Category Archives: Economy

Wal-Mart Cuts Some Workers’ Hours After Pay Raise Boosts Costs

shocked face

Bloomberg: Wal-Mart Stores Inc., in the midst of spending $1 billion to raise employees’ wages and give them extra training, has been cutting the number of hours some of them work in a bid to keep costs in check.

Regional executives told store managers at the retailer’s annual holiday planning meeting this month to rein in expenses by cutting worker hours they’ve added beyond those allocated to them based on sales projections.

The request has resulted in some stores trimming hours from their schedules, asking employees to leave shifts early or telling them to take longer lunches, according to more than three dozen employees from around the U.S. The reductions started in the past several weeks, even as many stores enter the busy back-to-school shopping period.

Chief Executive Officer Doug McMillon is trying to balance a desire to improve service — partly through increased spending on his workforce — against investors’ pressure to keep profit growing. Labor costs, which rose after Wal-Mart increased its minimum wage to $9 an hour in April, have weighed on earnings, which missed analysts’ expectations last quarter. At the same time, Wal-Mart is trying to maintain low prices to fend off rivals.

The reduction in hours is taking place only in locations where managers have overscheduled workers, staffing the store for more time than they’ve been alloted, said Kory Lundberg, a spokesman for Bentonville, Arkansas-based Wal-Mart. The reductions won’t affect efforts to better staff stores, shorten checkout lines, and improve cleanliness and stocking, he said.

Dual Goals

Greg Foran, the head of Wal-Mart’s U.S. operations, has said the retailer has dual goals of containing expenses and spending more to improve its stores. “Amid the investment, we’re focused on growing sales and controlling costs, as you would expect from Wal-Mart,” Foran said earlier this month after the company announced disappointing earnings. “We are staying true to our roots. However, we are committed to improving the customer experience and we will protect the investments necessary to achieve this goal.”

Striking that right balance is proving challenging for the world’s biggest retailer, according to accounts from some employees.

A Wal-Mart employee at a location near Houston, who asked not to be identified because she didn’t have permission to talk to the media, said her store had to cut more than 200 hours a week. To make the adjustment, the employee’s store manager started asking people to go home early two weeks ago, she said. On Aug. 19, at least eight people had been sent home by late afternoon, including sales-floor associates and department managers.

Long Waits

The employee said she’s covering an area once staffed by multiple people at one of the busiest times of the year — the back-to-school season. On a recent weekday, she had a customer who had to wait 30 minutes for an employee to unlock a product the shopper wanted to purchase, she said. In e-mails, interviews and social-media posts, employees in a range of positions across the country shared similar stories of hours being cut.

The staff at a location in Fort Worth, Texas, were told that the store needed to cut 1,500 hours, according to a worker who asked not to be named for fear of being reprimanded. After being asked to stay late to help with extra work earlier in the week, some were told to take two-hour lunch breaks to make up for the additional hours they’d clocked, the employee said.

Senior Workers

McMillon’s move to raise Wal-Mart’s minimum wage to $9 an hour in April has stirred other frustrations. Some of the chain’s more senior employees have criticized the increase, saying it mostly benefited newer workers and that more experienced staff shouldn’t be making at or near what new hires are paid.

Wal-Mart has said it anticipated some employees being disappointed about not getting raises and is trying to create more opportunities for workers to advance within the company. It also has a new scheduling system.

By cutting hours, Wal-Mart now risks losing some of its best employees to competitors that can provide more stable schedules, said Burt Flickinger, managing director at Strategic Resource Group LLC. The company also may alienate customers if the staffing levels result in poorer customer service and products not getting on store shelves, he said.

Wal-Mart has made strides during the past year in addressing customers’ complaints of barren shelves, dirty stores and long check-out lines, Flickinger said. But some locations still aren’t staffed well enough during peak times, he said.

“Wal-Mart risks a talent drain at a time when McMillon has made meaningful improvements in the company,” Flickinger said. “All these competitors will take Wal-Mart workers to make themselves strong and help make a major competitor weaker.”

math is hard

DCG

California taxpayers have never paid more for public worker pensions, but it’s still not enough

kick the can down the road

LA Times: California taxpayers have never paid more for public worker pensions, but it’s still not enough to cover the rising number of retirement checks written by the state’s largest pension plan. Even before the stock market’s recent fall, staffers at the California Public Employees’ Retirement System were worried about what they call “negative cash flows.”

The shortfalls — which totaled $5 billion last year — are created when contributions from taxpayers and public employees who are still working aren’t enough to cover monthly checks sent to retirees. To make up the difference, CalPERS must liquidate investments.

With more than $300 billion in investments, the nation’s largest public pension fund is in no danger of suddenly running out of cash. But even its staff acknowledges in a recent report that despite fast-rising contributions from taxpayers, the pension fund faces “a significant amount of risk.”

To reduce that financial risk, CalPERS has been working for months on a plan that could cause government pension funds across the country to rethink their investment strategies. The plan would increase payments from taxpayers even more in coming years with the goal of mitigating the severe financial pain that would happen with another recession and stock market crash.

Under the proposal, CalPERS would begin slowly moving more money into safer investments such as bonds, which aren’t usually subject to the severe losses that stocks face. Because the more conservative investments are expected to reduce CalPERS’ future financial returns, taxpayers would have to pick up even more of the cost of workers’ pensions.

are you serious

Most public workers would be exempt from paying any more. Only those workers hired in 2013 or later would have to contribute more to their retirements under the plan.

The changes would begin moving CalPERS — which provides benefits to 1.7 million employees and retirees of the state, cities and other local governments — toward a strategy used by many corporate pension plans. For years, corporate plans have been reducing their risk by trimming the amount of stocks they hold. The plan is the result of CalPERS’ recognition that — even with significantly more contributions from taxpayers — an aggressive investment strategy can’t sustain the level of pensions promised to public workers. Instead, it could make the bill significantly worse.

At an Aug. 18 meeting, CalPERS staff members laid out their plan for the fund’s board, saying the changes would be made slowly and incrementally over the next several decades. That isn’t fast enough for Gov. Jerry Brown. A representative from the governor’s finance department addressed the CalPERS board, saying the administration wants to see financial risks reduced “sooner rather than later.” “We know another recession is coming,” said Eric Stern, a finance department analyst, “we just don’t know when.”

economicsBehind the growing cash shortfalls: the aging of California’s public workforce. As more baby boomers retire, CalPERS estimates that the number of government retirees will exceed the number of working public employees in less than 10 years. Another reason for the cash shortages: the large hike in pension benefits that state legislators voted to give public workers in 1999 when the stock market was booming.

CalPERS lobbied for those more expensive pensions. In a brochure, the fund quoted its then-president, William Crist, saying the pension-boosting legislation was “a special opportunity to restore equity among CalPERS members without it costing a dime of additional taxpayer money.” That has turned out to be wishful thinking. Now, cities and other local governments are cutting back on street repairs and other services to pay escalating pension bills.

Chris McKenzie, executive director of the League of California Cities, said governments are in the midst of a six-year stretch in which CalPERS payments are expected to rise 50%. Some cities are now paying pension costs that are equal to as much as 40% of an employee’s salary, according to CalPERS documents. The cost is highest for police, fire and other public safety workers who often receive earlier and more generous retirements than other employees. In recent years, three California cities have declared bankruptcy, in part, because of the rising costs.

McKenzie said that despite the escalating pension bills, most cities are in favor of the plan by CalPERS staff. Many city finance officials believe that CalPERS’ investment portfolio is currently “too volatile,” he said. About 10% of cities don’t support the plan, McKenzie said. “Some said they simply can’t afford it,” he added.

Representatives from two public employee labor unions speaking at the Aug. 18 meeting said they generally supported the plan. The plan must be approved by CalPERS’ board, which is scheduled to discuss it again in October.

Last year, governments sent CalPERS $8.8 billion in taxpayer money, while employees contributed an additional $3.8 billion, according to financial statements for CalPERS’ primary pension fund. Those combined contributions fell $5 billion short of the $17.8 billion paid to retirees.

At the heart of the plan is the gradual reduction in what CalPERS expects to earn from its investments. Currently, CalPERS assumes its average annual investment return will be 7.5% — an estimate that has long been criticized as being overly optimistic. After several years of double-digit returns, the giant pension fund’s investments earned just 2.4% in 2014, according to preliminary numbers released in July. Under the new plan, as CalPERS moved more money to bonds and other more conservative investments to reduce risk, the 7.5% rate would gradually be reduced.

CalPERS is still recovering from the Great Recession of 2008 and 2009, when it suffered a 24% loss on its investments. Today its $300 billion in investments is estimated to be only about 75% of what it already owes to employees and retirees. A market downturn would create an even deeper hole.

In presentations, CalPERS told city finance officials that if its investments drop below 50% of the amount owed for pensions, even with significant additional increases from taxpayers, catching up becomes nearly impossible.

See also:

DCG

How many days could you be late to work before you were fired? How about 111?

What exactly does it take to get a public employee fired?

The teacher who can't manage his time

The teacher who can’t manage his time

Fox News: An elementary school teacher who was allowed to keep his job despite being late for work 111 times in two years said Friday that breakfast is to blame for his tardiness.

“I have a bad habit of eating breakfast in the morning, and I lost track of time,” 15-year veteran teacher Arnold Anderson told The Associated Press.

In a decision filed Aug. 19, an arbitrator in New Jersey rejected an attempt by the Roosevelt Elementary School in New Brunswick to fire Anderson from his $90,000-a-year job, saying he was entitled to progressive discipline. But the arbitrator also criticized Anderson’s claim that the quality of his teaching outweighed his tardiness.

Anderson was late 46 times in the most recent school year through March 20 and 65 times in the previous school year, the arbitrator said. Anderson said he was one to two minutes late to school “at the most” but was prepared and was never late for class. “I have to cut out eating breakfast at home,” he said Friday.

Anderson remains suspended without pay until Jan. 1. A message seeking comment was left Friday with the school superintendent’s office.

The arbitrator found that the district failed to provide Anderson with due process by not providing him with a formal notice of inefficiency or giving him 90 days to correct his failings before terminating his employment.

Republican Gov. Chris Christie referenced the case in a tweet on Friday. Christie wrote: “Think I’m too tough on the teachers union? This is what we’re dealing with in NJ.”

Anderson said he was “very upset” to be suspended but conceded that losing his job would have been worse. When he returns to school in January, “I will be early,” he said.

DCG

NLRB expands standards for ‘joint employers’

No doubt this will be heading to a court challenge.

Obama and his union buddy Trumka

Obama and his union buddy Trumka

Seattle Times: The National Labor Relations Board (NLRB) made it easier Thursday for unions to negotiate on behalf of workers at fast-food chains and other companies relying on contractors and franchisees.

The ruling could have an impact on future union talks involving contractors at companies in the Puget Sound region. Many of the Seattle area’s major employers, including Microsoft, Amazon.com, Boeing and Starbucks, use contract workers.

With its ruling in a case involving Browning-Ferris Industries and employees at one of its subcontractors, the labor board redefined what it means to be a “joint employer.”

The new standard is significant because corporations could be held liable for labor-law violations by their subcontractors and could be forced to the bargaining table by unions seeking to organize the employees of a subcontractor or franchisee.

The ruling, adopted in a 3-2 vote along partisan lines, was immediately attacked by business groups, which called on the Republican-controlled Congress to overturn it.

Employers such as McDonald’s and Yum Brands are also likely to challenge the decision if unions manage to organize a group of employees at one or more of their franchises.

The labor board, which is charged with protecting workers’ rights to organize, changed the definition of a crucial employer-employee relationship that had held in some form since the Reagan era of the 1980s.

Now, a company that hires a contractor to staff its facilities may be considered a joint employer of the workers at that facility, even if it does not actively supervise them.

A union representing those workers would be legally entitled to bargain with the parent company, not just the contractor, under federal labor law.

In Microsoft’s case, one of the company’s contractors, Lionbridge Technologies, last year was the subject of a successful union drive by workers seeking paid time off.

“It has pretty huge implications,” said Danielle Franco-Malone, a labor lawyer with Schwerin Campbell Barnard Iglitzin & Lavitt in Seattle. Her firm this year represented the union of Lionbridge employees, the Temporary Workers of America, in collective-bargaining talks with Lionbridge.

“The new framework is going to dramatically expand who is going to be considered an employer,” Franco-Malone said. “It’s going to make it harder for companies to use temporary staffing agencies and other intermediaries that insulate themselves from being an employer for labor-relations purposes.”

hopeandchange4

Marshall Babson, a lawyer who helped write a brief opposing the rule for the U.S. Chamber of Commerce, said: “The decision today could be one of the more significant by the NLRB in the last 35 years. Depending on how the board applies its new ‘indirect test,’ it will likely ensnare an ever-widening circle of employers and bargaining relationships.”

For example, if employees at a fast-food restaurant run by a franchisee were to unionize, they would immediately be entitled to negotiate not just with the owner of the individual restaurant but also with the corporate headquarters.

Many large companies maintain that they should not be required to bargain with employees of their contractors or franchisees and that they should not be held liable for violations of those workers’ rights, if they only exert control over the employees’ work conditions in indirect ways, such as laying out circumstances in which workers should be disciplined or fired.

The labor board explicitly rejected that logic Thursday. “It is not the goal of joint-employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers, while maintaining control of the workplace,” the Democratic-majority wrote, addressing the purpose of the National Labor Relations Act. “Such an approach has no basis in the act or in federal labor policy.”

The far-reaching implications of the decision stem from a 2013 election petition by the Teamsters union, which sought to represent workers at a Browning-Ferris recycling facility in Milpitas, Calif. The workers were employed by Leadpoint Business Services, a subcontractor, to sort recyclable items and clean the facility.

The petition triggered the question of whether Browning-Ferris and Leadpoint were joint employers. An NLRB regional director found that they were not joint employers because they did not share direct and immediate control over conditions of employment, such as hiring, firing and disciplining workers.

The union appealed the decision, which led to the board decision Thursday. The ruling means that ballots cast in a union election will now be unsealed and counted.

Experts say the case will eventually be appealed and could reach the Supreme Court.

Business representatives said the labor board was making it much harder to operate franchises in the future, undermining a popular path for many entrepreneurs.

Before the ruling Thursday, the prevailing doctrine typically required the parent company to exert “direct and immediate” control over working conditions of employees at its franchisees or contractors to be considered a joint employer.

Under the new test, a company can be considered a joint employer even if it has only indirect control over working conditions, say, by requiring the use of certain scheduling software that locks in the timing and length of workers’ shifts — or if it has the right to control certain conditions even if it doesn’t exercise that right.

DCG

Blue Cross of New Mexico pulls out of state exchange

obamacare

KRQE: Blue Cross and Blue Shield of New Mexico announced on Wednesday it “will not offer individual on-exchange health insurance products on the New Mexico Health Insurance Exchange in 2016.”

Officials say the rates of Blue Cross and Blue Shield of New Mexico did not cover the claim costs in 2014 and 2015 according to Albuquerque Business First.

“BCBSNM is extremely disappointed that we will not be an option for our customers on the New Mexico Health Insurance Exchange in 2016. We have been serving New Mexicans for 75 years and we hope to provide more options to individuals in the future,” said Kurt Shipley, president of BCBSNM. “While we are committed to helping communities expand access to health insurance, we cannot offer products in a sustainable and predictable manner without adequate rates. We will continue to offer an HMO product off-exchange in 2016, which will be available to all consumers.”

Earlier this month, the Office of the Superintendent of Insurance denied requests for a rate increase that would have helped cover the costs.

Authorities with BCBSNM said that policies for individuals will still remain in effect through the end of 2015. Also, non-individual policies may not be affected by the changes.

According to Albuquerque Business First, about 35,000 people are enrolled in the individual plans.

As reported via Twitchy:

The letter said Blue Cross Blue Shield of New Mexico lost $19.2 million in 2015 on the 35,000 individuals covered by plans they purchased on and off the exchange. “We were unable to reach an agreement with the Office of Superintendent of Insurance … that would allow us to continue to offer coverage on the state’s health insurance exchange with rates that would be adequate to cover the anticipated needs of our members for the coming year,” Shipley wrote.”

DCG

Report: Solyndra misrepresented facts to get loan guarantee

And in typical government fashion, no one is held accountable. We spent $500 MILLION for a “cautionary tale”.

solyndra

AP: A four-year investigation has concluded that officials of the solar company Solyndra misrepresented facts and omitted key information in their efforts to get a $535 million loan guarantee from the federal government taxpayers.

Solyndra was the first company to get federal loan guarantees under a program that was created in 2005 and expanded by President Barack Obama’s 2009 economic stimulus package.

The company’s failure soon after receiving the loan guarantee likely will cost taxpayers more than $500 million. Republicans and other critics cite it as an example of wasteful spending under the stimulus program.

The report by the Energy Department’s inspector general was released Wednesday. It’s designed to provide federal officials with lessons learned as it proceeds to grant billions of dollars in additional loan guarantees. The inspector general found fault with the department, describing its due diligence work as “less than fully effective.” The report also said department employees felt tremendous pressure to process loan guarantee applications.

In the end, however, the inspector general said the actions of the Solyndra officials “were at the heart of this matter.”

“In our view, the investigative record suggests that the actions of certain Solyndra officials were, at best, reckless and irresponsible or, at worst, an orchestrated effort to knowingly and intentionally deceive and mislead the department,” the IG’s report said.

The federal loan guarantee program for energy projects was established under President George W. Bush’s administration. After it was expanded by the 2009 stimulus law, the department disbursed more than $500 million to Solyndra. Obama personally visited the plant in 2010 to cite it as an example of economic progress stemming from the Democratic-led stimulus bill.

solyndra 2

But in September 2011, the company laid off 1,100 employees, ceased operations and filed for bankruptcy protection.

The IG’s report did not identify by name any particular Solyndra leader who gave misleading information.

Miles Ehrlich, counsel for the company’s former CEO, Chris Gronet, disputed the findings. “Solyndra executives were completely truthful and accurate in their representations during this loan process, and the DOE was never misled about Solyndra’s business or prospects,” Ehrlich said in a statement provided by his law office.

Ehrlich said the real cause of Solyndra’s failure had nothing to do with fraud, but was caused by the unexpected dumping of solar panels subsidized by China’s government.

The report notes that federal prosecutors and the Federal Bureau of Investigation also participated in the interviewing of witnesses and the examination of hundreds of thousands of documents. In early 2015, the Justice Department informed the inspector general’s office that it would not pursue criminal prosecution of any Solyndra officials.

The inspector general’s report said the department relied on third-party evaluations for part of its analysis of Solyndra. In one case, an engineering firm, R.W. Beck Inc., issued a report on the solar panel market relying on company representations that it had $1.4 billion in revenue under contract through 2012. The report said Solyndra’s “firm” sales contracts supported its financial model. But by the time Beck issued its final report, all four of Solyndra’s customers had been offered price concessions.

“Solyndra’s failure to directly disclose these significant material changes in its contractual relationships distorted the view the department and its consultants had of the market for Solyndra’s products,” the inspector general said.

Solyndra was also required to hire an outside firm, Fitch Ratings Inc., to prepare a credit assessment of the project, located in Fremont, Calif. A Fitch official told investigators that he asked Solyndra if any contract customers had received price concessions and was told no. Additionally, the company’s largest customer had informed the company it would not buy more panels in 2009 because Solyndra’s price was too high. A Fitch official told investigators that if it had been aware of price concessions it would have assigned Solyndra a lower credit rating.

The report was less detailed about the Energy Department’s shortcomings in conducting due diligence. It said the department needed to consider using “new and more intrusive validation techniques.” It also said consultants the department hires must be held accountable for their work.

Solyndra’s failure was the subject of numerous congressional hearings and a report from Republicans on the House Energy and Commerce Committee. The August 2012 report concluded that Solyndra was a cautionary tale on how political pressures and other factors can result in poor decision-making.

“The red flags about Solyndra’s financial condition and the turbulence in the solar market were there for DOE to see when it reviewed Solyndra’s application in 2009. DOE staff and (Office of Management and Budget) staff noted these concerns at the time the loan guarantee was under consideration,” the congressional report concluded.

DCG

De Blasio aide blames Bloomberg for growing number of homeless New Yorkers

Shocker, neither commie wants to man up to this mess.

deblasio and bloomberg

NY Daily News: It’s not his fault. The de Blasio administration, which has been under fire for the growing number of homeless New Yorkers, is pushing back and blaming former Mayor Michael Bloomberg.

One of Mayor de Blasio’s top aides took to Twitter Tuesday to point out the city’s shelter population exploded under Bloomberg. “Who was mayor during time when NYC homeless numbered 25,000 in 2002 and jumped to 53,000 by 2013. Not @BilldeBlasio,” press secretary Karen Hinton tweeted.

Her comment came hours after MSNBC host Joe Scarborough ripped de Blasio on air for 10 minutes, saying his “misguided liberalism” is contributing to the homelessness crisis.

lauren bacall

“There are a lot of liberal New Yorkers that are sick and tired of this happening with de Blasio,” Scarborough, a former Republican congressman from Florida who lives in New Canaan, Conn., ranted. “He can run a social experiment somewhere else, he can go to Philadelphia if he wants to run it.”

“Talk from pundits is cheap,” Hinton said. She said in the “face of past deep cuts to successful programs,” de Blasio has offered more support services and more care for the mentally ill homeless and increased affordable housing.

The number of people living in city shelters is close to 57,000, down from a historic high of 59,068 in February — which was a 10% jump from the number of people who lived in shelters when de Blasio took office in January 2014.

Numbers spiked after the city eliminated the Advantage Program, which gave rent subsidies up to $1,000 a month to select homeless families, following state budget cuts in 2011.

Bloomberg said on the radio that year that the program might have encouraged people to become homeless. “One theory is that some people have been coming into the homeless system, the shelter system, in order to qualify for a program that helps you move out of the homeless system,” he said.

Mary Brosnahan, of Coalition for the Homeless, said Bloomberg’s policies have contributed greatly to the uptick in homelessness in recent years. “He never really believed housing was the solution,” she said. “It was always, ‘Get a job.’ ”

A spokesman for Bloomberg declined comment.

On Monday, former Mayor Rudy Giuliani told NBC New York that he recently filed a complaint about a homeless man on his block. He said as mayor his policy was to “chase ’em, and they either get the treatment that they need or you chase ‘em out of the city,” he said.

His comments angered Brosnahan. “Asking Giuliani for advice on homelessness is like asking Bill Cosby to pour your wife a drink,” she said.

DCG