The Coffee Klatch with Robert Reich

The stock market is gyrating wildly in light of Putin’s aggression in Ukraine, but Wall Street traders are doing just fine. Bad news is good news for traders who make money off volatility.

After all, in the year of Delta and Omicron, climate chaos, Trump Republican attacks on democracy, bitter divisiveness, a calamitous exit from Afghanistan, and accelerating inflation, the Street’s biggest banks have reaped record profits. Bonuses are through the front Porsche. Hundreds of traders have racked up seven and eight-figure bonanzas. Morgan Stanley paid out $35 million to its CEO, James Gorman. Goldman Sachs, $35 million to David Solomon. Bank of America, $32 million to Brian Moynihan. Citigroup, $22.5 million to Jane Fraser.

Not the least, JPMorgan, which paid out $34.5 million to Jamie Dimon — plus a retention bonus of $50 million.

Dimon has become a spokesman for the Street and one of the most influential CEOs on Capitol Hill. His public statements are a barometer for what America’s financial oligarchs are thinking.

They are not fretting about what the Fed’s incipient fight against inflation is likely to do to jobs and wages. They’re not worried about the shrinkage of America’s middle class or the precariousness of the working class and poor. They aren’t even particularly worried about Putin’s invasion of Ukraine.

But they have been unsettled by what they consider to be creeping socialism. In an annual letter to JPMorgan shareholders, Dimon warned that socialism would be a “disaster for our country” because it produces “stagnation, corruption and often worse.”

It should be remembered that Dimon was at the helm in 2008 when JPMorgan received a $25 billion socialist-like bailout after it and other Wall Street banks almost tanked because of their reckless loans. Instead of letting the market punish the banks (which is what capitalism is supposed to do), the Obama administration bailed them out and eventually levied paltry fines which the banks treated as the cost of doing business. According to the Justice Department, JPMorgan acknowledged it had regularly and knowingly sold mortgages that should have never been sold. (Presumably this is where the “stagnation, corruption and often worse” come in.)

Millions of Americans lost their homes, savings, and jobs in the financial crisis. But neither Dimon nor any other top Wall Street executive was held accountable. If this isn’t socialism for rich bankers, what is it?

America’s five largest banks, including Dimon’s JPMorgan, now control almost half of all deposits, up from 12 percent in the early 1990s. Because of their size, these banks are now considered “too big to fail.” This translates into a hidden subsidy of some $83 billion a year — the total estimated discount that creditors and depositors give banks whose solvency is effectively guaranteed by the government. More socialism for rich bankers.

Dimon was instrumental in getting the big Trump tax cuts through Congress. They have saved JPMorgan and the other big banks over $50 billion so far.

But Dimon and JPMorgan are doing their bit to make sure average Americans experience the full consequences of harsh capitalism. Although federal regulators waived overdraft fees for big banks when the economy took a dive in 2020, Dimon and JPMorgan refused to waive overdraft fees for borrowers struggling to make ends meet amid pandemic lockdowns. Dimon and JPMorgan reaped $1.46 billion in overdraft fees — the most of any big bank.

Dimon is a registered Democrat and a major fundraiser for the Democratic Party. He warns that income inequality is dividing America, and laments that a “big chunk” of Americans have been left behind. Announcing a $350m program to train workers for the jobs of the future, he expressed concern that 40 percent of Americans made less than $15 an hour.

If Dimon were serious about the problem of widening inequality, presumably he’d use his lobbying prowess to help raise the federal minimum wage and to make the refundable Child Tax Credit permanent. He’d also try to make it easier for workers to unionize, and to raise taxes on the super-wealthy like himself. Do not hold your breath.

Dimon isn’t really concerned about widening inequality. He’s not really concerned about socialism, either. Nor about any of the other crises hitting America, which expose Americans to more economic uncertainty and insecurity than the citizens of any other advanced economy. His real worry is that one day America might end the type of socialism he and other denizens of Wall Street depend on – bailouts, regulatory loopholes, subsidies, and tax breaks.

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Happy Presidents Day. It’s a good day to contemplate whether Joe Biden has a prayer of keeping a Democratic House and Senate next year. Call me a hopeless optimist, but I think he does.

Yes, I know: Republicans are suppressing votes, Democrats are hopeless at messaging, Biden’s poll numbers are in the basement. But let me give you ten reasons why I think there’s a decent chance Democrats can maintain control of both the House and the Senate, and maybe even gain some seats.

First: It’s likely that job growth between now and November will remain strong (if the Fed doesn’t ruin everything by raising interest rates too high, too soon). We’re still 3.5 million jobs short of where we were in February 2020 — giving the economy lots of room to grow. Biden and the Democrats can take credit for putting the economy back on track.

Second: Inflation will begin edging downward, as supplies of goods increase and demand shifts back to services — removing the one big economic negative. If Omicron infections continue to drop, the decline in inflation could start as early as April.

Third: When the pandemic seems to be over — and there’s a good chance it will feel over by the spring — the nation will breathe a huge collective sigh of relief, and Biden can take credit for getting shots into the arms of 80 percent of Americans.

Fourth: If tensions continue or escalate with Russia over Ukraine – or, lord help us, Russia invades Ukraine – America will unite behind its Commander-in-Chief. Republicans and Democrats in Congress are already demonstrating a remarkable degree of unity over Russia. War is horrific, of course, but it tends to garner support for those in power (at least in its months).

Fifth: Democrats will almost certainly pass Build Back Better in some form this spring. It won’t be nearly as ambitious as the original, but probably enough to generate some visible benefits for families. Republicans will, of course, oppose it, which means even more help for Democrats in November. To pay for Build Back Better, Democrats will increase taxes on corporations and the super-rich (even Joe Manchin is in favor of doing this). Republicans will surely fight these measures to protect rich corporations. Another big plus for Democrats.

Sixth: The courts are pushing back against Republican gerrymandering, giving Democrats better opportunities to hold on to or gain seats.

Seventh: In late spring, Republican appointees on the Supreme Court are likely to overturn Roe v. Wade. Evangelicals will be delighted, but most Americans will be horrified – adding to their motivation to back Democrats in November.  

Eighth: The findings of the January 6 Committee will be reported. It won’t be a pretty picture for Trump or the Republican Party. If Democrats are wise, they’ll let Republican Liz Cheney, vice-chair of the committee, lead the charge – presenting the findings and blasting traitorous Trump and seditionist Republicans on every TV network, radio outlet, and whistle-stop around the country. Reminded of the sedition, more voters will swing toward Democrats.

Ninth: In light of this report – and desperate to keep the 2024 Republican nomination for himself – Trump will increase the volume and intensity of his wacko conspiracy theories and other lies. This will motivate even more Democrats as well as Independents and moderate Republicans to vote for Democrats in November.  

Tenth and finally: If they’re smart, Joe Biden and the Democrats will center their midterm campaign message on the vulnerability of average working Americans to big corporations and Wall Street, which continue to siphon off most economic gains while the typical American is barely holding on. Biden and other Democrats will show that the GOP remains the party of trickle-down economics, corporate welfare, and crony capitalism – a party that’s been blocking a slew of common-sense Democratic measures to help working Americans — which, they’ll argue, is why we need more Democrats in the House and Senate.  

Presto. A huge turnout in favor of Democrats this November, which results in Democrats retaining or even increasing their margins in the House and Senate.  

Is this really possible? Democrats have snatched defeat out of the jaws of victory too many times for me to feel confident. But the scenario I’ve sketched is far from being out of the question.  

What do you think?

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Hello again, friends. Thank you for joining me for the second week of my Wealth and Poverty class. In today’s class, we begin to explore why such inequalities have soared since the late 1970s and early 1980s.

The questions we’ll focus on today are: How did the market for financial capital contribute to inequalities of income and wealth? Did the accepted purpose of the American corporation change over the last fifty years, and, if so, when and how? More generally, for whom should the corporation exist? Is there such a thing as “corporate social responsibility?”

You’ll find recommended readings below the video. Just click on the links.

Ready? Here we go. Please double-click the video box below. Thanks again for joining me! (And as always, let me know what you think in the comments below.)

Click here for the Class 2 slides.

Looking for another session? Click the link for: Class 1, Class 3, Class 4, Class 5, Class 6, Class 7, Class 8, Class 9, Class 10, Class 11, Class 12, Class 13, Class 14.

P.S. If you’re enjoying this course and think your friends, family, colleagues, or social media networks would find it interesting and helpful as well, please share!

Select Readings:

* Bethany McLean, “Too Big to Fail, COVID-19 Edition: How Private Equity Is Winning the Coronavirus Crisis,” Vanity Fair, April 9, 2020

* Andrew Winston, “Is the Business Roundtable Statement Just Empty Rhetoric?” Harvard Business Review, August 30, 2019

* Neil Irwin, “To Understand Rising Inequality, Consider the Janitors at Two Top Companies, Then and Now,” The New York Times, Sept. 3, 2017

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For many years, my right ankle has been losing cartilage that keeps my ankle bones from scraping up against each other. The result: increasing inflammation and pain. An orthopedic surgeon suggested replacing the ankle with an artificial one, but the procedure is costly, takes months to heal, and requires lots of physical therapy. So I’ve taken a different route. I cut way back on sugar, began an exercise program aimed at strengthening the muscles around my ankle, and lost twenty pounds. Now, six months later, the ankle pain is almost gone.

I share this with you because I’m testifying today before a House committee that’s considering the future of healthcare in America.

The fact is, we have too many high-priced specialists who know how to do a few complicated and costly things such as replacing a bum ankle, and too few generalists who know enough about the whole body that they’re able to avoid the complicated and costly things. The big money is in the complicated things, so that’s where the talent goes and what hospitals aim for. And if you can pay for it, great. The complicated stuff is what America excels at.

But we’re terrible at the uncomplicated things — not just my cutting back on sugar, exercising, and keeping the weight down, but making sure everyone gets regular checkups from general practitioners who are trained to prevent serious illnesses. The terrible tolls of diabetes, heart disease, and some cancers, for example, are preventable if caught in time.

Even before the pandemic, the typical American family was spending more than $6,000 a year on health insurance premiums. Add in copayments and deductibles that doctors, hospitals, and drug companies also charge, and that sum rises to $6,400. Add in typical out-of-pocket expenses for pharmaceuticals, and it’s at least $6,800. That’s not all, because some of the taxes the typical family pays are for health insurance, too — for Medicare and Medicaid and the Affordable Care Act. Add them in, and the typical household pays $8,975 a year for health insurance. This number doesn’t include what typical workers’ employers spend on their health insurance – which might otherwise go to their wages.

American spending on healthcare per person is more than twice the average in the world’s other thirty-five advanced nations. Yet the United States ranks near the bottom among advanced nations for life span and infant mortality. Americans are sicker, our lives are shorter, and we have more chronic illnesses. Canadians, for example, can expect to live on average almost four and a half years longer than Americans, even though health care spending per person is only about half as high as in the U.S.

Healthcare is so expensive that many Americans put off seeing a doctor until their health has seriously deteriorated. Even with the Affordable Care Act, some 30 million Americans have no health insurance coverage at all.

Not only do too many dollars go to super-specialists and too few to preventive generalists, but the administrative costs involved in private for-profit insurance are humongous. About a third of what the typical American pays for health insurance goes to the people who oversee billing and collections. And then of course there are marketing and advertising expenses, and the profits that go to shareholders or private-equity managers.

Finally, if the pandemic taught us anything, it’s that we need to decouple health insurance from employment. Losing a job shouldn’t mean the loss of a family’s lifeline to healthcare.

The Affordable Care Act was a good start at reform, but today I’m urging Congress*to replace private for-profit health insurance with Medicare for all. This would lead to far lower total costs — including premiums, co-payments, deductibles, and taxes — and it would cover all Americans. People could keep their same doctor or other health-care provider, and could buy private insurance to supplement it — just as some people now buy private insurance to supplement Medicare and Social Security. But as Medicare and Social Security have demonstrated, we shouldn’t need to pay private for-profit insurers boatloads of money to get the insurance we need.

I have no illusions this will happen soon. But the road we’re now on is unsustainable — economically, politically, and socially. Eventually, we’re going to have some version of Medicare for All (and hats off to members of Congress who are leading the way, such as Representatives Pramila Jayapal, Debbie Dingel, and Ro Khanna). The question is how much unnecessary cost and hardship must we bear before we do?

* The hearing was well-attended by members, and the conversation was thoughtful and intelligent. A few Republicans got into their age-old “socialism” rant, but I quietly pointed out that Social Security and Medicare — both hugely popular with the public — were also criticized by Republicans as being “socialist” when first proposed.

** I hope you’ll join me for tomorrow’s second class on Wealth and Poverty — right here on this page.

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I got my start in American politics about 50 years ago. America was in many ways a different country then, but my political views weren’t all that different than they are now. I was against the Vietnam War and the military-industrial complex, pro civil and voting rights, and against the growing power of big corporations. That put me just left of the center. Today I’m much further left of center than I used to be — because the “center” has moved to the right and the right has become far far more extreme.

So today’s Office Hours question: What does this trend mean for the future of American politics? What, if anything, can be done to reverse it? (I’ll chime in starting midday.)

PS: Here’s a video I just did on this, with my talented colleagues at Inequality Media (special shoutout to Whittney Suggs for fabulous animation!).

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I mentioned yesterday that I’ve been inspired by the young Starbucks baristas who are leading the charge to unionize the company. The number of unionizing stores has risen to seventy-two since the fall. The weekly spate of new Starbucks election filings represents a breakthrough for labor.

Starbucks executives are counterattacking. Last week, they fired seven Memphis baristas who had led the organizing in that city.

I urge you to watch my interview with leaders of the Starbucks baristas (just double-click below).

Starbucks baristas are part of a movement of food service workers across the nation. These workers have not only endured the pandemic (they’ve been deemed “essential” and suffered high rates of COVID) but also lousy pay and insecure work.

A brief strike in Colorado last month by Kroger workers in Colorado revealed the scope of the problem. Kroger is the biggest supermarket chain in the United States and the fourth-largest employer in the Fortune 500. It owns more than 2,700 locations (its brands include Harris Teeter, Fred Meyer, Ralphs, Smith’s, Pick ’n Save and even Murray’s Cheese in New York City).

Kroger’s business has boomed during the pandemic. Its stock has risen about 36 percent over the past year. Its CEO, Rodney McMullen, earned $22.4 million in 2020.

But the median Kroger employee earned just $24,617 last year. That’s a CEO-to-worker ratio of 909 to 1 — one of the country’s starkest gaps between a CEO and typical employee.

About 75 percent of Kroger employees report being food insecure, meaning they lack consistent access to enough food for a healthy life. About 14 percent report being homeless, now or within the last year. Over 62 percent say they do not earn enough money to pay basic monthly expenses. And their pay keeps dropping: Kroger’s top-paid grocery clerks today earn 22 percent less than they did in 1990 (adjusted for inflation).

About two-thirds of all Kroger’s hourly employees work part-time, even though they want more hours. Yet more than half are given schedules that change at least every week, making it difficult for them to commit to another employer. As I noted last week, keeping workers part time is a strategy employers use to encourage turnover and reduce costs.

Hopefully, the Starbucks’s baristas I interviewed — and others like them — will lead the way to better pay and working conditions for all food service workers, including Krogers. Food service workers and the giant corporations that employ them reveal the shambles of labor-management relations in America today, and the hypocrisy of so-called “corporate social responsibility.”

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When I began this newsletter almost five months ago I had no idea what I was doing. I still don’t. But your enthusiastic response, thoughtful comments, and helpful feedback have guided me — and continue to make it all worthwhile.

It has been a journey into the unknown. We’re figuring it out together. A big thanks to you.

I hope you’re finding my course on inequality (which began here last Friday, and will be continuing for the next 13 weeks) helpful. I hope you’re also finding useful (and sometimes entertaining) my short essays and drawings, as well as the videos I’m making with my talented colleagues at Inequality Media. A big thanks to them in addition for helping me bring this newsletter to you.

I’m groping my way toward providing you with a larger context for what is happening in America and the world.

Although faced with existential challenges of a deathly pandemic, climate change, widening inequality, systemic racism, and direct attacks on democracy, America is strangely immobilized. Why? Because for years most of the gains from our political-economic system have gone to the top. Almost everyone else is working harder, getting nowhere, and feeling less secure. This has generated widespread anger and cynicism — which has increased many peoples’ receptivity to conspiracy theories and demagogues. (A similar dynamic is playing out in much of the rest of the world.)

In 2016, we elected a sociopath who spouted racist nationalism while giving the oligarchy whatever it wanted. Since then, the alliance of oligarchs and racist nationalists has continued. It appears to be growing.

Oligarchic economics combined with racist nationalism is treacherous for democracy. Oligarchs support racist nationalism because it divides people and diverts attention from how much wealth and power the oligarchy is accumulating. Racist nationalists thrive on oligarchs who provide almost limitless funding.

As early as 2012, more than 40 percent of all money spent in US federal elections came from the wealthiest of the wealthiest—not the top one percent or even the top tenth of the one percent, but from the top one percent of the one percent.

Peter Thiel, a staunch Trump supporter whose net worth is estimated by Forbes to be $2.6 billion, has become one of the Republican’s Party’s largest donors. The oligarchs don’t just support Republicans, though. Last year, at least 13 billionaires who had previously donated to Trump lavished campaign donations on Democratic senators Joe Manchin and Kyrsten Sinema, according to an analysis of Federal Election Commission records. 

The alliance between oligarchic economics and racist nationalism marks the failure of progressive politics. When the people are no longer defended against the powerful, they look elsewhere.

We must focus the national debate on this monumental and growing imbalance of power, and do whatever we can to rebalance it.

I am hopeful we can. What gives me hope? The new activism among workers struggling to unionize, young progressives who are giving new energy and purpose to the Democratic Party, people of color who are leading the way to social justice, and the young people I meet almost every day — such as the young baristas who are organizing Starbucks — who are building new centers of economic power.

Which brings me back to you. By becoming part of this community — subscribing to and sharing this newsletter and, offering your comments and feedback, and, if you can, supporting our work — you are part of this movement as well.

Today seems like a good time to declare my appreciation for our partnership in this experiment. Thank you, and Happy Valentine’s Day

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Labor Secretary Marty Walsh says he’s ready to step up to the plate and help end Major League Baseball’s lockout.

My advice to Marty, as former labor secretary to the current one: Stay away from baseball. I wouldn’t touch another baseball labor dispute if Babe Ruth asked me in person.  

In 1995, the owners and players were at loggerheads, too. I tried to mediate.

Bill Clinton (on phone): “Bobby, this is Bill. How you doing on the strike?” Translated: What the hell’s going on? The World Series may be canceled for the first time in a century – and on my watch – unless you settle this thing soon.

Me: “We’re doing a lot of talking. Players want free agency, owners want a salary cap. The only way to give players free agency and not have the stars all end up in the wealthiest clubs is for the big clubs to share some of their revenues with the smaller ones, maybe through a tax on team payrolls. Each side would have to give a bit. That’s what we’re working on now.” Translated: I’m getting nowhere.

Bill was eager to get involved. He smelled a deal. He wanted to be savior of the national pastime. He had heard that the two sides were in Washington. “Why don’t we just call them over to the White House and see how far we can get?” he said.

Hours later, Bill, Al Gore, and I were in the Roosevelt Room with Bud Selig, who represented the owners; Don Fehr, the players; and the other owners and players from the two bargaining committees. The owners were middle-aged, gray and corporate. The players were big, hulking young men who looked stiff and awkward in white shirts, ties, and jackets. All sat motionless around the giant mahogany table.

Down the corridor and around the corner, the White House press room was crowded with reporters and cameras, anticipating a story about how the President settled the baseball strike.

Al began ponderously. “As I understand it, the players don’t want their salaries to be capped, and the owners say a salary cap is the only way to keep the smaller teams competitive. Now, if the owners would agree to tax themselves so that the larger teams would subsidize the smaller teams, we’d be halfway home. And if the players would agree to some sort of ceiling on their individual contracts, that would get us the other half. S-o-o-o …” Gore seemed to be talking to five-year-olds. “The real question here is how far both sides are willing to come in order to strike a fair balance. Am I correct?”

No answer. One of the young pitchers cleared his throat. “Mr. President, Mr. Vice President, I love baseball. We all love baseball. This isn’t really a dispute over money.” He looked intently around the table. “Hell, I’d be willing to play the game for $3 million a year if I get some respect.”

I couldn’t repress a cough.

After two hours, we were still nowhere. “Let’s take a break,” Bill said quietly. “Maybe if we just talk informally we can make some progress.”

Bill was an eternal optimist, convinced that there was always a deal lying out there somewhere. It’s what made him a super-salesman: He was absolutely certain that every single person he met – Newt Gingrich, Yasir Arafat, whoever – wanted to find common ground. It was simply a matter of discovering where it was.

If the owners would agree to binding arbitration, it would be over. But they wouldn’t budge.

Bill and I went with Selig to another office. Bill sat down next to him on a couch, and commenced the move. Bill’s face was six inches away from Selig’s. Bill’s arm rested on the back of the couch behind Selig’s head so that his hand reached around to Selig’s other shoulder. It was full-intensity Bill Clinton. I was amazed Selig didn’t melt on the spot.

“Look, Bud,” Bill purred in soft southern. “You guys can make millions. Millions. We’ll have a b-i-g sendoff for the season. I’ll help you. We’ll all help. I’ll get Dole to go to Kansas, Gingrich to Atlanta. I’ll have every major figure in America out there for the start. Can’t you just see it?” Bill sketched the vision in the air with his other hand. “This will be the biggest season opening ever in the history of the game. Now … all you need to do” – Bill’s voice became even softer, and he moved his face even closer to Selig’s –“is agree to have this thing arbitrated. It’s in your interest, Bud.” Bill paused and looked deeply into Selig’s eyes. “And it’s also in the interest of … America.”

I thought I heard the National Anthem in the distance. The performance was spellbinding. Selig’s thin body seemed to be shaking. “Let … Let me just … just check with the other … other owners,” he said weakly. I helped him out of the couch. He could barely stand, poor man. He wandered out of the office, dazed.

Bill shot me a grin. “I think we hit a homer.”

The reporters down the hall were restive. I couldn’t help think there were more important things for the President and Vice President of the United States to be doing with their time than waiting for Bud Selig to return with his verdict. Surely something must be happening in China.

But Bill was feeling good. While Selig conferred with the other owners, Bill joked with the giant players who were then leaning against corridor walls chomping pretzels and slurping Cokes. The West Wing had been transformed into a locker room.

David Cone, a pitcher for the Kansas City Royals told me I’d make a fortune in the majors. “I don’t know a pitcher who’d ever be able to strike you out. Your strike zone is the size of a peanut,” he laughed. I tried to look amused.

This wasn’t a labor dispute. It was a big-finance fight between multi-millionaires and multi-millionaires over how to split billions.

A half hour later, word came back that Selig and the owners had reached a decision. We regrouped in the Roosevelt Room.

Selig looked at Bill like a guilty puppy who’s just chewed a hole through the carpet. He cleared his throat. “I’m sorry, Mr. President … We can’t do it.”

Bill seemed stunned. I wanted to strangle Selig.

Experts in the field of collective bargaining always warn that presidents should keep well away from labor disputes, unless the national interest requires action. The nation may love baseball but the national interest doesn’t require owners and players to agree on a contract.

A second precept is from experts on the presidency. Power is never to be frittered away on lost causes. Like much of the power in Washington, presidential power derives from the appearance of having it.

Bill lost big that night.

I remember him moving glumly into the press room, Al Gore and I at his side. The room was a pigpen of half-eaten sandwiches, soda cans, cigarette stubs, and bleary-eyed reporters. Boredom and impatience had evolved into hostility.

“I’m disappointed to say that the players and owners still haven’t reached an agreement,” Bill said earnestly, as the entire White House press corps began writing the next day’s headline story about Bill Clinton’s hubris and humiliation.

I heard angry grumbles and questions coming from several places simultaneously.

“Mr. President, why did you invite the players and owners to the White House in the first place?”

“If you can’t even get these parties to agree, what hope do you have in Bosnia?

“Does this mark the nadir of this administration’s influence?”

“Why do you and your labor secretary think Washington should be involved in every employment issue in America?”

The baseball strike effectively came to an end on April 2, 1995, after 232 days, making it the longest strike in Major League Baseball history. A total of 948 games were cancelled and MLB became the first major professional sports league to lose an entire postseason due to a labor dispute.

So you see, Marty — stay away from baseball. Let them work it out for themselves.

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More inflation buzz today. The U.S. consumer price index for January rose at an annual rate of 7.5 percent, the largest such increase since 1982.

Yes, prices are increasing. But would you prefer a recession? As a practical matter, that’s the choice the Fed gives us. When the Fed puts on the brakes, it often pushes the economy into a ditch. (Anyone remember when Paul Volcker “broke the back of inflation” by putting the economy into a tailspin?) A recession will cause far more hardship for many more Americans than inflation is now causing.

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

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

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

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

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

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

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

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

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

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

Congress must pass legislation banning forced arbitration in employment contracts.

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

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

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

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

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

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

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

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

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

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

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

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

My colleagues and I at Inequality Media have made a short video to inform workers of these five offenses so they can be on the lookout for them and take action. Please share this video so it gets to as many people as possible.

 

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit robertreich.substack.com/subscribe

Many people tell me America is going to hell.

But when I ask them how their own lives are going, they say pretty well.

This discrepancy between how people feel about America’s public life and their own private lives is wider today than it’s been since the late 1960s. Then, our public life was marked by assassinations, riots, an escalating war in Vietnam, and the deeply flawed Lyndon Johnson and Richard Nixon. But our private lives featured love-ins, Woodstock, and the Beatles. (I know; I was there.)

The latest Gallup poll show that just 17 percent of Americans are satisfied with the way things are going in the country. That’s the lowest percent since Joe Biden became president – and it coincides with his lowest job approval rating, as well as a rock-bottom 18 percent congressional job approval, sagging economic confidence, and the expectation that inflation will rise in the coming months.

But wait. At the same time we’re so down on America, our satisfaction with our own lives has ticked up to 85%. That’s just five points shy of the January 2020 record-high point. Take a look:

Why such a huge gap between public and private now?

It’s easy to understand why we’re so dissatisfied with the way things are going in America. The news from the mainstream media is unrelentingly bad — and those negatives are amplified by an angry, nasty (and often paranoid) social media. We’ve endured more than two years of a deathly pandemic, with all its accompanying confusions and fears. Inflation is high. Politics is meaner and more partisan. An astonishingly large portion of the country seems to have turned Trumpish. And last year’s high expectations for helpful measures from Biden and the Democrats have been dashed by Manchin, Sinema, and senate Republicans.

But given this, how can we be so satisfied with the way things are going in our personal lives?

Plenty of us remain hugely stressed – essential workers, parents of young kids who aren’t able to get childcare, poor people who can’t afford the rent, those of us who have gotten horribly sick or lost loved ones during the pandemic.

Yet the pandemic has also allowed almost half of us to work from home, which has proven to be a huge boon -- giving us, on average, a full extra hour each day, far more flexibility in how we use our time, and escape the daily agonies of commuter traffic. While I’d rather teach in person, I far prefer to attend all tiresome meetings on Zoom rather than in bland conference rooms.

We’re also spending less money on stuff, partly because we can’t afford it but also because we can’t get it Supply bottlenecks are forcing us to do without — and to simplify our lives as a result. My TV set is tiny by today’s standards, my car is a dozen years old, and my dryer doesn’t work half the time. But guess what? I can live without them. I’m exercising more, listening to more music, started to learn another language.

We can’t socialize as much — but this has forced us to be choosier about whom to spend our time with, allowing us to deepen those relationships. My wife and I are doing more together, just the two of us. I’ve seen more of my close friends and less of people I merely feel obliged to see.

We also worry less about clothing, haircuts, makeup, and other ways we present ourselves to the world — because we’re presenting less of ourselves and less often. Most days I look like a schlump. (To be honest, that’s always been the case.)

We eat out less and eat in more, enabling some of us to discover the joys of home cooking – both eating and preparing. (I’d forgotten how delicious homemade chicken soup with fresh vegetables can be.) We’re spending less time visiting parents, children, and siblings who live far away, but we can keep up with them over Zoom (which in some ways has made life less complicated).

This terrible period in public life, in other words, has also allowed more space for our personal lives. It’s enabled us to slow down, simplify, do without lots of stuff, deepen relationships, and create more room for ourselves. Which in turn has allowed many of us to ask ourselves — perhaps for the first time in many years, if ever — what we want from the rest of our lives, and maybe even decide to get off the track we’re on (just look at record quit rates).

I’m aware that life is indubitably hard for many people. And I’m sick about what’s happening to America — about its widening inequalities, racism, and attacks on our democracy. I’m determined to keep fighting for social justice.

But at the same time, I’m discovering an enjoyment in my own life that feels somehow deeper and more authentic than it’s ever been. I hope you are, too.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit robertreich.substack.com/subscribe