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Banking Goes Postal

American Postal Workers Union (APWU) president Mark Dimondstein has an offer that should be hard to refuse, especially for the 10 million American households, mostly low income, that do not have a checking account or other basic banking services.

Through its network of 30,000 post offices and other outlets, the United States Postal Service (USPS) could readily and cheaply provide many banking services (just as it now provides money orders), no matter where you live or what you earn. This could save people without bank access from paying the exorbitant interest and fees at currency exchanges, payday lenders, rent-to-own dealers, pawn shops and other subprime financial institutions.

Postal workers would also win: Expanding postal services would create more jobs. Moreover, the additional revenue would strengthen USPS’ finances, bolstering the four major postal unions’ ongoing fight against management’s austerity measures. Although the postal service earned a surplus on operations in 2014, it ran a deficit overall because of perverse requirements Congress imposed in 2006 that retiree health care benefits for the next 75 years be fully pre-funded within a decade, a standard far more demanding than those required by any other retirement systems. Much more than the decline in first-class mail, that manufactured budget crisis has fueled USPS management’s campaign of job cuts. The postal workforce dropped from about 700,000 in 2006 to less than 500,000 last year, and management hopes to reduce it by as many as 15,000 more this year. The cuts also involve service degradation, post office closings and privatization — such as delivering postal services at the office-supply store Staples, where jobs are low wage and non-union. If postal unions can implement banking and roll back the retiree pre-pay requirement, they will return the postal service to solvency while expanding the public sector to address private market shortcomings.

Dimondstein intends to make establishing postal banking a major demand, even though it falls outside the bread-and-butter issues unions typically bring up in bargaining. He plans to argue that creation of the bank would profoundly affect the mandatory bargaining issues of wages, hours and working conditions.

The negotiations come on the heels of a new campaign, launched by the postal unions — in partnership with community groups such as National People’s Action, Public Citizen, USAction and Interfaith Worker Justice — to mobilize the public in favor of a postal bank.

Twenty-eight percent of U.S. households either have no checking account or rely heavily on non-bank services such as currency exchanges. In many cases, poverty, high bank fees (especially for small-scale customers), credit problems and distrust keep people from opening bank accounts. But another major reason is lack of access.

United for a Fair Economy (UFE), a financial reform group and coalition member, reports that the number of federally insured financial institutions fell last year to the lowest level since 1934. This loss of banks is turning many distressed inner city and rural communities into “banking deserts,” especially for people of color. The more than one-quarter of Americans with little or no conventional banking services encompasses 53.6 percent of black households and 46.8 percent of Latino households, but only 19.5 percent of non-Latino white households.

These households are disproportionately poor; the average “underserved or unserved” household in 2012 made $25,500 a year. And, staggeringly, they paid an average of $2,412 for fees and interest to banking alternatives, according to a 2014 White Paper prepared by the Postal Service’s Office of Inspector General in support of a postal banking service. That added up to $89 billion in price-gouging revenue for the subprime finance industry in just one year. (And that’s the conservative estimate; UFE calculated the average fees and interest at $3,029 per household in 2013, for a total of $103 billion.) In one year, the underbanked and unbanked pay out more in financial service charges than the federal government spends on all domestic food aid, including food stamps — much of it going to the same people who frequent payday lenders.

Subprime financial predation seriously destabilizes working-class families. People who filed for bankruptcy in 2012 fell short on their bills by an average of just $26 a month. Given that underserved households pay out about $46 a week to the ripoff bank alternatives, these high-priced debt-service products may be a major factor driving many of the working poor into bankruptcy. Meanwhile, much of that predatory income ultimately finds its way into the coffers of Wall Street, the big banks and the super-rich who own and finance the alternative, high-cost operations.

Most poor people distrust both banks and the alternatives, such as pawn shops, but they do trust the post office, according to the UFE’s research. Also, unlike banks, post offices are in every neighborhood. Nearly 60 percent are in zip codes with one or no banks.

Postal banking has plenty of precedents. From 1911 to 1966, the United States Postal Savings System offered financially secure but low-interest savings accounts for small depositors. Many other countries, starting with Britain in 1861, have had postal banks, often quite large: Japan’s Post Bank was the world’s biggest savings bank in 2006.

A new postal banking system could be a fully public institution or an alliance with other parts of the banking system, such as community banks or credit unions. But in the end, “there’s this public option if [people] want to put their money where their mouth is,” says Dimondstein.

A postal bank is an example of the “Grand Alliance” between postal unions and the public that Dimondstein sees as essential for saving the postal service from dismantling. For this political strategy to succeed, the postal bank will have to provide its customers with a low-cost alternative to the predators, not just a means of making more money for the postal service.

The USPS should be able to dramatically reduce charges for services like check cashing, money transfer and bill paying, while still earning enough to make the postal service more financially sound. As the postal service already has a huge infrastructure and workforce, it would require relatively little startup capital and could quickly operate on a very large scale, opening up potential efficiencies.

The coalition for a U.S. postal bank is part of a small but growing movement to democratize finance through institutions such as state banks. Postal banking has already won support from consumer financial protection advocate Senator Elizabeth Warren (D-MA). In July 2014, Rep. Cedric L. Richmond (D-LA) introduced a bill that would establish a postal bank, but it died in committee.

Because postal banking has existed previously in the U.S., the APWU believes that new legislation may not be necessary for USPS to offer expanded financial services. Instead, says Dimondstein, “We want the postmaster general and postal management to take this up. Here’s a natural postal solution to their problems.”

But outgoing postmaster general Patrick Donahoe’s strategy has been the polar opposite. He explained in his farewell speech in early January that USPS management wants more flexibility to cut jobs, benefits, services and facilities, and to shift work into Staples stores. The new postmaster general, Megan J. Brennan, comes from his team; she served as chief of postal operations. But the combined pressure of union negotiations and public demand could inspire a new postmaster general to change course.

Dimondstein and the coalition believe the venerable post offices of America can play a new role in stopping the fleecing of a quarter of American families by piratical subprime financiers. And they believe that this old standby could demonstrate how government can fix a serious shortcoming of the private markets and avoid the resulting wreckage to many already hard-pressed American families. The opportunity for more democracy, equality and financial security, especially for the most vulnerable Americans, is huge. The cost of failure could be just as large.

David Moberg is a senior editor at In These Times.

Originally posted at In These Times.

Photo via Wikimedia Commons

Is Ronald McDonald Racist?

McDonald’s Corporation shares legal responsibility with three Virginia franchise restaurants and their owner for rampant racial and sexual harassment in those workplaces, according to a federal lawsuit that 10 former workers filed on January 22 alleging violations of their civil rights.

They accuse the franchise owner of firing them, despite their managers’ acknowledgement of their good work records, simply in order to reduce the proportion of non-white employees.

“All of a sudden, they let me go for no other reason than I ‘didn’t fit the profile’ they wanted at the store,” said fired plaintiff Willie Betts. “I worked at McDonald’s for almost five years, I was on time every day at 4:00 in the morning to open the store, and I never had a disciplinary write-up. They took away the only source of income I have to support my family.”

McDonald’s Corporation, the plaintiffs said, would not intervene to investigate or reverse the franchise actions after workers called and asked for help, a corporate inspector made a routine visit to check on franchise compliance with corporate procedures after the firings, or even after a local newspaper reported the story.

“This is a problem that goes far beyond these stores in Virginia,” said Kendall Fells, organizing director of Fast Food Forward, the New York area branch of the Fight for 15 movement. “It’s a problem with [the] McDonald’s business model itself when workers at the company have nowhere to turn. McDonald’s has the power to fix this problem, but instead it chooses to skirt its responsibility and hide behind its franchise model.”

The workers at restaurants in South Boston and Clarksville, Virginia, say that Michael Simon and his firm, Soweva, began a systematic plan to reduce the number of black workers soon after taking over the three stores in late 2013. Simon told workers, “the ratio [of black to white employees] was off,” and supervisors told them that the restaurants were “too dark” and that white workers needed to be hired “to get the ghetto out of the store.”

When Simon took control of the franchises, the lawsuit alleges, he promoted to the top day-to-day management of his business two supervisors who had a long history of racial abuse, such as calling African-American women “bitch” and describing the stores as “too ghetto.” They also sexually harassed both male and female workers, including soliciting sex from employees or touching their legs and buttocks, according to the plaintiffs’ lawsuit.

Even if the charges only were directed at one franchisee in the system, they would badly damage McDonald’s carefully nurtured brand image. But the suit names the corporation itself as essentially a joint employer. It calls into question McDonald’s model of trying to maintain tight control over how franchises operate, including personnel matters, while attempting to avoid any legal or financial liability. Plaintiff attorney Paul Smith says that McDonald’s seeks “all of the control and profit and none of the responsibility.”

The National Labor Relations Board has taken the same position as this lawsuit, treating the corporation as a joint employer, in a dozen complaints filed in December charging McDonald’s Corporation and many franchises with violating the rights of workers to organize and take collective action to improve their working conditions.

The lawsuit spells out much of the system that the McDonald’s Corporation uses to control its franchises. The mechanisms include its elaborate training program with Hamburger University on the grounds of the company’s suburban Chicago headquarters at its pinnacle and detailed guidelines on “quality, service and cleanliness,” and extensive business manuals for franchisees (covering personnel management, bookkeeping and other areas). The “bible” for franchisees, the Operations and Training Manual, is a detailed guide to hiring, discipline, diversity, non-discrimination and sexual harassment that the corporation can unilaterally change at any time, the lawsuit alleges.

The McDonald’s franchise agreement grants the corporation power to send in corporate “business consultants,” who review in great detail all operations of each restaurant, including staffing decisions, and provide recommendations that are mandatory for each franchise. In addition, the corporate office sends in “mystery shoppers” monthly to secretly observe and report back on even the most minute details of operations.

Fells indicated that after the firings, some supporters of Fight for 15 at the Virginia restaurants had contacted the local NAACP, which has been a major supporter along with the Washington Lawyers Committee for Civil Rights. Fight for 15, which invited some of the plaintiffs to a convention last year, has now set up a nationwide hotline for McDonald’s worker complaints: 855-729-2869.

Winning a lawsuit and damages would bring relief for the discharged workers and strike a blow at practices not only at McDonald’s but also at many other franchises. But fired cashier Katrina Stanfield says that workers also need their own voice at work. Never disciplined, regarded by her boss as a “good worker,” she was fired for being black, she says, leaving her out of work for five months and afraid she might lose the home shared by her sister and both women’s children.

“I still don’t understand why McDonald’s did nothing to get our jobs back,” she said. “I left a detailed message on the corporate hotline, but McDonald’s Corporation is concerned about the bottom line, not the workers. If we had a union, we could have done something.”

David Moberg is a senior editor at In These Times.

Originally posted at In These Times.

Photo via Wikimedia Commons

It’s The Inequality, Stupid

Cross-posted from In These Times.

President Barack Obama said last December that inequality is “the defining challenge of our time.” Americans agree. A Pew survey from June found that 62 percent think the country’s economic system unfairly favors the powerful, and 78 percent believe that too much power is concentrated in the hands of a few large companies.

Campaigning against the ongoing takeover of the country by the super-rich would seem to be a winning strategy for Democrats, then, as they struggle to hold on to the Senate and pick up a few governor’s seats in November. As a campaign issue, growing economic inequality plays to the Democrats’ image as the party of the little guy and to their brightest moments in power, such as the New Deal, when they made the country much more equal.

Yet with a handful of exceptions, Democrats are not talking about inequality. Raising the minimum wage — along with protecting Social Security, a campaign mainstay — may be the closest the Democratic Party has come to a national campaign theme on inequality. Overall, says Sam Pizzigati, editor of the online weekly on inequality Too Much, and author of Greed and Good, “there’s certainly no great move among Democratic candidates” to make inequality their focus.

Why not?

Democratic political strategists argue that while inequality may bother Americans, it doesn’t move them to vote. Polling seems to bear this out. In a recent Hart Research Associates poll, 60 percent of swing voters reacted favorably to a Democrat promising “economic growth,” and only 36 percent to a candidate pledging to “reduce income inequality.” Candidates seeing those numbers may be wary of making inequality a central theme.

But while voters may turn up their noses at pledges put in those terms, that doesn’t mean that any populist message is doomed to failure.

Hart polling has also found that the goal of “an economy that works for everyone, not just the wealthy few,” beat out other popular economic goals, such as “the creation of jobs and America going back to work” and “a strengthened middle class.” Tellingly, however, it was the phrase “not just the wealthy few” that made the difference. Dropping it did not broaden the Democrats’ appeal to independents, as many “centrist” Democrats might argue; it narrowed the appeal. Given a choice between a Republican who promised to “grow the economy” and a Democrat with this more populist message, swing voters picked the Democrat by 22 points. Without “not just the wealthy few,” the Democrat lost to the Republican by 10 points. What’s more, adding “just the wealthy few” boosted support for Democrats among swing voter groups that typically skew conservative, including men, older voters and those leaning Republican.

To Hart Research analyst Guy Molyneux, this signifies that the most effective populist message today is inclusive, but at the same time draws a sharp differentiation between the 99 percent and, well, the rich.

Defining the 99 percent against the 1 percent also has the benefit of counteracting Republican efforts to divide and conquer working Americans. Since at least the “Southern Strategy” of the early 1970s, the right has sought to divide working people by drawing lines between poor and middle-income workers, white workers and workers of color, and the native-born and immigrants. In particular, they paint the poor and people of color as lazy and undeserving. Of course, most of the poor work, and work hard — for too little pay — while many businesses show signs of pathological dependence on tax breaks, government contracts and lax regulations. Putting the spotlight on the 1 percent reminds voters who is really mooching off the hard work of others.

“If it’s the working and middle class against the poor, immigrant, and ‘undeserving,’ we [populist Democrats] lose,” argues longtime political consultant Vic Fingerhut. “If you’re going to tax me to take care of this bum, it gets more difficult. But Democrats discover that a lot of little guys vote for them when they stand up to the big banks. If it’s the working and middle class against the corporations, we win.”

However, the image of the 1 percent standing against the 99 percent understandably makes some rich people nervous. Centrist Democrats, reliant on close relationships with corporate and individual wealthy donors, want to comfort and reassure their check-writing supporters. Consequently, Democratic Party leaders, including Hillary Clinton, assert that “we’re all in this together”— fast-food worker and fast stock trader, hand in hand, presumably. This brings to mind a version of the 1930s rural populist joke about the elephant who shouts, “We’re all in this together,” as he dances through the chicken yard.

To the extent that Democrats rely on funding from rich individuals and corporations, they are more likely to do their bidding. And that tends to increase with time: Labor unions are more willing than business to back first-time candidates; as time passes, business contributions become more dominant. In other words, the rich help to create a political hegemony that defines the boundaries of acceptable debate for Republicans and Democrats alike.

The politics of the possible

Some strategists on the left believe that in order to campaign on inequality, Democrats must first demonstrate that ameliorating it is even possible.

“Inequality is an abstract idea,” says AFL-CIO political director Michael Podhorzer. “What is not abstract is that three-fourths of working people can’t make ends meet. They need to hear that candidates are going to do something about that.”

Mobilizing working-class voters is crucial for Democrats, he argues, because they determine elections. As he explained to The Atlantic, AFL-CIO exit polls show that Democrats have won big in elections over recent decades in which working-class voters (defined as those making less than $50,000 a year) come out in force for Democrats. When their margin of victory among working-class voters reaches roughly 20 percent, Democrats win; when that margin slips as low as 10 percent, they lose. And this year, the margins and mobilization for Democrats seem dangerously low among working-class voters.

“They see the rich getting away with murder,” Podhorzer says. “Voters are ready to believe.” But the Democrats too often fail to offer something in which to believe. Podhorzer suggests pushing for “higher living or minimum wages, affordable student loans, progressive taxation, and restrictions on outsourcing.” Many of these pragmatic proposals are indeed on the Democrats’ agenda. The problem with this pragmatic approach, however, is that each of these proposals faces opposition — whether it be practical, self-interested or ideological — from factions within the Democratic Party (especially the Wall Street wing), from independents who might vote Democratic and, of course, from Republicans.

For example, increasing Social Security benefits and making them more progressive would reduce inequality in a concrete way. It could be financed by eliminating the cap on wages and salaries that are subject to Social Security taxes. But such a proposal would have to contend with the propaganda that has convinced many people that Social Security is in financial trouble.

Moreover, as important as they are — and as difficult to win — most current proposals to address inequality are small in relation to the scale of the accumulated income inequity of the past 40 years. Even raising the minimum wage to $15 an hour would leave the United States behind pay levels seen in comparable industrial countries, and behind where the minimum should be set given changes in both prices and productivity.

In the long run, progressives cannot avoid confronting inequality, and that showdown is not likely to get easier as wealth grows more concentrated. Without campaign finance reform, weaning Democrats from corporate hegemony on key economic issues will be even harder. Though candidates can mobilize supporters in the short term with easily understood, concrete proposals, a moral and practical critique of inequality will be necessary to a create broader political appeal in the long run. Keywords can become touchstones of political movements, cultivated to carry a particular basket of meanings.

In this 50th anniversary year of “Freedom Summer,” for example, it is worth remembering that the civil rights movement had concrete goals — such as voting rights and access to public accommodations — but it was also a political movement imbued with the broader, uplifting vision of “freedom.” Unfortunately, today the right has appropriated “freedom” to mean, among other things, unlimited rights to guns, unfettered rights of private property and a right to act irresponsibly toward others. The progressive meanings of “freedom” have been smothered.

Along with freedom and democracy, the left still draws on the Enlightenment ideals of the French and American revolutions. Libertéégalité and fraternité serve as touchstones of progressive thought that extend beyond their embodiment in specific institutions. “Democracy” requires free speech and elections, for example, but it also carries a promise that is utopian, in a good way. Likewise, although most Americans associate the ideal of “equality” with movements of groups such as African-Americans, women and gays for civil and political rights, it also serves as an expansive touchstone, a value yet to be realized in other ways — including economic — but one that needs to be recognized as worthy of a movement.

David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy. He can be reached at davidmoberg@inthesetimes.com.

This piece originally appeared at In These Times.

AFP Photo/Brendan Smialowski

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