The New Bedford Raid and Its Aftermath

Back in March, ICE (Immigration and Customs Enforcement) officials pulled off the biggest raid New England has ever seen, bursting into a leather factory in New Bedford to arrest 360 illegal aliens who had been working for Michael Bianco, Inc, a company with contracts to “produce safety vests and backpacks for the US military”. The owner, one Francesco Insolia, was charged with “conspiring to encourage or induce illegal immigrants to live in the United States, and conspiring to hire illegal immigrants.” Why would they risk jail to hire illegals? Because those illegals were desperate enough to work in the intolerable conditions which were all Insolia was willing to furnish.

According to affidavits unsealed yesterday, Insolia hired illegal immigrants instead of legal workers because the immigrants were desperate for jobs and more willing to put up with working conditions in his factory. Federal investigators allege workers were denied overtime, docked 15 minutes for every minute they were late, and fined for talking on the job, or for spending more than two minutes in the plant’s squalid bathrooms.

“Insolia and others knowingly and intentionally exploited the government by recruiting and hiring illegal aliens without authorization to work,” said US Attorney Michael J. Sullivan, announcing the arrests yesterday. “They exploited the workforce with low-paying jobs and horrible working conditions, exploited the taxpayers by securing lucrative contracts funded by our legal workforce, and exploited the legal workforce by hiring illegal aliens.”

A month later the Boston Globe reported that Insolia had actually had the gall to apply for – and receive – grant money from the state of Massachusetts to “train” the workers he was already abusing.

The New Bedford manufacturer raided by federal agents last month for allegedly employing illegal immigrants won approval for $111,150 in state grants over the last four years to hire and train employees, as part of the company’s expansion.

The Massachusetts Department of Workforce Development approved two grants for Michael Bianco Inc. after the owner of the company, Francesco Insolia, appealed for help in winning new contracts from the US Department of Defense and building its share of the commercial textile market.

In early 2003, Michael Bianco, which then employed 87 people, was awarded a $66,250 grant to hire and train 80 new stitchers and machine operators, and to develop an in-house training program for entry-level workers. The state approved another $44,900 for the company this January, but the March 6 immigration raid put that grant on hold.

I probably don’t need to tell you that there is no evidence whatever that the “training sessions” actually took place. Insolia simply pocketed the money. Or perhaps he used it to pay Luis Torres for the fake ID’s Torres got for Insolia’s workers. But here’s the neat part: city officials, Republican and pro-business all, actually visited the factory and, rather than being appalled by the conditions, offered to help Insolia with the grant money and tax breaks.

Continue reading

Advertisements

Bush’s “Health Care Reform” 2: Selling the Scam

In the previous post, I said Bush’s pro-corporate proposal to address the health care problem through tax policy was liable to turn out to be the only initiative in the SOTU that he actually cared about and might try to implement. So far, I seem to be batting a thousand. He hasn’t mentioned the ethanol/alternative fuels thing, and even in the White House nobody knows what “Civilian Reserve Corps” means, let alone how it would be set up, who would be in it, or what it would do. But less than 48 hours after the speech ended, he was already out on the hustings hustling his health care “reform” package. Continue reading

Bush’s “Health Care Reform” Aims to Kill Employer Coverage

As I’ve said elsewhere, the only initiative Bush put forward in his lame SOTU that he might actually be serious about is the health care “reform” in which he wants to address a social problem through tax-policy-tweaking. I wrote:

But the truly insidious element is in the unspoken subtext: what this proposal basically does is offer cover to the corporatocracy so it can decide to stop offering health care to its employees. Why should it?

“Now employees can buy a private plan and pay for it themselves, right? Well, they’re paying $400/mon for our corporate-subsidized plan anyway and the govt will let them keep another $400, so there’s your $800/mon for a modest plan, and what do they need us for? They don’t. End of problem. Alright, so a modest plan probably won’t cover shit like surgery and extended hospital stays, and certainly won’t cover drugs or pre-existing conditions (and everything’s a pre-existing condition to an insurance company, just ask them), but what’s that to us? We can quit paying all that money to insurance companies and put it in our own pockets.”

This is potentially a major boost in the Great Risk Shift, taking a tremendous burden off corporations and dumping it straight onto the backs of its workers under the guise of “helping” them, while at the same time ensuring that greedy, inefficient but profitable insurance companies will stay in control of our health care system. It’s not just insidious. It’s evil.

It seems I’m not the only one to have reached – or at least to be on the road to reaching – that conclusion. Continue reading

Retirement in the Age of the Ownership Society: Keep Working

Bush may not have gotten everything he wanted with his “Ownership Society” gambit – the privatization of SocSec being his biggest defeat – but he got more than he should have and his anti-middle class policies are already bearing fruit.

In the WaPo yesterday, business columnist Martha Hamilton explained how the whole concept of “retirement” has changed in the last few years.

Here’s the harsh reality for those of us who have become worker-capitalists, responsible for funding our own retirement: We can’t afford to stop working at normal retirement age.

Typically workers have retired around age 62 or 63, although most anticipated staying on the job till age 65. But that will be way too soon for the many workers who haven’t accumulated enough in retirement savings accounts.

One in four workers currently in their 50s will need to work an extra two years because retirement won’t be affordable, according to a survey of employers published last month by the Center for Retirement Research at Boston College.

***

But the truth is that finding or even retaining a job after the age of 40 isn’t always easy. An earlier study by the Center for Retirement Research found that one in five adults age 51 to 61 lost his or her job between 1992 and 2002.

This is usually what is known as a Catch-22: you need a job to retire but if you retire there are no jobs. Even Hamilton’s dismal scenario is rose-colored if you include some factors she didn’t: Continue reading

Re-run: The “Ownership Society” and the Great Risk Shift

Ellen Goodman has just discovered the “risk shift” and written a column about it that reminds me how little we’ve progressed in the last quarter century – and how much we’ve regressed. Taking the Home Depot brouhaha as a starting point (she calls Nardelli “Bob the Un-Builder”), she connects the dots by comparing the risk factors he doesn’t share with the rest of us.

We all know about the growing inequality of income. In 1965, the average CEO was paid 24 times the average worker. In 2005, the average CEO was paid 262 times the average worker.It has taken 12 years and a new Congress just to get the minimum wage moving up to $7.25 an hour over the next two years. At Home Depot, where the average wage is $10 an hour, the boss made more every day than workers earned in a year.

But Bob the Un-Builder is also a symbol of something that has gotten a lot less attention: the growing inequality of risk.

“At one time, when corporate titans went down they went down hard,” says Jacob Hacker, a Yale political scientist. “Who could be more insulated from risk than today’s CEO? There’s never been a group of people richer or more protected from the vagaries of the economy.”

Life at the tippy top is sheltered from the “golden hello” to the “golden parachute,” no matter what happens under the CEO’s watch. That’s a level of security that’s virtually extinct in the rest of the world. Indeed, as Hacker writes in “The Great Risk Shift,” one of the hallmarks of today’s economy is that risks once widely shared by government and employers have shifted onto the American family. We carry more and more of the risks of retirement, illness, unemployment, even education. Continue reading

‘Ownership Society’=A Tax on Wages

An editorial in today’s NYT nails what one part of Bush’s ‘Ownership Society’ actually means: the elimination of taxes on the wealthy and shifting the burden to anyone who lives off wages rather than investments. It’s a direct strike at what’s left of the middle-class and, as usual, he’s lying about it.

Taxes for an Ownership Society

Published: September 15, 2004

When President Bush talks about an “ownership society,” hold on to your wallet. The slogan, like “compassionate conservative” before it, is sufficiently vague to mean many things to many people, and the few details that Mr. Bush has provided – bolstered home ownership and new tax-sheltered savings plans – seem innocuous enough. But in tax terms, “ownership society” means only one thing: the further reduction, if not the elimination, of taxes on savings and investments, including taxes on dividends and on capital gains on stocks, bonds and real estate. That, in turn, means – by definition – a shift in the tax burden onto wages and salary – or, put more simply, a wage tax.

The regressive results would be appalling. The richest 1 percent of Americans earn just about one-tenth of total wages and salary, but almost half of all income from savings and investments – income that would be largely, perhaps entirely, untaxed in an “ownership society.” In contrast, taxable wages and salary make up almost all of the income of most Americans.

The Bush camp has been floating the idea that what the president is getting at is a consumption tax. But the administration is not talking about a true consumption tax, which would apply to spending regardless of where the money comes from – from your paycheck, cashing in your stocks and bonds, selling your house, or borrowing. It is, in effect, talking about a tax on wages.

Properly understood, a consumption tax is intended to increase national savings by making it relatively more attractive to save than to spend. The main argument against it is that it hits hardest at low-income and middle-income families, who tend to spend most of what they earn. But as Peter Orszag, an economist at the Brookings Institution, pointed out in a recent speech at Georgetown University, Mr. Bush’s de facto wage tax would be the worst of all worlds: it would have all the regressive aspects of a consumption tax and none of its potential for increasing national savings.

When Mr. Bush talks about new tax-favored savings accounts, he never mentions that most people don’t even take advantage of existing plans. They won’t be turned into owners by new tax breaks for interest, dividends and capital gains. To turn Americans into owners requires a strong economy in which the people who work for a living share in the benefits of economic growth.

A good place to start would be to tackle the obstacles to sustained growth that currently exist, like spiraling health care costs, dependence on foreign oil and the administration’s mania for unaffordable tax cuts – in short, to reverse, not intensify, the trends in the current economy.

In the past nearly three years of economic recovery, the distribution of economic growth has become more skewed than at any other time in modern memory. Currently, 47 percent of growth is flowing to corporate profits, by far the largest share during any of the other eight post-World War II recoveries. Fifteen percent goes to wages and salary, the smallest share of economic growth in more than 50 years. To make matters worse, the share of compensation that is devoted to health and pension benefits is far larger during this recovery than any other, representing a further squeeze on the wages and salaries of ordinary Americans. In 2004, take-home pay as a share of the economy dropped to its lowest level since the government started keeping records in 1929.

All of this would make the drive for a wage tax laughable, if only it were a joke. And yet, when he says “ownership society,” a wage tax is exactly what Mr. Bush is driving at.

The ‘Ownership Society’: Another Orwellian Dodge

LA Times EDITORIAL
‘Ownership’ Isn’t the CureAfter 27 years of work, Dave Parker lost his job at a small electronics sales firm in Orange in October 2001. A 1986 federal law called COBRA, requiring insurers to continue offering employer-based coverage to employees who have lost their jobs, kept Parker’s insurer from dropping him. But that didn’t stop the insurer from “customizing” his policy to address his heart condition — a personal touch that boosted his premiums by 39%. Later, his premiums soared further, and this year his insurer doubled his co-payments and raised his premiums by an additional 16%.

Welcome to President Bush’s ideal of “added choice” in healthcare.

Buzzwords like “flexibility” and “ownership” might sound empowering when read off a teleprompter, as they were frequently during this week’s Republican convention. When discussed behind the scenes by health insurers, however, they are read as code words for giving insurers more leeway to “cherry-pick” — offering bargain-rate coverage to those who need it the least (such as healthy children) while pricing care beyond the reach of many who need it the most.

Bush’s “ownership society” ideal for healthcare is embodied in the health savings account. These let a family of four put aside up to $5,150 in tax-free savings that can be used to purchase health insurance on the open market. That will be small comfort to low- and middle-income families because the premiums for such family policies ran more than $9,000 in the group market last year, and would be even pricier if purchased by an individual family.

Another danger is that many healthy and wealthy people will flee group plans in favor of health savings accounts, leaving the older, more comprehensive health insurers stuck with a growing proportion of poor and sick members. Insurers that aren’t driven out of business would be forced to raise costs.

Not all “ownership society” healthcare ideas are bad. One of the most radical — requiring all U.S. residents, some with government help, to buy health insurance, much as drivers are required to buy auto insurance now — has gained converts not only from the predictable places like the conservative Heritage Foundation but from centrist think tanks like the New America Foundation. The proposal deserves to be at least discussed by both presidential candidates.

Most of the healthcare ownership ideas the president has proposed so far, however, are fundamentally unfair. It’s an issue both parties will have to address more seriously before the country’s near-terminal healthcare system goes flat-line.