America’s Small Towns as Opportunity Zones, Part II

We continue the discussion of the provision in the new Federal tax bill for designating small towns in trouble in this country as “Opportunity Zones,” thus making them eligible for assistance in the form of tax incentives.

One in six Americans lives in what the Economic Innovation Group calls a “distressed community,” where median household incomes remain far below the national level, which is $59,000 a year, and the poverty rate is well above the national average. Those communities are urban, rural and suburban. On average, the communities lost 6 percent of their jobs and a similar share of their business establishments from 2011 to 2015, according to census data.

        Gassaway, West Virginia                     Princeton, West Virginia

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America’s Small Towns as Opportunity Zones, Part I

The news about small-town life in America is not all bad. We have discovered through this recent article in The New York Times that there is an intriguing provision in the recent tax bill that would allow—in fact encourage—long-term investment in troubled towns. By being designated  “Opportunity Zones,” these towns or neighborhoods within towns would be targeted for development by means of tax incentives. What finer use of this country’s wealth than the reinvigoration of its civic life at this sub-metropolitan level? Before investing overseas let us look to our own. Our responsibility to our immigrants—our “huddled masses”—does not cease with their admission at Ellis Island.

If the zones succeed, they could help revitalize neighborhoods and towns that are starved for investment.

They could also deliver a windfall, in the form of avoided capital gains taxes, for corporations and financiers who invest in the Opportunity Zones.

Yet risks remain, including whether investors will steer dollars toward areas that really need investment.

         Tim Scott

The zones were included in the tax law by Senator Tim Scott, a South Carolina Republican who was born into poverty in North Charleston, and based on a bill he co-sponsored in 2017 with several Democrats. The effort to create the zones was pushed by an upstart Washington think tank, the Economic Innovation Group, and its patron, the tech mogul Sean Parker, of Napster and Facebook fame, who enlisted Mr. Scott and others to sponsor the legislation.

         Sean Parker

“I had to explain it several times to folks,” said Mr. Scott, whose co-sponsors on a previous iteration of an opportunity zone bill included Senator Cory Booker, Democrat of New Jersey, and House lawmakers from both parties. “I came out of one of these communities, so I believe that there’s untapped potential in every state in the nation.”

Mr. Scott said that he had discussed the plan with Mr. Trump and that the president had later spoken approvingly of it. But in the rush to pass the bill over the course of a few frenzied weeks, the idea was never debated on the floor of the House or Senate. It was never promoted by Republican leaders or the White House.

         Kevin Hassett

“This is a little billion-and-a-half dollar part” of the law, Kevin Hassett, the chairman of Mr. Trump’s Council of Economic Advisers, said in an interview. “But if it’s successful, we’ll look back 10 years from now and say this was one of the most important parts of the tax bill, and one we didn’t talk nearly enough about.”

Mr. Hassett has a longtime interest in providing tax incentives for economic development in distressed areas. He said he first began discussing opportunity zones with Mr. Parker several years ago at a meeting in Mr. Parker’s Greenwich Village home. Before joining the Trump administration, Mr. Hassett wrote several white papers to help elevate the idea as part of an extensive, multiyear effort by the Economic Innovation Group to win support.

Mr. Hassett said he was never paid for any of that work. His interest, he said, stems from growing up near Turners Falls, Mass., which has struggled since the closing of its longtime paper mills.

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Mr. Parker, who made his fortune as the first president of Facebook, was looking for a way to steer investors to parts of America that have been starved for economic activity in the wake of the Great Recession.

To be continued

 

How to Reduce Medicaid: Increase Paperwork

The perfect bureaucratic tool for reducing the rolls of Medicaid subscribers is, of course, additional paperwork. And this is how it is being used by its opponents. Like the identity papers requirements imposed to make voter registration more difficult for poor people, increased paperwork is an effective weapon in the relentless war the rich are waging against the poor, the helpless, the most vulnerable members of our society and, most shockingly, their children.

By MARGOT SANGER-KATZ  Jan. 21, 2018 for The New York Times

In 2003, Washington State was facing a budget crisis and wanted to reduce spending on Medicaid. Instead of requiring people to establish their eligibility annually, the legislature began requiring them to do so twice a year, and added some paperwork. It worked: Enrollment in the health insurance program fell by more than 40,000 children in a year.

In the early 2000s, Louisiana wanted to maximize the number of eligible children who signed up for coverage, so officials simplified the sign-up process. It also worked: Enrollment surged, and the number of administrative cancellations fell by 20 percentage points.

In 2006, Congress asked states to verify the citizenship of beneficiaries by seeking their birth certificates. Across the country, children’s Medicaid enrollment dropped, despite scant evidence that ineligible children had been signed up. That policy was reversed as part of the Affordable Care Act in 2010.

The Trump administration’s decision to approve a first-of-its-kind work requirement for Kentucky’s Medicaid program last week has inspired concern that the program will leave behind Medicaid beneficiaries who are unable to find or keep work. But a large body of social science suggests that the mere requirement of documenting work hours is likely to cause many eligible people to lose coverage, too.

“Without being tremendously well organized, it can be easy to fail,” said Donald Moynihan, a professor of public affairs at the University of Wisconsin-Madison, who is writing a book on the effects of administrative burdens. Researchers have studied the ways complexity can reduce sign-ups for workplace pension plans, participation in food stamps and turnout in elections, he noted. “These sorts of little barriers are ways in which humans get tripped up all the time when they’re trying to do something that might benefit them.”

Anyone who has ever forgotten to pay a bill on time, or struggled to assemble all the necessary forms of identification before heading to the D.M.V., is likely to sympathize with how administrative hurdles can stymie someone. But these may be especially daunting for the poor, who tend to have less stable work schedules and less access to resources that can simplify compliance: reliable transportation, a bank account, internet access. There is also a lot of research about the Medicaid program, specifically, that shows that sign-ups fall when states make their program more complicated.

The Kentucky program won’t just create a work requirement for some beneficiaries; it will set up a broader obstacle course of administrative rules. Many beneficiaries will be asked to pay monthly premiums to the state to retain their coverage, as little as $1 a month for some very poor families, who are unlikely to have bank accounts.

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They will be asked to notify Medicaid officials any time their income changes. Their benefits could rise or fall depending on whether they get an annual checkup, or take a financial literacy course. Beneficiaries who fail to renew their coverage promptly at the end of a year will be locked out for as long as six months. Beneficiaries who are “medically frail” can get an exemption from the work requirement, but they will need to submit a doctor’s note.

Kentucky officials argue that the changes will give beneficiaries more dignity and promote personal responsibility. But they also estimate that around 100,000 fewer people will be enrolled in the program by the end of five years. There are about 1.3 million Medicaid recipients in Kentucky.

Medicaid premiums are not unprecedented, and they’ve been studied. The results have typically been reductions in enrollment. Laura Dague, a professor of health policy at Texas A&M who has studied the effects of small premiums, found that both frequency and cost tend to cause drops in enrollment. “Any time the state requires more contact from the eligible population or enrolled population, you lose people at those places of contact,” she said.

Kentucky now will ask its beneficiaries to interact with the state monthly, both to pay premiums and to document the time they’ve worked or pursued work. A few missed premiums or work filings could cost them their coverage, even if they continue to work the required number of hours.

Renewals, historically, have also been associated with drops in enrollment, even among eligible people. Washington State officials were surprised by their experiment in checking families’ eligibility, said Mary Wood, an assistant director of the state’s Medicaid program. When the state asked the families why they were dropping coverage for their children, they learned that many families remained eligible but had simply lost track of the paperwork.

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“If you were busy and you forgot to do it, you would lose coverage,” she said. Two years after making the policy change, Washington State reversed it, as part of a broader effort at simplifying the sign-up process. Since then, the state has invested heavily in making renewal a default for most families, by searching electronic databases to figure out who is eligible without having to ask them.

Other states have seen similar effects. Jason Helgerson, New York’s Medicaid director, was the Medicaid director in Wisconsin in 2008 when the state started using data from other public programs to sign up people for Medicaid.

“We picked up almost 100,000 people on our first day under the new rule,” he said.

Wisconsin and Washington haven’t been the only states to push for simplification. While states have typically tended to turn dials of complexity up or down depending on state budget constraints and political control, Medicaid programs started trending in the same direction in recent years.

Louisiana made enrolling every eligible child a priority, and, by making renewals easier, it was able to slash plan cancellations.

The Affordable Care Act helped codify that simplification, by requiring all states to use the same definitions of income, to use electronic databases whenever possible, and to eliminate other eligibility rules that made it harder and more time consuming for people to seek coverage. The goal of simplification has been to enroll as many eligible people as possible, and drive down the uninsured rate.

The Kentucky waiver will be a shift in the opposite direction, toward more rules, paperwork and ways for Medicaid patients to lose their coverage if they don’t keep up. Nine other states have asked to make similar program changes. Champions for the policy say the new rules will help teach low-income people to take more responsibility for their health.

Advocates for the poor are disappointed. “It’s sad to me that we’re going to have to go through this proof again if these things really get implemented,” said Judith Solomon, a vice president for health policy at the liberal Center on Budget and Policy Priorities. “There is no doubt in my mind that the experience will be the same.”

Oh-oh, Drive By Home Appraisals Again

Is there not a pervasive sense of deja vu when we learn that the drive-by method of valuation is again being used, and on tens of thousands of homes? It was shoddy practices such as this that created the housing catastrophe that resulted in the Great Recession of ten years ago, from which we are just emerging. Does no one remember the movie “99 Homes” about the fraudulent home sales in Florida that led to the recent crash?

An aerial view of residential neighborhoods containing rental properties in Spring Hill, Tenn. Photo: Luke Sharrett for The Wall Street Journal

By RYAN DEZEMBER and PETER RUDEGEAIR  

When Blackstone Group LP wanted to borrow hundreds of millions of dollars to buy foreclosed homes after the housing crash, it needed a quick, inexpensive way to value thousands of houses the investment firm already owned and was offering as collateral.

Blackstone and its lender, Deutsche Bank AG, settled on a sort of drive-by valuation done by real-estate agents that are more cursory and cost far less than traditional appraisals.

Congress outlawed the use of such assessments, called broker price opinions, or BPOs, to value properties for traditional mortgages. But the prohibition, enacted as part of postcrash financial regulation, doesn’t apply to investors buying tens of thousands of houses.

Now these perfunctory valuations abound, underpinning tens of billions of dollars of home deals. Sometimes the process is outsourced to India, where companies charge real-estate agents a few dollars to come up with U.S. home values by consulting Google Earth and real-estate websites.

BPOs have been used to value collateral in the more than $20 billion of bonds sold by institutional landlords, such as Blackstone’s Invitation Homes Inc., and in the fast-growing business of lending to individual house flippers. Banks request them when considering whether to foreclose or negotiate repayment plans with delinquent homeowners.

Their popularity shows how Wall Street is finding ways to adapt to government efforts to crack down on some of the excesses that contributed to the housing crisis. Critics say BPOs are ill-suited to gauge home values and could leave debtholders with less collateral than they thought. Properties worth less than their debt could result in losses for investors, while inaccurate price information might misguide a lender in a foreclosure process.

“BPOs are a creature of financial institutions that want deals to close fast, and so they don’t have to use an appraiser,” said Donald Epley, a retired University of South Alabama professor who helped write national appraisal standards after the 1980s savings-and-loan collapse. “You’re just dumbing down the standards to make the loan.”

Their proliferation has drawn attention from the Securities and Exchange Commission, which is investigating whether rental-home companies pushed for higher valuations on properties underlying securities. Meanwhile, appraisers and Realtors say the quality of BPOs has deteriorated as the price for performing them has dropped to as little as $25 a house from $50 or more.

Unlike appraisers, people who perform BPOs don’t need much training or an appraisal license since the estimate is simply meant to suggest listing prices.

Andrew Garfield is instructed by Michael Shannon on how to misinform new home owners in order to make repossession easier, from the film “99 Homes.”

BPO proponents, including investors and rental-company executives, say that when pooling thousands of houses in an investment vehicle, individual valuations that are too high or low tend to balance out. The difficulty for appraisers to enter occupied homes also pushes investors toward BPOs, which they say are usually as accurate as appraisals.

“BPOs have really taken hold as a way for lenders and investors to do evaluations en masse,” said Dennis Cisterna, chief executive of Investability Solutions, which provides services to rental-home companies. “Using appraisals on every property usually isn’t financially or operationally feasible.”

When Fannie Mae last year guaranteed about $1 billion of Invitation Homes debt, it accepted BPOs for the 7,204 houses serving as collateral. Assuming a typical appraisal price of $450 and the $95 that Invitation Homes pays per BPO, the company saved about $2.6 million.

Credit-rating firms usually discount BPO values when grading rent-backed bonds. Kroll Bond Rating Agency has trimmed them by about 10% and uses the lower of the reduced BPOs and the amounts spent buying and renovating the homes.

“We’re never taking BPOs at face value,” said Kroll’s Daniel Tegen.

BPOs have been around for decades but boomed in the mortgage meltdown. Lenders ordered reams of them to price repossessed homes. Real-estate agents gobbled up the jobs as home sales dried up. Many, like Barbara Eisman, hoped the valuation work would lead to property listings.

It never did, said Ms. Eisman, a Washington, D.C., Realtor. Yet the roughly 5,000 BPOs she performed over the last decade provided regular income. Her recent assignments have included drive-bys to see if foreclosed homes were vacant and interior exams for mortgage modifications.

Ms. Eisman said an Indian company, AbVin Ventures LLP, offered to do the work for her for $10 a house. AbVin asked for her login credentials for sales databases and the firms that hire her. She declined. “They’ll kick me to the curb if they find someone is logging in and doing the work,” she said.

A foreclosure in progress from the film “99 Homes”

Edward Wisniowski, a Crest Hill, Ill., broker, dialed back on providing price opinions after pay for many fell below $50. He turned away Indian firms offering to do his work. “I don’t know how they can do it,” he said.

AbVin co-founder Abhishek Shimoga Onkaraswamy said his staff of 50 in Bangalore churns out as many as 300 BPOs a day using the clearinghouses of sales and listings data compiled by Realtors, who he said provide AbVin with login information, as well as websites like Zillow.

“There’s not a big difference between what a broker can do and what we can do,” he said. “We know what these companies are expecting from the brokers.”

Francois Gregoire, a St. Petersburg, Fla., appraiser and former state regulator who has examined thousands of BPOs as a litigation consultant, said quality varies greatly. “Some look like the real-estate broker hired someone to go take photos of the property and did nothing more than sign the BPOs.”

In the prospectus for the loan it guaranteed for Invitation Homes, Fannie Mae said drive-by assessments supplied by Green River Capital valued the collateral homes at 66.7% more than the loan amount, but that “the market values of the properties may not be accurately reflected.”

People familiar with Fannie’s processes said it compared the BPOs to home prices of the same properties in its own database.

Preferable Alternatives to Bail Bonds

We pick up once again the story of the injustice of bail bonds for those who cannot afford them and discover that there are alternatives and that the alternatives work as well as the traditional bail bond.

By ASHLEY SOUTHALL  Jan. 16, 2018 for The New York Times

By the time a Bronx jury acquitted Belkis Batista of attempted murder last August, her family had paid more than $16,000 to a bail bond company to help her stay out of jail while fighting the charge, which stemmed from a fight with her brother. A few weeks after the verdict, the bondsman returned about $5,740 and kept the rest.

When Belkis Batista was arrested, a judge set her cash bail at $50,000. Unable to afford that, her family got a commercial bond that wound up costing them more than $10,000. Credit Alex Flynn for The New York Times

 

Ms. Batista, a school bus aide who was making $250 a week, and her family could hardly afford the difference, but it had been the only option. At her arraignment 16 months earlier, a judge had given Ms. Batista the same two options courts give most defendants facing jail: pay cash bail up front, or hire a bondsman to post bail at a fraction of the upfront cost.

images-8   Bail-Bondsmen

Judges’ reliance on commercial bail bonds, a routine practice in the United States that is uncommon or illegal in most other countries, is a significant reason that New York City spends $10 million each year to jail thousands of defendants who post bail within a few days and are released, according to Comptroller Scott M. Stringer, the city’s chief financial officer. Mr. Stringer is set to release a report calling for commercial bail to be eliminated in the city.

For the accused in New York City, who are mostly poor African-American and Hispanic people, the financial burden is acute: about $28 million in lost wages, and between $16 million and $27 million in nonrefundable fees paid to bail bond companies, according to the report. The report says the fees, which are likely higher because bond companies do not always adhere to legal limits, represent a “significant transfer of wealth from low-income communities.”

“The commercial bail process is egregious to me, and we have to push the judiciary,” Mr. Stringer said in an interview. “Part of doing this report is to put the marker down and say ‘You’re costing the city money, you’re further putting poor families into poverty. Bail is not supposed to be punitive, and there are alternatives that the judicial system should be looking at.’”

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Calls to end commercial bail are part of a broader movement to fix a pretrial release system that many believe is broken. The city is experimenting with ways to reduce its jail population with a goal of closing the Rikers Island jail complex. And as state lawmakers consider eliminating cash bail, an idea boosted by Gov. Andrew M. Cuomo in his State of the State address, some prosecutors have stopped requesting it for most misdemeanor offenses.

But for now, Mr. Stringer and others are pushing for meaningful changes under the existing law, which gives judges options to set bail with bonds that can be paid in court with little to no money. Unlike commercial bail bonds, payments are returned when the case is resolved.

While current bail reform efforts mainly target people charged with misdemeanor offenses and nonviolent felony crimes that do not involve domestic violence, Mr. Stringer’s proposal could aid any defendant eligible for bail.

Emerging evidence suggests that alternative bail forms are just as effective in making sure people return to court. In one analysis released in September, the Vera Institute of Justice tracked 99 cases where judges set alternative bail options. Sixty-eight defendants were released on bail and five were freed on their word, and they returned to court at roughly the same rate as people who are released without bail conditions or freed after paying cash or posting a bond.

“The problem is old,” Insha Rahman, the author of the analysis, said. But in the state bail law, she added, “the solutions have been there since 1971.”

Woods-Bail-Bonds-Marion-County-Indiana-1  1024x1024

Not everyone is thrilled with the idea. Michelle Esquenazi, the owner of Empire Bail Bonds, one of the largest bail bond companies in the state, says her industry keeps people out of jail, while sparing taxpayers the cost of apprehending those who miss court appearances.

“The bail bondsman is vilified,” said Ms. Esquenazi, chairwoman of the New York State Bail Bondsman Association. “We’re an integral part of any successful criminal justice system.”

The use of commercial bail bonds in the city has risen even as crime and arrests have fallen, and they now make up more than half of all bail payments. In 2017, there were 12,345 private bail bonds executed in the city — a 12 percent increase from 2015 — with a cumulative value of $268 million, according to the report.

The commercial bonds are attractive because paying the full cash bail is impossible for many defendants. Contracting with bail bondsmen allows them to stay out of jail for a smaller upfront cost.

Lucian Chalfen, a spokesman for the state’s unified court system, said judges made decisions about which types of bail to assign based on what prosecutors and defense attorneys request in court.

83baxter_med  building-with-sign-bail-bonds-and-phone-number-los-angeles-california-B750RH

“We encourage judges to consider the use of all types  of bail,” he said. “We have done training outlining the various types and simplified the forms, but ultimately the decision comes down to judicial discretion.”

Ms. Batista was arrested after she intervened when her brother attacked her sister in their family’s ninth-floor apartment in the Webster Houses, a public housing complex in the Morrisania section of the Bronx, she and her lawyer said. Frightened, she approached her brother with a kitchen knife, then tried to retreat. But he lunged at her and was stabbed near his heart, requiring surgery. Her bail was set at $50,000 cash, or $100,000 bond.

Her family paid $12,000 to Marvin Morgan Bail Bonds, which required her to wear a $300-per-month ankle monitor for 16 months. The bondsman gave them one receipt showing the $5,740 in “returnable collateral,” while another, for $6,260, did not specify what it covered.

“That amount of money for you to be found not guilty,” said Ms. Batista, now 31, who spent two weeks in jail and was suspended from her job while the case was pending. “That’s crazy.”

Vague laws and lax regulation also leave people vulnerable to the whims of bail bondsmen. Their regulator, the state Department of Financial Services, received 111 complaints over the last three years alleging a range of misconduct, including unauthorized fees and unreturned collateral.

Since 2013, the office of the New York attorney general, Eric Schneiderman, has investigated 25 complaints against bail bond companies, including Marvin Morgan Bail Bonds. The company could not be reached for this article because phone numbers listed for it were disconnected.

Belva Service, a home attendant, filed a complaint against the company in 2016 after it refused to return the collateral she paid for her son, who was arrested barefoot and disoriented in Brooklyn on felony charges. Her son, who is schizophrenic, needed medical attention, she said.

Marvin Morgan Bail Bonds charged her a $1,760 premium, a $1,000 courier fee, which was illegal, and took $1,500 for collateral, according to Nick Encalada-Malinowski of the nonprofit group Vocal-NY, who was then a social worker for the Brooklyn Defender Services. The company returned the collateral after her son’s case was resolved in the mental health court, but refused to refund the illegal fee until Mr. Schneiderman’s office intervened in a letter.

“You become very vulnerable in this position,” Ms. Service said, “and this is where they come in and make their money, because you need them.”

Follow Ashley Southall on Twitter: @AshleyAtTimes

Unable to Pay $500 Bail, Homeless Man Jailed for 2 1/2 Months

Again the law falls most heavily on the most vulnerable, the poor. A few people, here and there, are waking up to the injustice of a system which penalizes only those who can’t afford it.

 

ATLANTA — The police arrested Randall McCrary, a mentally ill man, at a gas station on Oct. 22. They found him covered in his own waste and screaming at customers.

What happened next to Mr. McCrary, advocates say, was a depressingly common reality for poor people charged with minor crimes in Atlanta. The municipal court set his bail at $500, the predetermined amount for a disorderly conduct charge. Mr. McCrary, 45, is indigent and could not pay.

So he waited, in jail, for more than two and a half months, at great cost to both local taxpayers and Mr. McCrary himself. While he was detained, the federal government discontinued his disability checks, said Sarah Geraghty, a lawyer for the Southern Center for Human Rights, who filed a petition Monday demanding his release.

Sarah Geraghty of the Southern Center for Human Rights filed a petition asking Atlanta to release a man who couldn’t post a $500 bail. Credit Audra Melton for The New York Times

Ms. Geraghty said Mr. McCrary’s case exemplified the injustices inherent in Atlanta’s misdemeanor bail system, which resulted in hundreds of poor people being locked up each year, sometimes for long stretches, because they had been assigned bail amounts they could not pay. In 2016, at least 890 people were transferred from the city to the county jail after failing to make bail, the center found. They were held, many of them on minor charges like littering or driving without a license, for a total of 9,000 hours, costing taxpayers roughly $700,000.

The petition for Mr. McCrary generated some publicity, and on Tuesday, he was released after an anonymous donor posted his bail.

Ms. Geraghty and her allies are now pressuring Atlanta to embrace a national wave of bail reform that has already taken hold in places like Chicago, Houston, New Jersey and, most recently, Alaska. Those who support reform argue that detaining the working poor over small bail amounts can ruin careers and disrupt families. They note that jail time racked up while waiting for a case to be resolved can sometimes exceed the jail time prescribed for the offense itself. They argue that such detentions violate the 14th Amendment’s equal protection clause, because it denies arrestees “the pretrial freedom made available to those who can pay for release for the same offense,” as Ms. Geraghty wrote in her petition.

And, they say, bail does nothing for public safety, using access to money rather than potential for danger to determine who goes free. “This is the right time for Atlanta to move away from wealth-based detention,” Ms. Geraghty said.

Earlier this month, the Southern Center for Human Rights in Atlanta joined Civil Rights Corps, based in Washington, in sending a letter to Atlanta’s new mayor, Keisha Lance Bottoms, asking her to lead a change in the city’s bail system. The groups noted that they had forced changes in other Georgia cities by suing them.

But Atlanta already appears ripe for change. Ms. Bottoms has spoken candidly, and movingly, about the conviction of her father, the R&B singer Major Lance, on cocaine charges in the 1970s. “I learned very early on that good people sometimes make bad decisions,” she said in a biographical campaign video. Ms. Bottoms has pledged, in her agenda for her first 100 days in office, to create a criminal justice reform commission.

“When we know that we have people in the city of Atlanta who are incarcerated simply because they can’t afford to pay to get out of jail, then that’s certainly a concern,” Ms. Bottoms said in a news conference Thursday. “And that’s something I’ve asked our law department to take a very close look at, to see if there’s something that can immediately be done to remedy this.”

The Georgia Legislature is also likely to take up the matter of misdemeanor bail this session, part of a multiyear criminal justice reform effort led by the Republican governor, Nathan Deal.

Ms. Geraghty’s group has been combing the jail dockets to find people like Mr. McCrary, who had been detained for long periods for want of a few hundred dollars. In November, Ms. Geraghty filed another petition in Georgia Superior Court, demanding the release of a homeless man named Sean Ramsey.

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Mr. Ramsey, 48, had been arrested on Sept. 19 for holding a cardboard sign at an intersection that read, “homeless please help.” The charge was illegally soliciting motorists in a roadway. A day later, a municipal court set his bail at $200, which he could not pay.

 

Then, it appears, Mr. Ramsey got lost in the system. He was not seen by a public defender, Ms. Geraghty said, even after Oct. 4, when court records show that his case was dismissed. He stayed in jail until Nov. 29 — more than 70 days — before the county solicitor reviewed Ms. Geraghty’s petition, and he was released.

Civil Rights Corps and the Southern Center for Human Rights have raised similar issues in Calhoun, Ga., a small city about 70 miles north of Atlanta, filing a federal lawsuit that resulted in a judge’s blocking the city’s policy of holding poor people who could not afford bail. The case argues that a preset schedule that assigns bail amounts to crimes without considering the defendant’s ability to pay is unconstitutional. The case is currently before the federal appellate court in Atlanta.

The Georgia Association of Professional Bondsmen and the American Bond Coalition, the state and national bail-bond industry groups, have filed friend-of-the-court briefs in support of Calhoun’s policy, arguing that the preset bail schedules do not violate the equal protection clause.

“Under the city’s bail schedule, a defendant’s bail amount is initially set to match the crime he is accused of committing,” the groups wrote in their brief to the appellate court, describing a system similar to Atlanta’s. “The schedule does not consider, let alone discriminate on the basis of, the accused’s wealth or poverty.”

In an interview, Charles Shaw III, the president of the state bond industry group, made another argument. He said that without bail, there was no incentive “for the defendant to reappear in court for purposes of the administration of justice. Because no one has stake in the game.”

That point is moot, of course, for those who cannot afford bail at all. And judges have other options, such as setting bail that the person owes only if they fail to appear in court.

Other grass-roots solutions have sprung up in the meantime. Dozens of groups around the country are offering to pay bail for people who cannot afford it. In Georgia, a coalition led by the activist group Southerners on New Ground, or SONG, has been collecting donations to pay bail for black women.

Since May 2017, said Mary Hooks, the SONG co-director, the coalition has bailed out more than 50 women arrested in the city of Atlanta, and more than 100 around the South.

As Energy Source Shifts from Coal to Wind and Sun, Thousands of Jobs Vanish

The irony is that the old ways of making electricity by coal or nuclear power required thousands of workers to dig the coal and man the power plants while the new sources of energy from wind and sun require almost none. The bosses win again.

01retrain3-superJumboBy RUSSELL GOLD  Jan. 16, 2018 for The Wall Street Journal

As coal and nuclear power plants around the U.S. close due to competitive pressures, the number of people employed in making electricity is shrinking.

Older power plants are being retired at an unprecedented pace as power producers wage a fierce fight for market share. They are being supplanted by newer power plants fired by natural gas, as well as wind and solar farms, which often are simpler to operate and require fewer workers.

“The power sector is just not going to contribute to the economy in terms of jobs the way it once did,” said Curt Morgan, president and chief executive of Vistra Energy Corp, the electricity producer which used to be part of the former Energy Future Holdings Corp., and is planning to merge with rival Dynegy Inc.

Last week, Vistra shut down a power plant in Texas, along with a nearby mine that supplied it with coal via a 15-mile-long conveyor belt. Altogether, they employed 450 people.

Later this summer, Vistra expects to open up one of the largest solar farms in the country in the western part of the state. It will employ two people—and they might be part time, according to the company.

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Forty-one percent of the electricity in the U.S. is being generated by natural gas, wind and solar. In 2016, the most recent year federal data are available, gas provided about 33.8% of U.S. power, wind was 5.6% and solar was 1.3%. Five years ago, those three sources combined generated 27.7% of the total. Meanwhile, coal and nukes have fallen to 50% from 62%.

A flood of inexpensive natural gas, created by the fracking boom, helped drive the change along with state mandates and federal tax credits for more renewable energy. But lower operating costs for the newer plants helped as well.

It generally takes five times as many coal mining and power plant workers to generate a megawatt hour of electricity as wind farm operators, according to BW Research Partnership, an economic and workforce consultancy. Coal takes 50% more workers than gas, and twice as many as solar, it estimates.

“Natural gas, solar and wind are all less job intensive for ongoing operations,” says Philip Jordan, a vice president at the Carlsbad, Calif., based group, which has analyzed worker data for the U.S. Energy Department.

Coal plants require people and machines to unload the combustible rocks, sort them into piles and prepare them to be pulverized into a fine mist, which is then blown into boilers. Once the coal is burned, the resulting ash needs to be collected and disposed.

Natural gas is typically delivered straight to power plants by pipeline—no unloading required. It combusts completely, so it doesn’t need people or machines to handle the residue.

Wind and solar farms don’t require fuel to make power, so they don’t need workers to procure, deliver or process it. Solar farms also have few moving parts requiring maintenance or repair. Some newer wind turbines use permanent magnet motors instead of gearboxes connected to shafts, reducing the maintenance required.

Nuclear power plants, the most complex power producers—and the ones with the highest safety and security risks—require the most workers, including about 9,000 armed guards at the country’s 62 nuclear facilities.

Running Exelon Corp.’s 2,300-megawatt Limerick Generating Station in Pottstown, Penn., requires 800 workers. A two-hour drive north, Invenergy LLC is building the Lackawanna Energy Center, a 1,480-megawatt natural-gas fired plant. Once running, it will employ 30 people. Both will compete to provide electricity to the same regional power grid.

Puget Sound Energy, a utility based in Bellevue, Wash., plans to close two of the four units at the coal-burning Colstrip Power Plant in Montana. About 100 workers will lose their jobs when the 614 megawatts of power are taken down by 2022.

Its newest large power source is a wind farm completed in 2012, the Lower Snake River Energy Project. The 149 turbines there generate less power, about 343 megawatts. But they take far fewer people to keep running: about 20 full-time employees.

“The big difference is that a coal plant has many more systems” requiring maintenance and upkeep, said Grant Ringel, a spokesman for Puget Sound.

Short of a government intervention tipping the scale back in favor of coal and nuclear power, it seems unlikely that this trend toward using more gas and renewables will reverse. The Trump administration recently proposed such a market intervention, but an independent federal commission voted against it.

As older coal and nuclear plants close, the loss of well-paying jobs has become a sensitive political issue, especially in rural communities. Representatives of the wind and gas industries are quick to point out that they are creating good jobs in similar parts of the country.

Hannah Hunt, a senior analyst for the American Wind Energy Association, said the permanent jobs being created by the wind industry are “well-paying jobs and they allow people to have a stable employment for a number of years.”

A spokesman for Invenergy, which is building the Lackawanna natural gas plant in Pennsylvania, noted that the 30 jobs being created were for skilled technicians and plant operators and would pay, on average, about $125,000 a year.

That doesn’t do much for Dave Barkemeyer, the elected judge in Milam County, Texas, where the coal mine and plant Vistra Energy is closing are located. He estimated that the closure would erode about 15% of the county’s tax base.

Some solar developers have recently expressed interest in building farms in Milam County, but that wouldn’t replace the jobs and revenue lost, Mr. Barkemeyer said.

“A solar farm would have some value but we’re losing very good jobs, high paying jobs. Union jobs,” he said.

Work Requirements Are a Sham

“These days, they’re really time limits, or ruses to run needy people through bureaucratic mazes until they miss a crucial step.”

So claims David Super in this valuable article in this morning’s Los Angeles Times. He explains why today’s low unemployment figures are able to conceal  that we still have an unhealthily large non-working population—men and women looking for no longer existing jobs whom the government and industry refuse to retrain for needed jobs. 

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By DAVID A. SUPER   Jan. 15, 2018 for the Los Angeles Times

Once upon a time, everyone knew what a work requirement was. The agency administering a public benefit program would offer unpaid work to a recipient and reduce or terminate assistance if she or he refused to comply. Supporters extolled the requirements as character-building; critics worried about displacing regular employees and sometimes hazardous workplace conditions. Those days are long gone.

Today, politicians — including in the Trump administration, which last week said it would allow states to tie Medicaid benefits to employment — use the term “work requirement” to hide the true nature of their proposals.

So-called work requirements are now really time limits, disqualifications for those whose job searches have failed to bear fruit, or ruses for running needy people through bureaucratic mazes until they miss a step and lose eligibility.

As part of the 1996 welfare reform legislation, for example, the Clinton administration and the Republican Congress added a “work requirement” to the Supplemental Nutrition Assistance Program, or SNAP. Childless adults between the ages of 18 and 50 could obtain no-strings-attached access to the program for only three months. After that point, if they couldn’t find a job, they could theoretically retain eligibility by performing workfare.

    

But there was a catch: States were not obliged to offer recipients workfare slots. And, in fact, the vast majority of SNAP recipients cut off under the “work requirement” were given no opportunity to work for continued aid.

Even when the Clinton administration set aside a pool of money to reward states that pledged to offer work slots, only a small handful accepted. As a result, millions of needy people, many of whom qualified for no other public programs, were cut off from food assistance without regard to their willingness to work.

The SNAP “work requirement” continued in force until the Great Recession, when Congress suspended it temporarily as part of the Obama administration’s stimulus law. In recent years, however, it has been reimposed on much of the country, with many otherwise-eligible people suddenly denied food assistance when they could not find jobs quickly enough.

We shouldn’t be surprised that states aren’t operating large work programs — they’re difficult and expensive.

All of us can think of a few public services that could be improved with better staffing, but finding enough such positions for hundreds of thousands or even millions is an entirely different matter. Unemployed public-benefit recipients commonly have limited job skills. It’s a Herculean effort to match people with tasks they can perform. Those recipients who do have skills, moreover, turn over rapidly as they get paying jobs in the private sector.

Yet the Trump administration’s letter to states last week encouraged them to make the phony SNAP “work requirement” the model for Medicaid eligibility restrictions. As per usual, states are not required to give Medicaid beneficiaries workfare slots if they cannot find private-sector employment.

   

A close cousin of the “work requirement” as time limit is the “work requirement” as calendar-filler that’s really an excuse for caseload reduction. In some states, for instance, recipients subject to “work requirements” are not actually asked to work but rather obliged to come in for a seemingly endless series of orientations, meetings and repetitive pep talks. Sooner or later, the notice for one of these meetings comes late in the mail, or the meeting conflicts with an interview the recipient has for an actual job. As a result, the recipient is sanctioned for non-compliance. Because our safety-net agencies are woefully understaffed, getting through to someone on the phone to explain the problem and reschedule is often impossible.

The Trump administration’s letter to states also holds up as a model the work programs under the Temporary Assistance for Needy Families block grant. These programs have dramatically reduced participation despite continued high poverty among families with children — which is the whole point.

The transformation in the nature and function of “work requirements” reflects a change in the agendas of those proposing them. Previously, many conservatives’ public welfare policy focused primarily on correcting the perceived flaws in low-income people’s behavior. Today, the focus is on paying for huge upper-income tax cuts. Traditional work requirements — in which recipients were actually given the opportunity to work for continued aid — do not serve that purpose because they actually cost money.

    

Arbitrary and unreasonable time limits and purging still-needy recipients through bureaucratic churn can reap large budgetary savings. And calling these proposals “work requirements” makes them seem fair and reasonable.

David A. Super is a professor of law at Georgetown University.

 

The American Worker, Part IV

 Excerpted from Steven Greenhouse’s book The Big Squeeze: Tough Times for the American Worker (Knopf, 2008). Greenhouse is a labor and workplace reporter for The New York Times. 

Because of its length, this article is presented in four parts, of which this is the last. 

      

Workers at Wal-Mart and the Cheesecake Factory complained that managers often refused to give them the lunch breaks and fifteen-minute rest breaks that state law required. Bella Blaubergs, a diabetic who worked at a Wal-Mart in Washington State, said she nearly fainted several times from low blood sugar because managers often would not let her take breaks. At numerous Abercrombie & Fitch stores, African-American, Asian, and Hispanic workers complained that they were relegated to back-of-the-store jobs, doing stockroom work and inventory, while white employees were given jobs up front — all to promote Abercrombie’s preppy, fraternity, all-American look. Some cleaning workers at several of the hottest software companies in Silicon Valley earn so little that they live in rented garages in someone else’s home. Rosalba Ceballos, a divorced immigrant from Mexico, was one of them; she lived with her three daughters — ages one, three, and seven — in an absurdly cluttered, windowless garage just outside Palo Alto.

Middle-class workers have not been immune. On a day in 2003 that Circuit City workers remember as “Bloody Wednesday,” the retailer fired 3,900 senior commissioned salespeople — some earned $50,000 a year — having concluded that their commissions and wages were too high. Circuit City simultaneously hired 2,100 replacement salespeople who were to receive lower wages and far lower commissions. Then in 2007, Circuit City laid off another 3,400 employees because they, in the company’s words, earned “well above the market-based salary range for their role.” Many of those laid off were earning around $29,000 a year. Circuit City announced that these workers could reapply for their jobs ten weeks later, but if rehired, they would come back at the lower “market rate.”

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In her ten years at the Circuit City in Hoover, Alabama, Julie Godette was considered a model employee, assigned to train new hires and receiving repeated raises that brought her up to $16.40 an hour. She, too, was suddenly laid off. “To work that long for a company and to be let go because you did a good job really hurts,” Godette said. At JP Morgan Chase, Barbara Parkinson, a customer service representative in the global investment services department in New York City, said managers had repeatedly complained when workers submitted time sheets listing several hours’ overtime. To avoid management’s continued wrath, she and other workers decided to forgo the overtime pay due them. At RadioShack’s headquarters in Fort Worth, four hundred workers were fired by e-mail. “The workforce reduction notification is currently in progress,” the e-mail dryly informed recipients. “Unfortunately your position is one that has been eliminated.” Northwest Airlines gave laid-off workers a booklet entitled “101 Ways to Save Money.” But the booklet added insult to financial injury. “Borrow a dress for a big night out” and “Shop at auctions or pawn shops for jewelry” were among the tips it offered. And then it suggested, “Don’t be shy about pulling something you like out of the trash.” Rarely have so many economic and social forces been arrayed against the American worker. Downsizing, rightsizing, and reengineering have increasingly made job security an obsolete notion. Many workers fear pink slips so much that they are frightened to ask for raises or protest oppressive workloads.

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Globalization, including the recent rush to offshore hundreds of thousands of white-collar jobs, has increased such fears. Layoffs have become a fact of life. Nowadays, on nearly a daily basis, some company announces that it is laying off several thousand employees, and except for the workers and their families, virtually everyone who hears about it ignores it.

America has lost one-fifth of its factory jobs since 2000, jobs that have long been a stepping-stone to the middle class. There has been a concomitant decline in the labor movement to its lowest point in decades, undermining the one force that, for all its faults, created some semblance of balance between workers and management during the second half of the twentieth century.

The massive influx of immigrants has created a huge pool of easy-to-bully workers that has given managers greater leverage — most visibly in construction and meatpacking — to squeeze wages and worsen conditions for all workers.

Many companies have embraced the just-in-time workforce — a mass of temps, freelancers, and on-call occasionals whose lower pay and unstable status often undercut the wages, benefits, and job security of the traditional year-round workforce.

The position of the American worker has been further undermined by the economy’s evolution from industrial capitalism to financial capitalism. Industrialists were once firmly in control, intent on maximizing production and market share, but now investment bankers, mutual fund managers, hedge fund managers, and, increasingly, managers of private-equity funds wield great power and are forever pressuring the companies that they’ve invested in to maximize profits and take whatever steps are necessary to keep stock prices at their highest. Companies, in response, often skimp on wages, lay off workers, and close operations.

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Wal-Mart, founded in a small Arkansas town in 1962, has spearheaded the rise of a less caring, less generous, and often less law-abiding management style. Wal-Mart employs nearly 1.4 million workers in the United States, far more than any other company. With its phenomenal growth, it has become the world’s largest retailer, and its low wages and benefits — it provides health insurance to just half of its workers — have created a downward pull on the way that many companies treat their workers. (For that reason, we will examine Wal-Mart in great detail.) The Wal-Mart effect could be seen most starkly when the three largest supermarket chains in California — Safeway, Albertsons, and Ralphs — grew alarmed about Wal-Mart’s plans to open dozens of super-centers in California that would sell groceries in addition to general merchandise.

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The supermarket chains demanded lower wages and far less generous health benefits for all future hires, and after a bitter four-and-a-half-month strike and lockout in 2003-4, the chains got their way. The California supermarkets said they couldn’t compete when their cashiers earned $17.90 an hour on average and Wal-Mart’s earned $8.50 an hour.

The squeeze on the American worker has been further exacerbated by corporate America’s growing sway over politics and policy, making it harder for beleaguered workers to turn to government for help. When investigators unearthed serious child labor violations at a dozen Wal-Marts, officials in the Bush Labor Department signed a highly unusual secret agreement promising to give Wal-Mart fifteen days’ advance notice whenever inspectors planned to visit a Wal-Mart store to look for more such violations. Wal-Mart officials had been major donors to the Republican Party.

As a result of business’s strong influence over President George W. Bush and Republicans in Congress, the federal minimum wage remained stuck at $5.15 for nearly a decade. A full-time worker who earns $5.15 an hour grosses $10,712 a year, far below the $16,079 poverty line for a family of three. In 2007, the $5.15 minimum wage, after adjusting for inflation, was 33 percent below its 1979 level. In 2007, the Democratic Congress raised the minimum wage to $7.25 an hour over two years.

Nor have the tax policies emanating from Washington been very friendly to workers. President Bush and Republicans in Congress pushed vigorously to minimize taxes on investors, that is, taxes on dividends and capital gains, while urging elimination of the estate tax. Bush’s tax cuts saved the average middle-class taxpayer $744 a year, while saving $44,212 a year for the top 1 percent of taxpayers and $230,136 for the top one-tenth of 1 percent of households. Even though the government has done little of late to ease the squeeze on American workers, there are plenty of things government can do to alleviate the difficulties that workers face.

This concludes the four-part article

The American Worker, Part III

      

 Excerpted from Steven Greenhouse’s book The Big Squeeze: Tough Times for the American Worker (Knopf, 2008). Greenhouse is a labor and workplace reporter for The New York Times. 

Because of its length, this article is presented in four parts. 

Even though this is an era of increased economic volatility, the federal government has decided to let Americans fend increasingly for themselves. Just one-third of laid-off workers receive unemployment benefits, down from 50 percent a generation ago. And even though workers’ skills are becoming obsolete faster than ever because of new technologies and globalization, funding for the main federal program for retraining has been reduced by more than $10 billion in the last quarter century. “Americans increasingly find themselves on an economic tightrope, without an adequate safety net if — as is ever more likely — they lose their footing,” wrote Jacob S. Hacker, author of The Great Risk Shift. Business executives say they have been forced to tighten their belts on wages and everything else because they face ever-fiercer competition. That is true, but corporate profits have nonetheless soared, climbing 13 percent a year in the six years after the 2001 recession ended, while wages have remained flat.

(Employee productivity has also far outpaced wages, rising 15 percent from 2001 through 2007.) Corporate profits have climbed to their highest share of national income in sixty-four years, while the share going to wages has sunk to its lowest level since 1929. “This is the most pronounced several years of labor’s share declining,” said Lawrence Katz, an economics professor at Harvard. “For as long as we’ve had a modern economy, this is the worst we’ve seen it.” Very simply, corporations, along with their CEOs, are seizing a bigger piece of the nation’s economic pie for themselves, leaving the nation’s workers and their families diminished.

Many Americans are feeling the squeeze as part of a growing wave of worker exploitation. Faster line speeds at the nation’s meat and poultry plants are causing workers’ bodies to break down and leading to more amputations.

      

Workers have died at construction sites when scaffolding or trenches collapsed because supervisors ignored the most elementary precautions. Inside some of the nation’s best-known retail stores, immigrant janitors have been forced to work 365 days a year.

Exploitation is of course nothing new, as Upton Sinclair’s writings, Lewis Hines’s photographs, and the Triangle Shirtwaist fire all made clear. In the decades after the Great Depression, exploitation declined as the United States created the world’s most prosperous middle class and as business, labor, and government often worked hand in hand to improve workplace conditions. In recent years, however, worker mistreatment has been on the rise, spurred by a stepped-up corporate focus on minimizing costs and by an influx of easy-to-exploit immigrants. Corporate executives, intent on maximizing profits, often assign rock-bottom labor budgets to the managers who run their stores and restaurants, and those managers in turn often squeeze their workers relentlessly.

A steady decline in workplace regulation has opened the door to greater exploitation. Even though the workforce has grown from 90 million to 145 million over the past three decades, the number of federal wage and hour investigators has fallen. Seven hundred eighty-eight federal wage and hour inspectors are responsible for ensuring compliance at the nation’s 8.4 million business establishments. George W. Bush’s labor secretary, Elaine Chao, signaled her ambivalent views about enforcement when she said, “Sometimes it’s not what you do, but what you refrain from doing that is important.” The infamous Sago Mine in West Virginia had been cited 273 times for safety violations in the two years before an explosion there killed twelve miners in 2006. But none of those fines exceeded $460, and many were just $60 — a minuscule amount considering that the company that owned Sago had $110 million in annual profits. In the five years before, the Mine Safety and Health Administration, then run by former industry executives appointed by President Bush, failed to collect fines in almost half the cases in which it had levied them. The rising tide of exploitation has taken countless forms. Target, Safeway, Albertsons, and Wal-Mart have all hired cleaning contractors who required janitors to work the midnight shift thirty days a month. These contractors systematically broke the law by virtually never paying Social Security or unemployment insurance taxes, and they almost never paid janitors time and a half for overtime even though the janitors often worked fifty-five hours or more each week. These contractors sometimes dumped badly injured workers in front of a hospital or at a bus station with a ticket back to Mexico.

     

At Taco Bell, Wal-Mart, and Family Dollar, many employees complained that managers forced them to work five or more unpaid hours off the clock each week. The workers who were cheated often earned just $12,000 to $18,000 a year. At an A&P in Westchester County, New York, Wilfredo Brewster, a customer service manager, said he worked from six a.m. to six p.m. Monday through Friday, sixty hours, but was paid for only forty. Managers pressured him to donate his Saturdays to the store as well, telling him it would help him earn a promotion. Under federal and state law, he, as an hourly employee, was supposed to be paid overtime for those Saturdays.

      Stylists at SmartStyle, the nation’s largest hair salon company, said that pressure to minimize payroll costs was so intense that on days when there were few customers, managers often ordered stylists to clock out, then clean up the salon. Several hairdressers said they were occasionally paid for only half the hours they worked, their earnings sometimes slipping to $2.50 an hour, less than half the $5.15 federal minimum wage at the time. According to many workers and supervisors at Pep Boys, Toys “R” Us, Family Dollar, Wal-Mart, and other companies, some managers illegally tampered with time clock records to erase hours that employees had worked. Dorothy English, a payroll assistant at a Wal-Mart in Louisiana, said that if an employee had clocked forty-three hours in a week, her boss often ordered her to delete three hours from the worker’s time records to avoid paying time and a half.

“I told them this wasn’t right,” she said. “But they said, ‘This is how we keep people to forty hours.’ ” At dozens of upscale supermarkets in Manhattan, including Food Emporium and Gristede’s, deliverymen often worked seventy-five hours a week but were paid just two hundred dollars, or less than three dollars an hour. They were told they were independent contractors, a group that is not covered by minimum wage and overtime laws. Some call centers deduct pay for every minute a worker spends in the bathroom.

       

To be continued