Shouldn’t the ‘minimum-wage’ include compensating unpaid interns?

Loaded with optimism and student loans, the law grad sees the advertisement that reads: Democratic member of the Senate Committee on the Judiciary seeks law clerk for Fall 2014, full time, unpaid.

Presuming that law grad did not have a trust fund or wealthy parents to subsidize the inflated cost of living for Washington, DC, working for the powerful on Capitol Hill would be outside consideration.

How in the world can those who tout raising the minimum wage get by without paying at least the minimum for assistance?

Before scratching your head too much, let’s look at the economic and legal dynamics involved in this

White House internship programme. 2011 Getty/McNamee.

conundrum.

During President Barak Obama’s 2014 State of the Union Address, he asked Congress to pass the Harkin and Miller bill and raise the federal minimum wage from $7.25 to $10.10 per hour. The President went one step further by unilaterally signing Executive Order 13659 which raises the wage of federally contracted workers to $10.10 per hour.

Perhaps it should be noted here that White House interns are not paid. Yet these are highly sought after positions that see young brains fulfilling a full time position for six months to a year.

According to a 2012 Intern Bridge survey, more than half of all post-undergrad and grad-school internships and traineeships are unpaid. Many students desperately really on these work related experiences to land higher paying career type jobs.

In the years since the 2007-08 Financial Crisis, unpaid internships and traineeships have become the new norm. Many companies were unable to pay new workers during the crisis and new workers were eager just to gain experience.

The wave of unpaid internships in the private sector came to a skidding halt in June 2013 when a federal district court in New York held in Glatt et al. v. Fox Searchlight Pictures, Inc. that the company had violated the Fair Labor Standards Act by not paying for “benefits received.”

The Department of Labor has developed a six-part test, based on Supreme Court case law relating to railroad company’s trainees, to determine whether for-profit companies must pay interns.

In short, in order for a private business to meet Labor’s standards, the internship must be wholly for the benefit of the intern and not the employer – that’s a pretty tough to satisfy.

According to The 2013 Student Survey, a graduate who had a paid internship experience makes a medium starting salary of $51,930, compared with $35,721 for those who had an unpaid internship experience.

Law firms are also willing to pay for new associate’s experiences and connections to judges and lawmakers through clerkships. Many firms will pay a 20% bonus on top of a starting salary.

President Obama announces a $10.10 hourly minimum wage
during the 2014 State of the Union Address. USAToday.

With some of the highest paid first-year associates earning just over $160,000, why are we worrying about the President and his Congressional cronies not paying their clerks?

Firstly, if it was the private sector, it would be illegal under the pay-for-benefits test.

Secondly, with the average law school debt in America hovering around $150,000, it is very difficult for a newly minted grad to go a year without a pay check, no matter how amazing the potential bonus, from the potential job, might be. Unless, of course that grad has the coveted silver-spoon in the mouth, in which case, even a minimum wage would be offensive to the privileged elite.

This is not a Democrat vs. Republican issue; instead, this is a remnant of the old Governmental privilege which must go away. Currently, only the better-off people in society get to undertake such unpaid positions. The less fortunate must take paid positions that don’t come with connections.

If the President and Congress want everyone to be paid a proper wage, then shouldn’t “everyone” include the currently unpaid staff?

It's time to simplify the tax code & reduce governmental spending

With over 30,000 pages in the UK tax statutes it is time for parliament to tackle the ever burgeoning and convoluted mechanism for growing the governmental Leviathan and redistributing wealth. What modern social states like Britain and France and even the United States fail to grasp is that one must create wealth before you can re-distribute it.

Some argue that since paying taxes, by sheer definition, is inherently unfair, then the net should be cast wide to speed the pain equally. In other words, taxing or creating fees, surcharges, tariffs or levies for everything from income to interest earned from a bank account or building society; from tobacco and alcohol to bread and cheese; and from corporation tax to inheritance (death) tax.

The UK saw its highest tax rate in 1966, when the Labour government of Harold Wilson ushered in a 134.25% tax rate. This outraged George Harrison of The Beatles, who was affected the 95% super-income tax bracket, that he composed the music and lyrics for the ‘Taxman’, as a form of revolt. The Beatles band recorded the song in April and it was released in the album, ‘Revolver’ in August 1966.

 Tolly's UK Yellow Tax Handbook 2010 being burnt in protest

Many criticise the Thatcher-Major era as being ‘soft’ on taxing the rich and giving away government assets to private industry. The critics fail to acknowledge the quantitative data. The highest income tax bracket was 98%. Stated differently, for every £1 a person earned, 98p was going to the government. Today, the highest income tax bracket is 50%, which took effect in assessment year 2010 and catches individuals earning over £150,000 per annum. Under the New Labour government of Tony Blair, much of the neoliberalist economic policies of the Thatcher-Major governments were continued. This led Labour MP, Peter Mandelson to coin the term “Neo-Thatcherism” to describe the economic policies of New Labour.

Neoliberalism is a school of modern political theory which stresses market-driven approaches to economic and social policy, based on neoclassical theories of economics, which advocates efficiency of private enterprise, liberalization of free trade and open markets, and encouraging consumer free choice, individual thinking, and private enterprise. The tenets have frequently been a topic of conversation at Bohemian Grove. The ‘Washington Consensus’ is considered the theory’s definitive statement. International organizations such as the International Monetary Fund (IMF), World Bank, and World Trade Organization, along with regional trade associations such as the North American Free Trade Agreement (NAFTA), Association of Southeast Asian Nations (ASEAN), the Southern Common Market (MERCOSUR), and the European Union (EU) have endorsed the general principles of the theory.

National tax policy should encourage innovation and efficiency. Jobs must be created, at the core is build and maintain a strong and vibrant middle class, which broadens the tax base and brings stability to volatile global markets. The UK tax statutes are so complicated that while everyone in society gets caught by the tax ‘net’ burden, the lofty weight of a growing public sector places high demands to grow the public coffers. Government must learn to do more with less. A focus should be on prioritization of national policy objectives and efficiency placed at the heart of society’s vision and mission. An athlete performs best when he/she is in lean and well trained. Likewise, a government who learns to operate on less is able to understand the benefit of competition and getting quality.

One of the most efficient governmental organizations is the EU, which operates on a relatively small budget and meagre staff, yet the data they produce is unprecedented when comparing to national governments. An example is a student who is living on a shoe string budget is able to do far more than a professional paid a monthly salary. Why? The student understands the value of every pound-sterling and looks for the cheapest option (eg- riding the bus as opposed to the train, sleeping in a hostel compared to a 5-star hotel, et cetera et cetera). If governments operated in the same manner, more money would be in the hands of the private sector to grow the economy and allow citizens more options with how to live their lives.

In protest of the UK’s and US's confusing and convoluted tax policy, I took part in a tax act protest, where students burned their tax statutes in protest. Please join me in supporting a simplification of the tax statutes - the first step towards creating a more just British or American society.

Beyond the Crash: an evening with Gordon Brown

Tonight, a friend of mine, Magda, and I listened to a speech followed by a question and answer session with the former UK Prime Minister Gordon Brown. Since Labour losing the parliamentary election of 6 May 2010 to a Conservative and Liberal-Democrat coalition government, Gordon Brown has stepped down as his party’s leader and taken his ranks among the back benchers. The former prime minster, an alumnus of the University of Edinburgh and Scottish native, has been making the case for a global response to national problems.

The beginning of Mr Brown’s speech focused around memorable highlights of his 28 year career in the House of Commons – which included ten years as Chancellor of the Exchequer and the previous four as Prime Minister of Her Majesty’s Government. The speech was hosted by the University of Edinburgh and Blackwell’s bookshop in the George Square lecture theatre and featured a sold-out crowd of well over 300 people, many of whom were from the academic community of Edinburgh. Magda and I sat front and centre with only an agent of the Metropolitan Police’s Specialist Protection separating us from the former head of government. Brown looked at the crowd and immediately told the story of his first campaign for parliament, back in 1983, in which only three people attended the meet and greet, including him. Brown said that his journey through politics could be summed up by the custodian at the university telling him, “Mr Brown, I’m sure glad you remembered your roots on the way up and then again on the way down.” Mr Brown studied history and politics at the University of Edinburgh, earning a BA (Hon), MA and PhD while serving a three year stint as Rector of the University.[1]

Brown talked about how 300 years ago the first Scottish banking crisis resulted in a nationalized bail-out and the merger of the Scottish and English houses of parliament. He described this as a national solution to a local problem. In 2008, when news broke that Northern Rock, followed by Bradford & Bingley and the Royal Bank of Scotland were to be nationalized, along with the forced merger (shotgun wedding) of Lloyds TSB and Halifax-Bank of Scotland to stabilized the British economy[2] it became apparent that while these banks were headquartered in the UK, much of the risky investments, such as the purchasing of debt bundles from American sub-prime mortgages, were outwith the purview of British regulators at the Financial Services Authority (FSA).

“In every forum, my theme was that the financial crisis reflected a global problem that could not be resolved by one nation alone but needed a global solution”, Gordon Brown emphasised numerous times during the evening.[3] Brown called for addressing the problems posed by 2007-2009 crises in public international law, creating an international banking tax scheme, along with national regulations creating higher reserves and criminal laws for bad faith and undue-diligence. The former prime minister also called for the shutting down of international tax havens, calling them loopholes for circumventing national revenue tax collectors. This was a point I disagreed with, as the UK is in a good position to compete head-to-head with these so called tax havens, by lowering business taxes and creating a more favourable investing climate to stimulate the private sector to keep assets within the British Isles.

Mr Brown said he accepted full responsibility for what happened, as he was the Chancellor of the Exchequer the decade prior to the financial crisis. He went on to explain that what was known was limited and his office was preparing for an inflation crisis and had no warnings that an even greater threat existed, which was the concept of many banks failing at once due to poor liquidity and the purchasing of foreign toxic debt and speculations which were tantamount to gaming with Briton’s savings and investments. He averred that the problem requires global solutions, especially went banks are linked internationally. Mr Brown’s solution is a global banking tax to create a reserve fund for such an event as a global financial windfall.

“The American dream is one of the most powerful and enduring stories of hope that continues to inspire the world,” writes the former UK Prime Minister, Gordon Brown, in the opening sentence of chapter six of his new book, Beyond the Crash.[4] Before a joint-session of the US Congress, Brown said, “[E]arly in my life I came to understand that America is not just the indispensible nation, it is the irrepressible nation.”[5] Brown warns, the American dream is under new and unique pressures with consequences not just for the US but for the world, “The manifestations of this are high unemployment, falling middle-class incomes, and concern about educational opportunities and upward mobility amid rising competitive pressures from Asia.”[6] Brown explained the crunch on the middle class is an area of the economy to watch out for, as they are the ones who have been the biggest contributors to fuelling economic growth and providing a standard for morals.

Mr Brown concluded the evening by saying he was optimistic about the future, as new markets emerging in Asia would create demand for western made goods and services allowing for increased economic growth in both the service and manufacturing sectors. He said to stay abreast of the east, the US and EU must invest in higher education to train the specialists of the next decade, look for ways to create jobs – as to prevent another lost decade as he saw in Britain during the 1980s, and fund science and technology.

After the speech and question time I approached Mr Brown, shook his hand as he was taking off his microphone and he said to me, "...there, now I can talk to you." I asked if I could have a photo taken with him and he agreed, telling me how much he admired America and was happy to see the exchange and diffusion of knowledge across the pond. He then signed my copy of Beyond the Crash and shook my hand saying, “thank you.”

Magda and I walk out of the lecture theatre chatting about his talk, debating the pros and cons of his averments and observations along with chuckling about the number of times he said “global solutions” in the course of an hour. All in all I was very impressed with his address and am very proud to of had the honour of meeting a British prime minister.

__________________________________________
[1] “Gordon Brown as Rector”, http://www.archives.lib.ed.ac.uk/gallery/brown.shtml (accessed:17 February 2011)
[2] UK House of Commons, Finance Report Re the Banking Crisis of 2008, http://www.publications.parliament.uk/pa/cm200809/cmselect/cmtreasy/956/956.pdf (assessed: 17 February 2010)
[3] G Brown, Beyond the Crash: overcoming the first crisis of globalisation (Simon & Schuster, London 2010) 45
[4] G Brown, Beyond the Crash, 143
[5] Since the 1st US Congress in 1789, only 105 foreign heads of state, government or diplomats have addressed a Joint-Session of Congress.
[6] G Brown, Beyond the Crash, 143

Obama: The Great “American” Finger Pointer

Pres. Barak Obama’s first, hopefully only, term policies has resulted in business unfriendly tax policies, vast government spending and burdensome new financial and health care regulations. Not to mention an industry killing moratorium on deep water drilling in the Gulf of Mexico which provides a quarter of all oil consumed in the United States. The combination of these policies has resulted in unemployment soaring to 10 per cent and many small businesses struggling to stay in existence.

This president has the audacity of pointing fingers at everyone from a Cambridge, Mass. police officer to business and industry leaders. Somehow he has managed to depict both Wall Street and BP as "fat cat bankers", engaging in "reckless practices", a label which has managed to put-off many former supporters within the business community. Instead of working with those within the business and industry, Obama has opted to point his index finger and use his bully pulpit to tell the world, whom he thinks is liable to the world for damages. What happened to the mantra of former American Pres. Harry S. Truman, the one that went, “The buck stops here”? What hasn’t been the fault of “big business,” “fat cat bankers,” “failed Bush years,” a “broken system” or “racist Republicans,” seems to be the fault of “a maverick general,” “bigoted police officer,” “employers” or “insurance companies”.

This finger pointing president started blaming BP for the oil leak, after BP told the nation they fully accepted responsibility and were going to “make it right”. Where was the president during the first few weeks of the disaster – holidaying, attending a Paul McCartney concert and hanging out with Hollywood celebrities? Not bad for a guy “deeply concerned” for the people of the Gulf States.

Can Pres. Obama deliver a single speech without having to raise his hand and turn it into a physical finger point at the camera? Instead of blaming everyone and their dog for the problems facing America, perhaps the president would be well served to stand-up and tell the nation the “buck stops here!” There are no simple solutions, but there are intelligent choices and those choices come from surrounding yourself with advisors who are willing to think outside the box and conjure up creative alternatives to cyclical failed policies.

Policy items which should be tackled are reducing excessive government spending, creating a plan to pay down the deficit, loosening financial regulation to give small businesses the liquidity to return to work and start hiring again, sending soldiers to the US-Mexico border to bring peace and security to an ever-growing national security threat. Taking steps to stop illegal immigration and then working with employers to design an effective guest worker programme to meet the needs of the nation’s agricultural sector. Allowing American soldiers abroad to either fight or come on home. The bulk of the agenda should be centred on domestic affairs, as the world is best served by a healthy American economy that can import and export goods, in return helping bring the world’s economies back on their feet.

The United States should lead by example, not by bold words and finger pointing. The alternative is this headline: While Obama finger pointed, America burned and the world states left them in the dust.

Good stewardship starts at home, not in Washington

Good stewardship starts at home, not in Washington. The citizens of Delta approved a bond ballot issue, in November 2009, to raise the city’s indebtedness ceiling to $30 million, with repayment of that debt maxing out at nearly $69 million. These new indebtednesses will be generated from “the issuance of revenue bonds from the city-wide capital improvement fund.” A bond is an indebtedness and an indebtedness has to be re-paid.

Proponents of Delta’s Main Street bypass suggest the constructing of a multi-million dollar, 1.6-mile long road and bridge, will provide an alternative route for semi-trucks, allow emergency and police an entrance to North Delta during times of train delay, and provide faster access for consumers wishing to take their dollars from Main Street to Montrose or Grand Junction. The drive for urgency from the bypass supporters is a November State-wide ballot initiative that if passed, would prohibit municipalities from bonding beyond a 10-year period. The revenue bonds carry a 20-year payback time.

The voice of good stewardship, fiscal responsibility, and respect for the economic times we live must be supported. Liberal spending and overzealous borrowing, coupled with a downturn in the economy is what has gotten this county in the mess it currently faces. For example, last week’s Delta County Independent reported, Delta’s unemployment is once again on the rise (now above 8%), foreclose rates continue to go up (1 every 2 days), and actual real estate values are going down (mean value down over $25,000 per home). The Delta School District has been very fiscally responsible approach by trimming their fat and eliminating 17 FTE teacher positions. The North Fork coal mines, have about a 20-year max load left, are struggling to survive governmental bureaucratic regulations.

The economic signs indicate Delta’s municipal sales tax revenue will go down significantly, thus rendering the debt servicing schedule dubious at best. One of the provisions included in the voter approved bond ballot issue was that, “no increase in city taxes to pay such debt.” As tax revenue deceases, Delta’s debt service remains a constant, thus requiring the city to decrease services, increase fees, or privatize such tax draining entities as the golf course. None of these alternatives appears to be a viable solution, thus a future ballot issue should be expected.

Realistically, Delta is looking at $27 million in capital construction costs and a debt service to tax payers of at least $30 million over a period of 20-years. Proponents say some of this cost can be alleviated through DOLA grants, city reserves, and cuts in government spending. This argument is defeated by the mere fact that State grand funding has been denied, city reserves are low due to “progressive” spending, and current council has shown little inclination to practice fiscal responsibility.

The bond ballot issue specifically states the new debt is “for the purpose of enhancing safety conditions for those persons parking and shopping downtown”. The proponents of the Main Street bypass fanatically use the analogy of a semi-truck carrying oil, wrecking in downtown Delta, while a train is crossing Main Street, and causing a catastrophic fire. The analogy is rooted in such scare tactics that those perpetrating it should be ashamed. The reality couldn’t be closer to the truth. Since Delta’s founding in 1882, there have been no major trucking accidents of the scope and calibre which proponent fear. Semi-truck drivers are some of the safest on the road, as high industrial safety require drivers to maintain a clean CDL. A simple solution to the problem surrounding semi-trucks and Main Street would be to pass an ordinance requiring all vehicles over a certain weight to remain in the left-hand land between a certain set of mile-markers. A few signs and the force of law would keep trucks away from store fronts and cars parked on Main Street; maintain a constant, safe and efficient flow of traffic, along with costing the tax payers a few thousand dollars, instead of several million dollars.

A few years back a home burned to the ground while a fire truck was caught waiting for a train. An event like this, while unfortunate, is a fact of life. Governments seek to eliminate all risks to create a perfectly safe world – the concept of “too big to fail” is a perfect example of a government program deemed to eliminate risk a horrific consequences. Bad things happen to good people and that is life, however mitigation of risk through safety measures should be within our public means. A less costly alternative to the ones the proponents advocate is a fire and ambulance sub-station in North Delta. Another idea advanced is to partner with the hospital to offer medic-vac services which would be able to responder faster than an ambulance, with an annual cost equivalent to the controlled maintenance of a bridge and debt service. Safety concerns are a very real issue and should not be ignored. Conversely, economic considerations of rising unemployment, lay-offs, and businesses hardly making a profit, along with predicted declines in tax base revenue should be acknowledged.

We cannot continue to spend more than we make (this is especially true for governments). The modified Main Street bypass plan includes 2-lanes, instead of 4-lanes; 4 stop lights, a bridge over the railroad tracks and is 1.6-miles in length. No data exists on how much “safer” Delta citizens will be with a multimillion dollar debt. Tough economic times call for out-of-the-box thinking to produce creative solutions. This letter has attempted to demonstrate how good stewardship can start right here in Delta and be as a beacon on a hill to show Denver and Washington how problems can be tackled and solved without placing future generations under the burden of an indebtedness which must be repaid.

See: Delta County Independent