Archive for October, 2012

Small businesses experess concerns about new Southern CA Walmart

Recently we blogged about a study looking at the effects of a new Walmart development on nearby small businesses in a Chicago neighborhood. The study found that 35 to 60 percent of the closest small businesses had shut their doors in the two years after the Walmart opened. Walmart (and often municipal officials) assert that their stores generate positive economic development in the surrounding areas. Bottom line is that when a Walmart opens, the surrounding neighborhoods change and the question is, who benefits?

KPCC, a Southern California public radio station, is profiling small businesses in another neighborhood in the town of Altadena, CA that is about to get a new Walmart Neighborhood Market, which is smaller than a superstore (but still 28,000 square feet). KPCC is asking nearby small  businesses and residents about their concerns. While they can all agree that change is coming, not all of them agree on the impacts.

On the one hand are the long-time family run businesses, such as a liquor store and pinata store. These business owners are worried about being undercut by the much lower prices at Walmart, and eventually having to go out of business.

“I don’t understand Wal-Mart, why they (would) open around here,” Yoo said, as she watched over her store, All Star Liquor. “I know all of the small businesses in this area will be worse than right now. It’s bad news to the small business owner.”

KPCC cites a study that showed a new Walmart initially creates 100 jobs in a community, but over time as local businesses close, the addition of a Walmart actually leads to 40 to 60 of those jobs lost. As a professor from the University of Southern California puts it:

“Wal-Mart is really the 800-pound gorilla of the retail industry,” Schuetz said. “The mom and pop stores don’t have the same kind of bargaining power and so they are paying a higher price directly from the suppliers and that gets passed along to consumers in a higher markup.”

On the other hand are the consumers and businesses who are eager to see the new Walmart.  Particularly as many people continue to struggle in this economy, consumers in the area are looking forward to the lower prices and discounts. Some business owners believe that the Walmart will help spruce up the neighborhood, bringing in more foot traffic and reducing crime and loitering.

These perspectives again illustrate just how charged the discussion around big box retailers, such as Walmart, can be.  They also provide an example for other cities looking to do the same. Small businesses can’t compete with the larger stores, and it is inevitable that some will go out of business– a detriment to communities where small businesses help build community and family wealth. On the other hand, for families struggling to make ends meet, the prices at Walmart can offer relief by enabling them stretch their dollars.

At the end of the day, the net effects do not come down to dollars and cents, or numbers of jobs gained or lost. Communities and neighborhoods are built upon economically secure and stable households– people who are invested in the community for the long run. These people create those intangible aspects of vibrant communities, like a sense of place and uniqueness. Workers having access to good jobs and long-term stability is key, as are entrepreneurs who can build wealth for future generations, as well as contribute to the character and fabric of a community. If we design policy to support these things– good jobs, healthy local businesses, and resilient communities– then perhaps the needs that are being met by Walmart can be instead met from within communities.

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October 31, 2012 at 11:20 am

State increases efforts to combat worker misclassification

Yesterday, the state’s Labor and Revenue Departments announced that they will be working together to combat businesses who misclassify workers as “contractors” to get out of paying their required taxes and workers’ compensation insurance. The Governor had convened a task force to look at this issue back in August, after the News & Observer published a story about businesses who had  been evading the rules:

Honest employers struggled to compete as competitors cut corners by treating employees as independent contractors to save on taxes and insurance. All the while, state agencies operated in silos, failing to share information and crack down on businesses that break the rules.

The two agencies coming together on Monday was therefore a significant show of collaboration– a departure from the “isolation and independence that has marked the agencies.” They have already began working together an sharing information:

… the Division of Employment Security has shared its database of businesses that pay unemployment taxes with the Industrial Commission, which oversees and settles disputed workers compensation claims. Meanwhile, the Industrial Commission and the Revenue Department have prepared an information packet to be distributed to businesses about their tax and insurance obligations.

As the N&O also reports, although the extent of the problem of worker misclassification is not known exactly, it is considered to be widespread, particularly in the construction industry. An investigation by the Division of Employment Security found that 40 percent of businesses required to pay unemployment taxes in the state had classified workers as contractors when they should have been classified as employees. Thousands of other cases were found as problems arose when employees made claims for benefits or provided tips to agencies.
The issue of worker misclassification is a problem across the country. The National Employment Law Project estimates that labeling workers as “independent contractors” decreases payroll costs for employers by 15 to 30 percent. It also means that these employers are not responsible for overtime, minimum wage, workers’ compensation, and other worker protections. It is also bad for states, because they do not receive the payroll and other taxes from employers.
Unscrupulous businesses should not be allowed to get away with skirting the rules, while other businesses strive to uphold standards and abide by the regulations. It makes for an uneven playing field, in which some businesses profit at the expense of their workers. In the long run, it only serves to hamper the state economy as these workers are afforded less financial and economic security. The task force established by Governor Perdue is a good step forward in combating this issue in NC.

October 30, 2012 at 10:49 am

Workers struggle to make ends meet as part-time jobs increase

As we have previously blogged about, the recovery period from this economic recession has been characterized by an increase in low-wage jobs. Since the first quarter of 2001, the biggest job gains have been in low-wage jobs as the economy has shifted away from higher-wage jobs, like those in manufacturing, toward lower-wage jobs, such as those in retail and administrative sectors.

At the same time, companies– retailers in particular– have been increasing their share of part-time workers. In an effort to cut costs, many retailers are cutting down hours and hiring more workers, rather than retaining less workers with longer hours.  This trend contributes to the rise of underemployed workers– those who are employed, but not sufficiently so (for example, someone looking for full time work but currently in a part-time job would be underemployed).

The New York Times profiled this issue yesterday, pointing out the hardships this presents for many workers:

While there have always been part-time workers, especially at restaurants and retailers, employers today rely on them far more than before as they seek to cut costs and align staffing to customer traffic. This trend has frustrated millions of Americans who want to work full-time, reducing their pay and benefits.“Over the past two decades, many major retailers went from a quotient of 70 to 80 percent full-time to at least 70 percent part-time across the industry,” said Burt P. Flickinger III, managing director of the Strategic Resource Group, a retail consulting firm.

Retailers today use sophisticated software to help assign work hours in the most cost-effective way possible. By being able to carefully examine customer traffic, companies can schedule shifts down to 15 minute increments in order to have just the right amount of workers during each moment of the day. Consequently, assigning work shifts has become in many cases less predictable– work schedules can change any time depending on the need– and many workers have seen their hours reduced. For workers with families or other obligations, such as second jobs or school, this makes keeping a job even  more challenging.

The widening use of part-timers has been a bane to many workers, pushing many into poverty and forcing some onto food stamps and Medicaid. And with work schedules that change week to week, workers can find it hard to arrange child care, attend college or hold a second job, according to interviews with more than 40 part-time workers.

In addition to the lower wages offered by part-time work, reducing hours has also led to workers receiving fewer benefits– and even those who have benefits work such few hours that they can’t afford to use them. The article discussed one worker who, though she had health benefits, could not afford the co-pays for a doctor’s visit.

The jobs numbers may go up and down during the course of a recovery, and are an indicator of the health of the economy. But they’re not the only indicator. Job quality is equally important. For many people, simply having a job does not mean that they are on a path toward financial security. If the trend toward low-wages and job insecurity continue, then we will not be building a solid foundation for a true economic recovery.

 

 

October 29, 2012 at 2:39 pm

New Innovation in Urban Agriculture

Ben Greene has designed a new way to bring sustainable, organic agriculture to convenient urban settings.  His answer is The Farmery. Designed as part of his master’s thesis at N.C. State University, the idea is for a  building which serves as an integrated retailing and growing system.    By consolidating the production, distribution, and retail components of the healthy food economy, he will be able to increase the value of purchasing healthy foods while reducing the actual cost.

How does this work?  The design, which is here, involves using shipping containers to create a small greenhouse space.  The plants grow in a proprietary growing system allowing edible plants to grow vertically on the sides of the shipping containers.  The interior space, where sunlight will not reach, will also be used to cultivate mushrooms.  Being able to sell the produce directly where it is grown also limits spoilage and loss because the produce is not picked until it is purchased.

While the project is still developing their prototype greenhouses, they are already selling produce in Raleigh, NC.  To find out more, visit their website or check out this short video featuring Ben Greene on his design.  We are happy to have such an innovative team joining us in the battle to fight food deserts.

October 26, 2012 at 11:47 am 1 comment

Recent veterans face high unemployment and barriers to jobs

The national unemployment rate is at 7.8 percent, but for he almost 243,000 recent veterans (those who  have served since 2001) in the U.S., the unemployment rate is at 9.7 percent.  For some segments of the veterans population, it is much higher. As reported by the Greensboro News & Recorder:

For veterans, ages 20 to 24: 14.5 percent (12.1 percent for nonveterans).

For black veterans: 14.6 percent (12.5 percent for nonveterans).

For female veterans: 19.9 percent (7 percent for nonveterans).

In North Carolina, the veterans unemployment is at 8.3 percent. As the News & Record points out, although the nation as a whole has been struggling with high unemployment after the recession, getting jobs has been particularly difficult among veterans.

Still, being in the military isn’t the career it once was. Federal studies place the average retention rate between four and eight years, mostly because soldiers enter wanting to take advantage of the GI Bill. Once discharged, they’re finding the education and training they earned don’t immediately translate into a paycheck.

Although soldiers learn valuable skills in a range of areas while they are training and deployed, because of the way professional certifications work, they are often unable to use those skills in jobs when they are back home. Last night’s episode of The Daily Show featured two recent veterans, who were trained combat medics, and their struggle to translate their medical training to civilian jobs.

There are efforts to help veterans find jobs and build their lives when they’re back home. The Hire at Home Act would allow veterans to use their skills and training to find civilian jobs without having to go through re-certifications.

The HIRE at Home Act would streamline the state certification process making it easier for service members to utilize skills they have acquired in the military to find jobs in their communities. For example, someone who is trained by the military as truck driver or nursing assistant would not have to waste time and money on redundant trainings to do the same job at home. By allowing military training in a comparable field to count toward certification in the private sector, it will help veterans get back to work more quickly, making the transition to civilian life that much easier.

Clearly, our returning soldiers have gained valuable training– and have had to implement their skills in highly stressful and dangerous situations. It is only fair that these experiences are honored when they come back home. Ensuring that military and civilian certifications align, and that the skills are transferable, would be an important first step.

October 25, 2012 at 10:47 am 1 comment

2012 Food Day celebrates healthy, affordable, sustainable food

If you didn’t know, today is the annual Food Day, which is a “nationwide celebration and a movement toward more healthy, affordable and sustainable food.” Coordinated by the Center for Science in the Public Interest, Food Day is supported by a coalition of dozens of organization from across the country and an advisory board that includes some notable names, including author Michael Pollan and actress Jane Fonda. The goal of strengthening and uniting the healthy foods movement is centered around five priorities (click on each of these links for more information):

There are many great resources on the Food Day website, including recipes, videos, information on how to get involved, etc. Events are going on today all across North Carolina, and Boone is hosting a High Country Food Day Celebration.

The issues surrounding healthy foods are often discussed from the perspective of consumers– those who need access to healthy foods– but it is equally important to shine a light on the issues faced by workers across the food industry. One of the interesting things posted on the site is a report by the Food Labor Research Center at the University of California,  Berkeley and the Food Chain Workers Alliance and The Restaurant Opportunities Centers. The report looks at the impact of increasing the federal minimum wage, which has not been increased in 20 years, on food costs. Over these past two decades, inflation and rising costs of living have eroded the purchasing power of the minimum wage. The report found that increasing the minimum wage would have an impact of less than half of one percent on food costs. Restaurant food prices would also increase by less than one percent.

Of the 20 million workers in the U.S. food system– the largest employer of minimum wage workers– half are at the poverty level because of low wages. Increasing the minimum wage would benefit 29 million workers in all industries, and the average household would only have to pay 10 cents extra per day for food. As the authors of the report state on the Food Day blog,

… we had to confront the myth that raising the minimum wage would make food too expensive for all of us. In fact, raising the minimum wage would not only not prohibit us from being able to put food on the table, but it would also allow the millions of workers who work in the food system to put food on the table as well. They can’t right now because their wages are just too low.

So today, go out and participate in Food Day activities in your community. Join the movement to help make healthy foods accessible, affordable, and sustainable for all families. And while you do that, keep in mind the links between social justice, food justice, environmental justice, and economic justice. We need to address all of these in order to achieve systemic change in our healthy foods system, both here in North Carolina and nationwide.

 

October 24, 2012 at 11:04 am

Proposed CFPB mortgage servicing rules are a start, but more could be done

Back in August, the Consumer Financial Protection Bureau issued rules that would increase transparency and accountability within the mortgage servicing industry, which processes payments for the investors who own the home loans. In an effort to provide borrowers with the information they need to make sound decisions, the new rules (which will be finalized in January 2013) would require mortgage servicers to provide timely and accurate information about billing, interest rates, insurance, and other issues to borrowers. In addition, they would be required to be accessible and responsive to borrowers, and work to resolve any errors quickly.

These rules would help many borrowers facing potential foreclosure to get accurate information and counseling on their options, and hopefully be able to secure a modification and stay in their homes. The Huffington Post stated that

If enforced, the regulations would go a long way to resolving widespread abuses in the mortgage servicing industry. Borrowers seeking loan modifications, for example, often complain of a process that often feels like an existential nightmare: an endless cycle of lost paperwork, missed phone calls and conversations with low-level bank employees with no power to make deals. Judges have sanctioned servicers for charging unnecessary fees and for imposing expensive, insurance policies.

It also raised the question of whether or not mortgage services would abide by these rules, citing concerns that the servicing industry has already largely disregarded an earlier set of reforms. And then yesterday, the New York Times in an editorial asking, “Will foreclosure abuses ever end?” called these rules a disappointment:

In place of concrete standards, the bureau’s proposal largely relies on procedural reforms, like requiring servicers to establish reasonable policies for managing paperwork and answering phone calls from borrowers; to contact borrowers at an early stage of delinquency; and to adhere to deadlines for responding to borrowers who need help. Such requirements are not nearly enough.

The Times editorial stated that the CFPB should be focused on rule making that would allow for borrowers facing hardship to be considered for loan modifications, and that if a foreclosure is the only option, borrowers must be provided proof of the servicer’s legal right to foreclose.

Although this would provide more aggressive regulation of the mortgage servicing industry– and should certainly be a part of a reform agenda– the importance of the proposed mortgage servicing rules should not be understated. If anything, they speak to how faulty the industry’s practices were to begin with. While it may seem like a no-brainer to provide borrowers with accurate and current billing information, this was not the industry standard– leading to wrongful foreclosures, improper assessment of fees, and other abuses.

So yes, the CFPB could do more to help struggling homeowners; but these rules are important nonetheless. What should be a major concern is enforcement. As a new agency, what will the CFPB do to make sure that these rules are being adhered to?

October 23, 2012 at 11:10 am 1 comment

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