Author Archives: afscme

“When Do You Plan on Having a Baby?” and Other Questions Not to Ask

Source: Melissa Torres, Employee Benefit Plan Review, Vol. 74, No. 5, July-August 2020
(subscription required)

From the abstract:
Employers interviewing women of child-bearing age may be tempted to ask about plans for having a baby, but doing so poses risks. While an employer might be concerned about staffing coverage, the Pregnancy Discrimination Act prohibits employers with 15 or more employees from discriminating against a woman based on her potential or capacity to become pregnant. Taking adverse action against a pregnant employee because of her pregnancy is equally unlawful.

Nonetheless, an article in The New York Times not too long ago bore the striking headline: “Pregnancy Discrimination Is Rampant Inside America’s Biggest Companies.” The article indicated that, notwithstanding the law, many pregnant women were either passed over for promotions or fired when they complained.

Yet another Times headline focused on the failure of employers to provide light duty to pregnant women: “Miscarrying at Work: The Physical Toll of Pregnancy Discrimination.”

Employment Law Implications of a Refusal to Work Due to Fear of COVID-19

Source: Phillips L. McWilliams, Employee Benefit Plan Review, Vol. 74, No. 5, July-August 2020
(subscription required)

From the abstract:
During the height of the COVID-19 pandemic in America, one healthcare worker told the press: “Every day when I go to work, I feel like a sheep going to slaughter.” As states continue to reopen and businesses bring employees back to work, it is likely that some employees will feel this same way and refuse to return to work due to a fear of contracting COVID-19. When this occurs, employers need to know their obligations under various federal, state, and local laws – some of which have just recently been enacted. Failure to properly account for this patchwork of laws when faced with an employee refusing to work could expose a company to legal liability.

As an initial matter, before bringing the full workforce back, employers should analyze their workspace and determine which guidelines from the Centers for Disease Control and Prevention (“CDC”) and similar agencies they should implement. Employers should also communicate the new safety measures and procedures to the workforce prior to reopening. This will help alleviate concerns employees have about contracting COVID-19 while at work. Still, there will likely be employees who refuse to return to work. Discussed below are the laws employers must keep in mind when such a scenario presents itself.

Learning from Campaign Finance Disclosures

Source: Abby K. Wood, University of Southern California Gould School of Law, USC CLASS Research Papers Series No. CLASS20-10, Date Written: June 10, 2020

From the abstract:
In an age of dark money – the anonymous political spending facilitated by gaps in our campaign finance disclosure laws after Citizens United – the Supreme Court’s campaign finance disclosure jurisprudence may be on a collision course with campaign finance disclosure laws. The collision can be avoided if the court right-sizes its assumptions around the informational benefits of campaign finance disclosure. It is therefore urgent to help the court understand what we learn from campaign finance transparency.

Campaign finance transparency teaches us more than one-dimensional information about how progressive or conservative a candidate is. It also helps us learn about candidate type. As I explain in this Article, social scientists, including myself, have run several studies examining voter learning from campaign finance information. When voters learn about a candidate’s position with regards to dark money, they learn and vote differently than if they did not have that information. And, as I show using experimental methods and using data from the FEC audits in the 1970s, where campaign finance compliance information is available to voters, voters reward over compliance and punish failure to comply. In other words, transparency about campaign finance disclosure and compliance informs voters.

These findings point to useful policy innovations for states and cities while the federal government is unable or unwilling to regulate, such as “disclosure disclaimers” and campaign finance audits. I explain implications for the courts, campaigns, and policymakers, as well as limitations on the argument.

Biased Budget Scoring and Underinvestment

Source: Michael Simkovic, University of Southern California Gould School of Law; University of Southern California – Marshall School of Business, USC CLASS Research Papers Series No. CLASS20-11, Date Written: June 10, 2020

From the abstract:
Empirical studies routinely find evidence that public investments in education, science, and infrastructure have as high or a higher rate of return than private capital invested more broadly, and that such public investments are complementary to and crowd-in private investment. This implies that public borrowing or raising taxes to fund more public investment would increase the rate of economic growth and provide budgetary benefits.

However, when scoring the effects of legislation, the Congressional Budget Office and the Penn Wharton Budget Model, a think tank, use dubious assumptions that systematically put a thumb on the scale in favor of shrinking the government and against NPV-positive public investment. Rather than help correct shortcomings in CBO’s approach, the PWBM often amplifies them, making assumptions that are even less plausible than those of the CBO. PWBM’s errors are not random such that they offset each other, but rather have a single systematic direction — all of the problematic assumptions and methodological problems put a thumb on the scale in favor of low taxes on the ultra-wealthy.

PWBM, like CBO, assumes away the short-term benefits of public investments while treating private investments more favorably, even though many private investments — in particular those relating to development of new technologies — take a long time to produce positive cash flows. The PWBM assumes away the long-term benefits of public investment for reasons that are irrelevant and patently wrong under established principles of valuation. The PWBM elevates the role of arbitrary timing assumptions instead of focusing on lifetime IRR and NPV. The PWBM assumes crowding out of investment, when the empirical evidence is as strong, if not stronger, for crowding in. The PWBM assumes a coming crisis when both financial markets and ratings agencies suggest that this is very unlikely. The PWBM assumes that the United States is overwhelmingly a closed economy with respect to international investment when the evidence suggests that it is overwhelmingly open. The PWBM assumes a shortage of capital, when negative real risk-free interest rates point to a capital glut. The PWBM assumes that only the extremely wealthy can supply sufficient capital, and that changes to taxes and spending that benefit middle- and upper middle-income individuals will not enable these groups to serve instead as suppliers of capital. The PWBM assumes that the wealthy react to higher taxes by saving less, when it is possible that they react by working harder or consuming fewer luxuries.

The many problems with PWBM’s analysis raise serious doubts that the PWBM’s analysis can be used as a guide in selecting policy choices that will increase economic growth or improve the well-being of most U.S. citizens.

Congress’s counter-productive approach to scoring legislation should be revised to more accurately reflect the well-established benefits of public investment and the ambiguous effects of taxes or public borrowing.

Hands On! Part I: The Trilemma Facing the Federal Government During State and Local Budget Crises

Source: David Schleicher, Yale Law School, Public Law Research Paper Forthcoming, Date Written: July 12, 2020

From the abstract:
The economic crisis that accompanied the COVID-19 pandemic has left state and local budgets in tatters, with revenue falling quickly while demands for public services increase. The federal government responded in a number of ways, but the public debate over what it should do if there is an acute fiscal crisis – a state or a large city on the edge of default – has been theoretically confused and ahistorical.

This is no accident. The academic literature on state fiscal crises, while very impressive in many ways, is also somewhat confused. It focuses on two contrasting problems: the moral hazard that a federal bailout of an insolvent state government would create and the macroeconomic harm that a failure to bailout an insolvent state government would create. What these two branches of the literature agree on is that the federal government, for good or ill, has since the 1840s taken a “hands off” approach to acute state and local fiscal crises.

This Article and a companion piece will show that federal government simply does not have a history of “hands off” approaches to state and local defaults. While bailouts have been rare, officials from all three branches of the federal governments have intervened repeatedly in state and local fiscal crises to aid creditors and preserve confidence in the municipal bond market. These interventions are part of a long-running federal policy of encouraging states and local governments to borrow money to build civic infrastructure. Concern for the municipal bond market has led the federal government into all sorts of otherwise hard-to-explain policies, from President Ulysses Grant threatening to send troops to Iowa in 1870 to make a small town pay its debts to the Supreme Court’s radical transformation of the doctrine of Swift v. Tyson. Federal policy has been inconsistent, toggling between policies aimed at different and incommensurable goals, even during a fiscal crisis, perhaps most famously when it offered loans to New York City after the famous “Ford to City: Drop Dead” headline suggested aid would not be forthcoming.

Recognizing their real concern for the municipal bond market changes our understanding of what is at stake for federal policymakers when they respond to acute state and local budget crises. Federal officials face a “trilemma.” Whether they promote and/or enable bailouts, austerity, or defaults on municipal debt, federal officials can avoid two of these harms, but not three: (1) moral hazard for state budgets; (2) worsening recessions; (3) reducing future state and local infrastructure investment. The companion piece will suggest how federal officials can navigate this trilemma in the current crisis.

A State-by-State Look at Coronavirus in Prisons

Source: Marshall Project, Updated August 21, 2020

The Marshall Project is collecting data on COVID-19 infections in state and federal prisons. See how the virus has affected correctional facilities where you live.

Tracking the Spread of Coronavirus in Prisons
Source: Katie Park, Tom Meagher and Weihua Li, Marshall Project, April 24, 2020

A new Marshall Project effort has collected data on the prevalence of COVID-19 among prisoners and prison staff. Here’s what we know after one month of reporting.

Wealth Tax Design: Lessons from Estate Tax Avoidance

Source: Jason Oh, Eric M. Zolt, UCLA School of Law, Law-Econ Research Paper No. 20-01, January 27, 2020

From the abstract:
Presidential candidates Elizabeth Warren and Bernie Sanders have both proposed ambitious new annual wealth taxes based on academic work by Emmanuel Saez and Gabriel Zucman. They project these proposals to raise trillions of dollars over the next ten years. Some critics challenge the Saez-Zucman approach to measuring the aggregate wealth of those subject to a wealth tax. Other critics including Larry Summers and Natasha Sarin have used data from estate tax returns and the relatively small amount of revenue the estate tax currently raises to question the revenue projections of these proposals. This comparison can be useful only if one thinks carefully about specific estate tax strategies and how these strategies translate to an annual wealth tax. This article engages in that exercise. When one takes a closer look at estate tax avoidance and how it maps onto an annual wealth tax, a much more complex narrative emerges.

That narrative has four major themes. First, there are some estate tax planning techniques (like valuation games and charitable contributions) which pose similar challenges to an annual wealth tax. These structures provide some support for critics like Summers and Sarin who argue that the annual wealth tax will struggle to raise the projected revenue. Second, other structures (such as grantor-retained annuity trusts ) work well to minimize estate taxes but are of limited use for structuring around an annual wealth tax. Projecting wealth tax revenue using estate tax revenue without considering the revenue consequences of these strategies will understate wealth tax revenue. Third, other techniques (including the use of lifetime estate/gift exemptions) highlight possible synergies between an estate and wealth tax. In many ways, a robust estate tax will make the wealth tax harder to avoid and vice-versa. The converse is also true: a poorly designed estate/gift tax will undermine an annual wealth tax. Adopting a wealth tax without strengthening the gift and estate makes little sense. Fourth, one of the major lessons of estate tax planning is that it is much easier to minimize estate taxes on future wealth than existing wealth. A myriad of techniques allow taxpayers to “freeze” the value of assets for estate tax purposes. Freezing techniques will also prove helpful in minimizing wealth taxes. It is possible that even a well-designed wealth tax will have a base that shrinks rather than grows over time.

Why unions are good for workers—especially in a crisis like COVID-19: 12 policies that would boost worker rights, safety, and wages

Source: Celine McNicholas, Lynn Rhinehart, Margaret Poydock, Heidi Shierholz, and Daniel Perez, Economic Policy Institute, August 25, 2020

From the summary:
What this report finds: The COVID-19 pandemic has underscored both the importance of unions in giving workers a collective voice in the workplace and the urgent need to reform U.S. labor laws to arrest the erosion of those rights. During the crisis, unionized workers have been able to secure enhanced safety measures, additional premium pay, paid sick time, and a say in the terms of furloughs or work-share arrangements to save jobs. These pandemic-specific benefits build on the many ways unions help workers. Following are just a few of the benefits, according to the latest data:

• Unionized workers (workers covered by a union contract) earn on average 11.2% more in wages than nonunionized peers (workers in the same industry and occupation with similar education and experience).
• Black and Hispanic workers get a larger boost from unionization. Black workers represented by a union are paid 13.7% more than their nonunionized peers. Hispanic workers represented by unions are paid 20.1% more than their nonunionized peers.

CEO compensation surged 14% in 2019 to $21.3 million – CEOs now earn 320 times as much as a typical worker

Source: Lawrence Mishel and Jori Kandra, Economic Policy Institute, August 18, 2020

From the introduction:
Chief executive officers (CEOs) of the largest firms in the U.S. earn far more today than they did in the mid-1990s and many times what they earned in the 1960s or late 1970s. They also earn far more than the typical worker, and their pay—which relies heavily on stock-related compensation— has grown much more rapidly than typical worker pay. Importantly, rising CEO pay does not reflect rising value of skills, but rather CEOs’ use of their power to set their own pay. And this growing earning power at the top has been driving the growth of inequality in our country.

OSHA’s Next 50 Years: Legislating a Private Right of Action to Empower Workers

Source: Michael C. Duff, Thomas McGarity, Sidney Shapiro, Rena Steinzor and Katie Tracy, Center for Progressive Reform, July 2020

From the executive summary:
Over the last several decades, through a concentration of economic and political power by corporate executives and their allies in government institutions, workers have been systematically disempowered and silenced. Two important results of this dynamic are that the nation’s workplaces are not nearly as safe or healthy as they need to be to protect all workers, and workers lack the power they deserve to speak up against exploitation without fear of significant retaliation….

….As the 50th anniversaries of the Occupational Safety and Health Act (OSH Act) and OSHA approach in December 2020 and April 2021, respectively, it is time to address the law’s and agency’s shortcomings and chart a course of action to revolutionize worker health and safety for the next 50 years.

Fixing the current system requires an updated and vastly improved labor law that empowers workers to speak up about health and safety hazards, rather than risk their lives out of fear of losing employment and pay. It also requires that workers be empowered to fight back when government agencies fail to enforce safety and health requirements. Our vision is to guarantee all workers a private right of action to enforce violations of the OSH Act, coupled with incentives for speaking up and strong whistleblower protections to ensure workers can and will utilize their new authority. In addition, this private right of action should cover the millions of workers who are currently unprotected by OSHA, including misclassified independent contractors, agricultural workers, and public sector workers in states under federal OSHA’s jurisdiction. Congress should also ban mandatory arbitration as a condition of employment, since the purpose of such arbitration requirements is to disempower workers by denying access to the courts. Finally, Congress should require that all states and territories that operate their own occupational safety and health programs in lieu of federal OSHA incorporate a private right of action into their state plans.

Promoting laws and regulations that safeguard workers physically and financially and that rebalance the power dynamic between employers and workers is a necessary and vital step in building strong, resilient families and communities. Providing a private right of action, a common tool in a variety of other laws, is a long overdue measure that would empower workers to ensure safer and healthier workplaces when the agency tasked with protecting them is unwilling or unable to do so. Engaging workers more meaningfully in the enforcement of health and safety standards will not only improve their immediate conditions but also disrupt the cycle of worker disempowerment that contributes to unsafe and unhealthy working conditions, giving workers a voice to achieve lasting improvements in the workplace.