The Cost of Saving Money

Last year, In the Public Interest released a report that highlighted a harmful but frequently overlooked way in which our tax dollars are fueling income inequality.

Every time a city or state outsources a public service to a low-wage contractor, the community loses. Taxpayers have to make up the difference in the form of nutrition assistance, healthcare coverage, and other programs designed to help people working for minimum wage and living in poverty. The report included examples from across the country, including public servants in Costa Mesa and Fresno, CA, who either lost their jobs to – or were at risk of being replaced by – low-wage contractors.

There are a number of problems with government outsourcing–aka “privatization”–and a copious academic literature documenting those problems. When government provides services through surrogates–via third-party contracts–it needs different management skills (skills that are relatively rare in government agencies, meaning oversight is hit or miss). Mayors and governors often give in to the temptation to reward their cronies with lucrative contracts. (Indeed, privatization has become the current form of patronage). And the promised savings are rarely realized, even without accounting for the problem identified by the report.

There are certainly times when outsourcing makes sense, but far too often the decision has been made on the basis of a near-religious belief in the superior performance of the private sector. As this report suggests, those perceived “efficiencies” can end up costing us in less visible but no less expensive ways.

There really is no such thing as a free lunch.

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Is the Light Finally Dawning?

An article in the February 9th issue of The New Yorker reported that Aetna, a Fortune 500 company, plans to raise the pay of its lowest-paid workers, and improve employee medical coverage. The proposed increase is substantial—from twelve dollars an hour to sixteen dollars an hour in some cases.

Mark Bertolini, Aetna’s CEO, was quoted as saying it wasn’t fair for employees of a Fortune 500 company to be struggling to make ends meet.

It isn’t only Aetna.

A recent announcement from Ford Motor Company unveiled the carmaker’s plan to raise the pay of 300 to 500 of its entry-level workers by more than $19,000 a year, or nearly 50%. The announcement was heralded as another sign of the rebound of the U.S. auto industry, but its implications go well beyond that rebound. (Henry Ford would have understood; in 1914, he famously raised his workers’ pay to the then-unheard-of rate of five dollars a day. Turnover and absenteeism plummeted, and profits and productivity rose.)

Little by little, American businesses are recognizing that their own long-term interests are inextricably bound up with the welfare of their employees. That’s a lesson retailers like Costco learned long ago. I’ve previously quoted Business Week’s telling comparison between Costco and Walmart–Costco pays hourly workers an average of 20.89 an hour to Walmart’s 12.67.

Despite paying higher wages and offering more generous benefits, Costco not only nets more per square foot than Walmart, its prices are competitive with—and sometimes better than—those of Walmart.

Early last year Consumer Reports ran a very interesting chart comparing prices for the same brand of purchases like flour, coffee, tall kitchen bags, toilet paper and similar items.  Consumers compared the costs of store brands, Costco, Walmart, various regional chains and Walgreens for each item. Store brands, unsurprisingly, were cheapest overall.

Next was Costco.

As the New Yorker article noted, there are solid business reasons to pay workers more—turnover declines, and better-paid employees tend to work harder. There is also the question of fundamental fairness. American corporations pay their executives truly obscene amounts, while wringing every dime possible out of people who can least afford to work for poverty wages. When Bertolini announced Aetna’s decision, he talked about inequality and corporate responsibility, saying “For the good of the social order, these are the kind of investments we should be willing to make.”

When Charlie Wilson was President of General Motors, during the Eisenhower Administration, he supposedly said “What’s good for General Motors is good for America.” What he actually said was “What’s good for America is good for General Motors.”

Wilson was right. Reducing inequality will be good for America, and what’s good for America is good for business.

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Brace for Blowback…

Or was that Brownback? As in retrograde Governor of Kansas?

According to AP,

Brownback rescinded an executive order issued in August 2007 by then-Gov. Kathleen Sebelius barring discrimination based on sexual orientation or gender identity. The order applied to hiring and employment decisions by agencies under the governor’s direct control and required them to create anti-harassment policies as well.

 Brownback has defended his state’s constitutional ban on same-sex marriage,  which was recently invalidated by the federal courts. Apparently, this was his “I’ll show you” revenge.

At the same time he rescinded the order, which he criticized as “unilateral” (I think Executive Orders are “unilateral” by definition…) Brownback issued a new order reaffirming the state’s commitment to prohibit discrimination based on race, color, ethnicity, national origin, gender or religion. In other words, Kansans shouldn’t pick on people unless they’re gay.

“This executive order ensures that state employees enjoy the same civil rights as all Kansans without creating additional ‘protected classes’ as the previous order did,” Brownback said in a brief statement. “Any such expansion of ‘protected classes’ should be done by the Legislature and not through unilateral action.”…

Tom Witt, executive director of Equality Kansas, the state’s leading gay-rights group, said the jobs of hundreds of gay, lesbian and transgendered workers are now at risk, after they’ve spent nearly a decade believing they were safe on the job after disclosing their orientation or gender identity.

Two steps forward (aka same-sex marriage), one step back.

Kansas should be ashamed.

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Asking the Wrong Question

Yesterday, I posted about Roy Moore and Alabama’s resistance to same-sex marriage, and a commenter took the federal courts to task, asserting that they’d exceeded their authority by invalidating “the will of the people.”

The evidence of over-reach? Nowhere does the Constitution talk about same-sex marriage.

This is an argument that makes my head explode, because it betrays one of the most fundamental misunderstandings of our legal system.

Of course there’s nothing in the Constitution about same-sex marriage. There’s nothing in it about any kind of marriage. Or about the right to travel, or practice a profession, or numerous other rights it protects. That’s because the Constitution is not the source of our rights.

The Founders were persuaded by Enlightenment philosophers like Hobbes and Locke that humans are born with “natural rights.” We have those rights by virtue of being human (or, if you are religious, because we were “endowed” with them by a creator). The job of government, according to Hobbes, was to protect those natural rights and our individual liberty; Locke agreed, writing that government needed to be limited so that state power would not be used to infringe our natural rights and liberties.

The Bill of Rights doesn’t grant rights; it limits government. Even when that government is expressing “the will of the people”–or as the Founder’s might have put it, the “passions of the majority.”

If someone wants to argue that there is no “natural right” to choose your own marriage partner–that the right to live your life in accordance with your own conception of morality and with fidelity to your deepest identity is not a human right–I’ll disagree strongly, but that would be the appropriate argument.

Triumphant declarations that you read the text of the Constitution and didn’t find a “right”  to same-sex marriage simply tells the world that you are profoundly ignorant of the purpose of our Constitution and the theory of government upon which it was based.

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Alabama: Why Judges Shouldn’t Be Elected

He’s baaack!

Roy Moore, the infamous “Ten Commandments” theocrat, is serving a second stint as Alabama’s chief justice. Moore was first elected to that position in 2000, but was removed after refusing to move a Ten Commandments monument he had installed at the entrance to the courthouse. Carved into a five ton boulder. In a July 2003 ruling, the appeals court compared Moore’s actions to the

“position taken by those southern governors who attempted to defy federal court orders during an earlier era,” citing the actions of former governors Ross Barnett of Mississippi and George C. Wallace of Alabama in trying to block campus integration and protest marches during the height of the civil rights movement.

“Any notion of high government officials being above the law did not save those governors from having to obey federal court orders, and it will not save this chief justice from having to comply with the court order in this case,” the appeals court wrote.

In November 2003, the state ethics panel unanimously voted to remove Moore from the bench. He was reelected in 2012, narrowly defeating a candidate who didn’t join the race until August after Democrats disqualified their original candidate. (What was that old saying?–you can’t beat something with nothing.) When it became apparent that he’d won, he told supporters

“Go home with the knowledge that we are going to stand for the acknowledgment of God.”

Now, Moore has told the state’s probate judges–who evidently issue marriage licenses in Alabama– to ignore a federal judge’s ruling that same-sex marriages could proceed, and a majority of them have been complying.

Interestingly, Alabama does not require probate judges to have any sort of legal education. It’s also one of thirteen states where probate judges are elected in partisan primaries and general elections.

The U.S. Constitution made federal judges independent precisely in order to avoid this sort of assault on the rule of law. Congress and the Executive Branch are supposed to answer to the voters; courts of law are supposed to answer to the Constitution.

In best-case scenarios, judicial elections give rise to the appearance of impropriety– did campaign contributions influence the administration of justice? In the worst-case scenarios, judicial elections give you a Roy Moore.

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