Raising Minimum Wage Reveals Partisan Divide

Published in Pawtucket Times, January 31, 2014

On January 28, 2014, President Barack Obama gave his 2014 State of the Union (SOTU) a whopping  6,778 word speech, calling on both Chambers of Congress to either work with him to move the country forward or forcing him to use his presidential powers to enact  policy.

“America does not stand still, — and neither will I,” the President told a jam packed Chamber.  If Congressional gridlock continues, the President warned, “So wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.”   This would be accomplished by using executive orders, presidential memorandums to enact policies if lawmakers choose not to act on.

Congress to Debate Merits of Minimum Wage

            In a little over an hour, Obama rattled off dozens of policy initiatives for Congress to consider this session, including immigration, emergency unemployment, manufacturing, trade, environment, education, closing Guantanamo Bay, closing tax loop holes, job training, family policies, and retirement savings.  But the President also called for an increase in the nation’s minimum wage to provide America’s worker’s a living wage.  With Democratic and Republican gubernatorial candidates gearing up their campaigns to take the Ocean State’s top General Officer seat, look for ratcheting up the state’s minimum wage to hotly debated throughout the nine month political campaign.

             While Obama’s push to raise the minimum wage was derailed last year by the GOP House and its Tea Party Faction, the Democratic president noted that five states have already passed laws to raise theirs (including Rhode Island).

             With corporate profits and stock prices climbing, average wages “have barely budged,” observed the President.  “Inequality has deepened. Upward mobility has stalled.  The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead.  And too many still aren’t working at all,” he said.

             The President used his speech as a very visible bully pulpit to call on States to not wait for Congressional action to raise the nation’s minimum wage, to give people a living wage.

              Until Congress acts, it is up to businesses to voluntary give their employees a living wage or State legislators to mandate an increase.  Obama urged the nation’s business leaders to follow the lead of John Soranno, the owner of Minneapolis-based Punch Pizza, who has given his employees a raise to $10 an hour.  Large national corporations, should join profitable companies like Costco, the President urged, that “see higher wages as a smart way to boost productivity and reduce employee turnover,” he said,

             Through an executive order the President announced in his SOTU address last Tuesday evening that he would ratchet up the minimum wage of federal contractors to $10.10 per hour, “because if you cook for our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.”  

             “Today, the federal minimum wage is worth about twenty percent less than it was when Ronald Reagan first stood here,” the President quipped, noting that legislation to increase the nation’s minimum wage to $10.10 has been introduced by Senator Tom Harkin,  a Iowa Democrat who is retiring after serving almost 40 years in Congress, and Democratic Congressman George Miller, from California, also leaving office after 20 terms.

 Two Sides of the Coin          

            Although creating jobs will be one of the top campaign issues that must be addressed by the State’s gubernatorial candidates (Clay Pell was not available for comment by press time), look for the minimum wage issue to pop up for political discussion with the Democratic and Republican views being like two sides of a coin.

            When he announced his bid for governor, Providence Mayor Angel Taveras he told his supporters that increasing the minimum wage is a step in building an economy that supports higher paying jobs, puts people back to work and gives Rhode Island families the opportunity for a better life. There was a time when his mother worked at the minimum wage to support three children so he knows firsthand how much raising it can help a family, he stated. He is also pushing for statewide universal pre-kindergarten.

            Tarveras quoted from a recent study by the Economic Policy Institute that indicated that increasing the minimum wage to $10.10 an hour would increase the wages of 65,000 Rhode Island workers and indirectly benefit an additional 26,000 more, totaling nearly 20 percent of the work force.  He cited another study that found that moving to a higher wage would boost the national economy by as much as $22.1 billion, creating as many as 85,000 new jobs.”

            “I’m a Democrat who believes in raising the minimum wage and indexing it with regular cost of living adjustments,” noted Treasurer Gina Raimondo, in her announcement to run for Governor at Hope Artiste Village in Pawtucket.

            According to Eric Hyer’s, Gina Raimondo’s Campaign Manager, “Gina strongly believes that we need to increase the minimum wage and she was pleased to see President Obama call for increasing the minimum wage to $10.10 an hour during the State of the Union this week.  No one who works full time should live in poverty.  As the President said, it is time to give America a raise.”

             “But let’s not wait for a dysfunctional Congress to act; we can take action right here in Rhode Island,” states Hyer.

            “Gina is calling for us to take action on this now and raise the minimum wage to $10.10 by 2015 and then index it to the cost of living so that politicians can’t play games with people’s lives. Two-thirds of minimum wage earners are women so a raise would immediately help women across Rhode Island and their families, adds Hyer, noting that people are really struggling and there is an urgency to help out working families.

             But, the Rhode Island’s GOP candidates, Cranston Mayor Allan Fung and Businessman Ken Block, are not buying the Democratic candidate’s solution that minimum wage is the way to go.

             “Democrats continue to recycle bad ideas. It’s time we consider some new ones so people have the opportunity to succeed and thrive, and not rely on government coercion to dictate wages. Increasing the minimum wage will result in higher unemployment, reduced job opportunities, reduced customer spending, and will reduce net job growth because of the effect on expanding companies,” says Mayor Fung

             Mayor Fung states “At a time when we are tied for the highest unemployment in the country, we cannot put more hurdles in front of the companies we have here in Rhode Island; we need to remove them. Further, Obama Care is already hurting workers because employers are transitioning employees to part time work because they cannot afford the healthcare premiums. An increase in the minimum wage would only increase the burden on small business owners who are already working on thin margins.”

             “The real issue in Rhode Island is unemployment and getting our workforce prepared with the necessary skill set for the ever changing workforce. It is quite evident that raising the minimum wage would not solve these problems,” adds Fung.

            Gubernatorial candidate Ken Block agrees with Fung, noting in a recent statement, “”As I said the other day when it was announced that Rhode Island has the worst unemployment in the country, raising the minimum wage is a job killer.”

            Block adds, “President Obama seems to believe that government can just order the economy to improve. Republicans and Independents know that government has a critically important, but limited role in the growth of jobs. Government’s role is to regulate fairly and only where necessary, and to control its spending so people and businesses are not taxed to death. President Obama continues on the wrong track to fix lagging employment, just as the Democratic leaders of our General Assembly continue on the wrong track to fix Rhode Island.”

            But Edward M. Mazze, Distinguished University Professor of Business Administration, at the University of Rhode Island, has entered the policy debate, too.

            On the one hand, “Raising the minimum wage does not create jobs and can reduce the number of hours worked for existing workers and the number of jobs for part-time workers. There could also be an impact on the number of internships offered to high school and college students.  And, just as important, raising the minimum wage will also raise the price of products and services, observes Mazze.

             “The minimum wage is not the entry point to middle class, it is the jobs that pay over $20 an hour and have a “career” future, says Mazze, noting that Rhode Island recently increased the minimum wage.

             But, Mazze believes that the state’s minimum wage should be adjusted every number of years to keep up with inflation and other economic events.  “The best way to create living wages in Rhode Island is to prepare workers for jobs for the future, have an economic development strategy that creates jobs and attracts businesses, and have affordable housing and a fair sales, property and personal income tax program,” he notes.

             With the Rhode Island General Assembly geared up to pass legislation to make the Ocean State an easier place to do business, lawmakers should not forget their constituents who cannot pay their mortgage, utility bills, or even put food on their tables.  Until the State’s tax and regulatory system primes the economic pump to create more jobs, giving a little bit more money, say $10.10 per hour, will go a long way for tens of thousands of poor or working poor Rhode Islanders who struggle to survive.

            How can Rhode Islander’s currently making a weekly paycheck of $320 (minus taxes), receiving a minimum wage, support their families?  This is not the American Dream they were brought up to believe in.

             Herb Weiss, LRI’12 is a Pawtucket-based writer who covers, aging, health care, medical and business issues.  He can be reached at hweissri@aol.com.

 

Oxfam Report: Elites Get Richer; Poor Poorer

Published in Pawtucket Times, January 24, 2014

Just a week before the 44th annual gathering of the global elite at World Economic Forum in Davos, Switzerland, Oxford, England-based Oxfam International released a scathing report claiming that global wealth rests in the hands of just a few very rich people.

According to the report released on Jan. 20, co-authored by Ricardo Fuentes-Nieva, Head of Research, Oxfam Great Britain and Nicholas Galasso, Research and Policy Advisor, Oxfam America, 85 of the wealthiest people own the same amount of wealth as the bottom half of the world’s population.

Widening Income Gap Between Wealthy and Poor

Oxfam’s 31 page report, “Working for the Few,” warns that almost half of the world’s wealth concentrated in just one percent of the population, is a real threat to inclusive political and economic systems, and compounds other economic inequalities – such as those between women and men. The authors say, left unchecked, political institutions are undermined and governments overwhelmingly serve the interests of economic elites – to the detriment of the poor and middle class.

Today the gap between the rich and poor has become wider, with the wealth of the one percent richest people in the world amounting to $110 trillion, adds the report, around 65 times the total wealth of the bottom half of the world’s population. In the United States, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

“Without a concerted effort to tackle inequality, the cascade of privilege and of disadvantage will continue down the generations,” warns Oxfam’s Executive Director, Winnie Byanyima, in her statement announcing the release of her group’s report. She leads the world-wide development organization comprised of 17 organizations working in 90 countries to find solutions to poverty and related injustice around the world.

Byanyima, a grass-roots activist, human rights advocate and a world recognized expert on women’s rights, who plans to attend the Davos meeting, observes, “It is staggering that in the 21st Century, half of the world’s population owns no more than tiny elite whose numbers could all sit comfortably in a single train carriage.”

“We cannot hope to win the fight against poverty without tackling inequality. Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table,” says Bryanyima.

Bryanyima adds, “In developed and developing countries alike, we are increasingly living in a world where the lowest tax rates, the best health and education and the opportunity to influence are being given not just to the rich but also to their children.”

“Without a concerted effort to tackle inequality, the cascade of privilege and of disadvantage will continue down the generations,” states Bryanyima, noting that “We will soon live in a world where equality of opportunity is just a dream.”

Specific policies have widened the income gap between the rich and poor over the last decades, including financial deregulation, tax havens and secrecy, anti-competitive business practice, lower tax rates on high incomes and investments and cuts or underinvestment in public services for the majority. For instance, since the late 1970s, tax rates for the richest have fallen in 29 of the 30 countries for which data are available. In these places the rich not only get more money but also pay less tax on it.

Oxfam’s report calls on those gathered at this week’s World Economic Forum to take tackle inequity by cracking down on financial secrecy and tax dodging, including investing in universal education and healthcare; demand a living wage in all companies, and agreeing a global goal to end extreme inequality in every country.

Inequity in Our Back Yard, Too

Commenting on Oxfam’s report release, Robert B. Reich, former Secretary of Labor under President Bill Clinton who now serves as Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California, Berkeley, notes that inequality in the United State is not “that far off” from other countries. “Here, the 400 richest Americans have more wealth than the bottom 150 million Americans put together. We’re getting close to a tipping point where inequality undermines our economy (because the vast middle class doesn’t have the purchasing power to keep the economy going), hurts our democracy (because a handful of extremely rich individuals can control politics), and causes most people to feel the dice are loaded against them, he says.

Reich’s award-winning documentary “Inequality for All” — now out on iTunes, DVD, and On Demand — explains the roots of inequality, in the U.S. and around the world. For details, go to http://www.inequalityforall.com.

Kate Brewster, Executive Director of Rhode Island’s The Economic Progress Institute, notes that Oxfam’s report puts the growing problem of inequality on the world stage. “As the experts point out, inequality is not inevitable, but a manmade problem that can be tackled with policies that reward everyone for hard work, not just a few,” she says.

“Rhode Island has not escaped this disturbing trend,” states Brewster. According to a report issued by the Center on Budget and Policy Priorities, the Ocean State experienced the 9th largest increase in income inequality in the country between the late 1970s and mid-2000s. During this time the income of the top fifth rose by 99 percent while the bottom fifth grew by only 12 percent, she says.

Legislative Fixes to Reduce Income Gap

Brewster says there are two “two concrete policies” that the Rhode Island General Assembly could enact this legislative session that would immediately boost the income of low-income Rhode Islanders and begin to reverse this trend, specifically increasing the state’s minimum wage and increasing the refund available through the state’s Earned Income Tax Credit. “The latter would not only boost the income of low-wage workers but also bring more equity to a tax structure that has provided significant tax breaks to wealthy individuals and businesses for years,” she says.

Advocate Susan Sweet, a former state official and lobbyist for nonprofit groups, notes that while Rhode Island and the nation don’t have an overwhelming majority of citizens suffering the worst extremes of poverty such as starvation, homelessness and societal abandonment that exists in some other countries, we have our share. We also have a large and expanding underclass of counter culture and underground economy that serves to hurt the cohesiveness of society,” says the Rumford resident.

Sweet worries about the income gap between the poor and wealthy that will happen in years to come because of state policies. “The state took millions away from retired people who are receiving an average of $25,000 a year in their state pension and are in their seventies on average. The state gambled on the Studio 38 boondoggle, sold these risky bonds to unknown parties, and want to pay these gambling debts back to the investors because they have a ‘moral obligation’ to do so. Where is the moral obligation to those who performed their responsibilities by working for the state for many years with the promise of a secure retirement?” she says.

And what does she expect to see coming out of the General Assembly? “This year we will hear rhetoric to raise the absurdly low minimum wage in the nation and in the state, but not enough to give workers a decent living wage; we will hear promises to improve education, while students that have tried to achieve under great odds will be denied high school diplomas while the educational infrastructure remains in place and unchanging; we will be assured that the key to R.I.’s unyielding high unemployment rate has been found – again; and we will continue on the path of inequality.”

Oak Hill resident, Lisa Roseman Beade, an academic tutor who is been active in Progressive causes, says the U.S. has the widest income gap of any developing nation. “’Trickle down economics’ has turned into “vacuum upwards economics”. We need fair wages and fair and equitable taxation rates to circulate the money. That’s what puts people to work and will reduce the widening income gap between the nation’s wealthy and poor. Instead, workers, who have been breaking the bar in productivity year after year, now receive only 1 percent of the record breaking profits.”

Beade calls for keeping corporate dollars out of politics and supports the creation of a single payer healthcare system that would make healthcare a civil right.

She believes that change will only come when “we all stop the scape-goating teachers and workers and public employees and demand that we all have good wages, good benefits and good pensions and by restoring state levels to those pre-1998. If lower taxes create jobs, and taxes have never been lower…where are the jobs?”

“A vibrant, safe and livable community with good community services can only come if everyone earns enough and everyone pays their fair share of taxes. Let’s make paying taxes patriotic again,” says Beade.

A Final Note…

It’s time to hammer out a comprehensive legislative fix to reducing the wide income gap between the Ocean State’s wealthy and poor. Let those declared candidates for Governor come out with detailed briefing papers, unveiling their comprehensive approach to enable Rhode Islanders to finally make a living wage. That is tell the voters how you will close the income gap between the state’s have and have nots. Let the debate begin.

Herb Weiss, LRI ’12, is a writer who covers aging, health care, medical issues and Rhode Island’s political scene.

Collette’s Employees Key to Soaring Profits

Published in Pawtucket Times, July 17, 2014

During one of the most devastating economic downturns since the Great Depression, companies throughout the nation put hiring decisions on hold, even slashing employee benefits and compensation. But, savvy CEOs create employee benefits and compensation, to retain their good workers and grow their businesses. Yes, they know that employees play a key role in positively impacting their bottom-line, even ensuring their organizations financial survival in really bad times.

Just listening to talk radio and you will continually hear how the high cost of doing business in the Ocean State, fueled by taxes and regulation, drives businesses out-of-state in droves. But, business is booming at Pawtucket-based Collette and its CEO and President Dan Sullivan, Jr., can easily tell you why – his 544 employees.

With Rhode Island and Nevada tied for having the highest unemployment rate in the nation, Collette, one of the oldest tour operators in the nation, is looking to fill jobs. “We are doing everything we can to improve the employment statistics in Rhode Island,” said Sullivan. “Right now, Collette is focused on growth and acquiring great talent right in our own backyard and increasing job opportunities.”

Back in 1918, when founder Jack Collette established the travel company, World War I had just ended. The Boston Red Sox had won the World Series and porterhouse steak was 54 cents pre-pound. The company’s first tour left Boston for Florida, taking their customers on a three-week adventure for just $61.50. Today, Collette offers more than 150 tours to destinations across seven continents.

Company Values Employee Longevity

According to Sullivan, Collette, now a third generation family owned company, has been honored seven times as the Best Places to Work in Rhode Island. “It’s not just a job; the people love what they do,” observes Sullivan. Whenever Collette hires someone, the company wants the employee to be there for a long time. “We value longevity. We take care of our employees like family,” touts Sullivan.

Although Collette annually offers a performance-based incentive based on the company’s overall performance to its workforce, just two weeks ago every full-time employee who was hired before a designated date received an additional whopping $1,000 bonus at a company celebration held at the Rhode Island Convention Center.
Not bad when Rhode Island companies are slashing benefits and employee compensation.

At this celebration, most of Collette’s 544 employees including others joining them from the company’s offices near Toronto, Ontario, Canada, Vancouver, British Columbia, Canada and London, England, came to get a big thank you from Dan Sullivan Jr., along with his family and other top corporate executives. At a random drawing held that evening, 10 lucky full-time employees each received a $10,000 prize.

“This is to celebrate the success the team had this year,” says Sullivan. “In 2013, the company experienced a second consecutive year of record-breaking revenue and double-digit growth. With a 95-year track record, this is a major accomplishment. It’s our heartfelt ‘thank you’ to every employee for all they do to drive the company forward.”

The tradition of incentivizing Collette’s employees based on the performance of the company dates back several decades, notes Sullivan, who says that he wants all of Collette’s employees to “act as if they own the business and to reward them based on the performance of the company.”

Sullivan pointed out that the $1,000, which was on top of the company’s annual performance base incentive, was a result (77 percent of the employees received it) of one of the most profitable years in its long history. Collette is currently up over 37% in advanced reservations for 2014, too.

According to Sullivan, 82-year old Betty Sullivan, sister of the late Dan Sullivan, former President and CEO of Collette, was honored for her 50 years of service to the company. In recognizing her years of service, Collette gave her a new car.

To improve the health and quality of its employees’ lives, which in turn will enhance their productivity and competitiveness, last July Collette also built a 4,620 square foot Wellness Center that offers two levels of exercise areas and amenities for use by its employees and their families. It also includes one group exercise room, full facilities for men and women (locker room with showers, bathroom, etc.), towel service and more.

Life Long Learning

“Part of our long-term strategy is to rely on learning and critical skills development for growth and performance [of its employees],” said John Galvin, Chief Financial Officer for Collette. “Our goal is to develop and maintain a culture of learning in the organization – this is from the top down. Even the Executives are required to pursue continued learning. We want our entire team committed to continuous learning because this will make all of us more successful in the long run.”

Galvin says, “We offer classroom training for our in-house employees as well as newly hired members of the sales team. In 2013, we provided over 11,000 combined hours of training. Training will be made even more accessible to our outside offices with the use of our new video conferencing software.”

Tuition assistance is available to full-time employees who have worked here for six months, adds Galvin, noting that courses, up to two courses per semester, must be taken through an accredited program that’s job related. He notes that all courses have to be approved by an employee’s supervisor or manager and also by Human Resources Department. Once a grade is verified the employee’s tuition reimbursement will be processed.

Currently, there are 14 Collette employees enrolled in school for advanced degrees, and 215 employees are participating in multiple online training programs through the company’s innovative Learning Management System. In 2013 alone, Galvin states, “14 of our employees completed the Bryant Certificate program and four others completed degree programs earning a master’s, bachelor’s degree, and two earned associate’s degrees.”

As an employee perk, Collette even offers discounted tours to employees and FAM, or “Familiarization,” time off,” adds Jeni Wilson, Collette’s Vice President of Human Resources. “It gives employees a chance to become familiar with the products Collette sells without them having to tap into vacation time, and it is certainly a nice perk for employees and their families,” she notes.

Giving Back to Your Community

A sense of community even drives its charitable endeavors, says Sullivan, who notes that since 1997, his company has given more than $7 million to local and worldwide projects. Through employee-led initiatives, 20,000 children have received enhanced education; balanced nutrition; and clean water.

Sullivan says that Collette employees have the opportunity to designate four work hours each month to volunteer, too. In 2013, the Collette employee volunteers gave 2,263 hours to its communities.

“I feel like I get so much joy out of life that it is only fitting for me to try and give back,” said Chris Cahill, Collette’s Applications Developer. More specifically, the company allows its employees to travel worldwide and experience new cultures and Collette’s volunteer program gives them an opportunity to “give back to the communities they visit. An 11 year Collette employee, Cahill volunteers at Pawtucket Proud Day, the Rhode Island Food Bank and Tourism Cares event.

Collette has received kudos for its spirit of volunteerism. The company recently won a World Travel Market Global Award in recognition of its global philanthropic work over the past 12 months. Locally, Sullivan noted that his company was one of the local companies honored with The Ernie Marot Humanitarian Award Dinner by the Pawtucket Soup Kitchen. The award honored some of the kitchen’s most committed supporters.

Employees Are Assets

In Rhode Island or across the nation, successful companies view their employees and customers as their most valuable assets, says Edward M. Mazze former Dean of the College of Business Administration (from 1998 to 2006) at the University of Rhode Island. “To remain in business you must have the type of employee who is going to be loyal to your company and at the same time be customer-oriented,” he says.

Compensation and Benefit programs, like Collette, offers, will allow you to both motivate and compensate the best people, keeping them from going over to your competitor, says Mazze.

But it just makes good business sense to retain your employees rather then starting a job search to hire employees to fill vacant positions. “Giving a person a thousand dollar bonus is much cheaper than having to go into the market and fill the position,” adds Mazze.

Collette, like many over savvy companies, puts its dollars in its employees’ pockets, even supporting a myriad of worthy nonprofit causes both locally and globally. Collette is a perfect case study for other CEOs to look at – being penny-wise and pound foolish can be hazardous to your company’s bottom-line. Recognizing the importance of your employees’ role in meeting your business objectives will come back a thousand fold. Just ask Dan Sullivan, Jr.

For more information about Collette, visit http://www.gocollette.com.

Herb Weiss, LRI ’12, is a Pawtucket-based writer who covers aging, health care, medical and even business issues. He can be reached at hweissri@aol.com.