This week was New America’s Annual Conference, where we explored how to rewire the social contract to renew prosperity, politics, and purpose in the digital age. On Thursday, U.S. Senator Elizabeth Warren (D-MA) gave the opening keynote address, which focused on the gig economy and its impact on workers’ rights. Warren advocated portable benefits, stronger social security, and catastrophic insurance to cover workplace injuries for all workers. Keynote U.S. Senator Jeff Flake’s (R-AZ) address promoted the protection of free trade and the development of policies that would improve the visa process for working immigrants.
Two discussions with direct implications for the Asset Building field were “Economic Security in a Changing Workplace” and “Dismantling Defaults: Designing Social Policy that Moves All Families Forward.” The former examined the decrease in workplace benefits and the rise of contract work, while the latter centered on the intersection of race and class and their impact on intergenerational wealth. It also explored how contemporary social movements are bringing issues related to poverty into the mainstream conversation.
News Highlights: Predatory Lending, Economic Justice, and Worker-Owned Businesses
Emily Badger of The Washington Post reports that “contract lending,” is on the rise. In these arrangements, borrowers without access to traditional mortgages agree to make monthly payments on a home to the seller directly, instead of a bank. The homebuyer receives the deed only after they are finished paying off their debt, which can take 20 to 30 years. In the meantime, they are not granted the same legal protections afforded to those with traditional mortgages, but they still have all of the typical responsibilities of homeowners. If the borrower is evicted by the seller, they lose their investment. “What is particularly alarming about the trend, though, is that we've seen it before,” Badger writes. “In its earlier incarnation, it was an explicitly racist form of exploitation. And now it is victimizing the same groups again: mostly lower income and minority home buyers who can't access traditional credit.”
Paul Davidson in USA TODAY described the growing movement of worker-owned businesses in the United States. Davidson reports that to combat wage stagnation and income inequality, more employers are turning their employees into owners. The two most common means by which ownership is being transferred to workers are employee stock option plans (ESOPs) and worker-owned cooperatives. “An ESOP... sets up a retirement trust for all full-time employees and contributes shares annually. On average, the trusts are granted 30% to 50% ownership, but four in 10 ESOPs own, or eventually will, 100% of the companies…,” Davidson writes. In 2014, there were more than 6,300 ESOPs covering 14 million workers compared to 350 worker-owned enterprises. But cooperatives, which are usually worker-owned from the outset, have gained momentum in low-wage industries, and they have posted double-digit growth since 2010.
The Prison Policy Initiative released a new report on how an inability to pay money bail keeps thousands of low-income people in jail pretrial. Researchers Bernadette Rabuy and Daniel Kopf looked at the pre-incarceration incomes of those in local jails, and found that a majority fall in the lowest third of the national income distribution. The median pre-incarceration income of people in jail is $15,109—less than half of the median income for non-incarcerated people, and even less than people in prison. Since the average money bail amount for a felony offense is $10,000, Rabuy and Kopf found that it would take approximately eight months of income for someone earning $15,109 to meet bail. Rabuy and Kopf offer a number of recommendations to reverse this trend, particularly eliminating the use of money bail, and instead relying on “release on own recognizance,” which is “when a defendant signs an agreement that he will appear in court as required and is not required to pay any money for pretrial release.” Unsecured bonds, where “a defendant is not required to pay any money to be released pretrial, but [is] liable to pay an agreed upon amount of money if he does not appear for court,” is another recommendation.
News in Brief: Overtime Pay, Labor, the Middle-Class, and More
- Krishnadev Calamur of The Atlantic reports on new overtime rules announced by the U.S. Department of Labor, “under which four million more workers will become eligible for overtime pay.”
- Alice Speri of The Interpreter reports on an overlooked aspect of the U.S. justice system: the lack of affordable legal representation for poor individuals in civil cases.
- If manufacturing jobs are not going to return to the U.S., why do so many politicians promise to save them? Ben Casselman of FiveThirtyEight says it’s because they’re actually talking about unions.
- Prioritizing student loan payments over retirement savings is misguided says Shahar Ziv of Forbes.
- Demos released a new report outlining 14 policies to restore and stabilize the middle-class, including helping more Americans build assets.