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Robert Reich: Inflation Isn’t The Problem! The Real Problem Is Employers Are Shafting Workers – OpEd

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More inflation buzz. The U.S. consumer price index for January is expected to have risen 0.5% — culminating in an annual rise of 7.3%, which would be the largest such increase since 1982.

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Yes, prices are increasing. But would you prefer a recession? As a practical matter, that’s the choice the Fed gives us. When the Fed puts on the brakes, it often pushes the economy into a ditch. A recession will cause far more hardship for many more Americans than inflation is now causing.

Want to control inflation? Don’t do it by drafting millions of workers into the inflation fight by slowing the economy. Better to ride out the storm — prices will slow down as shortages are overcome (although don’t expect corporations to reverse their price hikes). Or there’s always stronger medicine — price controls, windfall profits taxes, and antitrust.

Most importantly, focus on the real problems facing working Americans — the power imbalance that’s been keeping wages and working conditions down (adjusted for inflation) while pushing profits and stock prices up.

Specifically, stop employers from using five tactics that are seriously harming working people. Three of them are legal but shouldn’t be. No other advanced nation allows its working people to be treated this way.

1. Forced overtime. Your employer can force you to work for more than 40 hours a week. If you refuse, you can be reprimanded, demoted, or even fired.

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Forced overtime is at the heart of the explosion of strikes in 2021. Workers at a Frito-Lay plant in Topeka, Kansas went on strike for nearly three weeks, demanding an end to 12-hour “suicide shifts,” forced 84-hour workweeks, and working conditions that have led to heart attacks, electrocution, and even death.

How is this legal? Because federal overtime laws are wildly out of date. The Fair Labor Standards Act of 1938 established the 40-hour work week and that workers must be paid “time-and-a-half” for hours worked beyond 40 hours, but imposes no limit on the number of overtime hours — unlike nearly every other industrialized nation.

The term “forced overtime” should not exist. Congress must pass legislation that bars employers from forcing workers to work more than 40 hours a week.

2. Forced arbitration. Under this often-hidden provision in employment contracts, you must waive your right to sue your employer or participate in a class action lawsuit against them. Employment disputes must be resolved by a private arbitrator — often chosen by the employer — rather than a judge or a jury in a court of law, and the outcome is not public.

Forced arbitration means that workers cannot sue their employers for violating any of their labor rightswhether it be wage theft, discrimination, retaliation, or sexual harassment. You might not have any idea you’re agreeing to this because it’s buried in the fine print of your employment contract. Unsurprisingly, the practice overwhelmingly favors the employer. One study estimates that forced arbitration enabled employers to steal $12.6 billion from low-wage workers in 2019. 

As of 2019, forced arbitration affected 60 million workers. It’s particularly prevalent in low-wage jobs held by women and people of color.

Congress must pass legislation banning forced arbitration in employment contracts.

3. Unpredictable and unstable scheduling. Millions of American workers are subject to “just-in-time” scheduling, in which your employer changes your schedule with little or no advance notice. Over 40 percent of younger retail workers with hourly wages report receiving their schedules with one week or less notice.

Unpredictable scheduling puts workers at the whim of their employer and prevents them from planning for childcare, attending school, or holding down a second job. It also causes high levels of stress. And it prevents millions of working families from gaining financial stability and building wealth.

It’s time for Congress to enact a fair workweek law, requiring employers to send out schedules two weeks in advance or pay extra for last-minute changes.

Add to these, two other tactics that are illegal but have become standard practice nonetheless.

4. Wage theft. Employers steal from you by working you off the clock, paying you below minimum wage, or not paying for overtime. A study of just three cities found that employers stole $3 billion in wages from low-wage workers in just a single year. On that basis, researchers estimate $50 billion is stolen from the country’s low-wage workforce every year. Many of them, as a result, have to rely on public assistance, meaning we all subsidize corporate theft.

What can be done? Tougher labor laws, better enforcement, harsher penalties for employers, and stronger unions. The Protecting the Right to Organize Act (PRO Act), passed in the House in March 2021, contains all these. But like many important bills that have been passed during the last year in the House, this is being held up in the Senate.

5. Misclassifying full-time employees as independent contractors. If you’re classified as an independent contractor, you’re not entitled to minimum wage, unemployment insurance, overtime pay, sick leave, workers’ compensation, protections against discrimination and sexual harassment, or the right to collectively bargain for better wages and working conditions.

But full-time workers are being misclassified as independent contractors all the time. Many gig-based companies have built their entire business model on misclassification. Uber and Lyft, for example, saved at least $413 million from 2014 to 2020 by not paying into unemployment insurance.

The good news is that more than 20 states have passed laws prohibiting employers from misclassifying employees as independent contractors. The PRO Act would make this the national standard.

To summarize: Inflation is a sideshow. The real problem is a lopsided economic system that allows employers to exploit workers by forcing them to work overtime, makes it impossible for them to sue their employer for violating labor protections, difficult for them to plan their life outside of work, steals their wages, and misclassifies them as independent contractors when they’re full-time employees.

American workers have the power to change this — but only if they demand it (and aren’t distracted by “inflation” scares).

Organize. If necessary, strike. Keep pressure on Congress to pass the PRO Act.

Robert Reich

Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, and writes at robertreich.substack.com. Reich served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fifteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "The Common Good," which is available in bookstores now. He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.

6 thoughts on “Robert Reich: Inflation Isn’t The Problem! The Real Problem Is Employers Are Shafting Workers – OpEd

  • February 11, 2022 at 11:53 pm
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    Amen! Right on target!✊👍🤟

    Reply
  • February 12, 2022 at 1:31 am
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    Bob,
    Inflation is 7.5%. (And that’s the toned-down official figure not the real world experience) That’s the most in 40 years!!! Yes, it’s a problem. You probably don’t do your own grocery shopping, but those of us who do have noticed we are spending a lot more. Milton Friedman said that inflation is always and everywhere a monetary phenomenon. M2 has SOARED in the past 18 months. You can look it up.

    Reply
    • February 12, 2022 at 4:07 am
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      The long missing invisible hand strikes again. What shall we do???

      Reply
    • February 13, 2022 at 1:41 am
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      and then theres shrinkflation – we are paying more and getting less

      Reply
  • February 12, 2022 at 5:25 am
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    You missed one important aspect and that could be point 6. Exploitation of non exempt employees. Companies make non exempt employees work much more than 40 hrs and do not have to pay any overtime legally. People work 60 to 80 hrs or more in a week with no overtime.

    Reply
  • February 13, 2022 at 1:10 am
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    Another factor… corporations increase their prices instead of taking a cut from their outrageously high profits. Everything is passed on to the consumer and employee to preserve greedy bottom lines. Fuel increases get passed into the consumer, but when the gas prices go down the cost of goods are not adjusted accordingly. Consumers are threatened with price hikes if the company has to raise minimum wage for their employees. Health insurance premiums go up and the cost is either passed on to the employee or the plan’s benefits are lowered. If corporate greed continues to obliterate the average citizen through non-livable wages and inflated prices, perhaps we will see the resurgance of smaller companies. Owners who make enough at the end of the day to be happy without being greedy, who choose to price their goods reasonably and pay their employees well. Another issue is that our tax structure used to support reinvesting profits into the company. Higher corporate tax rates actually ENCOURAGE companies to invest their revenue into the growth of their business, wages, benefits, etc. When corporate taxes are low, businesses have more of an incentive to pull their profits out of the business instead.

    Reply

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