Facebook, Amazon, and hundreds of companies post targeted job ads that screen out older workers

Facebook, Amazon, and hundreds of companies post targeted job ads that screen out older workers
Facebook users are suing them for age discrimination.
By Alexia Fernández Campbell
May 31 2018

Older workers are accusing Facebook, Ikea, and hundreds of other companies for discriminating against job seekers in their 50s and 60s through targeted job ads posted on Facebook.

The Communications Workers of America, a labor union representing 700,000 media workers across the country, added the companies to a class-action lawsuit on Tuesday, which was filed in California federal court in December. In its original complaint, the labor union accused Amazon, T-Mobile, and Cox Media Group of doing the same thing.

The case, Bradley v. T-Mobile, has major implications for US employers, who routinely buy job ads on Facebook to reach users. The plaintiffs argue that Amazon, T-Mobile, Ikea, Facebook, and hundreds of other companies target the ads so they are only seen by younger Facebook users. 

The lawsuit revolves around Facebook’s unique business model, which lets advertisers micro-target the network’s users based on their interests, city, age, and other demographic information. In the past, equal rights advocates have suedFacebook for accepting ads that discriminate against consumers based on their religion, race, and gender. 

Facebook has argued that the company is not legally responsible when other companies buy ads that violate the law. But in a new filing, the CWA has now added Facebook to its complaint as one of the companies accused of violating civil rights laws by targeting its own job ads to younger users.

Here is one ad Facebook posted, submitted by the plaintiffs, inviting users to a career fair with Facebook recruiters. The ads were visible only to users between the ages of 21 to 55:

Facebook has denied that these kinds of ads are a form of age discrimination. Rob Goldman, Facebook’s VP of ads, compared it to posting job ads in magazines geared for young audiences, which the courts have said isn’t inherently a form of age discrimination as long as the company is also posting job ads in media outlets with older audiences or making other recruitment efforts.

“What matters is that marketing is broadly based and inclusive, not simply focused on a particular age group. In addition, certain employers want to attract retirees or recruit for jobs with specific age restrictions like the military or airline pilots,” Goldman wrote in December in response to the original lawsuit and to the ProPublica and the New York Times’s investigation that described the widespread practice. 

Facebook came under fire in 2016 when a separate ProPublica investigation showed that companies could buy ads that screened out users based on their race, which is potentially illegal in the context of housing and employment advertising. Facebook announced in February 2017 that it had developed a new system to flag and reject certain ads that screened users based on “ethnic affinity,” but the network still lets advertisers filter out characteristics linked to other protected groups: women, people with disabilities, and religious minorities.

In the age discrimination case, plaintiffs want the court to order these companies, including Facebook itself, to stop posting job ads that filter out older workers. They argue that it’s a violation of the Age Discrimination in Employment Act of 1967, which makes it illegal to discriminate against workers over the age of 40 inemployment advertising, recruiting, hiring, and other employment opportunities.

Here are a few other ads the plaintiffs submitted as evidence:


White America’s racial resentment is the real impetus for welfare cuts, study says

White America’s racial resentment is the real impetus for welfare cuts, study says
By Caitlin Dewey
May 30 2018

White Americans are increasingly critical of the country’s social safety net, a new study suggests, thanks in part to a rising tide of racial resentment.

The study, conducted by researchers at two California universities and published Wednesday in the journal Social Forces, finds that opposition to welfare programs has grown among white Americans since 2008, even when controlling for political views and socioeconomic status.

White Americans are more likely to favor welfare cuts when they believe that their status is threatened and that minorities are the main beneficiaries of safety net programs, the study says.

The findings suggest that political efforts to cut welfare programs are driven less by conservative principles than by racial anxiety, the authors conclude. T hat also hurts white Americans who make up the largest share of Medicaid and food-stamp recipients. President Donald Trump and Congressional Republicans have proposed deep cuts to both programs.

“I think our research is very relevant to politics,” said Rachel Wetts, a doctoral candidate in sociology at UC Berkeley and the lead author of the new research. “My main hope here is that people take a step back, look at what these sorts of programs do for the poor, and think about what’s driving opposition to them.”

Wetts and her co-author, Stanford University sociologist Robb Willer, conducted three separate experiments designed to gauge white Americans’ attitudes toward welfare and the factors that influenced them.

In the first, the researchers analyzed 10 years of nationally representative survey data on attitudes toward race and welfare programs. Between 2008 and 2012 in particular, they found, opposition to welfare rose among all Americans — but far more sharply among whites, who also began scoring higher on racial resentment scales during that period.

These trends weren’t necessarily linked, however. So to determine if there was a connection, Wetts and Willer designed two more experiments: one in which they quizzed respondents on their feelings about welfare after seeing a graph about U.S. demographic change, and another in which respondents took a similar quiz after viewing information on average income by race and the demographics of welfare beneficiaries.

White Americans called for deeper cuts to welfare programs after viewing charts that showed they would become a racial minority within 50 years. They also opposed welfare programs more when they were told that people of color benefit most from them.

Those results show that the push to cut welfare programs is not driven by pure political motives, such as decreasing government spending or shrinking government bureaucracy, Wetts said.

“We find evidence that these shifts [in sentiment against welfare programs] are specifically directed at programs people see as benefiting minorities instead of whites,” she added.

Wetts isn’t ruling out the possibility that alternate factors could also be at play, of course. Some researchers have found that people embrace more conservative politics during periods of rapid social change — not necessarily because they fear their racial status is threatened, but because they fear change is happening too fast. Others have argued the connection between white Americans’ racial resentment and their politics has been exaggerated.

But there’s a growing body of evidence to suggest that white Americans who fear a loss of racial status are driving major shifts in policy and politics. A major study in the Proceedings of the National Academy of Sciences in April concluded that President Donald Trump was voted into office by people anxious about rising racial diversity and globalization.


From 9/11 to Mass Surveillance, The Man Who Knew Too Much – Thomas Drake on RAI

[Note:  This show is from 2015.  I thought it was again timely to post this given current events.  This one is worth your time if you have it!  DLH]

From 9/11 to Mass Surveillance, The Man Who Knew Too Much – Thomas Drake on RAI
Aug 2 2015

On Reality Asserts Itself, Mr. Drake, a former Senior Executive at the National Security Agency, says he was targeted by the NSA because he exposed that the agency had intel that could have prevented the 9/11 attacks and because he blew the whistle on a massive secret surveillance program aimed at Americans.

Video: Five part series.

Story Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to Reality Asserts Itself on The Real News Network. I’m Paul Jay. 
The man who knew too much–that’s Thomas Drake. Thomas Drake was in the Air Force, he was in the NSA, and, for many years, in and out of various parts of the American national security state, both in public service and in the private sector. I say the man who knew too much, but he’s also the man who saw and spoke. Internally to begin with, he raised objections to the NSA having knowledge about 9/11 and not making use of that knowledge to prevent 9/11. He went public eventually, but first anonymously, on a mass surveillance program that he thought violated the Fourth Amendment. He went public eventually, but first within all due internal process, on what he thought was a waste of multibillion-dollar program that had been created for mass surveillance. So not only did it violate the Fourth Amendment; it also was a big boondoggle. 
The man who knew too much now joins us in this studio. 
Thanks for joining us, Thomas.


JAY: So, just quickly, Thomas is a former senior executive at the U.S. National Security Agency. He’s a decorated United States Air Force and United States Navy veteran. And as I said, he’s a whistleblower. He’s a whistleblower who was indicted–didn’t go to jail, but you came pretty close. 
First of all, in Reality Asserts Itself, as most of our viewers know, I usually start with a personal back story. We’re going to get there, but we’re not going to quite start there. 
For people who don’t know your case, kind of just quickly, why did they go after you?

DRAKE: They went after me because I knew too much about several things, and I shared it within channels, and ultimately went to the press anonymously, and over the course of a number of years. But I was confronted by the dark side shortly after 9/11. 
So the first thing was the secret surveillance programs that were put into place as a result of 9/11 and unleashed on the Petri dish called the United States of America, turning the United States of America into the equivalent of a foreign nation for dragnet electronic surveillance. To this day, we still don’t know the full extent of that.

JAY: And we’re going to dig into all this.

DRAKE: Yeah. And then there was also the 9/11 knowledge, what NSA actually knew, what they should have known, what they didn’t share, what they kept hidden, and information that they never even discovered until later.

JAY: But you have said that if it had been acted on, it might have been able–that information might have led to preventing the 9/11 events.

DRAKE: Well, I consider NSA quite culpable. In fact–well, we’ll get into the detail as to why, but extraordinarily culpable. And they’ve been covering up their culpability ever since. 
What happened is I ended up speaking truth to power, starting with NSA, and they didn’t like that. And I ultimately became a material witness in several government investigations, including two 9/11 congressional investigations, a Department of Defense Office of the Inspector General audit and investigation. And the long story short, after significant reprisal and retaliation, the New York Times article comes out in December 2005 revealing for the first time publicly the existence of the so-called terrorist surveillance program–it was not known as that. It was a convenient cover. That caused a huge stir at NSA and within the Department of Justice. They referred it to the Department of Justice for criminal investigation, and I was put on a target list shortly thereafter.


Amazon, Stop Powering Government Surveillance

Amazon, Stop Powering Government Surveillance
May 29 2018

EFF has joined the ACLU and a coalition of civil liberties organizations demanding that Amazon stop powering a government surveillance infrastructure. Last week, we signed onto a letter to Amazon condemning the company for developing a new face recognition product that enables real-time government surveillance through police body cameras and the smart cameras blanketing many cities. Amazon has been heavily marketing this tool—called “Rekognition”—to law enforcement, and it’s already being used by agencies in Florida and Oregon. This system affords the government vast and dangerous surveillance powers, and it poses a threat to the privacy and freedom of communities across the country. That includes many of Amazon’s own customers, who represent more than 75 percent of U.S. online consumers.

As the joint letter to Amazon CEO Jeff Bezos explains, Amazon’s face recognition technology is “readily available to violate rights and target communities of color.” And as we’ve discussed extensively before, face recognition technology like this allows the government to amp up surveillance in already over-policed communities of color, continuously track immigrants, and identify and arrest protesters and activists. This technology will not only invade our privacy and unfairly burden minority and immigrant communities, but it will also chill our free speech.

Since the ACLU sounded the alarm, others have started to push back on Amazon. The Congressional Black Caucus wrote a separate letter to Bezos last week, stating, “We are troubled by the profound negative unintended consequences this form of artificial intelligence could have for African Americans, undocumented immigrants, and protesters.” The CBC pointed out the “race-based ‘blind spots’ in artificial intelligence” that result in higher numbers of misidentifications for African Americans and women than for whites and men, and called on Amazon to hire more lawyers, engineers, and data scientists of color. Two other members of Congress followed up with another letter on Friday.

Amazon’s partnership with law enforcement isn’t new. Amazon already works with agencies across the country, offering cloud storage services through Amazon Web Services (AWS) that allow agencies to store the extremely large video files generated by body and other surveillance cameras. Rekognition is an inexpensive add-on to AWS, costing agencies approximately $6-$12 per month.

Rekognition doesn’t just identify faces. It also can track people through a scene, even if their faces aren’t visible. It can identify and catalog a person’s gender, what they’re doing, what they’re wearing, and whether they’re happy or sad. It can identify other things in a scene, like dogs, cars, or trees, and can recognize text, including street signs and license plates. It also offers to flag things it considers “unsafe” or “inappropriate.” 

And the technology is powerful, if Amazon’s marketing materials are accurate. According to the company, Rekognition can identify people in real-time by instantaneously searching databases containing tens of millions of faces, detect up to 100 people in “challenging crowded” images, and track people through video—within a single shot and across multiple shots, and even when the camera is in motion—which makes “investigation and monitoring of individuals easy and accurate” for “security and surveillance applications.” Amazon has even advertisedRekognition for use on police officer “bodycams.” (The company took mention of bodycams off its website after the ACLU voiced concern, but “[t]hat appears to be the extent of its response[.]”)

This is an example of what can go wrong when police departments unilaterally decide what privacy invasions are in the public interest, without any public oversight or input. That’s why EFF supports Community Control Over Police Surveillance (CCOPS) measures, which ensure that local police can’t do deals with surveillance technology companies without going through local city councils and the public. People deserve a say in what types of surveillance technology police use in their communities, and what policies and safeguards the police follow. Further, governments must make more balanced, accountable decisions about surveillance when communities and elected officials are involved in the decision-making process.


Six or Seven Things Social Media Can Do For Democracy

Six or Seven Things Social Media Can Do For Democracy
By Ethan Zuckerman
May 30 2018

Social media doesn’t work the way we think it should. That’s the conclusion many people have come to in the wake of revelations about Cambridge Analytica’s mining of Facebook data to build political profiles and sway elections. Perhaps the concerns go further back, to the election of a US president in 2016 who seems fueled by social media, the more polarizing and divisive the better. Or perhaps it was Brexit that broke you. Or a gunman “self-investigating” the Comet Ping Pong pizza parlor, spurious accusations of crisis actors at Marjorie Stoneman Douglas and the amazingly inventive web of conspiracies the internet seems to engender. The cyberutopians have retreated, the creators of the modern internet are doing penanceand we’re all social media critics now.

Those critics include (suddenly) self-reflective executives at social media platforms, who are desperate for ideas on how their tools can return to society’s good graces. Having learned that platforms manage to metrics, making business decisions to maximize revenues, pageviews or engagement, there’s a new urgency to create a metric that will give us better social media, tools less likely to isolate, polarize and radicalize us. Tristan Harris has preached the gospel of Time Well Spent to newly receptive audiences at Facebook. At Cortico, my MIT colleague Deb Roy is working to define measures of healthy online communities, so Twitter and other platforms can optimize to encourage these behaviors.

These are worthy projects, and I am following both with optimism and interest. But I am concerned that we’ve not had a robust conversation about what we want social media to do for us.

We know what social media does for platform companies like Facebook and Twitter: it generates enormous masses of user-generated content that can be monetized with advertising, and reams of behavioral data that make that advertising more valuable. Perhaps we have a sense for what social media does for us as individuals, connecting us to distant friends, helping us maintain a lightweight awareness of each other’s lives even when we are not co-present. Or perhaps it’s a machine for disappointment and envy, a window into lives better lived than our own. It’s likely that what social media does for us personally is a deeply idiosyncratic question, dependent on our own lives, psyches and decisions, better discussed with our therapists than spoken about in generalities.

I’m interested in what social media should do for us as citizens in a democracy. We talk about social media as a digital public sphere, invoking Habermas and coffeehouses frequented by the bourgeoisie. Before we ask whether the internet succeeds as a public sphere, we ought to ask whether that’s actually what we want it to be.

I take my lead here from journalism scholar Michael Schudson, who took issue with a hyperbolic statement made by media critic James Carey: “journalism as a practice is unthinkable except in the context of democracy; in fact, journalism is usefully understood as another name for democracy.” For Schudson, this was a step too far. Journalism may be necessary for democracy to function well, but journalism by itself is not democracy and cannot produce democracy. Instead, we should work to understand the “Six or Seven Things News Can Do for Democracy”, the title of an incisive essay Schudson wrote to anchor his book, Why Democracies Need an Unloveable Press.

The six things Schudson sees news currently doing for democracy are presented in order of their frequency — as a result, the first three functions Schudson sees are straightforward and unsurprising. The news informs us about events, locally and globally, that we need to know about as citizens. The news investigates issues that are not immediately obvious, doing the hard work of excavating truths that someone did not want told. News provides analysis, knitting reported facts into complex possible narratives of significance and direction.

Schudson wades into deeper waters with the next three functions. News can serve as a public forum, allowing citizens to raise their voices through letters to the editor, op-eds and (when they’re still permitted) through comments. The news can serve as a tool for social empathy, helping us feel the importance of social issues through careful storytelling, appealing to our hearts as well as our heads. Controversially, Schudson argues, news can be a force for mobilization, urging readers to take action, voting, marching, protesting, boycotting, or using any of the other tools we have access to as citizens.

His essay closes with a seventh role that Schudson believes the news should fill, even if it has yet to embrace it. The news can be a force for the promotion of representative democracy. For Schudson, this includes the idea of protecting minority rights against the excesses of populism, and he sees a possible role for journalists in ensuring that these key protections remain in force.


Open Telecom Data

Open Telecom Data
Moving Forward
By Steve Song
May 30 2018


The value of being connected to a communication network is steadily rising. More than a decade ago researchers established that simple proximity to a communication network was directly correlated to a reduction in the probability of dying from malaria. Today, with smartphones delivering powerful generic services like group and personal messaging and more specific apps aimed at critical sectors like education, agriculture, and others, communication networks are approaching the status of essential infrastructure for a modern economy.

And yet, mobile subscriber growth is slowing as the current economics of mobile network operators struggle to find viability in markets with subsistence level incomes and/or sparsely populated regions. Attempts to address this problem through universal service strategies/funds have met with limited success.

This presents a conundrum for policy-makers and regulators where value continues to accrue to those with affordable access to communication infrastructure while the unconnected fall further and further behind by simply staying in the same place. Those who most desperately need support are cut off from access to opportunity, to social and health safety nets, to education, to information that can improve lives and to platforms to demand change. It is ironic, or perhaps tragic, that the voice of the unconnected are not heard on this issue for the very reason that they are unconnected.

In order to address this issue, fresh thinking is required. Previously, solving connectivity challenges could only be tackled by entire governments investing vast resources in state-owned networks. The mobile phone revolution opened the door to private sector investment in telecoms and new business models like pay-as-you-go services extended sustainable communication services further than anyone could have imagined. Yet becoming a mobile network operator still involves millions of dollars, creating a high barrier to market entry.

There are a number of factors that suggest that the telecommunications landscape is shifting once again.

• The value chain of telecommunications networks is becoming disaggregated. Previously in order to enter a market, an operator needed to invest in international, national, middle mile, and last mile infrastructure. Now we are beginning to see competition in each of those segments.
• The spread of fibre optic infrastructure, both undersea and terrestrial is changing the access market. While there is no question that fibre optic networks are increasing the ability of existing operators to deliver broadband, those same networks are opening up possibilities for new players who now can deliver more targeted, localised, affordable solutions to unserved populations.
• Changes in last mile technology are also opening up new possibilities. The spread of WiFi as an access technology is empowering both commercial, government, and community access initiatives to offer local services. Dynamic spectrum technology also shows promise as an alternative access technology.
• Finally, the meteoric growth of access and mass manufacturing has brought down the cost of access technologies to the point where they are within the reach of small scale operators. Low-cost solar-powered Open Source GSM base stations can be deployed for a fraction of the cost models of existing mobile network operators.

All of these changes represent genuine cause for optimism that it is possible to sustainably connect everyone on the planet. However, in order for that to happen, changes in access policy and regulation are required. And those changes need to be informed by accurate data on existing telecommunication infrastructure and its use. This includes data on the extent and uptake of fibre optic networks, towers used by mobile operators, broadcasters and ISPs, as well as the wireless spectrum assignments that are assigned to operators. The pricing of wholesale networks is also an important data point, especially from the point of view of regional benchmarking.

To date, public access to any of the above information has been through communication regulators who collect some or all of this information from licensed operators. Some of this information may be passed on to the public through the regulator website. In some cases the operators themselves may release some of this information. What is evident from an examination of the websites of communication regulators is that there is no consistency as to what information is made publicly available and how detailed that information is.

In the early days of mobile networks (and fibre networks) there was not that much emphasis on accurate mapping of network infrastructure in part because operators were expanding so rapidly at the time. Now, as subscriber growth is slowing and the challenge of providing affordable access in more difficult regions becomes more evident, it is essential to have more accurate information on the state of network growth and the resources in use.
It is also essential that this data be made available to the public as Open Data. There are several reasons for this:


Self-driving technology is going to change a lot more than cars

Self-driving technology is going to change a lot more than cars
How self-driving technology could transform everything from retail to transit.
May 29 2018

When people think about self-driving cars, they naturally think about, well, cars. They imagine a future where they buy a new car that has a “self drive” button that takes them wherever they want to go.

That will happen eventually. But the impact of self-driving technology is likely to be much broader than that. Our roads are full of trucks, taxis, buses, shuttles, delivery vans, and more—all of these vehicles will have self-driving equivalents within a decade or two.

The advent of self-driving technology will transform the design possibilities for all sorts of vehicles, giving rise to new vehicle categories that don’t exist now and others that straddle the line between existing categories. It will also change the economics of transportation and delivery services, making on-demand delivery a much faster, cheaper, and more convenient option.

Recently we had the chance to talk to two self-driving vehicle startups that are at the forefront of these trends.

Earlier this month, the startup Drive.ai announced an autonomous shuttle servicethat will launch in July in the Dallas metropolitan area. The company’s vehicles straddle the line between buses and taxis—like a bus, they’re designed for shared service in a fixed area, but rather than being on a fixed route and schedule, they can be hailed on demand.

Meanwhile, Nuro is building self-driving cars for moving goods instead of people, and it recently applied for permission to test its fully driverless vehicles in Arizona. Because Nuro’s cars don’t need room for passengers—or all the safety equipment a human rider needs—Nuro’s cars can be much smaller and lighter (and therefore cheaper and safer) than a conventional car.

You can think of this as a high-tech replacement for a pizza delivery guy, but Nuro co-founder Dave Ferguson argues that the potential market here is much bigger. Without the need to pay a driver, on-demand deliveries will become much cheaper, so a lot more stores will offer delivery services. Instead of running to the grocery store for a couple of ingredients, you’ll be able to order them on your smartphone and have them show up at your door 30 minutes later.

Talking to these companies helped me appreciate how much both the design of vehicles and the economics of transportation services is driven by the need for human drivers. The roads of the future are going to have a richer assortment of vehicles of all sizes, shapes, and functions. Companies are only starting to explore what they might look like.

Self-driving technology will change the transportation landscape

To help myself think through the design space for self-driving vehicles, I created this two-dimensional grid showing some of the most common vehicles on the road today and the companies that are working on self-driving vehicles in the same categories:


Poor People’s Campaign Is The Angry Response To Inequality America Needs

Poor People’s Campaign Is The Angry Response To Inequality America Needs
By Leo W. Gerard
May 26 2018

For the past half century, Americans have allowed the wealthy to get away with economic murder. Income inequality has risen to pre-Great Depression levels. Compensation for CEOs skyrocketed while wages for the rest stagnated. The wealthy received fat tax breaks even as workers got a pittance. Just this month, America’s high rollers bought dozens of paintings at prices tens of millions higher than anticipated during auctions at hoity-toity Christie’s and Sotheby’s.

And all of this has occurred with barely more than a peep of protest from the populace, no more than a few here today, gone tomorrow Occupy Wall Street sit-ins. 

This month is not, however, business as usual. Two Mondays ago, a bunch of dedicated rabble-rousers launched a new Poor People’s Campaign. Thousands demonstrated in Washington, D.C., including members of the union I lead, the United Steelworkers. The group, led by the Rev. William Barber II and the Rev. Liz Theoharis, plans actions in 30 states over 40 days. This past week, dozens of Poor People’s Campaign activists were again arrested in Washington, D.C., as they demanded restoration of the Voting Rights Act. 

The campaign is dedicated to the idea that “people should not live in or die from poverty in the richest nation ever to exist.” Its revival could not be more urgent or timely.

The original Poor People’s Campaign was the vision of Dr. Martin Luther King, who wanted to expand the fight for civil rights to include a movement against the indignities of poverty across all racial lines. Dr. King was assassinated before he formally launched the campaign, but his supporters took up the cause beginning with an encampment in Washington, D.C., in 1968. 

Fifty years later, income inequality is worse. The poverty rate declined from 1968 through 1975 then remained fairly steady since, though it is higher now than in 1975. Deep poverty has increased. According to the U.S. Census, 43 million Americans live in poverty. The Institute for Policy Studies, a progressive think tank, estimates that there are 140 million Americans who are either impoverished or so low-income that they are unable to routinely afford food, clothing and utilities. Dr. King would be appalled.

The United Way tracks this latter group, which they refer to as ALICE (Asset Limited, Income Constrained, Employed). These are Americans who work hard and are above the formal poverty line but who live paycheck to paycheck and experience a major financial crisis when a car breaks down or a child falls ill. 

NPR found such a couple in Kansas City, Missouri. Terrance Wise works for $10.25 an hour at McDonald’s. His fiancé gets $12 an hour as a home health care worker. Still, Wise told the NPR reporter, he skips meals as the couple struggles to support their three daughters.

Full-time workers suffering from hunger can be explained by this: The portion of national income that goes to workers has declined. It was 64.5 percent in 1973. Now, it’s 56.8 percent. For the bottom half of all earners, their share of income declined from 20 percent in 1980 to 12 percent in 2014.

Meanwhile, the numbers are great for the richest. The top 1 percent got 12 percent of income in 1980. They took 20 percent in 2014. For the richest of the rich, the top .001 percent, the boost is staggering. Their incomes rose 636 percent in that same period.

This is reflected in the CEO-to-worker pay ratios that federal legislation required corporations to disclose beginning this year. The worst so far is Mattel, where the CEO took home $31.3 million, or 4,987 times the corporation’s median worker’s pay. That suggests that if 4,986 Mattel workers got together, they couldn’t do as good a job as Margo Georgiadis did, even though toy sales continued to slump under her leadership, and the board of directors dumped her earlier this year.

Similarly, the CEO at Gap made $15.6 million, which was 2,900 times the pay of the clothing company’s median worker. Like Mattel, the Gap board of directors ditchedits CEO this year for poor financial performance. But before that, through quarter after quarter of sales declines and store closings, the board of directors decided that CEO Jeff Kirwan was more valuable than 2,899 Gap employees put together.

The CEO-to-worker pay ratio list is full of such examples. Corporate boards of directors apportion an excessive amount of pay to the top, even when the top bungles badly. That’s one way income inequality is sustained and worsened.


The financial scandal no one is talking about

[Note:  This item comes from friend David Rosenthal.  DLH]

The financial scandal no one is talking about
Accountancy used to be boring – and safe. But today it’s neither. Have the ‘big four’ firms become too cosy with the system they’re supposed to be keeping in check?
By Richard Brooks
May 29 2018

In the summer of 2015, seven years after the financial crisis and with no end in sight to the ensuing economic stagnation for millions of citizens, I visited a new club. Nestled among the hedge-fund managers on Grosvenor Street in Mayfair, Number Twenty had recently been opened by accountancy firm KPMG. It was, said the firm’s then UK chairman Simon Collins in the fluent corporate-speak favoured by today’s top accountants, “a West End space” for clients “to meet, mingle and touch down”. The cost of the 15-year lease on the five-storey building was undisclosed, but would have been many tens of millions of pounds. It was evidently a price worth paying to look after the right people.

Inside, Number Twenty is patrolled by a small army of attractive, sharply uniformed serving staff. On one floor are dining rooms and cabinets stocked with fine wines. On another, a cocktail bar leads out on to a roof terrace. Gazing down on the refreshed executives are neo-pop art portraits of the men whose initials form today’s KPMG: Piet Klynveld (an early 20th-century Amsterdam accountant), William Barclay Peat and James Marwick (Victorian Scottish accountants) and Reinhard Goerdeler (a German concentration-camp survivor who built his country’s leading accountancy firm).

KPMG’s founders had made their names forging a worldwide profession charged with accounting for business. They had been the watchdogs of capitalism who had exposed its excesses. Their 21st-century successors, by contrast, had been found badly wanting. They had allowed a series of US subprime mortgage companies to fuel the financial crisis from which the world was still reeling.

“What do they say about hubris and nemesis?” pondered the unconvinced insider who had taken me into the club. There was certainly hubris at Number Twenty. But by shaping the world in which they operate, the accountants have ensured that they are unlikely to face their own downfall. As the world stumbles from one crisis to the next, its economy precarious and its core financial markets inadequately reformed, it won’t be the accountants who pay the price of their failure to hold capitalism to account. It will once again be the millions who lose their jobs and their livelihoods. Such is the triumph of the bean counters.

The demise of sound accounting became a critical cause of the early 21st-century financial crisis. Auditing limited companies, made mandatory in Britain around a hundred years earlier, was intended as a check on the so-called “principal/agent problem” inherent in the corporate form of business. As Adam Smith once pointed out, “managers of other people’s money” could not be trusted to be as prudent with it as they were with their own. When late-20th-century bankers began gambling with eye-watering amounts of other people’s money, good accounting became more important than ever. But the bean counters now had more commercial priorities and – with limited liability of their own – less fear for the consequences of failure. “Negligence and profusion,” as Smith foretold, duly ensued.

After the fall of Lehman Brothers brought economies to their knees in 2008, it was apparent that Ernst & Young’s audits of that bank had been all but worthless. Similar failures on the other side of the Atlantic proved that balance sheets everywhere were full of dross signed off as gold. The chairman of HBOS, arguably Britain’s most dubious lender of the boom years, explained to a subsequent parliamentary enquiry: “I met alone with the auditors – the two main partners – at least once a year, and, in our meeting, they could air anything that they found difficult. Although we had interesting discussions – they were very helpful about the business – there were never any issues raised.”

This insouciance typified the state auditing had reached. Subsequent investigations showed that rank-and-file auditors at KPMG had indeed questioned how much the bank was setting aside for losses. But such unhelpful matters were not something for the senior partners to bother about when their firm was pocketing handsome consulting income – £45m on top of its £56m audit fees over about seven years – and the junior bean counters’ concerns were not followed up by their superiors.

Half a century earlier, economist JK Galbraith had ended his landmark history of the 1929 Great Crash by warning of the reluctance of “men of business” to speak up “if it means disturbance of orderly business and convenience in the present”. (In this, he thought, “at least equally with communism, lies the threat to capitalism”.) Galbraith could have been prophesying accountancy a few decades later, now led by men of business rather than watchdogs of business.

Another American writer of the same period caught the likely cause of the bean counters’ blindness to looming danger even more starkly. “It is difficult to get a man to understand something”, wrote Upton Sinclair, “when his salary depends upon his not understanding it.”

For centuries, accounting itself was a fairly rudimentary process of enabling the powerful and the landed to keep tabs on those managing their estates. But over time, that narrow task was transformed by commerce. In the process it has spawned a multi-billion-dollar industry and lifestyles for its leading practitioners that could hardly be more at odds with the image of a humble number-cruncher.

Just four major global firms – Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY) and KPMG – audit 97% of US public companies and all the UK’s top 100 corporations, verifying that their accounts present a trustworthy and fair view of their business to investors, customers and workers. They are the only players large enough to check the numbers for these multinational organisations, and thus enjoy effective cartel status. Not that anything as improper as price-fixing would go on – with so few major players, there’s no need. “Everyone knows what everyone else’s rates are,” one of their recent former accountants told me with a smile. There are no serious rivals to undercut them. What’s more, since audits are a legal requirement almost everywhere, this is a state-guaranteed cartel.

Despite the economic risks posed by misleading accounting, the bean counters perform their duties with relative impunity. The big firms have persuaded governments that litigation against them is an existential threat to the economy. The unparalleled advantages of a guaranteed market with huge upside and strictly limited downside are the pillars on which the big four’s multi-billion-dollar businesses are built. They are free to make profit without fearing serious consequences of their abuses, whether it is the exploitation of tax laws, slanted consultancy advice or overlooking financial crime.


The new American feudalism

The new American feudalism
Tens of millions of families struggle for shelter, while media tails Trump’s clown car
May 27 2018

As the corporate news media continues to fixate exclusively on the fates and fortunes of President Trump the Great Unraveling of America continues as does the acceleration of wealth concentration. Just as the news media’s inattention to the deterioration of the economic circumstances of tens of millions of America’s poor and working-class families all throughout the Obama years set the stage for Trump’s rise, their continuing inattention to this cohort is setting the stage for his reelection.
They will say they did not see it coming.

The reality is, when you have the disappearance of $20 trillion in American household wealth through Wall Street’s predations it is going to have consequences for generations. The fact that this misery is largely being born by households of color and the marginal working class of all colors makes it all the easier to ignore in the polite society where the media elite hang on this latest palace intrigue.

And while the assertion by the former Director of National Intelligence James Clapper that Russia threw the 2016 election by flipping tens of thousands of votes in three Rust Belt states is probably accurate, it doesn’t explain how those states got rusty in the first place and so vulnerable to Trump’s tropes about bringing back shiny steel.
Nowhere is the Great Unraveling of America more evident than in the deepening crisis of housing affordability. According to Harvard University’s Joint Center for Housing Studies report last year, the growing wealth inequality and concentration is playing out in the landscape and increasingly shaping the nation in a kind of 21st century feudalism.
While trendy towns on the two coasts are seeing housing prices go up,  they are flat or declining in places that voted for Trump in the Rust Belt. But even within states this kind of ‘Tale of Two Economies” is becoming more pronounced. “The disparities in price appreciation across and within markets adds concerns that entire metro-areas are becoming inaccessible to low and moderate income households,” wrote the Harvard researchers.

What’s being built are luxury homes and apartments, not housing that works for the growing cohort of working-class Americans that struggle from month to month to pay for shelter.

This new feudalism is most evident in my native New Jersey where for decades I have been observing and writing about local land use. At 17 I was a reporter for a local weekly chronicling how the local officials approved the paving over of celery farms and orchards for McMansions and strip malls.

​​But there were occasional moments of enlightenment.

More than 40 years ago the New Jersey Supreme Court’s Mount Laurel decision proclaimed it was unconstitutional for local zoning to exclude housing for its poor and working class. Yet, decades later New Jersey is in a full-blown affordable housing crisis and leads the nation in foreclosures. And despite the scarcity of affordable housing there are tens of thousands of vacant homes just wasting away.

Back in January of 2015 attorney Kevin Walsh, with the advocacy group Fair Share Housing, was before New Jersey’s highest court making the case it was time for the courts to step back in because their Mount Laurel decision that declared the state had to make room for housing the poor and working class had been ignored. He described how Gov. Christie had hollowed out the Council on Affordable Housing that was created by the legislature to implement the court’s landmark 1975 ruling.

“It’s 15 years in which the rights that Mount Laurel recognized have gone unenforced with real human consequences, so we come to the court and say please do what you promised to do,” Kevin Walsh told the justices.