Hartley Boudreau, 1 – Boston Herald, 0

The supplemental budget that’s making its way to the Governor’s desk includes a small offering of vindication for retired Lynnfield police officer Hartley Boudreau.

Three years ago, Boudreau was on the receiving end of some Boston Herald vituperation that designated him the “poster boy” for an alleged public employee income scam the paper was busy flogging:

A retired Lynnfield cop, already collecting a pension check while pocketing thousands in detail pay, has now managed to score taxpayer-funded unemployment benefits — part of a pattern of public cash grabs that has municipal officials howling to the Patrick administration for reform.

To flesh out the story a bit, in 2012 Mr. Boudreau was 70 years old and receiving a pension of $36,000 a year for his 32-year career as a police officer. (It’s doubtful that he was receiving any significant amount of federal Social Security retirement income because state and municipal employees in Massachusetts do not pay into that system.) The town of Lynnfield had supplemented his income in recent years by employing him as a part time police officer, but those wages were subject to a statutory cap limiting a public employee’s post-retirement earnings. When Mr. Boudreau reached the cap (of $25,000 annually), the town ended his part-time employment. He then applied for and received some unemployment insurance benefits under a statute of some 58 years’ standing that expressly permitted him to do so. Based on his $25,000 salary, the benefits he received could not have exceeded $9,000 and might have been less. Mr. Boudreau was required to pay both federal and state income taxes on them.

(A pause here to note that when some people — Donald Trump — avail themselves of the benefits of the law by, for example, filing for bankruptcy when their investments go sour, they are praised and admired for their shrewdness. But when others do, not so much.)

The Herald put the Patrick administration back on its heels with this issue, to which the paper devoted more than 20 stories and editorials. The state’s unemployment insurance agency immediately rescinded Mr. Boudreau’s benefits and appointed a special commission to investigate whether, as the Herald was claiming, Mr. Boudreau was no more entitled “to an unemployment check than the Powerball winner who decides to ‘retire.’”

But as time passed and the Herald was probably beginning to conclude that it had extracted just about all the outrage against government workers that this particular vein was going to yield, the Patrick administration reinstated Mr. Boudreau’s unemployment benefits, concluding that the law intended him to be eligible. The special commission that the Governor had appointed also determined that policy behind that law had much to recommend it: the average public pension was a mere $28,000 annually, the number of former public employees across the state receiving both pension and unemployment benefits was probably not much higher than 100, municipalities choose whom to hire and they are free not to hire retirees if they want to avoid any risk of owing unemployment insurance, and federal law requires that states treat their public sector retirees the same as their private sector retirees, who are certainly eligible for unemployment benefits if they are laid off from post-retirement jobs.

So when the city of Boston recently sought permission to hire retired police officers for part-time work and the question of the possible future eligibility of these officers for unemployment benefits arose, Governor Baker signaled his assent to that notion and the Legislature responded by including a provision affirming the law as it stands.

SECTION 76. Notwithstanding any general or special law to the contrary, a retired police officer of a city or town who is appointed as a special police officer pursuant to special legislation shall be subject to chapter 151A of the General Laws.

So far, no comment from the Herald.

Coming Wednesday 4/2: House Debate on Minimum Wage (AND Unemployment Insurance AND Domestic Workers)

On Wednesday, the House Ways and Means Committee released its bill covering not only the minimum wage but also unemployment insurance and protections for domestic workers. Amendments to the bill were due on Friday in preparation for debate this coming Wednesday.

By Friday’s deadline, a total of 99 amendments had been filed. Among the subjects of greatest interest,

  • Tipped minimum wage: Amendment 88, sponsored by Democrat Tricia Farley-Bouvier of Pittsfield and 40 co-sponsors, would raise the tipped minimum wage to $5.25, half of the regular minimum wage of $10.50 proposed by the House bill.
  • Providing for future automatic increases in the minimum wage by tying it to the Consumer Price Index: Amendment 50, sponsored by Democrat Russell Holmes of Mattapan. This amendment has no-cosponsors, which likely means that the word went out that minimum wage indexing is DOA in the House and members’ time would be used more productively on other subjects.

It is still entirely unclear what will happen after the House passes its bill. Even though both the House and Senate will have acted on both the minimum wage and unemployment insurance, their bills will be like “ships passing in the night,” because, as reported earlier, the House declined to use either the minimum wage or unemployment insurance bills passed by the Senate and instead is starting at Square One with an entirely new bill. No House-Senate conference committee will be appointed to work out the differences until this standoff  is resolved. (A HT to Brian from Health Care for All, who points out that the U.S. Congress, not widely known as a model of cooperation, has found a way of resolving these conflicts.)

More on the amendments filed:

  • The majority (55) were filed by the distinct minority (31) of House Republicans. They include the cuts to Unemployment Insurance eligibility and benefits that many businesses have been asking for.
  • The restaurant industry is very well represented among the Republican amendments, with proposals including an exemption from any minimum wage increase, and the establishment of a “meals tax holiday” in July. (The most alarming of the restaurant amendments, entitled “Equity for Restaurants,” would take away the authority of the Board of Health to revoke a restaurant license for health code violations, granting only the lesser authority to impose a series of fines, increasing as the number of violations total six in a six-month period. Note to self: find out which restaurants are pushing this amendment and don’t eat there.)
  • DINO award to Representative Paul McMurtry (D-Dedham) for sponsoring an amendment to establish a two-tier minimum wage, one for adults and one for teenagers, and for suggesting that the concerns expressed by former Representative and Boston Mayor Marty Walsh about the need for more jobs for teenagers would be alleviated by this proposal.
  • The amendment topic on which there’s the most bipartisan agreement is a proposal to increase the state’s Earned Income Tax Credit, under which the state’s taxpayers help low-income working families by providing them with an annual subsidy at tax time. The GOP’s rather surprising enthusiasm for the idea is the result of gubernatorial candidate Charlie Baker’s endorsement. He’d rather boost this anti-poverty program instead of increasing the minimum wage. (Is it me, or is it true that the only time that Republicans are interested in having government help the poor is when it appears that private business is going to be asked to do so?)

After this week’s debate, stay tuned to see if the House and Senate reach agreement on any of the many issues now in play.

Yesterday’s Minimum Wage Fracas – What Was THAT About?

UPDATE, March 25: Forecast for minimum wage bill: mainly preposterous, with gusts reaching absurdity.

After last week’s scrapped takeoff, House Representative Tom Conroy announced today that the House will release its bill dealing with the state minimum wage and the unemployment insurance system very soon. The new House bill will add yet a third issue to the mix — workplace protections for domestic employees.

The Senate has already acted on the first two issues (minimum wage and unemployment), but it hasn’t acted on the workplace protections issue. The procedural result of the action the House is planning to take will, like the bill the House hoped to launch last week, “reset the process” and will require the Senate to act again on minimum wage and unemployment. But this time, the House will not need to go through the Labor Commmittee, because the workplace protections bill is no longer in that Committee. Instead it is in the House Ways and Means Commmittee and will apparently serve as the vehicle for the House to act on all three issues at once.

After charging that the Senate rather than the House is the true “obfuscatory body” here, Representative Conroy added that “this process issue should not get in the way of politics.”

OK, here’s another suggestion – how about not letting this political issue (of the sibling rivalry sort) get in the way of helping people?

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ORIGINAL POST, March 21

If you’re following the campaign to increase the state’s minimum wage, yesterday was something of a head-scratcher.

A quick recap – in November, the State Senate passed a bill that largely tracked the minimum wage increase proposal that is making its way to the statewide ballot in November. The Senate bill would increase the minimum wage to $11 over three years, increase the minimum wage for tipped workers to 50 percent of the regular minimum wage, and provide for automatic increases in the minimum wage in the future by tying the wage to the Consumer Price Index. In response, House of Representatives Speaker Bob DeLeo pronounced the Senate bill too unfriendly to the state’s business interests and proposed pairing any minimum wage increase with changes to the state’s unemployment insurance (UI) system to reduce those business costs. Many in the business community want to see those cost reductions come in the form of eligibility and benefits cuts to unemployed workers who file UI claims.

Yesterday began with a post to BlueMassGroup by House Labor Committee Chairman Tom Conroy introducing the House proposal. It would increase the minimum wage to $10.50 over three years, slightly less than the Senate proposal, and it would not make future increases automatic. The UI changes in the House bill would not have included any cuts to benefits or eligibility (as the employers were undoubtedly hoping), but instead would have reallocated the costs among employers, with employers whose workers used the UI system more often (the so-called “frequent fliers”) paying more than employers whose workers rarely used it. As it happens, the Senate passed a UI bill in February that took a very similar approach to reallocating the costs of the system.

So, in substance, it is fair to say that the Senate and the House were reasonably close on the minimum wage and unemployment insurance. The differences, one might think, could be worked out in the conference committee process.

But there was a big problem yesterday, and it was procedural, not substantive. The House wanted its bill to originate in the Labor Committee. That would have meant that the bill would then go to the House for passage and then over to the Senate. But what about the bills — both minimum wage and unemployment insurance — that the Senate has already passed? They are both sitting in the House awaiting action. If the House started the process over by having the Labor Committee act, then the Senate would have to schedule new debates and essentially re-do the work it has already done — a penalty for having acted first.

And that’s pretty much the point. House leadership hates it when the Senate goes first. Under the State Constitution and by tradition, the House goes first on any bills that raise tax revenue and on the annual budget. The House seems to feel that example should be followed in all cases, even in those cases where the deadline for the joint committees to have finished their work has passed. As it happens, that day was the day before yesterday. After the deadline has passed, a committee can take action only if both the House and Senate agree, and yesterday the Senate declined to let the Labor Committee do so.

Representative Conroy, understandably upset at losing the opportunity to move his bill forward, accused the Senate of pettiness. But from the Senate’s point of view, the problem is that the House so rarely goes first these days. All the committees, including the Labor Committee, include more House members (who number 160 in total) than Senate members (who number 40 in total), so the House completely controls the committee process. (You could make the argument that because Senators represent four times the number of people that House members represent, the committee membership really ought to be adjusted. But it hasn’t happened.)

So in order to preserve the Senate’s opportunity to act, they adopted Rule 19, which allows them to introduce and act on a bill that has not yet been through the committee process. The Senate used that rule to introduce and pass both its minimum wage and unemployment insurance legislation.

So what happens now? The Senate could agree to let the Labor Committee act, which would mean re-doing their work after the House has finished and postponing the final resolution of these issues. With only four months left in the legislative session and much, much more work to be done, one might wish for a simpler way out of this impasse, and fortunately one exists. The House can use the bills that the Senate has already passed as their vehicles for acting on minimum wage and unemployment insurance. We’ll see if — and when — they do.

UPDATED – Get Ready: More Minimum Wage and Unemployment Insurance Talk

After a very slow start in 2014, the minimum wage debate is heating up again.

Tomorrow, U.S. Labor Secretary Tom Perez will be in town to talk about President Obama’s plans to raise the federal minimum wage, and House Speaker Robert DeLeo will be addressing the Boston Chamber of Commerce. The speculation is that the Speaker will be affirming his support for making any increase in the state’s minimum wage contingent on changes to the Unemployment Insurance program that would restrict workers’ eligibility and benefits.

Meanwhile, the Massachusetts High Technology Council, which has been one of the most vocal supporters of changes to the UI system, sent a memo to Legislators yesterday renewing its prior demands for eligibility and benefits cuts, and adding a new one: a two-tier minimum wage, under which only adults would see an increase to $10 per hour and teenagers would continue to earn the current $8 rate. (A quick tutorial on the teen minimum wage is here).

The employer community is also very eager to see legislation passed that would freeze their UI payments for the coming year, blocking a scheduled increase. The Senate included that provision in the UI bill it passed in November, which is awaiting action in the House. The House for its part included it in a supplemental budget passed last month (the Senate did not include the provision in its supplemental budget). Today, the House and Senate agreed on a compromise budget, which will be on the Governor’s desk soon, and the employers are undoubtedly dismayed to see that the freeze was not included.

The suspense builds…
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UPDATE: March 13, 1:00 PM. From the Speaker’s remarks today (text of his prepared remarks is here:
Minimum wage proposal:
$9.00 on July 1, 2014
$10.00 on July 1, 2015
$10.50 on July 1, 2016
No indexing to inflation.

Tipped minimum wage proposal:
$3.00 (presumably on July 1, 2014)
$3.35 (presumably on July 1, 2015)
$3.75 (presumably on July 1, 2016)
No indexing to inflation.

Lower minimum wage for teenage workers not mentioned.

UI Proposal:
The changes the Speaker mentioned in his address to the Boston Chamber do not include either of the significant changes to eligibility or benefits being advocated by employers (reduction of maximum duration of benefits from 30 to 26 weeks; increase in amount of time needed to work to qualify for UI from 15 to 20 weeks). His proposal would freeze the UI rate for the coming year (which is pretty universally agreed upon), and appears to adopt some version of the Senate’s reworking of employer costs so that employers whose employees collect UI frequently would pay more than employers whose employees collect less often. His proposal does not appear to increase the amount of wages on which employers pay UI taxes, as the Senate bill does, which would leave the UI financing system vulnerable to being underfunded. The Speaker’s proposal also includes some changes to reduce UI costs for cities and towns (not for employers generally) that Governor Patrick recommended in January.

Overall, it’s hard to imagine that the Massachusetts High Technology Council and other employer groups are thrilled with this proposal (but the Senate bill is still a better approach).

UI “Reform”: Let’s Count the Savings (this won’t take long)

House Speaker DeLeo said again this week that he plans to couple legislation to increase the minimum wage with changes to the unemployment insurance system that businesses want. Meanwhile, the coalition that secured far more signatures than necessary to put the minimum wage increase on the November ballot, Raise Up Massachusetts, has taken the position that pairing the two bills is unacceptable.

So as the standoff continues, let’s take a closer look at one of the UI changes that top every corporate wish list: eliminating the “lenient qualification requirements” that allow Massachusetts workers to qualify for UI after 15 weeks of work in the prior year, when many states require 20 weeks. Some facts:

  • An unemployed worker in Massachusetts who has worked for only 15 weeks receives benefits for a far shorter time than someone with a longer work history – so parity is already built into the system.
  • People whose work histories are short because they work in jobs clearly intended to be seasonal positions are not eligible for UI. In his Globe column stating that they are eligible, Scot Lehigh must have forgotten about the part of the UI law expressly excluding them. Not even business groups are making this claim.
  • According to Associated Industries of Massachusetts, one of the largest employer trade associations and a big advocate for this change (and therefore without any reason to lowball its potential savings), estimates that it will reduce costs by $30 million annually. Let’s put that number in context: the total amount of money collected in 2012 to pay the UI benefits earned by unemployed workers was $1.767 billion. Thirty million dollars represents 1.7 percent of that total.

The argument from business, therefore, is that Massachusetts needs to try to become a more competitive place for employers by revamping our “antiquated and expensive” UI system so that it excludes more unemployed workers and leaves them to fend for themselves unless our state’s tattered safety net can help them. All for employer savings of (at most) 1.7 percent, and at a social cost that hasn’t been estimated yet. Got it.

The “Five Stages” of Opposition to a Minimum Wage Increase

The 2014 Legislative session has gotten underway, and employer groups opposed to an increase in the state’s minimum wage are firing warning shots and charting diversionary tactics to try to keep this very popular proposal at bay.

For example, on Monday, Associated Industries of Massachusetts, popularly known as AIM and one of the largest employer trade groups, endorsed a version of the familiar “Walmart Strategem” — that a better approach to alleviating poverty would be for the state to pick up the tab by increasing its Earned Income Tax Credit. But even if the state doubled the size of this program, eligible families would see an average increase of maybe $400 or so, almost nothing compared to an increase in the minimum wage. (Also, does anybody really recall AIM making a big priority of expanding this taxpayer-funded program before? ed. – AIM says they have supported in past but not claiming “big priority”)

For the upcoming minimum wage battle, it seemed to me that those of us in support ought to have a guide to the various lines of attack we may anticipate. And so, borrowing from the work of Dr. Elizabeth Kubler-Ross to track the grieving process and a variety of other human ailments, here are the “Five Stages” of Opposition to a minimum wage increase.

First Stage: Denial. In this stage, the subject is given to repeating statements such as “this can’t be happening,” and “it is impossible that the order of the universe might be altered.” An example from our friends at Mass. Fiscal Alliance, who cannot contemplate such a development:

[Employers must] develop a campaign plan that addresses their largest two concerns: making payroll and knowing where their income is going to come from…by increasing the minimum wage rate, you are making it almost impossible for many to win; the rules are being changed for them.

Denial generally proves to be only a temporary defense and is soon followed by the other stages.

Second Stage: Anger. In this stage, the subject wants someone to blame and lashes out in anger that is often misdirected or displaced onto others. An example from our friends at AIM, in which anger is displaced onto the co-workers of those who would benefit from a minimum wage increase:

[Increasing the minimum wage] causes multiple problems for employers. It can erode morale among workers as existing employees become angry that newer or lower-skilled colleagues are making nearly as much or, in some cases, more than they are. That anger can in turn accelerate turnover as the result of employees quitting.

Third Stage: Bargaining. In this stage, as it becomes evident that the unwanted event might nonetheless occur, the subject attempts to negotiate conditions under which it might be acceptable. An example from our friends at the Mass. High Technology Council:

[Although employers] do not support the Senate’s approach to raising the minimum wage as a stand-alone proposal, there is a considerable change in opinion when cost-reducing reforms to the Unemployment Insurance system are considered as an inseparable component of the minimum wage proposal.

Fourth Stage: Depression. In this stage, the subject feels despondent and bleak about the future. As the debate progresses, we may expect to see evidence of this stage in the form of a downturn in business confidence as employers are surveyed about their outlook and the prospect of a minimum wage increase clouds their horizon.

Fifth Stage: Acceptance. In this stage, the subject finally begins to feel that things are going to be okay after all. Those of us who support a minimum wage increase hope that with acceptance also comes the realization that employers and employees are not engaged in a zero sum game, and instead, we all do better when we all do better.

Onward!

Heads I Win, Tails You Lose (More from the Unemployment Insurance Front)

In our last episode, employers in the Bay State, a little sore after the passage by the Senate of a $3 per hour increase in the minimum wage, were contending that any minimum wage increase must be paired with a reduction in the Unemployment Insurance (UI) costs employers pay. After all, if workers are getting something, it would only be fair if employers got something too. And what they want is for the state to cut back in various ways on our “overly generous” UI benefits. (If you’re curious, those benefits provide a maximum of $679 per week — before federal and state income taxes are deducted — which is the equivalent of an annual salary of $35,308. Many unemployed workers who even qualify for these benefits receive far less.)

Everyone agrees (in theory at least) that the Unemployment Insurance system should be forward funded — that is, funding should grow during good economic times when unemployment is low, providing a reserve to be drawn on during bad times when unemployment is high. To that end, lawmakers adopted a schedule to determine annual UI rates for employers. The primary purpose of the schedule was to maintain the fund at adequate levels. A secondary purpose was to provide employers with certainty and the ability to plan ahead.

The problem has been that while employers may approve of the forward funding in theory, they don’t like forward funding in practice. Whether we’re enjoying good economic times or suffering through bad ones, employers feel that it’s always a good time to lower their UI rates.

Let’s climb into the Wayback Machine and go back to September, 1997. Times are good and more Massachusetts residents than ever are working. The unemployment rate is under four percent, the lowest in years. Would this not be a good time to save up for the next recession’s rainy day? No, not really. The fund is in good shape, say the employers, so in fact it is the perfect occasion to lower employer costs by cutting UI taxes. Despite warnings that a severe recession could easily wipe out the fund, lawmakers side with the employers and pass special legislation for the coming year to override the rate schedule that would have gone into effect.

And thus a tradition is born. From 1997 to 2013, with only one exception, lawmakers intervene every year to override the rate schedule, ensuring a lower rate than the schedule would have provided. And when recessions arrive in 2001 and 2008 and unemployment rises, the fund is considerably less solvent than it would otherwise be, requiring the state to borrow to cover the shortfalls.

For Massachusetts employers, the prescription for UI funding has been — heads I win, tails you lose.