally consisting of managers and shareholders for corporations and members for unions and other interest groups. Sponsor may not contribute to the PAC directly but can absorb costs of administrative operations and soliciting contributions. As of 2009, there were 1,598 registered corporate PACs, 272 related to labor unions, and 995 to trade organizations.

This Free Enterprise PAC from Idaho is an example of a non-connected PAC, used by politicians, parties, and ideology groups. Unlike connected PACs, they must pay their administrative expenses through donations but may accept funds by anybody. It's one of the fastest growing categories in campaign finance.

This Free Enterprise PAC from Idaho is an example of a non-connected PAC, used by politicians, parties, and ideology groups. Unlike connected PACs, they must pay their administrative expenses through donations but may accept funds by anybody. It’s one of the fastest growing categories in campaign finance.

Non-Connected PACs- basically financially independent PACs that must pay for its own administrative expenses with contributions it raises. May be financially supported by an organization but such expenditures are considered PAC money which are subject to the dollar limits and other requirements of FECA. May accept funds from any individual, connected PAC, or organization. Used by members of Congress, political leaders, ideology, and single-issue groups. As of 2009, there were 1,594 registered, the fastest growing category.

Now this is CAPAC which is a PAC for Asian and Pacific Islander Americans in Congress. This is an example of a leadership PAC sponsored by political parties and elected officials. Now these can't be used to fund an official's own campaign but they can fund other expenses.

Now this is CAPAC which is a PAC for Asian and Pacific Islander Americans in Congress. This is an example of a leadership PAC sponsored by political parties and elected officials. Now these can’t be used to fund an official’s own campaign but they can fund other expenses.

Leadership PACs- non-connected PACs sponsored by elected officials and political parties with independent expenditures, which isn’t limited (as long as it isn’t coordinated with the other candidate). Nor can they be used to support the official’s own campaign. Set up since elected officials and political parties can’t give more than the federal limit directly to candidates. Can fund travel, administrative expenses, consultants, polling, and other non-campaign expenses. Used by dominant parties to capture seats from other parties. Between 2008 to 2009, these have raised more than $47 million.

Of course, this is Stephen Colbert's Super PAC, which started appearing after the Citizens United ruling. Now these may not contribute or coordinate directly to candidates or campaigns. But there is no legal limit on contributions it can receive. As of August 2012, these have raised over $349 million with 60% from just 100 donors.

Of course, this is Stephen Colbert’s Super PAC, which started appearing after the Citizens United ruling. Now these may not contribute or coordinate directly to candidates or campaigns. But there is no legal limit on contributions it can receive. As of August 2012, these have raised over $349 million with 60% from just 100 donors.

Super PACs- Citizens United gave rise to this new kind of PAC designated as “independent-expenditure only committees,” because they may not make contributions to campaigns or parties directly but can generate any political spending independently of the campaigns. Unlike other PACs, there is no legal limit on funds they can raise from individuals, corporations, unions and other groups, provided they are operated correctly. As of August 2012, 797 of these have raised $349 million, with 60% of that money coming from just 100 donors, according to the Center of Responsive Politics. Also, Stephen Colbert started his own Super PAC for his show to inform his viewers how it’s done (but he donated all the money he raised to charity).

Aside from the PACs, there are some other organizations and entities also known to raise money for political campaigns as I list below:

Crossroads GPS is one of many 501(c)(4)s that have appeared after the Citizens United ruling. Considered

Crossroads GPS is one of many 501(c)(4)s that have appeared after the Citizens United ruling. Considered “social welfare” organizations under the IRS, they can only use 49.9% of their contributions for political purposes. Can accept unlimited contributions as well as aren’t required to disclose their donors. In 2012, Crossroads GPS and Americans for Prosperity raised more money into the presidential campaigns than all of the Super PACs combined.

501(c)(4) Organizations- defined by the IRS as “social welfare” non-profit and tax-exempt organizations but may also participate in political campaigns and elections. That is, as long as its “primary purpose” it promoting social welfare and not political advocacy (50.1% of their spending efforts much go to “social welfare” activities or “promoting in some way the common good and general welfare of the people of the community.”) Like Super PACs they can accept unlimited amounts of money from corporations, unions, or other interest groups. However, they are not required to disclose spending on their political activity or information on their donors unless they give for the express purpose of political advocacy. Traditionally these have been civic leagues promoting social welfare or local associations of employees with limited memberships to a designated company or a municipality or neighborhood. And often these net earnings went exclusively to charitable, educational, or recreational purposes. Groups like Planned Parenthood, the National Rifle Association, the NAACP, the National Organization for Marriage, the Sierra Club, and the League of Conservation Voters have been active in lobbying and have long held 501(c)(4) status before 2010. Citizens United has seen a dramatic rise of these organizations that contributed to a sharp increase in outside campaign spending from undisclosed sources from a bit more than 1% ($700,000) in 2006 to 44% ($1.27 million) in 2010. In 2012, that number was more than $308 million. And as far as we know much of this anonymous donor money went to Republican organizations and candidates since it helped topple the Democrats in Congress that year. And as of August 2012, two of the biggest 501(c)(4) organizations (Crossroads GPS and Americans for Prosperity) put more money into the presidential campaign than all the Super PACs combined, according to Pro Publica. However, these two groups were much less successful in that year’s presidential election (because Obama still won). Along with Super PACs, it’s also said that these organizations tend to coordinate among themselves and each other. Nevertheless, almost every advocacy organization has one. Also, Stephen Colbert talked about these on his show as well.

MoveOn.org is a famous example of a 527 organization. These are tax-exempt and not regulated under federal and state election laws. Mostly because they don't

MoveOn.org is a famous example of a 527 organization. These are tax-exempt and not regulated under federal and state election laws. Mostly because they don’t “expressly advise” whether to elect or defeat a candidate or party (officially). Can receive unlimited donations from anyone and there are no limits. However, they are required to file with the IRS and report independent expenditures.

527 Organizations- tax-exempt organizations which aren’t regulated under state and federal campaign finance laws because they do not “expressly advocate” the election or defeat of a particular candidate or party. When operated within the law, there are no limits on contributions to these groups or restrictions on who may contribute. Nor are they subject to spending limits either. However, they must register with the IRS, disclose their donors, and file periodic reports of contributions and expenditures.

Political Parties- while they may do more than just raise campaign cash, national and state party committees may contribute funds directly to candidates and make additional “coordinated expenditures” for their nominees in general elections. But these are subject to FECA limits. However, national party committees may make unlimited “independent expenditures” to support or oppose federal candidates. Nevertheless, since 2002, national party committees have been prohibited from accepting any funds outside FECA limits.

Here's an infographic on the bundler contributions in the presidential elections. These are individuals who raise money from other contributions and present the sum to the campaign.  However, while disclosing them isn't required, they are likely to be appointed to posts in presidential administrations.

Here’s an infographic on the bundler contributions in the presidential elections. These are individuals who raise money from other contributions and present the sum to the campaign. However, while disclosing them isn’t required, they are likely to be appointed to posts in presidential administrations.

Bundlers- actually these are individuals who can gather contributions from many individuals in an organization or community and present that sum to the campaign. They’re often recognized with honorary titles and sometimes exclusive events featuring the candidate. It has evolved into a more structured form in the 2000s and we know that all high profile candidates use them. However, there’s currently no law requiring disclosure of campaign bundlers as long as they’re not active, federally registered lobbyists. Nevertheless, the amount raised by bundlers has grown significantly with each election year with average contributions to winning presidential candidates reaching $186.5 million in 2012. We should also note that bundlers are more likely to be appointed to administration posts. In the Obama administration, it’s apparent that 80% of those collecting over $500,000 took key administration posts. George W. Bush appointed about 200 bundlers to posts in his administration.

I know writing about this campaign finance stuff might seem boring and meaningless to you in our political process. But it’s not. In fact, knowing about such organizations can explain how campaign donations for elections shapes the political landscape. Besides, noting how campaign finance works tends to explain a lot about what’s going on in this country. The rise in political activity pertaining to 501(c)(4)s was what led to the IRS scandal in 2013 as employees tried to create ways to weed out organizations that applied for 501(c)(4) status for being overly political. Their methods might not have been specifically appropriate but you really couldn’t blame the IRS for suspecting certain applicants of being overly political, particularly if they support conservative or Tea Party policies. This is especially the case if the recent 501(c)(4)s like Karl Rove’s Crossroads GPS and the Koch Brothers’ Americans Prosperity which many people seem to believe as having little to do with promoting the social welfare whatsoever. Following the money in Washington also explains other recent events as well. Powerful healthcare lobbies help explain why it was so difficult for Democrats to pass the Affordable Care Act despite a Democratic presidential administration and significant control of both congressional houses. The significant influence of the Koch Brothers and industry on Washington help explain the pervasive influence of climate change denial among Republican politicians and why so many polluters shift clean up costs to taxpayers during environmental disasters. And the NRA’s influence helps explain why no gun control legislation has ever been passed in either congressional house, despite the prevalence of mass shootings in recent years.

Open Secrets.org has this diagram of how much campaign cash each sector contributes between 1990-2010. The fact the financial sector contributes the most money offers a great explanation why almost no one involved in the Wall Street collapse in 2008 was prosecuted.

Open Secrets.org has this diagram of how much campaign cash each sector contributes between 1990-2010. The fact the financial sector contributes the most money offers a great explanation why almost no one involved in the Wall Street collapse in 2008 was prosecuted.

But what the nature of campaign finance really helps explain is the relationship between Washington and Wall Street. The fact that the financial sector tends to be the largest contributor to federal office candidates and parties explains why the federal government has been so reluctant to prosecute Wall Street after the 2008 recession. It helps explain why many Republicans have vociferously opposed raising taxes and instilling regulation but supported bailouts. Yet, the financial sector also contributes money to Democrats which doesn’t make passing financial reform on Capitol Hill any easier. Just so you know, the financial sector contributed $468.8 million to federal campaigns and candidates in 2008 alone (80% more than in 2006) and has spent more on K Street lobbying than any other sector. As of 2014, the financial sector has spent nearly $500 on lobbying as well reports 855 clients and 2,358 lobbyists. Thus, it’s a very powerful influence in Washington as well as a very corrupting one. Wall Street’s dubious practices basically led to an economic collapse and recession in 2008 as well as put so many people in financial ruin, possibly for the rest of their lives. But because of the financial sector’s hold on Washington, the federal government walks a fine line between its obligation to the general public and the desires of powerful backers many of them committed actions that should’ve put them in jail.

This is an infographic from the Center for Media and Democracy explaining how ALEC works. Now it calls itself a nonprofit and nonpartisan organization. However, it's really a business friendly conservative bill mill. Let's just say, even if you disagree with my politics, this is a very powerful lobby whose activities should concern you.

This is an infographic from the Center for Media and Democracy explaining how ALEC works. Now it calls itself a nonprofit and nonpartisan organization. However, it’s really a business friendly conservative bill mill. Let’s just say, even if you disagree with my politics, this is a very powerful lobby whose activities should concern you.

Still, while this post appears to focus on the nature of campaign finance in Washington, the corrupting influence of the political money culture doesn’t just affect the federal government alone. State governments have their officials supported by the same kind individuals and organizations with the same agendas and in very much the same way. Of course, what’s different at the state level is voters can elect more people to office like high court justices and cabinet positions. However, there’s a special nonprofit organization founded in the 1970s called the American Legislative Exchange Council (ALEC) consisting of state legislators and private sector representatives. Now according to ProPublica, ALEC is said to produce model legislation that is heavily influenced by big business and industry as well as “works to advance the fundamental principles of free-market enterprise, limited government, and federalism at the state level through a nonpartisan public-private partnership of America’s state legislators, members of the private sector and the general public.” Each year almost 1,000 bills based on ALEC’s “model” legislation are introduced in state houses across the country of which about 200 become law. Now these ALEC sponsored bills advocate a wide range of measures like reducing corporate regulation and taxation, combating illegal immigration, loosening environmental regulations, preventing Medicaid expansions and other state-related Obamacare policies, reducing pensions for public employees, retaining the minimum wage, privatizing prisons as well as enacting harsh sentencing laws, deregulating the telecom industry, privatizing public education, tightening voter identification rules, weakening labor unions, and promoting gun rights. It also acts as a networking tool among Republican state legislators, allowing them to research conservative policies implemented in other states. Not to mention, it’s funded almost exclusively by big business.As of 2013, ALEC’s membership consists of 1,810 state legislators representing nearly a quarter of legislative seats in the US as well as 300 corporate, foundation, and private-sector members.

Now this is a rough diagram explaining how ALEC works and its appeal among corporations and politicians. Now ALEC helps give each entity what they want on an expense paid vacations and parties. Corporations get legislation tailored to their interests and access to politicians. And politicians gain access to campaign funds and private sector jobs.

Now this is a rough diagram explaining how ALEC works and its appeal among corporations and politicians. Now ALEC helps give each entity what they want on an expense paid vacations and parties. Corporations get legislation tailored to their interests and access to politicians. And politicians gain access to campaign funds and private sector jobs.

Now it’s very simple to explain why politicians and private entities would want to join this organization if you know a anything about campaign finance. ALEC allows state legislators to be acquainted with potential campaign backers while it helps corporations gain access to and form long term relationships with politicians.They also hold meetings on all expense paid trips in cities across the country that are said to resemble vacations (sometimes funded by taxpayer money by the way). Another way to explain its appeal was how it helps draft model bills through task forces during their meetings. Public and private sector members make up each of their task forces with the later typically being corporate or think tank representatives (who have veto power over drafted model bills). These task forces generate model bills that members can customize an introduce for debate in their own state houses after being approved by their board of directors who comprise of all legislators. In your 2016 Republican lineup, ALEC-related contributions have gone to Marco Rubio, Bobby Jindal, John Kasich, Lindsey Graham, Rick Perry, and Scott Walker as well as held some considerable influence in Chris Christie’s gubernatorial administration in New Jersey. Nevertheless, it’s a hugely influential lobbying organization in the states which it has always denied to keep its tax-exempt status. Yet, what it does can be seen by most Americans as nothing but the very definition of lobbying. But media scrutiny has grown after being publicized by liberal groups and news outlets like The New York Times and Bloomberg Businessweek since 2011 and for a good reason.

As a conservative bill mill, ALEC produces model bills through the collaboration between state legislators, right wing special interests, and corporations. So far, it's apparent that ALEC's model bills have done absolutely nothing to benefit the public. In fact, they've impacted a considerable degree of harm.

As a conservative bill mill, ALEC produces model bills through the collaboration between state legislators, right wing special interests, and corporations. So far, it’s apparent that ALEC’s model bills have done absolutely nothing to benefit the public. In fact, they’ve impacted a considerable degree of harm.

However, while I might pick on ALEC for supporting measures I think hurt this country, I think all Americans should be very concerned about this organization regardless of their politics. Because if their politics doesn’t trouble you, its conduct should since this conservative bill mill is well known for its lack of transparency. Since the 2000s many news organizations have found that ALEC hasn’t been friendly to reporters much and usually doesn’t grant interviews. They may open policy seminars to reporters and other nonmembers but they will receive public conference agendas that don’t include names of presenters, the lists of legislative and private-sector board chairs, or the meetings’ corporate sponsors. Task-force meetings and bill-drafting sessions are held behind closed doors mostly taking place at high end hotels in American cities, which resulted in reporters being turned away. ALEC doesn’t disclose membership lists or the origins of its model bills. Instead lawmakers generally propose ALEC-drafted bills without disclosing authorship as an newspaper found out in 2012 after analyzing 100 bills proposed by the Christie administration in New Jersey.

Besides being a conservative bill mill producing

Besides being a conservative bill mill producing “model legislation” for state lawmakers to pass into law, ALEC’s reputation for lack of transparency should also concern you. Such activities are undemocratic as well as possibly unconstitutional. Sure ALEC may give corporations a voice and a vote, but it also goes to great lengths to deny a say to anyone who potentially disagrees with them. All it cares about is promoting its own agenda.

Now it’s one thing for businesses to lobby for business friendly legislation drafted in the state house committee. But a lobbying organization drafting model bills behind closed doors for lawmakers to introduce and adopt them without disclosure seems like a violation of the democratic process, if not then the US Constitution. In fact, I’m not sure if the idea of a political organization drafting a model bill in secrecy is even legal or ethical, especially if it promotes legislation benefiting big business at the public expense. It also excludes not just Democratic legislators but also the American people from having a say in drafting legislation, which ALEC puts in highly partisan politicians and private sector hands. And in many ways, I see ALEC’s methods of secrecy as as a way for corporations and politicians to put their legislative ideas forward and avoid public scrutiny by opposing forces like liberals, the media, or the American public. But while public scrutiny can be annoying and disruptive, it’s an essential component in our democracy which should never by taken away even by some private and right-wing lobbying organization. While ALEC claims that their organization is supposed to give corporations a voice and a vote, they also want to make sure to deny a voice to anyone who potentially disagrees with them. It also shows that this organization only cares about enacting its own agenda and would do so through any means necessary. It doesn’t care whether its proposed legislation works at the public interest’s expense to enhance corporate profits. Not only that, but this organization has existed for over 40 years and prior to 2011, almost nobody knew it existed outside its membership until investigative reporters blew the whistle on it. And as of 2015, there are still people who’ve never heard of this organization. Now people have talked about certain shadow government organizations as the stuff of conspiracy theories such as the Illuminati. But ALEC is a real organization that functions exactly like one that reflects the relationship between money and politics at its worst. However, thanks to investigative reporting exposing the organization, ALEC has become a toxic brand as well as experienced an exodus of politicians and corporations.

In recent years, the influence of money in politics has made elections much more expensive. This chart shows the increase shows the rising costs of beating an incumbent in Congress. Really disturbing, I know.

In recent years, the influence of money in politics has made elections much more expensive. This chart shows the increase shows the rising costs of beating an incumbent in Congress. Really disturbing, I know.

Now I understand that American campaigns will always be tied to money and special interests to a certain extent even if I may not always like it. However, we need to understand that corporations are not people and money isn’t speech. Nor should political access and influence be a pay to play field. Yes, money buys influence and influence buys votes. But sometimes political money games prevent a substantial number of citizens from having a political voice in their governments all because they don’t contribute thousands of dollars to their representatives. And I mean at the state and federal level. Sure I know that liberals aren’t above these political shenanigans either as I’m well aware of it. But we have to understand that most big money contributors are more likely to support Republican policies, especially since most campaign donations come from big business. And since 2010, those who’ve benefited from Citizens United and its impact have been Republican politicians. Besides, as far as I know, the Democratic Party doesn’t have its own shadow government organization generating model bills for them. Or at least one as powerful or influential as ALEC. Thus, my focus on contributions and lobbies in Republican campaigns is based on more than my liberal political biases here. But the growing influence of money in politics hasn’t been good to our democracy its created a system where incumbents almost always win, the races are not even competitive, politicians are at the mercy of big donors and their lobbyists, and a significant chunk of Americans feeling like they don’t matter in the political system.

Since incumbents usually have more connections to donors and name recognition, this makes it difficult for anyone to challenge them. This chart shows how most 2010 congressional races usually have one candidate outspending their opponents 10 to 1.

Since incumbents usually have more connections to donors and name recognition, this makes it difficult for anyone to challenge them. This chart shows how most 2010 congressional races usually have one candidate outspending their opponents more than 10 to 1.

Now I know politicians don’t want to implement campaign finance reform since it hurts their self-interests. But since money tends to talk, we need regulations to keep those with the big money at bay. Or else such influence might make us wonder whether our political representatives work for the voters who elected them or the donors who bankroll them that consist of a wealthy few. Yes, I know that some people don’t like regulations they think infringes on their rights. But regulations also protect the rights of those who may otherwise be sidelined by the rich and powerful special interests. And powerful special interests care more about themselves and don’t care if the public has to suffer for policies they want passed. Besides, we want our elections to be fair while big money tends to offset the balance, especially in races involving incumbents who have access to considerable financial resources. Our country was founded on freedom of the people, by the people, and for the people with a government to promote the general welfare and secure the blessings of liberty, for ourselves and posterity. And if we want that, we need to acknowledge and do what we can to keep big money from undermining these ideals. Yes, I know that money is necessary for everything, but it doesn’t have to be the bottom line in politics or how representatives conduct their business. We can start with overturning Citizens United so we can set limits on campaign spending by corporations because we need to.

To learn more:

OpenSecrets.org: The Center for Responsive Politics OpenSecrets.org: Money in Politics — See Who’s Giving & Who’s Getting

ALEC Exposed from the Center for Media and Democracy ALEC Exposed

Why We Can’t End the Fed

Marriner_S._Eccles_Federal_Reserve_Board_Building

I haven’t written on anything political on this blog for a long time but I think a post on the Federal Reserve is a worthy topic of discussion since it’s not much understood even if what I have to say isn’t what people want to hear. I know this isn’t a favorite institution among Americans who sometimes think that it’s corrupt or doesn’t have much transparency. Some like to think that it’s been involved in a lot of conspiracies such as the Kennedy assassination (which it certainly wasn’t, nor has the CIA). Many view the Fed There are libertarians like Ron Paul and his son Rand who want to end the Fed thinking that it’s unconstitutional and that there’s no need for such system since they believe the economy could regulate itself on its own (I’ll get to this later). Then you have people in the Occupy movement who think that the Federal Reserve exists as a private corporation with too much power in the federal government and only serves the interests of large corporations led by people with too much power and too much money already (it’s actually an amalgamation of a government agency-corporation but with 12 privately owned district banks, yet all profits and central authority belongs to the federal government). However, while many of the anti-Fed movement don’t realize (or ignore) is that the Federal Reserve plays an essential role in the American economy which most Americans take for granted. And while it’s not a perfect system or one a lot of people like, we need to understand that to abolish the Federal Reserve would be absolutely insane.

Now you don’t have to be a financial genius to know that abolishing the Federal Reserve would be a catastrophically stupid idea. In the United States the Federal Reserve functions as a central bank to manage the nation’s money supply through monetary policy, deter bank panics, providing financial services for the government as well as private banks (particularly as a lender of last resort),  strike a balance between privatization and government involvement, and create a stable economic environment for businesses, investors, and consumers alike. All these are extremely important for a national economy as well as in our daily lives. Still, while many do blame the Fed for the country’s economic woes, many don’t understand that if the Fed wasn’t around in the first place, the US would’ve been in much worse economic shape than it has been since its creation in 1913. Yet, even Founding Father Alexander Hamilton knew that establishing a centralized national bank was necessary to stabilize and improve the nation’s credit as well as to improve handling of the US government’s financial business. While this idea was controversial for years (even in his own time), history would later vindicate Hamilton’s views on finance, particularly that of a centralized national bank and the Federal Reserve is living proof of this from its inception to its 100 year existence.

When it comes to understanding why we need the Federal Reserve, we need to remember that the Fed was created in 1913 after the US had spent 76 years without a central bank (giving us a good window into what would happen if we actually ended the Fed.) Now unlike what many free-market libertarians would want you to believe and Ron Paul’s gold standard nostalgia,  these weren’t great economic times to be honest. Of course, the reason why the US went through a period with no centralized banking system during this time had to do with a few factors. For one, the First and Second Banks of the United States were privately owned (and had foreigners share in the profits), shared only 20% of the nation’s currency supply while state banks accounted for the rest, and ran on 20 year charters which both expired before they could be renewed (all based on Hamilton’s ideas by the way save for the expiring bit). Nevertheless, the fatal flaw with Hamilton’s central banking system was that it provided a way for business interest and greed to usurp power from the federal government and common citizens. Second, a lot of Americans didn’t like a centralized banking system which they saw as undemocratic, corrupt, and favoring the interests of big business. They particularly distrusted centralized financial authority which undermined both banks, which was particularly personified in Andre Jackson who was more than happy to help the Second Bank of the United States along its demise in 1836 even to the point of vetoing congressional attempts to renew its charter to usher an era of laissez faire economics and de-centralized American banking. Unfortunately financial anarchy didn’t go so well.

Of course, running a country without a central bank empowered to issue paper money led to more than a few problems, well, more like large systematic financial fuck ups between 1837 and 1913. During this time the dollar supply was tied to private banks’ holdings and government bonds, which would’ve been fine if the need for dollars was fixed over time. Unfortunately it wasn’t the case. Since there was no central, government-backed bank able to create money on demand, the American banking couldn’t provide it nor was there a for a bank’s money supply to adjust with demand either. When people would try to withdraw more money from one bank that it had available, the bank would fail leading to other people trying to withdraw their funds from other banks. Such activities would create a vicious cycle later snowballing into widespread bank failures and contraction of lending across the economy resulting in economic depression. This happened every few years. Another reason for bank failures being so common before 1913 was the tendency of huge fluctuations in the money supply. Often the US economy would alternate between too much money in circulation and not enough causing all sorts of economic chaos.

The American banking system was particularly unstable during the Free Banking Era between 1837 and 1862 when banks had no federal oversight whatsoever. During this time, banks were short lived with an average lifespan of 5 years with half of them would failing (due to fraud, incompetence, or bad economic conditions) and a third going out of business because they couldn’t redeem their notes. You also have a practice called wildcat banking in which many banks would issue nearly worthless currency backed by questionable security (like bonds or mortgages) since the institution’s real value would often be lower than its face value. Some bank currency was more valuable than others depending on the bank you received the banknote and the quality of its assets, your state’s banking regulations, the quality of your state’s bonds if your state required such banknotes to be backed by them, and the likelihood of fraud. Not only that, but there was no transparency at all so you couldn’t tell whether your neighborhood bank’s assets were wildcat money. And if that weren’t enough, you had to deal with the fact that there were over 30,000 different currencies floating around in the United States at this period, which could be issued by almost anyone even drug stores and steakhouses. A lot of problems also stemmed from this including the fact that some currencies were worth more than others whether backed by silver, gold, or government bonds. Then you have the Panic of 1837 that caused a major recession that lasted until the mid-1840s, eight states either wholly or partially unable to pay their debts, and 343 of the nation’s 850 banks closing their doors resulting in a shock from which the system of state banks would never recover.

The National Bank Era of 1863-1913 was not much better. Though it did establish a uniform US banking policy, established a series of national banks with higher standards than many state ones,  created a national currency, and basically helped put an end to the wildcat banking practices. National banks were required to use government issued bills and back them with US government issued bonds as well as accept each other’s currency at par value. The federal government’s 1865 issue of a 10% tax on state bank bills would not only give rise to a uniform national currency by forcing all non-federal issued currency out of circulation but also the creation of checking accounts by the state banks which became the primary source for most banks’ revenue by the 1880s. Yet, despite the reforms, a lot of problems still remained. For one, while the US finally had a uniform currency, it was required to be backed up by treasuries. When such treasuries fluctuated in value, banks had to either recall loans or borrow from other banks or clearinghouses. Second the banking system of the National Bank Era created seasonal liquidity spikes particularly in rural areas during planting season when demand for funds was the highest. When the combined liquidity demands were too big, the bank would again have to find a lender of last resort to borrow from so it could pay its depositors and escape from financial ruin. Unfortunately, the responsibility would usually fall to other banks and financial institutions yet they weren’t always willing to bail out a troubled entity since doing so could put them in financial risk. This led to a string of financial panics which caused serious economic damage. Because there was a chance that you wouldn’t be able to access your bank account during an economic meltdown, Americans didn’t have much faith in their banking system.

The worst of the financial meltdowns to occur during the National Bank Era that helped facilitate the creation of the Federal Reserve was the series of events that helped lead to the Panic of 1907, the period’s worst. Now there are a variety of factors that contributed to this financial crisis that happened to converge all it once. It all began with the devastating San Francisco Earthquake of April 1906 not only developing an urgent need for cash to fund the recovery efforts and contributing to market instability but also made the survivors unable to access their cash for weeks mainly because it had been locked in bank vaults so hot from broken gas line fires that opening them would’ve caused their money to burst into flames. Not only that, 1906 was also a bumper year for crops which brewed a possible economic boom so companies nationwide wanted more cash to invest in new ventures like rebuilding San Francisco. Both of these events made dollar demand uncommonly high at a time when the money supply couldn’t increase much resulting in rising interest rates and withdrawals. Before long, the high number of withdrawals would soon put banks across the country on the brink of failure. In October of 1907, a copper miner turned banker F. Augustus Heinze and his stockbroker brother Otto tried to take over the United Copper Company’s market by buying up its shares. They failed and United Copper’s stock price tumbled causing investors to rush to pull any deposits out of any bank even remotely associated to F. Augustus Heinze. Banks and financial institutions began to fail, particularly the huge Knickerbocker Trust Company, the third largest trust in New York, which had its depositors withdrawing $8 million of its funds in less than 3 hours. Knickerbocker’s failure led banks and financial institutions nationwide to hoard their cash unwilling to lend to other banks, especially in New York. Though undisputed Wall Street king J. P. Morgan managed to bail out some of the troubled banks due to his immense wealth and his ability to get rich guys and bankers to do what he wished, he was unable to solve the systemic failures of the US finance system caused the crisis in the first place.  The Panic of 1907 would spark one of the worst recessions in US history as well as similar crises in much of the world as well as would lead to the creation of the Federal Reserve four years later.

Of course, the Federal Reserve doesn’t prevent bank panics it just serves as a better tool to deal with them as a lender of last resort as well as regulating money supply. Thanks to the Fed, the United States has experienced fewer major financial panics and the money supply is mostly under control with huge fluctuations being few and far between. Because of the Federal Reserve, the United States has become a much more stable economy which has helped create a better climate for capitalist enterprise than any US banking system has ever had in its existence. Sure the Federal Reserve isn’t a perfect institution and has problems that need corrected. Yet,  we need to understand that when the US tried to do without centralized banking, the economy was much less stable and much more unpredictable while banks weren’t always places you could put your money in. No American wants to live at the time when they’d have to worry whether their bank ran out of money, loan their money to someone else who didn’t pay them back, or issued currency notes of questionable value. Nor do Americans want to live at a time of dramatic fluctuations in the money supply either or frequent bank panics and financial meltdowns. Sure there have been accusations that the Fed serves the interests of wealthy bankers and corporations but it also serves in the best interests of all Americans by making sure that the public retained confidence in the nation’s money and where it’s held. It also helps keep our economy system moving and minimize financial disturbances threatening economic stability. Our ancestors in the 19th century didn’t have such system nor did they have as much trust in the American financial system as we do nowadays. While there were plenty of financial institution running to Washington for bailouts during the 2008 meltdown, there were very few Americans running to the banks to withdraw their life savings before they ran out of money. Thus, while the Federal Reserve may have its flaws and critics, at least it’s a viable system that has worked quite well in its 100 year existence playing a crucial role in the US economy and performing services the American people just can’t live without. So perhaps when people talk about possibly ending the Fed, you might want to remind them that our financial system before the Federal Reserve was much worse and much less accountable. Nevertheless, to say that the Fed does more harm than good is simply not the case at all.