May, 16 2023, 12:01pm EDT
For Immediate Release
Contact:
Tillie McInnis,Domestic Communications Coordinator,202-293-5380 x117,E-mail,Dan Beeton,International Communications Coordinator,202-239-1460,E-mail
The Subminimum Wage Plus Tips: A Bad Bargain for Workers
In a new report published Monday in the New Labor Forum, the Center for Economic and Policy Research’s (CEPR’s) Sylvia Allegretto sheds light on the systemic flaws in the United States’ two-tiered minimum wage system, focusing on the long-overlooked subminimum wage for tipped workers. While many think of the federal minimum wage as $7.23/hour, the subminimum wage for tipped workers is, in fact, $2.13/hour – and has been since 1991.
Using data spanning back to 1966, when Congress made it legal to pay tipped workers a subminimum wage, Allegretto shows how the federal tip-credit provision, which is the difference between the minimum wage and the subminimum wage, has grown over time. Originally set at a 50–50 split, the tip-credit now represents 71 percent of a tipped worker’s wage as shown in the figure. Many consumers are not aware that their tips, in part, essentially function as a wage subsidy to employers.
In her article, Allegretto traces the history of the tipped minimum wage, describes the policies that have allowed the situation to deteriorate, and proposes legislative and labor-based solutions. She also explores the vast state differences in minimum and subminimum wages across the country, as well as the lack of access to employer-provided benefits for minimum and subminimum wage workers.
“Every worker has the right to work with dignity at a fair wage. It is ludicrous to think that the U.S. cannot pursue and successfully implement high-road wages and labor protections at the federal level to uplift millions of workers and institute a fairer labor system regarding the tipped workforce,” said Allegretto.
“The Subminimum Wage Plus Tips: A Bad Bargain for Workers” can be read here.
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.
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Congressional Report Calls Trump Deportation Plan 'Catastrophic' for Economy
"All it will do is raise grocery prices, destroy jobs, and shrink the economy," JEC Chair Martin Heinrich said of the president-elect's plan to deport millions of immigrants.
Dec 12, 2024
Echoing recent warnings from economists, business leaders, news reporting, and immigrant rights groups, Democrats on the congressional Joint Economic Committee detailed Thursday how President-elect Donald Trump's planned mass deportations "would deliver a catastrophic blow to the U.S. economy."
"Though the U.S. immigration system remains broken, immigrants are crucial to growing the labor force and supporting economic output," states the new report from JEC Democrats. "Immigrants have helped expand the labor supply, pay nearly $580 billion a year in taxes, possess a spending power of $1.6 trillion a year, and just last year contributed close to $50 billion each in personal income and consumer spending."
There are an estimated 11.7 million undocumented immigrants in the United States, and Trump—who is set to be sworn in next month—has even suggested he would deport children who are American citizens with their parents who are not and attempt to end birthright citizenship.
Citing recent research by the American Immigration Council and the Peterson Institute for International Economics, the JEC report warns that depending on how many immigrants are forced out of the country, Trump's deportations could:
- Reduce real gross domestic product (GDP) by as much as 7.4% by 2028;
- Reduce the supply of workers for key industries, including by up to 225,000 workers in agriculture and 1.5 million workers in construction;
- Push prices up to 9.1% higher by 2028; and
- Cost 44,000 U.S.-born workers their jobs for every half a million immigrants who are removed from the labor force.
Highlighting how mass deportations would harm not only undocumented immigrants but also U.S. citizens, the report explains that construction worker losses would "make housing even harder to build, raising its cost," and "reduce the supply of farmworkers who keep Americans fed as well as the supply of home health aides at a time when more Americans are aging and requiring assistance."
In addition to reducing home care labor, Trump's deportation plan would specifically harm seniors by reducing money for key government benefits that only serve U.S. citizens. The report references estimates that it "would cut $23 billion in funds for Social Security and $6 billion from Medicare each year because these workers would no longer pay into these programs."
Sen. Martin Heinrich (D-N.M.), who chairs the JEC, said Thursday that "as a son of an immigrant, I know how hard immigrants work, how much they believe in this country, and how much they're willing to give back. They are the backbone of our economy and the driving force behind our nation's growth and prosperity."
"Trump's plan to deport millions of immigrants does absolutely nothing to address the core problems driving our broken immigration system," Heinrich stressed. "Instead, all it will do is raise grocery prices, destroy jobs, and shrink the economy. His immigration policy is reckless and would cause irreparable harm to our economy."
Along with laying out the economic toll of Trump's promised deportations, the JEC report makes the case that "providing a pathway to citizenship is good economics. Immigrants are helping meet labor demand while also demonstrating that more legal pathways to working in the United States are needed to meet this demand."
"Additionally, research shows that expanding legal immigration pathways can reduce irregular border crossings, leading to more secure and regulated borders," the publication says. "This approach is vital for managing increased migration to the United States, especially as more people flee their home countries due to the continued risk of violence, persecution, economic conditions, natural disasters, and climate change."
The JEC report followed a Senate Judiciary Committee hearing on Tuesday that explored how mass deportations would not only devastate the U.S. economy but also harm the armed forces and tear apart American families.
In a statement, Vanessa Cárdenas, executive director of the advocacy group America's Voice, thanked Senate Judiciary Committee Chair Dick Durbin (D-Ill.) "for calling this important discussion together and shining a spotlight on the potential damage."
Cárdenas pointed out that her group has spent months warning about how Trump's plan would "cripple communities and spike inflation," plus cause "tremendous human suffering as American citizens are ripped from their families, as parents are separated from their children, or as American citizens are deported by their own government."
"Trump and his allies have said it will be 'bloody,' that 'nobody is off the table,' and that 'you have to send them all back,'" she noted, arguing that the Republican plan will "set us back on both border control and public safety."
Cárdenas concluded that "America needs a serious immigration reform proposal—with pathways to legal status and controlled and orderly legal immigration—which recognize[s] immigrants are essential for America's future."
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New Rule From Agency Trump Wants Destroyed Would Save Consumers $5 Billion Per Year in Overdraft Fees
One advocate called the CFPB's new rule "a major milestone in its effort to level the playing field between regular people and big banks."
Dec 12, 2024
The Consumer Financial Protection Bureau, one of President-elect Donald Trump's top expected targets as he plans to dismantle parts of the federal government after taking office in January, announced on Thursday its latest action aimed at saving households across the U.S. hundreds of dollars in fees each year.
The agency issued a final rule to close a 55-year-old loophole that has allowed big banks to collect billions of dollars in overdraft fees from consumers each year,
The rule makes significant updates to federal regulations for financial institutions' overdraft fees, ordering banks with more than $10 billion in assets to choose between several options:
- Capping their overdraft fees at $5;
- Capping fees at an amount that covers costs and losses; or
- Disclosing the terms of overdraft loans as they do with other loans, giving consumers a choice regarding whether they open a line of overdraft credit and allowing them to comparison-shop.
The final rule is expected to save Americans $5 billion annually in overdraft fees, or about $225 per household that pays overdraft fees.
Adam Rust, director of financial services at the Consumer Federation of America, called the rule "a major milestone" in the CFPB's efforts "to level the playing field between regular people and big banks."
"No one should have to pick between paying a junk overdraft fee or buying groceries," said Rust. "This rule gives banks a choice: they can charge a reasonable fee that does not exploit their customers, or they can treat these loan products as an extension of credit and comply with existing lending laws."
The rule is set to go into effect next October, but the incoming Trump administration could put its implementation in jeopardy. Trump has named billionaire Tesla CEO Elon Musk to co-lead the Department of Government Efficiency, an advisory body he hopes to create. Musk has signaled that he wants to "delete" the CFPB, echoing a proposal within the right-wing policy agenda Project 2025, which was co-authored by many officials from the first Trump term.
"The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they're charging on overdraft loans."
"It is critical that incoming and returning members of Congress and President-elect Trump side with voters struggling in this economy and support the CFPB's overdraft rule," said Lauren Saunders, associate director at the National Consumer Law Center (NCLC). "This rule is an example of the CFPB's hard work for everyday Americans."
In recent decades, banks have used overdraft fees as profit drivers which increase consumer costs by billions of dollars every year while causing tens of millions to lose access to banking services and face negative credit reports that can harm their financial futures.
The Federal Reserve Board exempted banks from Truth in Lending Act protections in 1969, allowing them to charge overdraft fees without disclosing their terms to consumers.
"For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans' deposit accounts," said CFPB Director Rohit Chopra. "The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they're charging on overdraft loans."
Government watchdog Accountable.US credited the CFPB with cracking down on overdraft fees despite aggressive campaigning against the action by Wall Street, which has claimed the fees have benefits for American families.
Accountable.US noted that Republican Reps. Patrick McHenry of North Carolina and Andy Barr of Kentucky have appeared to lift their criticisms of the rule straight from industry talking points, claiming that reforming overdraft fee rules would "limit consumer choice, stifle innovation, and ultimately raise the cost of banking for all consumers."
Similarly, in April Barr claimed at a hearing that "the vast majority of Americans" believe credit card late fees are legitimate after the Biden administration unveiled a rule capping the fees at $8.
"Americans pay billions in overdraft fees every year, but the CFPB's final rule is putting an end to the $35 surprise fee," said Liz Zelnick, director of the Economic Security and Corporate Power Program at Accountable.US. "Despite efforts to block the rule and protect petty profits by big bank CEOs and lobbyists, the Biden administration's initiative will protect our wallets from an exploitative profit-maximizing tactic."
The new overdraft fee rule follows a $95 million enforcement action against Navy Federal Credit Union for illegal surprise overdraft fees and similar actions against Wells Fargo, Regions Bank, and Atlantic Union.
Consumers have saved $6 billion annually through the CFPB's initiative to curb junk fees, which has led multiple banks to reduce or eliminate their fees.
"Big banks that charge high fees for overdrafts are not providing a courtesy to consumers—it's a form of predatory lending that exacerbates wealth disparities and racial inequalities," said Carla Sanchez-Adams, senior attorney at NCLC. "The CFPB's overdraft rule ensures that the most vulnerable consumers are protected from big banks trying to pad their profits with junk fees."
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Arrests of US Journalists Surged in 2024 Amid Crackdown on Gaza Protests
Police use of "catch-and-release" tactics is particularly worrying for press freedom advocates, according to the U.S. Press Freedom Tracker.
Dec 12, 2024
Arrests and detainments of journalists in the United States surged in 2024 compared to the year prior, according to the U.S. Press Freedom Tracker, a project of the Freedom of the Press Foundation.
The tracker reports that journalists were arrested or detained by police at least 48 times this year—eclipsing the number of arrests that took place in the previous two years combined, and constituting the third highest number of yearly arrests and detentions since the project began cataloging press freedom violations in 2017. 2020, however, still stands as far and away the year with the most arrests and detentions.
The 48 arrests and detentions this year is also part of a larger list of "press freedom incidents" that the tracker documents, including things like equipment damage, equipment seizure, and assault.
While a year with a high number of protests typically leads to more arrests, "it was protests in response to the Israel-Gaza war that caused this year's uptick," according to the tracker.
The vast majority of the arrests and detainments out of the total 48 were linked to these sorts of demonstrations, and it was protests at Columbia University's Manhattan campus that were the site of this year's largest detainment of journalists.
The report also recounts the story of Roni Jacobson, a freelance reporter whose experience on the last day of 2023 was a harbinger of press freedom incidents to come in 2024. Jacobson was on assignment to cover a pro-Palestinian demonstration for the New York Daily News on December 31, 2023 when she was told to leave by police because she didn't have city-issued press credentials with her. She recounted that she accidentally bumped into an officer and was arrested. She was held overnight at a precinct and then released after the charges against her, which included disorderly conduct, were dropped.
Even five arrests that the tracker deems "election-related" took place at protests that were "at least partially if not entirely focused on the Israel-Gaza war." Three of those election-related arrests took place at protests happening around the Democratic National Convention in August.
One police force in particular bears responsibility for this year's crackdown: Nearly 50% of the arrests of journalists this year were at the hands of the New York Police Department (NYPD). Many of those taken into custody had their charges dropped quickly, but the tracker notes that the NYPD's use of "catch-and-release" tactics was particularly worrying to press freedom advocates.
Two photojournalists, Josh Pacheco and Olga Federova, were detained four times this year in both New York City and Chicago while photographing protests. They were both "assaulted and arrested and [had] their equipment damaged" while documenting police clearing a student encampment at Manhattan's Fashion Institute of Technology; however, they were released the next day and told their arrests had been voided.
"While [we are] glad that some common sense prevailed by the NYPD not charging these two photographers with any crime, we are very concerned that they are perfecting 'catch-and-release' to an art form,” Mickey Osterreicher, general counsel for the National Press Photographers Association, told the tracker.
"The fact that they took two photojournalists off the street, preventing them from making any more images or transmitting the ones they already had on a matter of extreme public concern, is very disturbing," he said.
Besides covering protests, 2024 also saw the continued practice of "criminally charging journalists for standard journalistic practices," according to the tracker. For example, one investigative journalist in Los Angeles was repeatedly threatened with arrest while attempting to cover a homeless encampment sweep in the city, and then was detained in October, though he was let go without charges.
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