TIME Opinion

Obama Takes a Page From FDR’s Playbook

President Obama Speaks At Chicago's Gwendolyn Brooks College Preparatory Academy
Scott Olson—Getty Images President Barack Obama speaks in Chicago on Feb. 19, 2015. Obama used the event to designate Chicago's historic Pullman district a national monument.

In helping to resolve a longshore standoff, the President showed that he’s learned from history

Correction appended, Feb. 24, 2015, 10:45 a.m.

For nine months, trade in the Pacific has been stalled. Ships languished at docks, their cargo stuck, lost profits ticking up into the millions, as negotiations between the International Longshore & Warehouse Union (ILWU) and their employers, the Pacific Maritime Association (PMA), dragged on. But the tide may be turning: the dockworkers’ union and the PMA announced that they have reached a tentative agreement on their next contract—and the repercussions reach far beyond the West Coast ports at the heart of the negotiations. This conflict between workers and employers goes to the heart of the crisis of inequality facing the American economy today.

President Obama repeatedly has claimed one of his top priorities is supporting middle class families. And, though he hasn’t articulated the comparison himself, this latest news shows that one of his strategies for doing so takes a page from history—namely from Franklin D. Roosevelt. Almost exactly 80 years ago, Roosevelt helped resolve a dispute not unlike the current ILWU-PMA showdown, and, in doing so, helped tens of thousands of working people and their families.

In 1934, militant longshoremen rose up and declared the “Big Strike,” shutting down every West Coast port. Workers demanded decent wages and workplace improvements, but employers called upon their allies in government to break the strike—most notoriously when San Francisco police killed two strikers and wounded dozens on “Bloody Thursday.” This remains an official holiday for ILWU members even today.

Employers did not listen to the cries of their own workers but President Roosevelt did. In a shocking break from precedent, he sent a trusted aide, Secretary of Labor Frances Perkins—the first woman ever to serve in a presidential cabinet—to mediate negotiations between workers and their bosses.

With Perkins’ assistance, the strikers won an astounding series of concessions: a union-controlled hiring hall, which ended discrimination and favoritism in hiring; a coastwide contract with all workers receiving the same wages and conditions; and a better hourly wage.

Shortly thereafter, working with a sympathetic Congress, FDR made unions, strikes and collective bargaining legal. He also helped abolish child labor, establish a minimum wage, the 8-hour day and overtime rates. In 1936, he explained why he sided with working people over corporations: “The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little.”

Due to unions like the ILWU and public officials like Roosevelt and Perkins, the American middle class grew to a previously unimaginable size. Collectively bargained pay-raises in union workplaces lifted wages in non-unionized ones, too, because employers competed for workers. Not coincidentally, the so-called Greatest Generation also was the most heavily unionized generation in U.S. history.

In recent decades, however, that trend has reversed. Unions and the middle class are both weaker than they once were. Enter the ILWU-PMA impasse. During the past month, the PMA had begun rolling lockouts and blamed the union for work slow-downs. Business associations and retailers called for an end to West Coast port congestion and for the destruction of one of America’s last strong unions.

Given the relative weakness of support for unions today, President Obama found himself in the same situation FDR faced. The easy choice would be to side against the union, intervening to break the impasse, if at all. Some corporate executives and anti-union politicians called for Congress to change labor law to permanently weaken the ILWU or for Obama to invoke an anti-union “cooling off” provision of the Taft-Hartley Act (as President George W. Bush did in 2002 during previous ILWU-PMA negotiations).

But when President Obama finally acted, it was to make the choice Roosevelt also made about a century prior. He dispatched his Secretary of Labor, Tom Perez, who traveled to San Francisco to meet with ILWU and PMA officials. The result is an agreement that could put both laborers and business back to work, though the details of the deal remain secret and, given the union’s democratic process, subject to a vote by the 20,000 members of its longshore division.

The timing of Obama’s intervention is apt. This past Thursday, Obama announced a new national monument, in Chicago’s Pullman neighborhood, to honor workers. Pullman was the birthplace of an important labor union of (mostly African American) sleeping car porters—but was also ground zero for a mammoth railroad strike that rocked American in its First Gilded Age.

As Obama noted in his announcement, the Brotherhood of Sleeping Car Porters dramatically benefited its members and their families by helping them enter the middle class. Crucially, unionism also facilitated racial equality by sufficiently empowering black citizens to be able to demand equal treatment.

Perhaps more surprisingly, four Illinois Republicans—one Senator and three Congressmen—endorsed the Pullman designation. In their letter to the president, they also insisted that the porters union “laid the groundwork for the Civil Rights movement.” Furthermore, they recognized that the mammoth Pullman strike in 1894 “provided workers across America with a blueprint for how to achieve a better working environment and secure fair wages and rights in the workplace.”

These statements from Obama and the Illinois Republicans would likely appeal to Roosevelt—but FDR, the best president American working people have ever had, would take even more comfort from what’s happened with the longshoremen. Eight decades after an earlier West Coast longshore dispute, the president has taken an opportunity to demonstrate—rather than merely declare—that the government serves the people rather than the interests of those FDR called “economic royalists.”

Correction: An earlier version of this article misstated how many years ago FDR intervened in the longshoremen’s strike. It was 81. That version also incorrectly referred to the ILWU situation as a strike. It was an impasse in negotiations.

The Long ViewHistorians explain how the past informs the present

Peter Cole is a Professor of History at Western Illinois University. He is the author of Wobblies on the Waterfront: Interracial Unionism on the Progressive Era Philadelphia. His current book project is entitled Dockworker Power: Struggles in Durban and the San Francisco Bay Area.

MONEY salary

The Real Reason Wal-Mart is Giving Workers a Raise

Walmart exterior
Joe Raedle—Getty Images

Wal-Mart is no altruist on pay.

Wal-Mart WAL-MART STORES INC. WMT 1.2% made big headlines when it announced pay boosts for its lowest-paid employees. Some investors may be appalled by this “altruistic” news, but don’t worry: it makes perfect business sense, and Wal-Mart’s smart to do it.

The Bentonville, Ark.-based megaretailer has made waves by announcing that it’s raising its minimum salary; soon, its lowest paid employees will make $9 per hour and by next year, the level will go up to $10, well above the federally mandated minimum wage of $7.25 per hour.

Some people aren’t jazzed about Wal-Mart’s decision. The stock dropped on the news Thursday, and some analysts have issued downgrades. Those are short-sighted responses, though. Wal-Mart’s doing the smart thing by working on the most controversial element of its business, and the one that makes many consumers believe its low-priced merchandise just isn’t worth the cost to many Americans’ personal bottom lines.

The move is going to cost Wal-Mart about a billion dollars, and Wal-Mart’s CEO Doug McMillon talked up the morale-boosting element of the strategy, as well as the idea of giving employees “opportunity” and a career path. People may feel cynical about his statements, but the spirit there is right on. Employees who are treated well are more engaged, and are more likely to provide a positive customer experience.

Wal-Mart gets a lot more attention for worker strikes than for its customer service, and that’s a problem that’s long overdue for a fix.

Take this job and shove it

As it stands now, Wal-Mart’s rating on job reviews site Glassdoor.com is a dismal 2.8, with only 44% of reviewers willing to recommend working there to a friend. Compare that to Costco (3.9, 80% would recommend to a friend), Whole Foods (3.6, 73% would recommend to a friend), and Starbucks (3.7, 76% would recommend to a friend). We can throw McDonald’s in for good measure, since it often shares the hot seat with Wal-Mart — its rating is 3.0, with just 50% willing to recommend a job there to a pal.

There’s been increasing attention to severe income equality and the fact that many people working for companies like Wal-Mart and McDonald’s MCDONALD'S CORP. MCD -1.14% are making poverty wages (and are reliant on public subsidization, which of course means we all lose). Those in the ivory towers may say the recession’s over, but there are still a lot of people out there who haven’t seen their wages rise much if at all as the economy supposedly “recovered.”

On the other hand, companies like Costco COSTCO WHOLESALE CORPORATION COST 2.72% , Whole Foods Market WHOLE FOODS MARKET INC. WFM 1.46% , and Starbucks STARBUCKS CORPORATION SBUX 0.61% , all treat their employees well — making them anomalies in the modern retail industry. (Starbucks, in fact, began rolling out a round of pay raises to baristas earlier this year.) They haven’t been subject to nearly the same amount of scathing scrutiny on the worker front as Wal-Mart has been.

Even more pointedly, they have managed to do so while being highly profitable, successful companies, and they have done what well-run capitalistic companies should do: they built employee care into their business missions without waiting for a law forcing them to.

Dollars and cents, not heart and soul

There are plenty of pins we can poke into the happy bubble of Wal-Mart’s announcement, not least of which is the fact that we’re still not talking about a heck of a lot of money even with the new wage floors. Wal-Mart’s wages would still leave some subsisting along the poverty line. Many activists have been rallying for what they peg as a more reasonable $15 per hour “living wage.”

Wal-Mart’s also not turning into a big softie. MarketWatch pointed out that the company’s press release not only included the news about the pay increase, but also a one-time $0.05 per share charge related to a “wage and litigation matter.” We all know that Wal-Mart’s been in the hot seat for years, but that is a good reminder that it’s facing dollars and cents risks on many fronts, including in court.

And of course, the specter of the possibility of a federal minimum wage hike hangs over it all as well. The truth is, should the minimum wage increase, companies like Wal-Mart that have already started dealing with it will be in a far better competitive and even financial position than those who haven’t. They — and you, if you’re a shareholder — will have a whole lot of peace of mind as the laggards struggle to adjust their businesses.

Positive reinforcement for positive business

All in all, though, maybe even the most critical among us should probably give Wal-Mart some credit for being on the right track. Business can be a force for positive change, and Wal-Mart’s high-profile move might help catalyze a little more of a voluntary “race to the top” regarding many Americans’ wages instead of the race to the bottom behavior that has been all too common in too many pockets of our economy.

And even the investors who are appalled at Wal-Mart’s doling out raises should think twice. Anyone who cares about capitalism and free markets should have always considered the idea that companies like Wal-Mart and McDonald’s actually weren’t doing any of us any favors by squeezing profits out of people and hardly budging over what the government demanded by law — resulting in a state in which so many citizens’ pay was so pathetically low that they have had to rely on public assistance.

Wal-Mart’s no altruist — it’s doing what it has to do, and it certainly seems like it could do more. Given Wal-Mart’s massive scale, though, this move will hopefully nudge more corporate managements to see the risk of not moving on this front. Not to mention highlighting to corporate American the importance of investing in its own employees. That would be a win for all of us.

TIME Business

Walmart’s One-Time Claim to Fame: Employee Morale

Andy Wilson
Alan Levenson—;The LIFE Images Collection/Getty Wal-Mart regional VP Andy Wilson (L) giving a pep talk on corporate values at a Wal-Mart store, in 1992

On Thursday, the company announced a plan to increase wages for some employees

These days, Walmart is such a powerful company that this week’s news that it will give employees a raise could potentially change the minimum-wage landscape nationwide.

In 1983, when TIME first profiled the company, many readers might not have even heard of it. Though Wal-Mart was already the ninth-largest retailer in the nation and had raked in $3.4 billion the previous year, it had locations in only 15 states.

And the size of the operation — it now operates in 27 countries — isn’t the only thing that has changed. The news about the Walmart minimum-wage hike has been tied to an ongoing campaign for the rights of workers; like the fast-food industry, the company has acquired a reputation as a place where low-level employees aren’t paid enough. In 1983, however, employee happiness was said to be one of the company’s strengths:

Wal-Mart’s 50,000 employees, called “associates,” share in the company’s profits, earn bonuses for reducing shoplifting or suggesting merchandising ideas. “Their morale is fantastic,” says one Wall Street admirer. Each Saturday morning at 7:30 in the headquarters auditorium packed with new merchandise samples, “Mr. Sam” holds meetings with buyers and managers. Walton plans to continue expanding rapidly. The company will open more than 100 stores next year. At that sizzling pace, sales by 1987 would hit $10 billion. That would put Wal-Mart in a position to challenge K mart as the king of the discounters.

Read the 1983 story, here in the TIME Vault: Small-Town Hit

TIME Economy

What’s Really to Blame for Weak Economic Growth

The George Washington statue stands covered in snow near the New York Stock Exchange (NYSE) in New York, U.S. Wind-driven snow whipped through New Yorks streets and piled up in Boston as a fast-moving storm brought near-blizzard conditions to parts of the Northeast, closing roads, grounding flights and shutting schools.
Jin Lee—Bloomberg via Getty Images The George Washington statue stands covered in snow near the New York Stock Exchange

Finance is a cause, not a symptom, of weaker economic growth

After years of hardship, America’s middle class has gotten some positive news in the last few months. The country’s economic recovery is gaining steam, consumer spending is starting to tick up (it grew at more than 4 % last quarter), and even wages have started to improve slightly. This has understandably led some economists and analysts to conclude that the shrinking middle phenomenon is over.

At the risk of being a Cassandra, I’d argue that the factors that are pushing the recovery and working in the favor of the middle class right now—lower oil prices, a stronger dollar, and the end of quantitative easing—are cyclical rather than structural. (QE, Ruchir Sharma rightly points out in The Wall Street Journal, actually increased inequality by boosting the share-owning class more than anyone else.) That means the slight positive trends can change—and eventually, they will.

The piece of economic data I’m most interested in right now is actually a new report from Wallace Turbeville, a former Goldman Sachs banker and a senior fellow at think tank Demos, which looks at the effect of financialization on economic growth and the fate of the working and middle class. Financialization, a topic which I’m admitted biased toward since I’m writing a book about it, is the way in which the markets have come to dominate the economy, rather than serving them.

This includes everything from the size of the financial sector (still at record highs, even after the financial crisis and bailouts), to the way in which the financial markets dictate the moves of non-financial businesses (think “activist” investors and the pressure around quarterly results). The rise of finance since the 1980s has coincided with both the shrinking paycheck of most workers and a lower number of business start-ups and growth-creating innovation.

This topic has been buzzing in academic circles for years, but Turberville, who is aces at distilling complex economic data in a way that the general public can understand, goes some way toward illustrating how the economic and political strength of the financial sector, and financially driven capitalism, has created a weaker than normal recovery. (Indeed, it’s the weakest of the post war era.) His work explains how financialization is the chief underlying force that is keeping growth and wages disproportionately low–offsetting much of the effects of monetary policy as well as any of the temporary boosts to the economy like lower oil or a stronger dollar.

I think this research and what it implies—that finance is a cause, not a symptom of weaker economic growth—is going to have a big impact on the 2016 election discussion. For starters, if you believe that the financial sector and non-productive financial activities on the part of regular businesses—like the $2 trillion overseas cash hoarding we’ve heard so much about—is a cause of economic stagnation, rather than a symptom, that has profound implications for policy.

For example, as Turberville points out, banks and policy makers dealt with the financial crisis by tightening standards on average borrowers (people like you and me, who may still find it tough to get mortgages or refinance). While there were certainly some folks who shouldn’t have been getting loans for houses, keeping the spigots tight on average borrowers, which most economists agree was and is a key reason that the middle class suffered disproportionately in the crisis and Great Recession, doesn’t address the larger issue of the financial sector using capital mainly to enrich itself, via trading and other financial maneuvers, rather than lending to the real economy.

Former British policy maker and banking regular Adair Turner famously said once that he believed only about 15 % of the money that followed through the financial sector went back into the real economy to enrich average people. The rest of it merely stayed at the top, making the rich richer, and slowing economic growth. This Demos paper provides some strong evidence that despite the cyclical improvements in the economy, we’ve still got some serious underlying dysfunction in our economy that is creating an hourglass shaped world in which the fruits of the recovery aren’t being shared equally, and that inequality itself stymies growth.

TIME Labor

Ships Queue off California as Dock Labor Dispute Intensifies

Port Labor
Nick Ut—AP This Feb. 9 file photo the Yang Ming Masculinity, YMMS cargo ship anchored off the Long Beach Harbor waits to be unloaded due to a labor dispute in Long Beach, Calif.

Los Angeles and Long Beach ports account for 40% of America's incoming cargo

Ports on the West Coast will partially shut for four days amid an ongoing dispute between operators and workers.

The ports will see reduced activity on Thursday, Saturday, Sunday and Monday as terminal operators and shipping lines accuse workers of deliberately slowing operations, the LA Times reports. The workers would be eligible for overtime pay on Thursday and Monday, which are holidays, and it’s unclear whether a continued slowdown or even a total closure will follow.

The union representing the workers denies the allegations and blames the shipping companies for the port congestion that has delayed shipments from Asia. Los Angeles and Long Beach ports are the country’s busiest, accounting for roughly 40 percent of incoming container cargo according to the Times.

The nine-month labor dispute, which has left workers without a contract since July, has repeatedly slowed operations and prompted concerns recently of a lockout of dockworkers.

Read more at the LA Times.

TIME Labor

Why This New McDonald’s Lawsuit Could Be Big Trouble for Fast Food

McDonald's
Andrew Burton—Getty Images A sign for a McDonald's restaurant is seen in Times Square on June 9, 2014 in New York City.

A new civil rights suit is holding McDonald's responsible for a franchise owner's actions

Former McDonalds workers filed a lawsuit Thursday that could put more responsibility on national restaurant chains for franchise owners’ actions.

The suit, filed in Virginia, alleges that a McDonald’s franchisee was acting in a racially motivated way when he fired several employees. But the workers are taking their grievances a step further by also suing McDonald’s national corporation, arguing the larger company is liable for the franchisee’s alleged actions.

The suit also comes just one month after the National Labor Relations Board took the unprecedented step of holding McDonald’s Corporation responsible as a “joint employer” for labor violations the agency says occurred at McDonald’s franchise locations. McDonalds is fighting the distinction.

Historically, national restaurant chains have been insulated from legal culpability for activities at franchised restaurants because the franchises are seen as independent businesses. This structure has been particularly useful in the last two years as fast food workers nationwide have gone on multiple one-day strikes demanding a $15 per hour living wage in coordinated, union-backed campaigns. By invoking its franchisees’ independence, McDonald’s doesn’t have to bargain with workers collectively or issue a wage increase that would affect all workers at once.

But Thursday’s lawsuit argues that McDonald’s franchises are “predominately controlled” by their corporate parent, as McDonald’s sets national policies for restaurant operations, corporate representatives oversee franchises and the national company coordinates training for all managerial employees. An operational manual issued to franchise owners specifically outlines a “zero tolerance” policy for discrimination, as well as a mandate against workplace remarks that demean individuals because of their race, sex or religion, according to the suit.

The ten workers involved in Thursday’s suit, all either black or Hispanic, claim their managers consistently addressed them in derogatory ways, calling them “ghetto,” “ratchet,” or “dirty Mexican.” Several female employees also say they were victims of sexual harassment that included being touched inappropriately and being sent unwanted explicit photos. The workers ultimately argue they were terminated from their jobs because the store owner wanted to increase the ratio of white employees to minority ones — supervisors said they needed “to get the ghetto out of the store,” according to the lawsuit.

The McDonald’s restaurants involved in the lawsuit are run by Soweva Corporation, a company owned by franchisee Michael Simon. However, Paul Smith, the plaintiffs’ legal counsel, says McDonald’s Corporation “could have put policies in place to stop what the plaintiffs endured.”

“We believe that McDonald’s Corporation controlled nearly every aspect of the store’s operations,” Smith said on a press call with reporters Thursday.

Soweva Corporation did not return a call seeking comment. In an emailed statement, a McDonald’s spokeswoman said the company had not seen the lawsuit, but planned to review it carefully.

“McDonald’s has a long-standing history of embracing the diversity of employees, independent Franchisees, customers and suppliers, and discrimination is completely inconsistent with our values,” the statement read. “McDonald’s and our independent owner-operators share a commitment to the well-being and fair treatment of all people who work in McDonald’s restaurants.”

Dave Sherwyn, a law professor at Cornell University’s School of Hotel Administration, says more cases are likely to emerge that try to hold corporate chains responsible for the actions of franchisees. This is the tip of the iceberg,” Sherwyn says. “The next step is going to be in discrimination litigation and wage and hour litigation.”

 

TIME Innovation

Five Best Ideas of the Day: January 22

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Want to improve your bottom line? Diversify your workplace.

By Joann S. Lublin in the Wall Street Journal

2. Journalism shouldn’t be a transaction for communities. A local news lab can make it transformational.

By Josh Stearns in Medium

3. The spike of hysteria about artificial intelligence could threaten valuable research.

By Erik Sofge in Popular Science

4. A new vision for securing work and protecting jobs can ensure stability in the face of rising automation.

By Guy Ryder at the World Economic Forum

5. Purchasing carbon offsets is easy. With carbon ‘insetting,’ a business folds sustainable decisions into the supply chain.

By Tim Smedley in the Guardian

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Opinion

History Shows How 2 Million Workers Lost Rights

US-LABOR-PROTEST-WAGE
Robyn Beck—AFP/Getty Images Fast food workers, healthcare workers and their supporters march to demand an increase of the minimum wage, in Los Angeles on Dec. 4, 2014

Home attendants and aides have historically been singled out for denial of basic labor rights

Over the last year, the nation has seen a tumultuous wave of low-wage workers contesting terms of employment that perpetually leave them impoverished and economically insecure. It’s a fight in which home-care workers—one of the fastest growing labor forces—have long participated, as home attendants and aides have historically been singled out for denial of basic labor rights. Their work is becoming ever more important in our economy, with over 40 million elderly Americans today and baby boomers aging into their 70s and 80s; the demand for such workers is projected to nearly double over the next seven years. And yet, this week a federal judge is likely to put up just the latest obstacle to their receiving the minimum wage and overtime compensation granted to other workers through the 1938 Fair Labor Standards Act (FLSA).

The story of how home-care workers ended up without rights begins in the Great Depression. Home care first originated as a distinct occupation during the New Deal, and evolved after World War II as part of welfare and health policy aimed at developing alternatives to institutionalization of the elderly and people with disabilities. Prior to the mid-1970s, public agencies provided or coordinated homemaker and home-attendant services. Fiscal constraints subsequently led state and local governments to contract home care first to non-profit and later to for-profit agencies. In 1974, Congress extended FLSA wage and hour standards to long-excluded private household workers. A year later, however, the U.S. Department of Labor (DOL) interpreted the new amendment to exempt home-care workers, even employees of for-profit entities, by misclassifying them as elder companions, akin to babysitters. It provided no explicit reasoning for introducing this new terminology, beyond the need for uniform definitions of domestic service and employer. This exclusion became known as the “companionship rule.”

The rule was a boon for employers. Amid nursing-home scandals and an emergent disability-rights movement, demand for home-based care burgeoned, but the women actually performing the labor were invisible. A distinct home-health industry began to grow following the 1975 exemption, as the rule freed staffing and home-health agencies from paying minimum wages and overtime. Opening Medicaid and other programs to for-profit providers after 1980 led to a tenfold increase in for-profit agencies during the next half decade. By 2000, for-profit groups employed over 60 per cent of all workers. Today, the home franchise industry is worth $90 billion.

Care workers, however, were never just casual friendly neighbors; even before this expansion, home-care workers were middle-aged, disproportionately African American, female wage earners—neither nurse nor maid, but a combination of both. Despite changes in their title since the 1930s, these workers always performed a combination of bodily care work (bathing, dressing, feeding) and housekeeping necessary to maintain someone at home. They increasingly have become a trained workforce.

With the expansion of the industry, service sector unions and domestic worker associations lobbied to change the “companionship rule.” Recently, they seemed to have won: After extensive public comment, the DOL issued a new rule in September of 2013, which would have finally included home-care workers under FLSA coverage. The Obama Administration also updated the definition of domestic service to match the job as performed by nearly 2 million workers who belong to one of the fastest growing, but lowest paid, occupations, with median hourly wages under $10. It recognized aid with activities of daily living as care, and care as a form of domestic labor. Whereas companionship services had previously included even those who spent more than 20 hours engaged in care, the new rule narrowed the meaning of companionship to mere “fellowship and protection” in order to close the loophole that for-profit agencies were deploying to profit by underpaying live-in home attendants. It was to go into effect on Jan. 1, 2015, though enforcement was delayed until June.

Then, in late December, at the urging of for-profit home care franchise operators, led by the Home Care Association of America, Judge Richard J. Leon (a George W. Bush appointee) of the U.S. District Court for the District of Columbia struck down a key element of the revision. The decision vacated the responsibility of third-party employers (such as home-care businesses) to pay minimum wage and overtime for so-called companionship services. In his opinion, the judge charged the DOL with “arrogance,” “unprecedented authority” and “a wholesale abrogation of Congress’s authority in this area.”

A historical perspective suggests otherwise. In the 1970s, Congress never intended to enhance corporate profits by narrowing wage and hour protections; to the contrary, it expanded them. Granted, the Senate Committee on Labor and Public Welfare refused “to include within the terms ‘domestic service’ such activities as babysitting and acting as a companion”—but it distinguished teenage sitters and friendly visitors from domestic workers by adding “casual” to those exempted from labor standards. It explicitly did not refer to “regular breadwinners,” those “responsible for their families.” Moreover, the Supreme Court has repeatedly reaffirmed the supposition that where Congressional intent is ambiguous, executive agencies—including the DOL—have leeway. In the 2007 case Long Island Care at Home, Ltd. v. Coke, a unanimous Supreme Court commended the expertise of the agency to determine the meaning of undefined phrases like “domestic service employment” and “companionship services.”

During oral argument in Coke, Justice Ruth Bader Ginsberg suggested that the proper way to amend the exemption was either a new rule through the DOL, which is what ended up happening, or legislation. Judge Leon reads back Congressional intent from the fact that legislative fixes have stalled in committee in the years following Coke. But there are many reasons why bills go nowhere in our gridlocked government.

The temporary restraining order from Judge Leon effectively blocked implementation of the new DOL rule in totality, setting off a ripple effect against this primarily female workforce. California, for example, instantly suspended implementation for some 80,000 workers. Then on Jan. 9, he heard oral arguments on whether to strike down the redefinition of the companionship classification. Given his prior decisions, the bet is that his next ruling on Jan. 14 will do so. Continuous litigation is in the offering, as the DOL is likely to appeal his decisions all the way to the Supreme Court.

For over 40 years, we’ve relied on cheap labor for care. The structure of home-care has exemplified a broader trend of reconfiguring work throughout the economy as casualized and low-waged, outside of labor standards and immune from unionization. But stopping the correction of this injustice means distorting history—and devaluing the care that someday most of us will need.

Eileen Boris is Hull Professor of Feminist Studies and Professor of History, Black Studies, and Global Studies at the University of California, Santa Barbara. Jennifer Klein is Professor of History at Yale and a Public Voices Fellow. They are the authors of Caring For America: Home Health Workers in the Shadow of the Welfare State.

TIME Economy

Unemployment Rate Drops to 5.6% as Employers Add 252,000 Jobs

Pedestrians walk by a now hiring sign posted in the window of a business on Nov. 7, 2014 in San Rafael, Calif.
Justin Sullivan—Getty Images Pedestrians walk by a now hiring sign posted in the window of a business on Nov. 7, 2014 in San Rafael, Calif.

December marked the 11th straight month of payroll increases above 200,000

U.S. job growth remained brisk in December, with employers adding 252,000 jobs to their payrolls after November’s outsized increase. The nation’s unemployment rate fell to 5.6% from November’s 5.8%.

December marked the 11th straight month of payroll increases above 200,000, the longest stretch since 1994. With a revised 353,000 jump in November, and October’s count also revised higher, the economy created 50,000 more jobs than previously reported in the prior two months.

“The U.S. is sort of an island of relative strength in a pretty choppy global sea. People are worried the problems abroad could afflict the U.S., but our domestic fundamentals are pretty sound and should outweigh that,” said Josh Feinman, chief global economist at Deutsche Asset & Wealth Management in New York.

December’s gains capped a strong year for hiring. With another job creation number over 200,000, employment gains for 2014 at around 3 million — the largest since 1999.

A five cent drop in average hourly earnings after rising six cents in November, took some shine off the report.

Wage growth has been frustratingly tepid and economists believe the Federal Reserve will be hesitant to pull the trigger on raising interest rates without a significant increase in labor costs.

The U.S. central bank has kept its short-term interest rate near zero since December 2008. It has not raised interest rates since 2006, but recently signaled it was moving closer to hiking, even if inflation remains below the Fed’s 2.0 percent target. Most economists expect the first rate increase in June.

But an acceleration in wage gains is in the cards as the labor market continues to tighten.

That, together with lower gasoline prices are expected to provide a tail wind to consumer spending this year.

“As the labor market moves closer to full employment … we are likely to see firms increase wages. We have already started to see some of that,” said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.

Most of the measures tracked by Fed Chair Janet Yellen to gauge the amount of slack in the labor market have pointed to tightening conditions and would be again under scrutiny.

A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment is at six-year lows, the labor force appears to have stabilized, while the ranks of the long-term unemployed are also shrinking.

—Reuters contributed to this report

This article originally appeared on Fortune.com

TIME Companies

The Biggest Problem American Business Is Facing in 2015

TIME.com stock photos Money Dollar Bills
Elizabeth Renstrom for TIME

In order to remain competitive on the world stage, America’s top companies need to take the lead in addressing economic inequality

As 2015 progresses, an improving U.S. economy should buoy markets and provide hope for the business sector. However, before we pop the champagne, it is worth remembering that the past year has also been a turbulent one. Economic inequality continues to widen and worker strikes, once rare, are now increasing in frequency.

The reality is that despite gains in profitability and shareholder value, American businesses could experience a serious labor problem in the near future, and the sooner it is addressed it, the better.

Broadly speaking, there are three factors working against the U.S. right now. The first is an aging population, which not only threatens to burden the system with greater costs in terms of social benefits and pensions, but also a shortage of younger people to fill jobs. Exacerbating this is the fact that the working age population in the future, composed of millennials (and their successors) will require better work benefits, including flexible schedules, higher pay, and room for creativity, in order to feel motivated – a phenomenon that will make it more difficult for companies to secure and retain talent.

By contrast, China and India have vast untapped labor pools, and 65% of India’s population is currently 35 or under, ensuring a young and dynamic labor force for decades to come. This has historically benefited the U.S. through cheap labor, but that could change as these economies become stronger and wage levels rise in response. In addition, Chinese and Indian companies have themselves begun to compete aggressively in the global arena with the workforce behind them to support it, which could put their American counterparts at a disadvantage.

The combination of these factors and a growing perception amongst low and middle income workers of economic unfairness could lead to a crisis of worker availability and competitiveness for U.S. companies within the next few decades unless employers can reach a balance between profitability and compensation that will motivate workers. This is particularly important in the arenas of fast food and retail, which require a large labor force but where wage levels are typically low and a source of escalating friction between companies and their employees, but could effect other sectors as well.

Unfortunately, we keep looking towards the government for a solution, which is a mistake. In today’s hyper-partisan environment of Capitol Hill, compromise on a politically charged issue like wages on which Democrats and Republicans fundamentally disagree is nearly impossible. Moreover, the idea of taxing our way to economic equality, advanced by economists like Thomas Piketty and even Microsoft founder Bill Gates, is unrealistic. Even if it was politically feasible, additional taxation would do little to bridge the gap between employers and workers.

That can only be accomplished by a concerted effort to understand and address the needs of workers by companies themselves, and requires the participation of our most influential business leaders.

For too long, the debate over fair wages has remained stuck in the quagmire of ideology (on both sides), but what is really required is the recognition by the CEOs who run our major corporations of the direct link between worker compensation and the future profitability of their businesses. The reason this is so critical is that our biggest companies set wage levels in their sectors and so only through their participation can a true market-driven solution be found to this pressing problem.

Sanjay Sanghoee is a business commentator. He has worked at investment banks Lazard Freres and Dresdner Kleinwort Wasserstein, at hedge fund Ramius Capital, and has an MBA from Columbia Business School. Follow him on Twitter @sanghoee

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