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Our neighbors in the Midwest Money Exchangehad a big victory earlier this year when Cincinnati passed an innovative ordinance aimed at reducing wage theft. Recognizing the devastating impact of this common problem on workers and the local economy, Cincinnati is setting expectations for companies that do business with the city or that receive incentives. These companies must disclose prior labor law violations as part of the bidding process and report to the city any wage or payroll fraud complaints received from employees (including employees of subcontractors) during the performance of the contract. In turn, the city will refer complaints to appropriate agencies and, if an adverse determination is issued, will take steps such as termination of the contract, reduction of the incentives payment, and/or debarment from future contracts.

In 2013, the NC General Assembly clamped down on local governments’ ability to take some of these steps in our state. In its expansion of the public policy known as “preemption,” the state now prohibits cities and counties from placing certain requirements on their contractors. Local governments in North Carolina do have the ability to take some measures to improve worker wellbeing in their communities, as explained in our brief The power of wage policies: how raising public sector wages can promote living incomes and boost the economy  – but legislative action is required to enable North Carolina communities to follow Cincinnati’s lead and put other proactive measures into place to protect workers’ wages.

Commentary

Cherie BerryIf you didn’t see it over the weekend, you need to click here and catch up with reporter Mandy Locke’s new series on North Carolina’s absurdly ineffective and lackluster Department of Labor: “The Reluctant Regulator.”

As Locke explains, Labor Commissioner Cherie Berry, who has now been in office for almost 15 years and long been an outspoken defender of the state business community, has been doing a mostly lousy job at what she was elected and gets paid to do:

“North Carolina has a simple requirement of employers: Pay your workers what you promise. When bosses don’t, Labor Commissioner Cherie Berry’s team has the duty under state law to step in and try to make it right.

But for years, Berry’s Labor Department has rarely pushed uncooperative companies to settle debts to their employees. The News & Observer reviewed reports from nearly 50 cases in fiscal year 2014 that resulted in little or no money for workers. If a company owner pleaded poverty or refused to pay, state investigators nearly always gave up. If the employer simply ignored them, the department closed the case.”

The series goes on to document case after case and area after area in which Berry’s department has failed to do its job and/or blames someone else for its shortcomings. You can almost hear the leaders of the various conservative business lobby groups that are responsible for funding Berry’s campaigns chuckling nervously to themselves: “C’mon Cherie, don’t be quite that obvious.”

Of course, the thrust of these revelations is not particularly new or surprising. There have been numerous stories down through the years about Berry mailing it in at DOL to little obvious effect. Let’s fervently hope that this time the spotlight finally brings on some actual change for the state’s beleaguered workers.

Click here to read “The Reluctant Regulator.”

 

NC Budget and Tax Center

Yesterday, Lawrence Mishel from the Economic Policy Institute made the compelling case that policymakers have missed the mark by focusing on tax levels rather than wage stagnation in their pursuit of improving growth rates and the economic well-being of the majority of Americans.  As Mishel points out:

Wage stagnation is a decades-long phenomenon. Between 1979 and 2014, while the gross domestic product grew 150 percent and productivity grew 75 percent, the inflation-adjusted hourly wage of the median worker rose just 5.6 percent — less than 0.2 percent a year. And since 2002, the bottom 80 percent of wage earners, including both male and female college graduates, have actually seen their wages stagnate or fall.

At the same time, taxation does not explain why middle-income families are having a harder time making ends meet, even as they increase their education and become ever more productive. According to the latest Congressional Budget Office data, the middle 60 percent of families paid just 3.2 percent of their income in federal income taxes in 2011, less than half what they paid in 1979.

Mishel goes on to detail a policy agenda that is far better targeted than tax cuts for delivering benefits to the majority of American workers and the broader economy.  This agenda includes some familiar proposals also appropriate for state policymakers: addressing wage theft and misclassification, raising the minimum wage and protecting workers rights to collectively bargain.  It also includes important macro-economic and trade policy choices like stopping the offshoring of jobs through trade deals like the Trans-Pacific Partnership and ensuring the Federal Reserve holds interest rates down until wage growth is more robust.

Again in Mishel’s own words:

Contrary to conventional wisdom, wage stagnation is not a result of forces beyond our control. It is a result of a policy regime that has undercut the individual and collective bargaining power of most workers. Because wage stagnation was caused by policy, it can be reversed by policy, too.

News

A chain of Mexican restaurants with a Jacksonville location is paying more than $50,000 in back wages to employees, after federal authorities discovered some workers weren’t receiving minimum wage.

Pancho Villa Mexican Restaurants, a small chain with one location near the Camp LeJeune Marine Corps Base, was not paying dishwashers and cooks at the federal minimum wage ($7.25), nor was it paying overtime, ac according to a news release from the U.S. Department of Labor.

The underpayments affected 30 workers from December 2010 to December 2013 at the company’s eight Virginia locations (in Fredericksburg, Culpeper, Dahlgren and Stafford) and its sole North Carolina location at 2121 N. Marine Blvd. in Jacksonville.

Pancho Villa’s owners agreed to pay $57,446 in back wages to 30 employees, as well as a $6,600 fine.

Federal labor officials are looking for former employees of the restaurant. Those affected can all the Wage and Hour Division at (804) 771-2995.

Commentary
Mandy Locke

Mandy Locke

Looking to learn about an issue — any issue — on which the North Carolina General Assembly might actually pursue a moderately progressive course in 2015? If so, you should definitely plan on attending this Wednesday’s Crucial Conversation luncheon with Raleigh News & Observer reporter Mandy Locke: “Fraud in the workplace: How numerous North Carolina employers are cheating their competitors and stealing from employees and taxpayers (and what should be done about it).”

Locke will discuss the ongoing multimillion dollar crime spree in North Carolina in which “wage theft” and “worker misclassification” by dishonest employers are both robbing workers (and state tax coffers) of millions and millions of dollars. Please join us as we explore this huge and poorly understood problem and how state lawmakers and regulators might properly address it.

Locke will be joined by Raleigh businessman Doug Burton, President and Owner of Whitman Masonry and one of the numerous North Carolina employers who treats his workers fairly, plays by the rules and is regularly disadvantaged as a result of the state’s lax law enforcement in this area and Bill Rowe, General Counsel and Director of Advocacy at the North Carolina Justice Center, who will discuss possible legislative and law enforcement solutions.

When: Wednesday, January 28th, at noon — Box lunches will be available at 11:45 a.m.

Where: Center for Community Leadership Training Room at the Junior League of Raleigh Building, 711 Hillsborough St. (At the corner of Hillsborough and St. Mary’s streets)

Space is limited – preregistration required.

Cost: $10, admission includes a box lunch.

Click here to register

Questions?? Contact Rob Schofield at 919-861-2065 or rob@ncpolicywatch.com