Daniel Wolff, Grown Up Anger: The Connected Mysteries of Bob Dylan, Woody Guthrie and the Calumet Massacre of 1913, (NY: Harper-Collins, 2017), $26.99
In Grown Up Anger author Daniel Wolff connects a labor history narrative with the evolution of mid 20th century protest music. As the title suggests, the labor history emphasizes the 1913 copper strike in Keweenaw County in Michigan’s Upper Peninsula, and the protest music discussion emphasizes the work of Woody Guthrie and Bob Dylan. Woody Guthrie was born in 1912 while Bob Dylan was born in 1941, and so the music covers the depression era in the 1930’s into the modern era. There are 14 chapters with 259 pages.
It was not obvious to me how the title, Grown Up Anger, relates to labor history and protest music but Wolff uses the opening pages to explain his choice. “History happens in a classroom. I didn’t (voluntarily) approach the world that way.” Instead he connected through anger, “Specifically, the voice of Bob Dylan.” Wolff explains his feeling that Dylan’s “Like A Rolling Stone” was the sound of unresolved anger, which “didn’t seem to need to justify itself.”
Since it was July 1965 and Wolff was thirteen years old, he felt adolescent anger that could not be discussed with dismissive adults; “If you did, you got a look that meant, ‘Oh, yes, you’re a child.’’ By now, 52 years later, looking back generates Grown Up Anger, which can be written down in articulate prose.
The remainder of Chapter One provides a reminiscence for 1960’s music and the Bob Dylan and Woody Guthrie place in it. Wolff introduces the Guthrie song “1913 Massacre” that makes an early connection to the Keweenaw copper strike, a song I did not previously know about. Chapter 2 introduces more Bob Dylan biography; chapter 3 introduces more Woody Guthrie biography. Both chapters relate their early interest in music.
Chapter 4 narrates the early history of Keweenaw County, Michigan copper mining and union organizing, which picks up again and continues in chapters 7, 9, and 12. The history moves along to the December 24, 1913 Christmas party and the infamous “Massacre” that took place at Italian Hall in Calumet. I reviewed a book length account of the 1913 Keweenaw strike by Steve Lehto, Death’s Door on this blog. Death's Door Death's Door Lehto, Ella Reeve Bloor and Arthur Thurner are also important sources used in Wolff’s account.
The other chapters - 5, 6, 8, 10, 11, and 13 - return to narrate and analyze the music and careers of Guthrie and Dylan. We find out “both Guthrie and Dylan spent their childhoods in relatively prosperous, supportive, Middle American families.” Woody Guthrie and his cousin Jack Guthrie left Oklahoma for California looking for music careers. They succeeded getting a radio show and confronted the great “Okie” migration in John Steinbeck’s Grapes of Wrath and In Dubious Battle in the process.
Dylan was 14 in 1955 when Emmett Till was murdered in Mississippi and was already trying to express himself through music. He graduated from Hibbing High in 1959 and recalled “I just turned my back on it. It couldn’t give me anything.” He went to the University of Minnesota and then to New York to pursue music as a career.
While Dylan and Guthrie remain the central theme of the music narrative it wanders and weaves its way into a variety of related historical events and musical figures. There are composer-musicians, Earl Robinson, Paul Robeson, Lead Belly, Alan Lomax, Pete Seeger, Joan Baez; music groups, the Kingston Trio, Peter, Paul and Mary, the Weavers; agitators and activists, Upton Sinclair, Bill Haywood, Elizabeth Gurley Flynn.; one composer-musician-activist Joe Hill. There are music titles and discussion of lyrics for many songs, especially Dylan and Guthrie songs and the songs of others that influenced them and of their influence on each other.
As the discussion moves along it mixes more with politics and political events; the House Un-American Activities Committee and the Communist purges of the 1940’s and early 1950’s. Suddenly lyrics were subversive and folk singers like Guthrie and the Weavers were denounced as Communists. Wolff describes the post 1955 folk revival and the Guthrie and Dylan part in it. The Dylan song “Like a Rolling Stone” has a suspicious connection to a doggerel poem composed by Joe Hill on the eve of his execution, or assassination as I would see it. The first stanza in his twelve line poem reads “My will is easy to decide. For there is nothing to divide. My kind don’t need to fuss and moan. Moss don’t grow to a rolling stone.”
A final chapter takes a driving tour through present day Keweenaw where copper mining ceased in 1968, fifty years ago. Wolff gives inequality data from 1913 and today and finds nothing has changed. The book ends with a brief allegory where the landscape beneath the surface in the world’s shell remains a molten core in a “kind of rage.” Enough said.
I cannot think of a comparable book, but that’s not a criticism. The narrative reads easily and chapter titles and divisions help move the story along. There are footnotes although they are not numbered but appear by the page rather than by number, which I don’t like. A bibliography includes some standard labor history books like Philip Foner, Jeremy Brecher, Melvin Dubofsky and Foster Rhea Dulles. I wonder about the audience that reads the book since I am guessing people interested in Guthrie and Dylan would not know much about strikes like the Keweenaw strike. In that way people interested in the music could get a first introduction to labor history. America would be better off if it knows more of its labor history. I predict it would create more Grown Up Anger.
Friday, August 10, 2018
Friday, June 29, 2018
Harley-Davidson Motor Cycles, Trade Wars and our Obsolete Constitution
Harley-Davidson Motor Cycles, Trade Wars and our Obsolete Constitution
Harley-Davidson Motor Cycles recently announced it will be moving some production to Europe to avoid new tariffs made in retaliation to unilateral increases in United States tariffs. Harley officials reported a $2,200 price penalty from the Trump tariff war. In spite of the abuse and ridicule from Trump, Harley-Davidson Motor Cycles did what any business has to do week in and week out; they adjusted to a change in economic circumstance. In this case Trump made a significant change in their market condition imposing tariffs with a guaranteed retaliation.
For at least 50 years the United States sent representatives to repeated meetings of the General Agreement on Tariffs and Trade(GATT) with instructions to negotiate lower tariffs and trade barriers. The world economy and companies like Harley-Davidson have adjusted completely to the lower tariffs. The Trump tariffs make American companies especially vulnerable because retaliation only affects American products made in America; every other company from every other country now has a price advantage over American companies like Harley-Davidson.
More companies will have to do what Harley-Davidson does, which will accelerate job loss in the United States. Trump remains immune to economic forecasts and market conditions while his conduct continues to be so erratic no one can predict how bad things might get.
Congress?
Congress granted Presidents the dictatorial power to impose tariffs for national security reasons, but has allowed Trump to define national security as anything he wants. Congress can take the power back anytime it wants. As Trump threats and bluster translate into retaliation by other countries a weak and plaintive protest of corporate America has appeared in the media, but nothing happens about the tariffs. Corporate America appears powerless to challenge Trump, a Republican no less.
Congress can be obnoxious and threatening and make life a misery for administrators; it can stall and obstruct, but it can’t make a simple decision to stop an idiotic policy that guarantees economic loss as Harley-Davidson officials so clearly understand.
The current Trump tariff abuses highlight the workings of an obsolete constitution. The founding fathers designed a Congress with machinery designed for obstruction; very small numbers can obstruct majorities in a bicameral Congress filled with rules to block decisions. No balance of power remains among the three branches of government we all learned about in high school. The initiative and power have all passed to the President and his executive branch machinery. Anyone who doubts that should ask why corporate America with all its money bags looks at economic loss as a spectator in a brewing trade war?
Harley-Davidson Motor Cycles recently announced it will be moving some production to Europe to avoid new tariffs made in retaliation to unilateral increases in United States tariffs. Harley officials reported a $2,200 price penalty from the Trump tariff war. In spite of the abuse and ridicule from Trump, Harley-Davidson Motor Cycles did what any business has to do week in and week out; they adjusted to a change in economic circumstance. In this case Trump made a significant change in their market condition imposing tariffs with a guaranteed retaliation.
For at least 50 years the United States sent representatives to repeated meetings of the General Agreement on Tariffs and Trade(GATT) with instructions to negotiate lower tariffs and trade barriers. The world economy and companies like Harley-Davidson have adjusted completely to the lower tariffs. The Trump tariffs make American companies especially vulnerable because retaliation only affects American products made in America; every other company from every other country now has a price advantage over American companies like Harley-Davidson.
More companies will have to do what Harley-Davidson does, which will accelerate job loss in the United States. Trump remains immune to economic forecasts and market conditions while his conduct continues to be so erratic no one can predict how bad things might get.
Congress?
Congress granted Presidents the dictatorial power to impose tariffs for national security reasons, but has allowed Trump to define national security as anything he wants. Congress can take the power back anytime it wants. As Trump threats and bluster translate into retaliation by other countries a weak and plaintive protest of corporate America has appeared in the media, but nothing happens about the tariffs. Corporate America appears powerless to challenge Trump, a Republican no less.
Congress can be obnoxious and threatening and make life a misery for administrators; it can stall and obstruct, but it can’t make a simple decision to stop an idiotic policy that guarantees economic loss as Harley-Davidson officials so clearly understand.
The current Trump tariff abuses highlight the workings of an obsolete constitution. The founding fathers designed a Congress with machinery designed for obstruction; very small numbers can obstruct majorities in a bicameral Congress filled with rules to block decisions. No balance of power remains among the three branches of government we all learned about in high school. The initiative and power have all passed to the President and his executive branch machinery. Anyone who doubts that should ask why corporate America with all its money bags looks at economic loss as a spectator in a brewing trade war?
Thursday, June 28, 2018
DC Initiative 77 and the Tip wars
On June 19, 2018 District of Columbia voters had a chance to vote on Initiative 77 to do away with the sub minimum wage and the tip credit for tipped employees like waiters, waitresses, and bartenders. They did so by a 55 percent to 44 percent margin. [D.C. voters approve initiative to raise minimum wage for tipped workers to $15, Washington Post, June 20, 2018]
The minimum wage in Washington, DC is $12.50 an hour in 2018, but as with the Federal minimum wage the District of Columbia has a sub minimum wage for businesses with employees who customarily receive tips. The sub minimum wage in DC is $3.33 an hour. Under rules governing the sub minimum wage those restaurants that pay a sub minimum wage must verify the additional amount from tips are enough to bring an employee up to at least the minimum wage, a practice known as taking the tip credit. If tips are not enough to equal the minimum wage then the employer is expected to keep track of the short fall and make up the difference. Notice that means all tips paid above $3.33 an hour up to $9.17 an hour, or $12.50 minus $3.33, are in lieu of normal wage obligations and become a subsidy to the restaurant.
Initiative 77 eliminates the sub minimum wage gradually by raising the current $3.33 cash wage plus tips to be a $15.00 an hour cash wage by 2025. After 2025 any tips will be the property of servers in addition to their cash wage; the business subsidy will gradually disappear.
The subsidy from the sub minimum wage dates from 1942 and a decision by the U.S. Supreme Court to ratify a private scheme to use tips as wages. The wage data reported by the Bureau of Labor Statistics in its Occupational Employment Survey suggest the restaurant subsidy scheme in the sub minimum wage does not ensure employees are paid the minimum wage. In DC the median wage reported for waiters and waitresses in 2017 was only $11.86, not $12.50, which means something over half of waiters and waitresses earn less than the minimum wage including tips.
California, Oregon and Washington are three states that abandoned the sub minimum wage for tipped employees. California and Oregon have a minimum wage of $10.5 an hour and Washington $11.50 an hour for all industries. The Bureau of Labor Statistics reports all 31 of California metropolitan areas and 5 sub state non-metropolitan regions have a median wage for waiters and waitresses above their minimum wage; and for Oregon’s 8 metropolitan areas and 4 sub state non-metropolitan regions; and for Washington’s 13 metropolitan areas and 4 sub state non-metropolitan regions.
The effect in these three states suggests it pays for the working class waiter and waitress to get rid of the sub minimum wage subsidy for restaurants. If, or when, restaurants confront much higher food prices they have to experiment with a combination of cost cutting and price increases. They might serve smaller portions, or change the menu to save costs while experimenting with higher prices. I’m hard pressed to understand why they expect to avoid doing that when wage costs rise. They have had this favor since 1942 and judging from their publicity campaign against changing it they think it as their inalienable right.
The Washington Post article mentioned above goes on to discuss the grimy politics of DC voter initiatives because apparently the city council and always the U.S. Congress can overrule a voter initiative. To justify throwing out a District wide election opponents of the working class debase democracy by complaining only 18 percent voted in the election as an excuse to ignore voters. They act as though they know the other 82 percent would have defeated the measure, and we all should respect the lethargy of no shows. If it was Trump talking I could understand it, but the DC city Council?
Strike! Strike?
The minimum wage in Washington, DC is $12.50 an hour in 2018, but as with the Federal minimum wage the District of Columbia has a sub minimum wage for businesses with employees who customarily receive tips. The sub minimum wage in DC is $3.33 an hour. Under rules governing the sub minimum wage those restaurants that pay a sub minimum wage must verify the additional amount from tips are enough to bring an employee up to at least the minimum wage, a practice known as taking the tip credit. If tips are not enough to equal the minimum wage then the employer is expected to keep track of the short fall and make up the difference. Notice that means all tips paid above $3.33 an hour up to $9.17 an hour, or $12.50 minus $3.33, are in lieu of normal wage obligations and become a subsidy to the restaurant.
Initiative 77 eliminates the sub minimum wage gradually by raising the current $3.33 cash wage plus tips to be a $15.00 an hour cash wage by 2025. After 2025 any tips will be the property of servers in addition to their cash wage; the business subsidy will gradually disappear.
The subsidy from the sub minimum wage dates from 1942 and a decision by the U.S. Supreme Court to ratify a private scheme to use tips as wages. The wage data reported by the Bureau of Labor Statistics in its Occupational Employment Survey suggest the restaurant subsidy scheme in the sub minimum wage does not ensure employees are paid the minimum wage. In DC the median wage reported for waiters and waitresses in 2017 was only $11.86, not $12.50, which means something over half of waiters and waitresses earn less than the minimum wage including tips.
California, Oregon and Washington are three states that abandoned the sub minimum wage for tipped employees. California and Oregon have a minimum wage of $10.5 an hour and Washington $11.50 an hour for all industries. The Bureau of Labor Statistics reports all 31 of California metropolitan areas and 5 sub state non-metropolitan regions have a median wage for waiters and waitresses above their minimum wage; and for Oregon’s 8 metropolitan areas and 4 sub state non-metropolitan regions; and for Washington’s 13 metropolitan areas and 4 sub state non-metropolitan regions.
The effect in these three states suggests it pays for the working class waiter and waitress to get rid of the sub minimum wage subsidy for restaurants. If, or when, restaurants confront much higher food prices they have to experiment with a combination of cost cutting and price increases. They might serve smaller portions, or change the menu to save costs while experimenting with higher prices. I’m hard pressed to understand why they expect to avoid doing that when wage costs rise. They have had this favor since 1942 and judging from their publicity campaign against changing it they think it as their inalienable right.
The Washington Post article mentioned above goes on to discuss the grimy politics of DC voter initiatives because apparently the city council and always the U.S. Congress can overrule a voter initiative. To justify throwing out a District wide election opponents of the working class debase democracy by complaining only 18 percent voted in the election as an excuse to ignore voters. They act as though they know the other 82 percent would have defeated the measure, and we all should respect the lethargy of no shows. If it was Trump talking I could understand it, but the DC city Council?
Strike! Strike?
Thursday, June 14, 2018
GOP Repeals Michigan Wage Law
In Michigan the Republican controlled legislature repealed the prevailing wage law that applied to public construction projects. Supporters cited by the Detroit Free Press [Det. FP, June 7, 2018] claim repeal will save taxpayers money as projects paying prevailing wages “cost 10-15 percent more than if it was built by the private sector.” State representative Gary Glenn called prevailing wages a “discriminatory relic of the past.” He claims it will save “hundreds of millions of dollars.”
No one quoted in the Free Press mentions a dollar wage when speaking of a prevailing wage, but if repeal will save money then wages must fall and for wages to fall there must be a big surplus of labor. Since business keeps whining about labor shortages, they contradict themselves.
The U.S. Bureau of Labor Statistics reports the median wage for 50 construction and extraction occupations, which in Michigan is $22.67 an hour, or $47,167 a year. That puts Michigan 19th among the fifty states and the District of Columbia. A 10 percent cut would be $4,717 and leave $42,438 a year.
If, as seems likely, business contractors bid on public projects then there can be no guarantee the contractors will bid lower in response to repeal of a prevailing wage law. Unless there is vigorous competition among many contractors they maybe able to bid as usual and pocket the wage savings themselves. It appears quite likely taxpayers will get nothing from this repeal.
The Free Press reported that all Democrats in the House voted against the measure and therefore Republicans take the entire responsibility for repeal, which makes the whole episode another in string of examples of politics in a divided society. Saving taxpayers was just the excuse. Democrats will have to figure out why so many in the working class vote for Republican pickpockets who lower their standard of living.
No one quoted in the Free Press mentions a dollar wage when speaking of a prevailing wage, but if repeal will save money then wages must fall and for wages to fall there must be a big surplus of labor. Since business keeps whining about labor shortages, they contradict themselves.
The U.S. Bureau of Labor Statistics reports the median wage for 50 construction and extraction occupations, which in Michigan is $22.67 an hour, or $47,167 a year. That puts Michigan 19th among the fifty states and the District of Columbia. A 10 percent cut would be $4,717 and leave $42,438 a year.
If, as seems likely, business contractors bid on public projects then there can be no guarantee the contractors will bid lower in response to repeal of a prevailing wage law. Unless there is vigorous competition among many contractors they maybe able to bid as usual and pocket the wage savings themselves. It appears quite likely taxpayers will get nothing from this repeal.
The Free Press reported that all Democrats in the House voted against the measure and therefore Republicans take the entire responsibility for repeal, which makes the whole episode another in string of examples of politics in a divided society. Saving taxpayers was just the excuse. Democrats will have to figure out why so many in the working class vote for Republican pickpockets who lower their standard of living.
Monday, June 11, 2018
The Birth of a New American Aristocracy - Review
Matthew Stewart, “The Birth of a New American Aristocracy: The gilded future of the top 10 percent – and the end of opportunity for everyone else” Atlantic Monthly, June 2018, 48-63
In his ten part cover story for the June 2018 Atlantic author Matthew Stewart begins dividing United States wealth into three classes: the top .1 percent, the next 9.9 percent and the 90 percent at the bottom. He defines the 9.9 percent as the new aristocracy in order to argue their self-deception makes them a cause of our growing inequality, destabilizing politics and eroding democracy.
Readers get financial information to help define the groups. The .1 percent have 160,000 households and 22 percent of American wealth in 2012, up from 10 percent in 1963. Assets of $1.2 million in 2016 puts a household in the 9.9 percent and the assets of the 9.9 percent exceed the combined assets of the top .1 percent and the lower 90 percent.
In the mass media mobility justifies inequality, but Stewart reports several research efforts that show the average income of children correlates significantly with the average income of parents. In other words, the wealth of the current generation depends very much on having wealthy parents. Comparisons with other countries show the correlation of wealth between generations gets higher in countries with higher inequality. Since the United States has the highest inequality, a parent’s wealth does a better job predicting their children’s wealth than other developed countries. Mobility today requires winning the mega-millions jackpot.
That finishes part 2, part 3 through part 6 describes some ways the 9.9 percent game the system. Those in the 9.9 percent tend to be people of “good family, good health, good schools, good neighborhoods and good jobs.” They meet and marry in process of “assortative mating.”
Part 4 outlines the game in education. Matthews reports 2.2 percent of America’s high school students graduate from private high schools and make up 26 percent of Harvard students. Education for the “sake of society” has given way to a private benefit measured by higher salary, which helps the financial benefit of the college premium correlate with a decrease in social mobility. Part 5 takes up tax subsides that favor the 9.9 percent and the .1 percent who then fill the media whining about food stamps and welfare cheats. In part 6 readers learn the returns to real estate in the “right places” may account for essentially all of the increase in the concentration of wealth over the last 50 years and coincidentally much of the isolation of the 9.9 percent from the 90 percent.
These first six parts establish a platform to discuss the politics of resentment. Part 7 confronts and scoffs at the 9.9 percent’s delusions of a meritocracy, which Stewart argues has evolved into a class of aristocracy over only a few decades. In part 8 – the Politics of Resentment – inequality provokes a chain of consequences: resentment, political division, instability. Here Stewart lets Trump make his case by citing examples of Trump stoking the fires of resentment for political gain. Stewart concedes the .1 percent delight in their manipulations, but blames the 9.9 percent for taking “our cut of the spoils” while looking “on with smug disdain” and taking it all for granted. Stewart reminds readers that resentment breeds an increase in inequality as every change made by Trump so well demonstrates: the new tax law to wit. At the end of part 8 Stewart warns the 9.9 percent they will soon find themselves the target of economic attack.
Part 9 provides a sobering reminder: reform seldom relieves inequality. History suggests it takes depression, violence, or warfare to bring change and Stewart gives the American Civil War as one example. Remember slavery is a system of cheap labor that guarantees inequality. Lincoln in his famous house divided speech addressed that issue before the civil war: “A house divided against itself cannot stand. I believe this government cannot endure permanently half slave and half free. . . . It will become all one thing, or all the other.” Free labor in competition with slave labor generated poverty, inequality and a violent political instability. Our high school textbooks emphasize the stance of the abolitionists and their ethical and moral objections to slavery. They were a factor, but the civil war started much more for economic reasons: inequality and the depressing effects of a dual wage system.
Part 10 offers a tiny bit of optimism by suggesting the 9.9 percent could get hold of themselves and offer the country some leadership. Leaders should support the larger social order and help direct resources to causes in the common good like health care. Many people of my acquaintance have wondered why so many of the 90 percent keep voting for people like Trump and the Republican pickpockets. I thought of that when Stewart mentioned the poor, southern white boys in butternut and gray that died by the tens of thousands to save the wealth and life of the southern planter class that so crudely exploited them. The United States has had one civil war and I get the feeling Stewart believes the Trump base could bring another. We can hope not, but if it comes to pass the Trump base will join the .1 percent on the one side, and the 9.9 percent will be the other; the resentful always join the authoritarians. Mr. Stewart has warned you.
In his ten part cover story for the June 2018 Atlantic author Matthew Stewart begins dividing United States wealth into three classes: the top .1 percent, the next 9.9 percent and the 90 percent at the bottom. He defines the 9.9 percent as the new aristocracy in order to argue their self-deception makes them a cause of our growing inequality, destabilizing politics and eroding democracy.
Readers get financial information to help define the groups. The .1 percent have 160,000 households and 22 percent of American wealth in 2012, up from 10 percent in 1963. Assets of $1.2 million in 2016 puts a household in the 9.9 percent and the assets of the 9.9 percent exceed the combined assets of the top .1 percent and the lower 90 percent.
In the mass media mobility justifies inequality, but Stewart reports several research efforts that show the average income of children correlates significantly with the average income of parents. In other words, the wealth of the current generation depends very much on having wealthy parents. Comparisons with other countries show the correlation of wealth between generations gets higher in countries with higher inequality. Since the United States has the highest inequality, a parent’s wealth does a better job predicting their children’s wealth than other developed countries. Mobility today requires winning the mega-millions jackpot.
That finishes part 2, part 3 through part 6 describes some ways the 9.9 percent game the system. Those in the 9.9 percent tend to be people of “good family, good health, good schools, good neighborhoods and good jobs.” They meet and marry in process of “assortative mating.”
Part 4 outlines the game in education. Matthews reports 2.2 percent of America’s high school students graduate from private high schools and make up 26 percent of Harvard students. Education for the “sake of society” has given way to a private benefit measured by higher salary, which helps the financial benefit of the college premium correlate with a decrease in social mobility. Part 5 takes up tax subsides that favor the 9.9 percent and the .1 percent who then fill the media whining about food stamps and welfare cheats. In part 6 readers learn the returns to real estate in the “right places” may account for essentially all of the increase in the concentration of wealth over the last 50 years and coincidentally much of the isolation of the 9.9 percent from the 90 percent.
These first six parts establish a platform to discuss the politics of resentment. Part 7 confronts and scoffs at the 9.9 percent’s delusions of a meritocracy, which Stewart argues has evolved into a class of aristocracy over only a few decades. In part 8 – the Politics of Resentment – inequality provokes a chain of consequences: resentment, political division, instability. Here Stewart lets Trump make his case by citing examples of Trump stoking the fires of resentment for political gain. Stewart concedes the .1 percent delight in their manipulations, but blames the 9.9 percent for taking “our cut of the spoils” while looking “on with smug disdain” and taking it all for granted. Stewart reminds readers that resentment breeds an increase in inequality as every change made by Trump so well demonstrates: the new tax law to wit. At the end of part 8 Stewart warns the 9.9 percent they will soon find themselves the target of economic attack.
Part 9 provides a sobering reminder: reform seldom relieves inequality. History suggests it takes depression, violence, or warfare to bring change and Stewart gives the American Civil War as one example. Remember slavery is a system of cheap labor that guarantees inequality. Lincoln in his famous house divided speech addressed that issue before the civil war: “A house divided against itself cannot stand. I believe this government cannot endure permanently half slave and half free. . . . It will become all one thing, or all the other.” Free labor in competition with slave labor generated poverty, inequality and a violent political instability. Our high school textbooks emphasize the stance of the abolitionists and their ethical and moral objections to slavery. They were a factor, but the civil war started much more for economic reasons: inequality and the depressing effects of a dual wage system.
Part 10 offers a tiny bit of optimism by suggesting the 9.9 percent could get hold of themselves and offer the country some leadership. Leaders should support the larger social order and help direct resources to causes in the common good like health care. Many people of my acquaintance have wondered why so many of the 90 percent keep voting for people like Trump and the Republican pickpockets. I thought of that when Stewart mentioned the poor, southern white boys in butternut and gray that died by the tens of thousands to save the wealth and life of the southern planter class that so crudely exploited them. The United States has had one civil war and I get the feeling Stewart believes the Trump base could bring another. We can hope not, but if it comes to pass the Trump base will join the .1 percent on the one side, and the 9.9 percent will be the other; the resentful always join the authoritarians. Mr. Stewart has warned you.
Monday, May 14, 2018
Jobs and Telework
The U.S. Department of Agriculture (USDA) changed telework rules for thousands of its employees. The Washington Post [March 18, 2018] quoted a USDA spokesperson that “USDA’s telework policy is designed to be responsible to the taxpayers and responsive to the customers who depend on our services. It is also respectful of our fellow employees who come to work each day.” The change in policy promotes “USDA as one family working together as a single team to serve the American people.” House Representative Gerald Connolly from a nearby Virginia House District co-sponsored the telecommuting rules back in 2010; he called the changes a retrograde move.
The Office of Personnel Management reported a steady increase in the share of Federal Workers who telecommute, which now stands at 20 to 22 percent. Telecommuting helps relieve serious traffic congestion for commuters. I-95 into the District has an average of 23 traffic jams a day. Based on telecommuting data from USDA around Washington the new rules will add 42,000 trips a week to area commuters.
The March 18 article in the Washington Post spawned several letters to the editor. One claimed “Teleworking is a scam” because employees on site are far more productive working together and there should be no special privileges allowing employees to make the same income as those who show up everyday. Another person wrote in that working at home increased his productivity because office distractions made it hard to work. He wore head phones with piped in music to minimize “working together.”
Weary commuters spending hours a day sitting on a cement slab lookin’ up some guy’s tail pipe will recognize a subplot here. Work could be about getting work done, accomplishing necessary tasks, rather than how and where the work gets done. For authoritarian bosses work should be suffering and so they want to see all their underlings dutifully sitting in their office warming up a chair. The authoritarian boss always thinks other people cheat; no one can be trusted to do what they’re supposed to do. They have rules: no reading newspapers, no personal emails, no breaks. Anyone not in their plasterboard cubicle must be malingering, or possibly having fun.
Somehow it fits right in for the Trump people where authority and form counts and substance does not.
The Office of Personnel Management reported a steady increase in the share of Federal Workers who telecommute, which now stands at 20 to 22 percent. Telecommuting helps relieve serious traffic congestion for commuters. I-95 into the District has an average of 23 traffic jams a day. Based on telecommuting data from USDA around Washington the new rules will add 42,000 trips a week to area commuters.
The March 18 article in the Washington Post spawned several letters to the editor. One claimed “Teleworking is a scam” because employees on site are far more productive working together and there should be no special privileges allowing employees to make the same income as those who show up everyday. Another person wrote in that working at home increased his productivity because office distractions made it hard to work. He wore head phones with piped in music to minimize “working together.”
Weary commuters spending hours a day sitting on a cement slab lookin’ up some guy’s tail pipe will recognize a subplot here. Work could be about getting work done, accomplishing necessary tasks, rather than how and where the work gets done. For authoritarian bosses work should be suffering and so they want to see all their underlings dutifully sitting in their office warming up a chair. The authoritarian boss always thinks other people cheat; no one can be trusted to do what they’re supposed to do. They have rules: no reading newspapers, no personal emails, no breaks. Anyone not in their plasterboard cubicle must be malingering, or possibly having fun.
Somehow it fits right in for the Trump people where authority and form counts and substance does not.
Wednesday, April 18, 2018
Tip Rules – A History of All You Need to Know
Tip Rules – A History of All You Need to Know
The Trump people proposed to rescind the 2011 Obama Administration Fair Labor Standards Act regulations that regulate tip-pooling arrangements. The Obama rules allowed the restaurant owner to pool tips but only among employees who customarily receive at least $30 a month in tips. Angry American Restaurant Association and other groups representing restaurant owners filed suit challenging the rules. While the litigation continued the Trump people proposed new regulations that help restaurant owners take tips from dining room help that normally receive tips to pay the wages of kitchen help that do not. In the process of working out a budget for 2018 Congress inserted new language as Title XII, Section 1201 into the budget resolution that changes the Fair Labor Standards Act. The new language intends to block the Trump proposal and appears to resolve the dispute over tips, but the matter is not entirely resolved as of now, April 2018.
The new language reads in part “An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.”
To understand why restaurant owners favor the Trump tip pooling rule requires knowing procedures under the Fair Labor Standards Act of 1938, which excluded restaurant workers from employer minimum wage obligations until 1966. In 1966 they were finally included, but only at 50 percent of the minimum wage. Some of the restaurant owners complained they shouldn’t have to pay any wages because their waiters and waitresses earned plenty from their tips.
From 1966 to 1996 the tipped wage went up when Congress raised the minimum wage, but in 1996 and again in 2007 the restaurant industry lobbied Congress to leave the tipped minimum at $2.13 an hour. The Federal tipped minimum has remained at $2.13 an hour since 1991, which makes it only 29 percent of the present $7.25 an hour minimum wage.
First, recognize that the monthly minimum wage at $7.25 an hour is $1,160 a month at 40 hours a week and 4 weeks per month. However, the $2.13 an hour sub minimum wage for tipped employees is just $340.80 a month, which means a tipped employee needs an additional amount of $819.20 a month in tips to get up to the minimum wage, or $7.25 - $2.13 = $5.12 an hour.
Under federal rules governing the Fair Labor Standards Act employers who pay a sub minimum wage must verify the additional amount from tips are enough to bring an employee up to at least the minimum wage, a practice defined as taking the tip credit. If tips are not enough to equal the minimum wage then the employer is expected to make up the difference.
Notice though the additional amount in tips received up to $819.20 per month are in lieu of normal obligations to pay wages to employees. Even if tipped employees receive tips at or above $819.20 a month, wage costs drop from at least $7.25 an hour to as low as $2.13 an hour. Even when tips are less than $819.20 a month all of the tips recorded become a cost saving tip credit for their restaurant owners. The tip credit actually has its origin in a legal case from 1942 known as Williams v. Jacksonville Terminal Pickett.
Tips and the Courts - Williams v. Jacksonville Terminal Pickett
In the case Williams v. Jacksonville Terminal Pickett decided March 6, 1942 two Red Caps, Williams and Pickett, brought suit over minimum wage requirements under the new Fair Labor Standars Act(FLSA) against two railroad terminals, Jacksonville Terminal and Union Terminal in Dallas, Texas. In response to the Fair Labor Standards Act terminal managers insisted, in writing, that beginning on October 24, 1938 all red caps must report their tips, which management would offset against their minimum wage obligations. If tips were less than the minimum wage, then management would make up the difference, otherwise not. This arrangement was a new invention of railroad management, no where in the law.
Both Williams and Pickett protested on behalf of red caps that their tips could not be used in lieu of minimum wage obligations. The management demand that tips be reported in lieu of wages in what the court called an “accounting and guarantee system” but their system ended by July 1, 1940; instead both terminals instituted a fee for service charge on passenger luggage and then paid the minimum wage in cash. Since red caps believed FLSA required payment of the minimum wage without deduction of tips, they continued to work and filed suit in United States District Court for the recovery of unpaid minimum wages between October 24, 1938, and July 1, 1940. Both disputes went to the Supreme Court combined as the case of Williams v. Jacksonville Terminal Pickett, (315 U.S. 386) discussed here.
The Supreme Court wrote “We deal here only with the petitioners' [Red Caps] assertion that the wages Act [Fair Labor Standards Act of October 24, 1938] requires railroads to pay the red caps the minimum wage without regard to their earnings from tips.”
In making their decision the Supreme Court Justices decided the terminal management letters of written notice to the red caps and their willingness to continue working provided agreement for management to treat tips as wages. The court wrote “This employment of the red caps was at will and subject to the employers' conclusions as to the desirability of continuing their employment.” Since the red caps did not quit work after receiving written notice of the “accounting and guarantee system” the justices declared they accepted the agreement.
Then the court wrote “In businesses where tipping is customary, the tips, in the absence of an explicit contrary understanding, belong to the recipient. Where, however, an arrangement is made by which the employee agrees to turn over the tips to the employer, in the absence of statutory interference, no reason is perceived for its invalidity.” Notice here the false use of “employee agrees.” The court referenced letters dictated the terms of payment and were imposed by unilateral decision of management. As such the red caps did not and could not disagree or they would be fired.
In the next paragraph of the Jacksonville Terminal opinion, the majority justices wrote “The employer furnishes the facilities, supervises the work and may take the compensation paid by travelers for the service, whether paid as a fixed charge or as a tip.” Therefore, tips are the property and revenue of the employer.
The Justices decided the Jacksonville Terminal case by a vote of five to three with one abstention. Justice Black wrote a dissent in concurrence with the other two in the minority, Justice Douglas and Justice Murphy. Justice Black wrote in part
“I am unable to agree that tips given to red caps by travellers are 'wages' paid to the red caps by the railroad. … The tip paying public is entitled to know whom it tips, the red cap or the railroad. A plan like that before us, which covertly diverts tips from employees for whom the giver intended them to employers for whom the giver did not intend them and to whom any kind of tip doubtless would not have been voluntarily given, seems to me to contain an element of deception. And I think that an interpretation of the F.L.S.A. which permits employers to benefit from such a plan does not accord with the meaning of the language used by Congress.”
Go to 1966 when the restaurant association managed to use their influence and the Jacksonville Terminal Case to get Congress to agree to the sub-minimum wage for tipped employees devised by the railroads in 1938, but now giving it the official term: tip credit. Business devised the tip credit and five justices did business a favor back in 1942 by making tips the property of business, but there is more.
The restaurant association argued the tip credit rule could result in some waiters and waitresses having tips much higher than the minimum difference while other waiters and waitresses might have tips below the minimum difference. Suppose Alice and Anne earn $15.00 an hour with tips, while Bettie and Bonnie earn only $4.00. To meet minimum wage obligations the restaurant owner will need to pay all four people $7.25 an hour or a total of $29, but the four of them earn $38 dollars. Without tip pooling management would owe $3.25 an hour of tip credit to Bettie and Bonnie, or a total of $6.50. With a pooling system the management has $15.50 of extra tip money to take from Alice and Anne to make up the $6.50 of shortfall to Bettie and Bonnie. The disparity in tips could require the restaurant owner to incur a tip credit for some of their help while the total of tips could be big enough to pay the entire tip credit obligation. Tip pooling might reduce the tip credit to zero allowing the restaurant owner to save more on wage costs by forcing employees with high tips to pay the tip credit of employees with low tips.
Pooling for those who receive tips was the rule under FLSA and the practice until Aaron Woo, a Portland, Oregon owner of Woody Woo Café decided to ignore the practice in 2009. He reasoned that the FLSA rule 203(m) only applied to those restaurants that take the tip credit and so pay the sub minimum wage. Since he paid the full minimum wage, he took it upon himself to save wage costs by pooling tips from those who receive them to those who do not; like the kitchen help. A lawsuit followed known as Cumbie versus Woody Woo Inc; Cumbie is Misty Cumbie, one of the disgruntled employees.
The District Court in Oregon dismissed the case by summary judgement and appeal was taken to the Ninth Circuit Court in Oregon. On Appeal, Cumbie argued sharing tips with the kitchen help who are not “customarily and regularly tipped employees was invalid under 29 US Code section 203(m) and the Code of Federal Regulations 29 CFR 531.52-54 written for it. Woody Woo argued that since they did not take a tip credit and paid the full minimum wage, they could devise any tip pooling arrangement that suited them.
The court read the last sentence of the statute 29 US Code 203(m), which stated that tip credit rules “shall not apply with respect to any tipped employee unless such employee has been informed by the employer of the provisions of this subsection, and all tips received by such employee have been retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips.”
The majority ruled the Woody Woo tip credit claims irrelevant, but ruled in their favor for a different reason. They found the statute language too vague to define any specific tip pooling arrangement. Specifically they wrote “for an employer that meets its minimum wage obligation without taking a tip credit, section 203(m) is silent; therefore, there is no statutory interference.” In other words Mr. Woo could make any tip pooling arrangement he wanted and the Williams v. Jacksonville ruling remained.
The Woody Woo ruling came in 2009. In 2011, the Obama Administration revised the Code of Federal Regulations 29 CFR 351.52 to make it clear that tips are the property of the employee and that tip pools can only be made among employees who “customarily and regularly receive tips.”
Again restaurant owners were incensed and filed suit in the case Oregon Restaurant and Lodging Association versus Perez [Sec’y of Labor]. The Oregon District Court held that Cumbie left "no room" for the Department of Labor to make its 2011 rule and so granted Oregon Restaurant & Lodging's motion for summary judgment. Appeal was taken but now the same 9th Circuit Court disagreed with the District Court’s use of the Cumbie ruling.
In the new ruling the justices explained they did not hold the Fair Labor Standards Act unambiguously and categorically protects Mr. Woos tip pooling arrangement. Rather, they held that "nothing in the text purports to restrict" the practice in question.
In the new Oregon Restaurant case a majority of the justices relied on the wording of the 1974 FLSA amendments. In the 1974 amendments “Congress expressly delegated to the Department of Labor the broad authority 'to prescribe necessary rules, regulations, and orders' to implement the FLSA amendments of 1974.”
The minority justices argued “This case is nothing more than Cumbie II.” They insisted the court must follow precedent. The majority countered “We have no quarrel with Cumbie v. Woody Woo Inc. Our conclusion with respect to Cumbie is only that its holding was grounded in statutory silence.” Therefore “we find that Cumbie does not foreclose the DOL's ability to regulate tip pooling practices of employers who do not take a tip credit.” ... “In exercising its discretion to regulate, the DOL promulgated a rule that is consistent with the FLSA's language, legislative history, and purpose.”
Justice O’Scannlain wrote a dissent for the minority, which was used as the basis for a Writ of Certiorari to have the U.S. Supreme Court hear the case. The Writ was filed January 19, 2017. Looking at the Proceedings and Orders on the U.S. Supreme Court website shows the case National Restaurant Association, et al., v. Department of Labor, et al. Has many motions to extend the time to file a response, which have been granted repeatedly and last time I checked on April 16, 2018 the time was extended until May 9, 2018, but might well be extended again.
However, to complicate matters Congress intervened with new language as mentioned above, which makes employees the owners of their tips. The Congressional action in this long dreary episode of tips does not really resolve the matter for tipped employees, especially restaurant employees. As long as U.S. employees work “at will” and can be fired at any time for any reason, or no reason, tipped employees can be pressured to give up tips to their employer. Few restaurant employees have the wherewithal to pursue legal enforcement and Republican administrations are famous for not enforcing labor law.
Tip rules give a good illustration how courts will interpret legislation to favor and subsidize business. The tip rules that remain in force, and the tip credit that still remains, originated 76 years ago when the five Supreme Court justices seized on the Red Cap’s decision to continue working while claims in dispute worked through the courts. When some members of Congress tried to get restaurant employees included in the minimum wage requirements of FSLA in 1966 the Restaurant Association was right there demanding to codify their subsidy.
After successfully keeping the sub minimum wage for tipped employees fixed at $2.13 an hour for 27 years, restaurants and the Restaurant Association realized it was so low that they often had to pay $7.25 an hour just to get dining room help. That made the tip credit useless and their subsidy ended. That’s why Mr. Woo became a test case to demand expanding tip pooling to non tipped employees and restore their subsidy.
Once more Trump showed us who he is by joining corporate America to help them cheat tipped employees.
I will keep an eye on future legal developments and update them here. Or you can do it yourself. Docket files at the Supreme Court are No. 16-920, the Writ was docketed on January 24, 2017 No. 16A529
The Trump people proposed to rescind the 2011 Obama Administration Fair Labor Standards Act regulations that regulate tip-pooling arrangements. The Obama rules allowed the restaurant owner to pool tips but only among employees who customarily receive at least $30 a month in tips. Angry American Restaurant Association and other groups representing restaurant owners filed suit challenging the rules. While the litigation continued the Trump people proposed new regulations that help restaurant owners take tips from dining room help that normally receive tips to pay the wages of kitchen help that do not. In the process of working out a budget for 2018 Congress inserted new language as Title XII, Section 1201 into the budget resolution that changes the Fair Labor Standards Act. The new language intends to block the Trump proposal and appears to resolve the dispute over tips, but the matter is not entirely resolved as of now, April 2018.
The new language reads in part “An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.”
To understand why restaurant owners favor the Trump tip pooling rule requires knowing procedures under the Fair Labor Standards Act of 1938, which excluded restaurant workers from employer minimum wage obligations until 1966. In 1966 they were finally included, but only at 50 percent of the minimum wage. Some of the restaurant owners complained they shouldn’t have to pay any wages because their waiters and waitresses earned plenty from their tips.
From 1966 to 1996 the tipped wage went up when Congress raised the minimum wage, but in 1996 and again in 2007 the restaurant industry lobbied Congress to leave the tipped minimum at $2.13 an hour. The Federal tipped minimum has remained at $2.13 an hour since 1991, which makes it only 29 percent of the present $7.25 an hour minimum wage.
First, recognize that the monthly minimum wage at $7.25 an hour is $1,160 a month at 40 hours a week and 4 weeks per month. However, the $2.13 an hour sub minimum wage for tipped employees is just $340.80 a month, which means a tipped employee needs an additional amount of $819.20 a month in tips to get up to the minimum wage, or $7.25 - $2.13 = $5.12 an hour.
Under federal rules governing the Fair Labor Standards Act employers who pay a sub minimum wage must verify the additional amount from tips are enough to bring an employee up to at least the minimum wage, a practice defined as taking the tip credit. If tips are not enough to equal the minimum wage then the employer is expected to make up the difference.
Notice though the additional amount in tips received up to $819.20 per month are in lieu of normal obligations to pay wages to employees. Even if tipped employees receive tips at or above $819.20 a month, wage costs drop from at least $7.25 an hour to as low as $2.13 an hour. Even when tips are less than $819.20 a month all of the tips recorded become a cost saving tip credit for their restaurant owners. The tip credit actually has its origin in a legal case from 1942 known as Williams v. Jacksonville Terminal Pickett.
Tips and the Courts - Williams v. Jacksonville Terminal Pickett
In the case Williams v. Jacksonville Terminal Pickett decided March 6, 1942 two Red Caps, Williams and Pickett, brought suit over minimum wage requirements under the new Fair Labor Standars Act(FLSA) against two railroad terminals, Jacksonville Terminal and Union Terminal in Dallas, Texas. In response to the Fair Labor Standards Act terminal managers insisted, in writing, that beginning on October 24, 1938 all red caps must report their tips, which management would offset against their minimum wage obligations. If tips were less than the minimum wage, then management would make up the difference, otherwise not. This arrangement was a new invention of railroad management, no where in the law.
Both Williams and Pickett protested on behalf of red caps that their tips could not be used in lieu of minimum wage obligations. The management demand that tips be reported in lieu of wages in what the court called an “accounting and guarantee system” but their system ended by July 1, 1940; instead both terminals instituted a fee for service charge on passenger luggage and then paid the minimum wage in cash. Since red caps believed FLSA required payment of the minimum wage without deduction of tips, they continued to work and filed suit in United States District Court for the recovery of unpaid minimum wages between October 24, 1938, and July 1, 1940. Both disputes went to the Supreme Court combined as the case of Williams v. Jacksonville Terminal Pickett, (315 U.S. 386) discussed here.
The Supreme Court wrote “We deal here only with the petitioners' [Red Caps] assertion that the wages Act [Fair Labor Standards Act of October 24, 1938] requires railroads to pay the red caps the minimum wage without regard to their earnings from tips.”
In making their decision the Supreme Court Justices decided the terminal management letters of written notice to the red caps and their willingness to continue working provided agreement for management to treat tips as wages. The court wrote “This employment of the red caps was at will and subject to the employers' conclusions as to the desirability of continuing their employment.” Since the red caps did not quit work after receiving written notice of the “accounting and guarantee system” the justices declared they accepted the agreement.
Then the court wrote “In businesses where tipping is customary, the tips, in the absence of an explicit contrary understanding, belong to the recipient. Where, however, an arrangement is made by which the employee agrees to turn over the tips to the employer, in the absence of statutory interference, no reason is perceived for its invalidity.” Notice here the false use of “employee agrees.” The court referenced letters dictated the terms of payment and were imposed by unilateral decision of management. As such the red caps did not and could not disagree or they would be fired.
In the next paragraph of the Jacksonville Terminal opinion, the majority justices wrote “The employer furnishes the facilities, supervises the work and may take the compensation paid by travelers for the service, whether paid as a fixed charge or as a tip.” Therefore, tips are the property and revenue of the employer.
The Justices decided the Jacksonville Terminal case by a vote of five to three with one abstention. Justice Black wrote a dissent in concurrence with the other two in the minority, Justice Douglas and Justice Murphy. Justice Black wrote in part
“I am unable to agree that tips given to red caps by travellers are 'wages' paid to the red caps by the railroad. … The tip paying public is entitled to know whom it tips, the red cap or the railroad. A plan like that before us, which covertly diverts tips from employees for whom the giver intended them to employers for whom the giver did not intend them and to whom any kind of tip doubtless would not have been voluntarily given, seems to me to contain an element of deception. And I think that an interpretation of the F.L.S.A. which permits employers to benefit from such a plan does not accord with the meaning of the language used by Congress.”
Go to 1966 when the restaurant association managed to use their influence and the Jacksonville Terminal Case to get Congress to agree to the sub-minimum wage for tipped employees devised by the railroads in 1938, but now giving it the official term: tip credit. Business devised the tip credit and five justices did business a favor back in 1942 by making tips the property of business, but there is more.
The restaurant association argued the tip credit rule could result in some waiters and waitresses having tips much higher than the minimum difference while other waiters and waitresses might have tips below the minimum difference. Suppose Alice and Anne earn $15.00 an hour with tips, while Bettie and Bonnie earn only $4.00. To meet minimum wage obligations the restaurant owner will need to pay all four people $7.25 an hour or a total of $29, but the four of them earn $38 dollars. Without tip pooling management would owe $3.25 an hour of tip credit to Bettie and Bonnie, or a total of $6.50. With a pooling system the management has $15.50 of extra tip money to take from Alice and Anne to make up the $6.50 of shortfall to Bettie and Bonnie. The disparity in tips could require the restaurant owner to incur a tip credit for some of their help while the total of tips could be big enough to pay the entire tip credit obligation. Tip pooling might reduce the tip credit to zero allowing the restaurant owner to save more on wage costs by forcing employees with high tips to pay the tip credit of employees with low tips.
Pooling for those who receive tips was the rule under FLSA and the practice until Aaron Woo, a Portland, Oregon owner of Woody Woo Café decided to ignore the practice in 2009. He reasoned that the FLSA rule 203(m) only applied to those restaurants that take the tip credit and so pay the sub minimum wage. Since he paid the full minimum wage, he took it upon himself to save wage costs by pooling tips from those who receive them to those who do not; like the kitchen help. A lawsuit followed known as Cumbie versus Woody Woo Inc; Cumbie is Misty Cumbie, one of the disgruntled employees.
The District Court in Oregon dismissed the case by summary judgement and appeal was taken to the Ninth Circuit Court in Oregon. On Appeal, Cumbie argued sharing tips with the kitchen help who are not “customarily and regularly tipped employees was invalid under 29 US Code section 203(m) and the Code of Federal Regulations 29 CFR 531.52-54 written for it. Woody Woo argued that since they did not take a tip credit and paid the full minimum wage, they could devise any tip pooling arrangement that suited them.
The court read the last sentence of the statute 29 US Code 203(m), which stated that tip credit rules “shall not apply with respect to any tipped employee unless such employee has been informed by the employer of the provisions of this subsection, and all tips received by such employee have been retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips.”
The majority ruled the Woody Woo tip credit claims irrelevant, but ruled in their favor for a different reason. They found the statute language too vague to define any specific tip pooling arrangement. Specifically they wrote “for an employer that meets its minimum wage obligation without taking a tip credit, section 203(m) is silent; therefore, there is no statutory interference.” In other words Mr. Woo could make any tip pooling arrangement he wanted and the Williams v. Jacksonville ruling remained.
The Woody Woo ruling came in 2009. In 2011, the Obama Administration revised the Code of Federal Regulations 29 CFR 351.52 to make it clear that tips are the property of the employee and that tip pools can only be made among employees who “customarily and regularly receive tips.”
Again restaurant owners were incensed and filed suit in the case Oregon Restaurant and Lodging Association versus Perez [Sec’y of Labor]. The Oregon District Court held that Cumbie left "no room" for the Department of Labor to make its 2011 rule and so granted Oregon Restaurant & Lodging's motion for summary judgment. Appeal was taken but now the same 9th Circuit Court disagreed with the District Court’s use of the Cumbie ruling.
In the new ruling the justices explained they did not hold the Fair Labor Standards Act unambiguously and categorically protects Mr. Woos tip pooling arrangement. Rather, they held that "nothing in the text purports to restrict" the practice in question.
In the new Oregon Restaurant case a majority of the justices relied on the wording of the 1974 FLSA amendments. In the 1974 amendments “Congress expressly delegated to the Department of Labor the broad authority 'to prescribe necessary rules, regulations, and orders' to implement the FLSA amendments of 1974.”
The minority justices argued “This case is nothing more than Cumbie II.” They insisted the court must follow precedent. The majority countered “We have no quarrel with Cumbie v. Woody Woo Inc. Our conclusion with respect to Cumbie is only that its holding was grounded in statutory silence.” Therefore “we find that Cumbie does not foreclose the DOL's ability to regulate tip pooling practices of employers who do not take a tip credit.” ... “In exercising its discretion to regulate, the DOL promulgated a rule that is consistent with the FLSA's language, legislative history, and purpose.”
Justice O’Scannlain wrote a dissent for the minority, which was used as the basis for a Writ of Certiorari to have the U.S. Supreme Court hear the case. The Writ was filed January 19, 2017. Looking at the Proceedings and Orders on the U.S. Supreme Court website shows the case National Restaurant Association, et al., v. Department of Labor, et al. Has many motions to extend the time to file a response, which have been granted repeatedly and last time I checked on April 16, 2018 the time was extended until May 9, 2018, but might well be extended again.
However, to complicate matters Congress intervened with new language as mentioned above, which makes employees the owners of their tips. The Congressional action in this long dreary episode of tips does not really resolve the matter for tipped employees, especially restaurant employees. As long as U.S. employees work “at will” and can be fired at any time for any reason, or no reason, tipped employees can be pressured to give up tips to their employer. Few restaurant employees have the wherewithal to pursue legal enforcement and Republican administrations are famous for not enforcing labor law.
Tip rules give a good illustration how courts will interpret legislation to favor and subsidize business. The tip rules that remain in force, and the tip credit that still remains, originated 76 years ago when the five Supreme Court justices seized on the Red Cap’s decision to continue working while claims in dispute worked through the courts. When some members of Congress tried to get restaurant employees included in the minimum wage requirements of FSLA in 1966 the Restaurant Association was right there demanding to codify their subsidy.
After successfully keeping the sub minimum wage for tipped employees fixed at $2.13 an hour for 27 years, restaurants and the Restaurant Association realized it was so low that they often had to pay $7.25 an hour just to get dining room help. That made the tip credit useless and their subsidy ended. That’s why Mr. Woo became a test case to demand expanding tip pooling to non tipped employees and restore their subsidy.
Once more Trump showed us who he is by joining corporate America to help them cheat tipped employees.
I will keep an eye on future legal developments and update them here. Or you can do it yourself. Docket files at the Supreme Court are No. 16-920, the Writ was docketed on January 24, 2017 No. 16A529
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