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Fed Rates

Fischer praises economy, straddles FOMC liftoff date camps

Federal Reserve Vice Chairman Stanley Fischer left open the option of an interest-rate increase next month, walking a line between officials who want to delay due to market turmoil and those who say the economy is strong enough to handle a move. Fischer said reports on the U.S. economy’s tempo have “been impressive, and the economy is returning to normal,” in an interview with CNBC from the Kansas City Fed’s annual retreat in Jackson Hole, Wyoming. “I think it’s early to tell, the change in the circumstances which began with the Chinese devaluation is relatively new and we’re still watching how it unfolds,” he said. “I wouldn’t want to go ahead and decide right now what the case is, more compelling, less compelling,” for a September liftoff. On Wednesday, New York Fed President William C. Dudley said market turbulence made the case for a September move “less compelling to me than it was a few weeks ago.” Fischer’s remarks place himself between two camps on the Federal Open Market Committee. Officials such as Fed presidents James Bullard of St. Louis and Loretta Mester of Cleveland say the economy’s cumulative gains have been strong and they expect them to continue, and put varying weight on recent market movements. “My view so far in looking at all of the factors is that the economy can sustain an increase in interest rates,” Mester said in an interview Friday with Bloomberg Television at Jackson Hole. Another camp is signaling there is little reason to rush and appears to prefer to hold off and determine if there is fallout from market volatility, a slowing Chinese economy and the devaluation of the yuan on Aug. 11. Fed officials next meet Sept. 16-17. “We’ve got a little over two weeks before we have to make a decision, and we’ve got time to wait and see the incoming data,” Fischer said. “We haven’t made a decision yet and I don’t think that we should make a decision,” he said. “We’re dealing with something which happened about 10 days ago, particularly the change in the circumstances.” Officials had been “anxious to get going” with getting rates off zero but now need to figure out if market events have blown them off course, said Atlanta Fed President Dennis Lockhart, who is a voting FOMC member this year. The Fed has held rates near zero since 2008. “The fundamentals of the economy are really solid,” he told Bloomberg Television Friday at Jackson Hole. “I weigh both the distance that we have traveled as well as the current outlook for the economy. Both of those to me I think would suggest that we’re close. The timing is close.” Equities around the world have been whipsawed this week, indicating markets remain subject to sudden shifts in investor sentiment. The Standard & Poor’s 500 Index fell 0.2 percent as of 2:53 p.m. in New York Friday after the U.S. stock benchmark’s biggest two-day gain since the beginning of the bull market in 2009. The yield on 10-year Treasuries was 2.18 percent, little changed from Thursday. “If you don’t understand the market volatility,” Fischer said, “yes, it does effect the timing of a decision you might want to make. But I think they could settle fairly quickly, there is that possibility.” Investors have increased the probability of a move at the FOMC meeting on Oct. 27-28 to 49 percent from 40 percent on Thursday. They see a 38 percent chance the Fed will move next month. The Fed last raised rates in 2006. “If markets behave themselves and we get a decent jobs number on Friday we are back to a very close call” on a September interest rate increase, said Michael Feroli, chief U.S. economist at JPMorgan Securities in New York. Monthly job gains have averaged 211,000 so far this year, and economists expect a 220,000 gain when August data is reported on Sept. 4. Bullard raised the possibility of delaying a move until October if market turmoil persists. “The committee does not like to move when there’s volatility,” he said in remarks to reporters Friday after an interview with Bloomberg Television in Jackson Hole. “If we had the meeting this week, people would probably say let’s wait.” He added, “but the meeting is not this week, it’s Sept. 16 and 17.” Bullard said he would support scheduling a press conference following the Oct. 27-28 FOMC meeting if the committee doesn’t raise rates next month. That would make it easier for the Fed to explain a liftoff in October. Bullard and Mester next year will move into two of four rotating voting seats on the FOMC reserved for regional Fed presidents. “The big takeaway is that Fed officials sound pretty uncertain, amidst a pretty uncertain environment,” said Omair Sharif, a rates sales strategist at Societe Generale in New York. “With this much uncertainty, and the cautious tone that they’ve all adopted, at this point I have to think that odds of September are lower — that they’ll probably skip September.”

leslie meredith tech matters web sig.jpg

Little tips for big security gains

A week doesn't go by without news of a security breach on some big name website. Add to that the constant stream of phishing scams, ransomware attacks and other new malware varieties and it's clear no computer user is beyond risk. But there are simple things you can do to help make sure you are not among the next batch of victims. Let's call it our best practices for safer computing. Turn the following tips into daily habits and you shouldn't have to worry quite so much about online security. Delete online accounts you no longer use. Maybe you like trying new services like a photo editing site or a new online store. Most websites ask you to set up an account before you can use their services and that means you could have a lot of passwords floating around out there. When you decide you don't want to use a service anymore, remember to delete your account. Then if the service is hacked, your credentials won't be part of the stolen data. If you have a number of online accounts, you'll want to keep tabs on any security breaches that are made public. Rather than browse news sites or set up a lengthy list of Google alerts, you can do a quick check on https://breachalarm.com. Type in your email and the site will tell you if the address is associated with a security breach. (Tip: Don't allow your browser to automatically fill in your email address — Breach Alarm reads this as mechanical input and won't run your result.) If your account has been compromised, you'll see that immediately. Change your passwords. Breach Alarm also offers a free alert service for one email; to monitor multiple emails, packages start at $10 per year. For safe password use, the most important thing you can do is use a different password for each account, the longer and more nonsensical the better. By using unique passwords, you'll avoid one hacked password opening the door to multiple accounts. Consider using a password manager to streamline the process, but understand it won't work on all websites. For instance, Equifax will not let you paste in a password — it must be typed. If available, always opt for two-factor authentication, which means a service will ask for a second piece of "identification" such as texting a temporary code to your phone that you'll use to login. Biometrics, such as Apple's Touch ID that became available with the iPhone 5S, is another form of two-factor authentication. Outlook, Gmail, Dropbox, Chase and Facebook offer it, usually as a text. You can see a full list of companies that use two-factor authentication at https://twofactorauth.org, as well as many who do not. Before you input personal information, including a credit card, make sure the website is secure. Look for https at the beginning of the URL in your address bar. When you are finished with any website, log out. Working in a public place brings a new set of risks. It is possible for someone to access your computer and its data whenever you're sharing a network. Because it's so risky, minimize logging into a public WiFi network. And, if you don't need the an Internet connection, turn your WiFi off. Otherwise, your computer may establish the connection on its own. Windows users should right-click on the wireless icon in the taskbar to turn it off. Similarly, Mac users will click the WiFi icon in the menu bar and select "Turn Wi-Fi off." If you use your computer's file sharing feature at home, turn it off when you are in a public place. In Windows, open the Control Panel, select Network and Internet and then Network and Sharing Center. Choose Homegroup and Sharing Options and choose Change Advanced Settings. Turn off file sharing, print sharing, network discovery, and the public folder. For Mac users, open System Preferences from the Apple menu and click on the sharing folder. Uncheck all boxes. One last thing. Regularly back up your computer. And then go a step further by copying your important documents and photos onto a flash drive or uploading them to a cloud storage service such as Dropbox or Google Drive. If your computer is stolen or breaks, you'll still have the data that could be really tough to replace. Leslie Meredith has been writing about and reviewing personal technology for the past six years. She has designed and manages several international websites. As a mom of four, value, usefulness and online safety take priority. Have a question? Email Leslie at asklesliemeredith@gmail.com.

Economy Manufacturing

Texas is booming and investors are yawning

For all its success as the fastest-growing big state, luring the most business with a paucity of taxes and regulation, Texas is an inferior investment. Even before the 14-month collapse that cut the price of oil by 63 percent, the publicly traded shares of Texas companies (64 percent are energy-related) underperformed the Russell 3000 Index. Since 2010, they’ve also trailed companies domiciled in California and New York, states known for high taxes and enthusiasm for regulation, according to data compiled by Bloomberg.Stock Markets Rate Texas Companies ‘Meh‘ The Lone Star State’s AAA-rated debt also gets modest respect in the bond market. Its return is third from the bottom among the nine states sharing the best credit rating during the past five years, Bloomberg data show. What makes the Texas economy so impressive also limits its appeal in financial markets. Investors aren’t looking at the past and present. They’re looking for exciting things in the future. That can confer an advantage on states that are willing to actively shape their destiny and to invest in things like education and infrastructure. Low costs are fine, but high value is better. Texas extols its low-cost, nonintrusive government approach as “wide open for business,‘‘ and it continues to lure companies seeking cheaper labor and capital. Toyota, the world’s No. 1 maker of vehicles, last year moved its North American headquarters and 2,000 jobs to Plano from Torrance, California. Being the cheapest big state for business has benefits. Texas’ gross domestic product increased more than the GDP of at least the 10 largest states in the U.S. during the past five years. Since 2010, the workforce in Texas expanded 15.9 percent, the most after North Dakota and Utah. Texas personal income increased 37.2 percent during the same period, bettered only by North Dakota and Wyoming. Tax revenue increased 62.3 percent, trailing only the District of Columbia, New Hampshire, North Dakota, New York and Pennsylvania. Texas home prices rose 17.3 percent, lagging the gains only in North Dakota, D.C., California, Hawaii and Colorado. Yet none of these achievements make Texas bonds a winner in the market for comparable state and local government debt. So far this year, the total return, or income and price appreciation, of Texas has amounted to 1.55 percent, better than only two other states with AAA-rated debt. The other six AAA states are enjoying superior returns: Virginia at 2.05 percent, North Carolina at 1.81 percent, Georgia at 1.84 percent, Utah at 1.79 percent, Missouri at 1.65 percent and Maryland at 1.57 percent, according to data compiled by Bloomberg. Like bondholders, stock investors also perceive being cheapest for business as a strategy that favors the present over the future. While companies domiciled in Texas produced a total return of 52 percent in the three years leading up to June 2014, when oil prices started to fall, the benchmark Russell 3000 Index returned 58 percent during the same period. Companies based in California and New York, two states Texas governors deride as bad for business, returned 75 percent and 52 percent during those three years. So far this year, the August market crash pushed down stocks nearly everywhere. Texas shows a total loss of 16 percent, worse than California’s 2 percent loss, New York’s 5 percent loss and the Russell’s 5 percent retreat, according to data compiled by Bloomberg. It’s true that the oil-price collapse hit Texas companies hard. But it can’t account for inferior investment performance in other industries. Shares of Texas health-care companies returned 104 percent during the past five years, compared with the 163 percent average for the industry. Texas information technology companies returned 98 percent, compared with 100 percent for the U.S. industry. Texas consumer discretionary companies, which include J.C. Penney, returned 110 percent compared with 152 percent across the United States. Texas industrial companies, which include KBR, returned 84 percent compared with 96 percent for U.S. industrial companies since 2010. Trailing market performance hasn’t prevented Texas companies from getting bigger. They spent $220 billion acquiring other companies in 2014 -- the most since 2004 -- and $146 billion this year. Foreign companies also have been busy in Texas, seeking the same low costs as their U.S. counterparts, paying lower premiums for the Texas-based firms they acquire and proving above all else that Texas remains cheap, according to Bloomberg data. The quality of jobs remains a weakness in Texas. Growth in per capita income in California and New York is superior to Texas. Even Rhode Island, the smallest state, does better than Texas, with higher per capita income growth. All of which suggests that being cheapest for business isn’t necessarily best for investors. Matthew Winkler, editor-in-chief emeritus of Bloomberg News, writes about markets.

AP Poll Millennials Online

When it is and isn't OK to be on your smartphone: the conclusive guide

Etiquette, by definition, is a form of consensus: not a static code of conduct, necessarily, but a set of norms we all agree on at a given moment. We change, the moment changes — the agreement evolves, too. And it’s evolving really dramatically right now, according to new findings from Pew. The paper, which surveyed more than 3,200 American adults, found that the vast majority of us own cellphones and are rarely parted from them. (That’s not exactly news.) But it also documented striking new patterns in how and where we use our phones, particularly in places where, even two or three years ago, whipping out a cellphone would be considered rude. Nearly 80 percent of all Americans, for instance, think it’s OK to blunder down the sidewalk with your eyes trained on your phone. And a majority of young people say they post pictures, send tweets and surf the Web in front of other people. If etiquette’s a majority consensus on acceptable behavior, and this is what the majority thinks and does, then the rules on using your phone in public have permanently changed (for better or worse). What’s more, they’re likely to continue changing in the future: Pew found, predictably, that young people are “generally more permissive than their elders about cellphone use.” With that in mind, we combed through Pew’s report looking for behaviors and habits that more than half of all American adults either say that they find acceptable, or that they do themselves. This is the new normal, so to speak — our emerging consensus on when and where to use phones in public. Don’t gripe to us about it: You made this mess. Do: Use your phone in any ambient public space of your choosing, even if you risk running into someone. Just about everyone, of every age, agreed it was all right to browse your phone while walking down the street, waiting in line, or riding public transit. Don’t: Use your phone during meetings, movies, church services, or other places where you’re expected to be attentive to someone else. Etiquette sticklers rejoice: This is one area where public sentiment doesn’t appear to have changed at all. Nine in 10 people says it’s unacceptable to use a phone in these places. Do: Send messages in front of family or friends, provided they are quick and/or important. Even though most adults think whipping a phone out at a social gathering tends to hurt the dynamic — and even though science firmly supports that — most people do use their phones in front of other people. They just use them under specific circumstances: More people will read a text than will send one, for instance, presumably because reading a text is faster and less disruptive. Half of all people will get on their phones if it’s important, though: 52 percent have pulled out their phone in a recent social situation to “catch up on tasks (they) need to accomplish.” Don’t: Use your phone at meals, whether with family or at a restaurant. Most adults think it’s rude to use your phone during meals, particularly family dinners. That could change, though, given that half of all 18 to 29-year-olds think it’s cool to text at restaurants. Ugh. Do: Get your phone out to take photos and videos, regardless of where you are. Everybody accepts that phones are the new cameras. Almost 60 percent of respondents say they recently took a cellphone photo or video during a social outing; young people go even further, posting that stuff to social media while they’re still with the group. Do: Take calls in front of other people. Fifty-two percent of phone-owners say they do. Don’t: Use your phone as a shield to avoid people or conversations. Very, very few people admit to using their phone as a form of avoidance, which is probably a sign of how anathema the practice still is: Only 10 percent of adults say they’ve gone on their phones to avoid a conversation, and 16 percent because they’re bored of the group they’re with. Fascinatingly, however, the phone-as-shield tactic is more common among young women — perhaps because they’re the demographic that receives the most unwanted attention. Do: Get on your phone in front of family or friends to look up important, relevant information. You know the type that qualifies: directions, quick “are you here?” texts, Google searches needed to settle bets. Most phone-owners have done these things in social settings recently, and most reasonable people would agree they don’t kill the vibe too horribly. Don’t: Aimlessly browse the Web or check your phone for notifications in front of someone else. Relatively few people check apps or push notifications without any specific reason, or browse their phone in front of other people “just for something to do.” (Alas, a lot of young people do browse for the heck of it, so — that could be changing, too.) Much of this should be common sense, of course. (In theory, at least, most etiquette should be.) The bottom line is that our understanding of mobile phones is changing: Where we once saw them as tools in solitary endeavors — highly personal, self-directed, isolating screens — we now understand that they can also be used pro-socially. The rule here, as in all social endeavors, is to use them considerately. None of this will comfort the old-schoolers in the crowd, of course. What about the days when people looked at each other while they talked?, they ask. What happened to basic manners? To this, I can only point out that “manners” have always changed in response to new technologies, more or less since “manners” became a conscious, codified thing. Consider the lowly fork, widely viewed as scandalous when it was introduced to Europe in the 11th century. Before the fork, it was considered the height of rudeness not to eat from a communal plate with your bare hands; over time, the fork’s invention would rewrite that script, giving us place settings, dinner parties, Victorian table manners. Etiquette changes — it’s a fact of life, and it’s not inherently good or bad. In all likelihood, our cyborg descendants will look back on us and laugh. Dewey writes The Post’s The Intersect web channel covering digital and Internet culture. http://www.washingtonpost.com/news/the-intersect/

National Business

China Economy Politics

China's economic woes expose drawbacks of president's power play

BEIJING — President Xi Jinping has set out a beguiling vision for what he calls the “great rejuvenation” of the Chinese nation, one where his country strides confidently on the world stage while, at home, a reinvigorated Communist Party curbs corruption and crushes dissent. It is a vision all about power and control, with Xi calling the shots. Yet, as China’s stock market plunge has shown, it has a crucial weakness. Xi, experts say, has failed to set out a coherent plan to rescue China’s slowing economy, caught between an old model of state intervention and a new commitment to market forces. Indeed, the reforms that China’s economy desperately needs involve measures that its leader instinctively cannot stomach: relinquishing control and surrendering power. “The only important thing to Xi is power,” said Liu Junning, an independent scholar and former researcher for the Chinese Academy of Social Sciences, a prestigious official think tank, who was fired in 2000 for criticizing the Communist Party. “There is no room for further reform without surrendering power.” The confusion at the heart of the government was exposed with its handling of the stock market — as authorities first pumped up the bubble and then intervened heavily in an attempt to prop shares up after the bubble burst. Earlier in the month, it paired its surprise devaluation of the currency with a statement that it was allowing the exchange rate to be set mainly by market forces. Since then, it has intervened heavily to prevent a further slide, noted Arthur Kroeber, managing director of Gavekal Dragonomics in Beijing. Recognizing concerns both inside and outside China, the Communist Party mouthpiece the People’s Daily carried a front-page commentary last week insisting that the pace and depth of reforms was unprecedented, but warning in unusually stark terms of the resistance they faced. “The enormity of the difficulties, the scale of the resistance — and the uncanny, complex, ferocious and stubborn ways of the forces that have not adapted to reforms — go beyond what people could imagine,” the piece argued. But Willy Wo-lap Lam, an expert on Chinese politics at Hong Kong University, says this article was a smokescreen — propaganda meant to distract attention from the fact that Xi was not really ready to embrace reform himself. “Stability is still the overriding consideration, and the huge state-owned enterprises are seen as an anchor of the economy,” Lam said. “State-owned enterprises are a manifestation of political control of the economy.” Kroeber is also skeptical. While Xi has talked of markets playing a “decisive role” in resource allocation, he has also reaffirmed the “dominant role” of the state sector. His government has reined in excessive credit growth and excessive investment, but it has failed to make good on promises of deregulation and curbing the power of state-owned enterprises, Kroeber wrote in a note to clients. “We are increasingly of the view that this mediocre result arises not because a bold and visionary reform program has broken up on the reefs of political opposition, but because the main aims of China’s leader Xi Jinping are political and geo-strategic, while his economic goals are contradictory,” he wrote. In preparation for Xi’s high-profile state visit to the United States next month, President Obama’s national security adviser, Susan E. Rice, is due in Beijing on Friday and is scheduled to meet with the Chinese leader. China hopes to use the visit to project Xi as the leader of a global power in the same league as Obama. But the stock market’s woes have dented his image and provoked mocking comments from some Republican presidential hopefuls. When Xi took power two years ago, China seemed to be drifting after a decade of ineffectual collective leadership by a cabal of uncharismatic men in dark suits. Reforms had slowed, government spending was out of control, and corruption was rampant. Xi has tried to change that by focusing on governance, fighting graft and centralizing power. He has established a series of high-level committees to run foreign, security and economic policy, each with him at the helm. Collective leadership has been replaced by more than a hint of a personality cult around China’s supposedly strong and decisive leader — a man whom Australian sinologist Geremie Barme has nicknamed the “Chairman of Everything.” When a stock market rally began to gather pace this year, sucking in tens of millions of retail investors, state media soon joined the party, loudly announcing that the bull market was only just beginning. The rally, experts say, seemed to serve two purposes: Politically it was easy to see it as an endorsement of Xi and his “China dream,” while economically it seemed like an easy way out of China’s problems. Andy Xie, an independent economist in Shanghai, said the authorities were “juicing up” the market as a substitute for real structural reform, hoping that an asset bubble would stimulate consumer demand, help inject fresh capital into businesses and cover up for increasingly unproductive state-led investment. “Structural reform had somehow not been considered. They thought the stock market would somehow make everything rosy and solve all the problems,” he said. “But when the market started collapsing, there was no Plan B. That’s why we are seeing such a haphazard reaction.” Victor Shih, associate professor at the University of California at San Diego’s School of Global Policy and Strategy, agreed. “The entire policy establishment was thinking they had found the magic bullet for corporate finance in China and not really thinking about where the money comes from,” he said. For Shih, the sorry episode also reflected a more fundamental flaw in China’s system, especially with power so centered in one man. “In dictatorships, when things are going well, nobody wants to end the party,” he said. “When anything goes well in China, people can attribute that to the top leader. But it would be very difficult for anyone to come and say, ‘Things are not going well; it’s a bubble and it’s about to crash.‘” “Had power been a bit more decentralized, people would have come to say, ‘Lets end the party.‘ There would be less fear of offending any particular leader.” Xi’s centralization of power, some experts and foreign business leaders say, has also undercut a strength of the Chinese system — decision-making by consensus, in which policy was implemented only after careful consultation and cautious experimentation. Today, they say, policy seems less considered, more haphazard. The stock market’s crash has badly dented the notion that China’s leaders were almost infallible guides for the nation’s economy. Concerns are now mounting globally about China’s economic slowdown and its ability to rebalance away from state-led investment and heavy industry toward services and consumer demand. Independent economist Xie believes his country still has enormous economic potential if it can manage that transition. But that, he says, requires a different approach from China’s top leaders. “There is a tendency to think power is everything, to think that political stability is based on raw power — that everything is okay if you can lock people up and no one can challenge you,” said Xie. “But that’s very wrong thinking. Political stability is based on economic prosperity. China’s rise in the past three decades is based on economic prosperity, and prosperity can only come from sensible economic management.”

Wal Mart Guns

Wal-Mart to stop selling AR-15s and similar weapons

LITTLE ROCK, Ark. — Wal-Mart will stop selling the AR-15 rifle and other semi-automatic weapons at its stores because fewer people are buying them, a spokesman said. The AR-15 rifles and other modern sporting rifles were being sold at less than a third of the company’s 4,600 U.S. stores. Company spokesman Kory Lundberg said Wednesday that Wal-Mart Stores Inc. will remove the remaining inventory as stores transition from summer to fall merchandise, which should take a week or two to complete. Lundberg said the decision to remove the weapons was not political and that the Bentonville, Arkansas-based retailer made the decision earlier this year. “It’s similar to what we do with any product. Being what it is, it gets a little more attention, but it’s the same process for any other product,” Lundberg said. Lundberg said the company had seen a decrease in sales of the particular models of guns, but declined to give specific sales numbers. He said stores would increase inventory of other models of shotguns and rifles popular among hunters. “We wanted to make sure when customers are coming and looking to purchase those products, they see the products they want. We see more business from hunters and people shooting clay,” he said. Several analysts said the decision was likely based on sales and demand. “Big retailers don’t make decisions on a whim, and it would appear that they are responding to their market,” said Jason Maloni, a crisis communications expert at LEVICK. “This seems to be a strategic decision of Wal-Mart to address customer desires.” In recent years, shareholders have placed some pressure on the company to reconsider its sales policies of products such as weapons that hold high-capacity magazines. Bushmaster variations of the semi-automatic AR-15 have been used in such high-profile mass shootings as the Sandy Hook massacre in Newtown, Connecticut, and the theater shooting in Aurora, Colorado. The historic Trinity Church on Wall Street in New York, which owns stock in Wal-Mart, filed a lawsuit last year after the company declined to allow a shareholder vote on the church’s proposal for the board of directors to more closely review policies on sales decisions of products that could “endanger public safety and well-being” or hurt the company’s reputation or emphasis on family and community values. A lower court ruled that the shareholders should be allowed to consider the proposal, but a U.S. Circuit Court of Appeals judge lifted that injunction. The church has not appealed, but officials said they are not ready to drop the lawsuit either. The Rev. William Lupfer, rector of the church, said in a statement Wednesday that the church was “pleased to hear Wal-Mart will no longer sell the kinds of weapons that have caused such devastation and loss in communities across our country.” “We continue to believe that corporate boards have the responsibility to oversee the creation of policies that will guide decision making on marketing and other issues that could have momentous impact on the safety and well-being of society and to shareholder value,” Lupfer wrote. Wal-Mart scaled back the number of stores that sold guns around 2006, Lundberg said, but has no plans to stop the sale of guns all together.

kent winward biz law.jpg

Last week's column sparked lots of emails ... from the incarcerated

I enjoy hearing from readers of my column. I’m often surprised at what strikes a chord with people and last week was no exception: I received more emails from readers than any of my other previous columns. Last week I wrote about the United States’ number one ranking for incarcerating its citizens. Utah, while having the estimated incarceration rate of North Korea (620 per 100,000 people), is still well below the more disgraceful national average of 910. Most of the states with the lowest incarceration rates are in New England with Maine having the lowest at only 350 in custody per 100,000. Before you despair too much about our state, Utah’s overall correctional supervision rate (people in jail or on court-supervised probation) is the third lowest in the country with only Maine and New Hampshire having fewer people per capita being governed by their criminal justice system. Now, I'm a bankruptcy attorney, not a criminal defense attorney. I’m not in a position to raise a ruckus and righteously defend the wrongfully accused, although finding the right criminal defense attorney is vital for anyone charged with a crime. I am also not sociologist, but the question comes up — why does the United States have such a high incarceration rate? As with any complex system, the answers are multi-faceted, nuanced, and highly interdependent. Yet certain factors seem to make the United States particularly prone to locking up its own. The American idea of freedom often pits the individual versus the community, and crime by definition is an individual who acts against community interests. The politicization of criminal law also adds gasoline to the fire of American individualism because it creates an us versus them mentality that leads to incarceration for nonviolent crimes, minimum mandatory sentencing, “three strikes” laws, and incarceration for simply being different. “Give us your tired, your poor, your huddled masses, yearning to be free” is the motto on the Statue of Liberty, but the unfortunate addendum and the political discourse seems to be “so we can lock them up and eventually kick them out.” The violent racial history of the South shows in the incarceration rates. The Southern states have double the rates of incarceration compared to the rest of the country. Just a random plucking of statistics to prove my point, Alabama and New York state have close to the same violent crime rates, even though Alabama incarcerates almost twice as many people. With more people locked up, Alabama remains as violent as New York state. Yet, I don’t mean to suggest that race is the only reason or even the major determining factor. The differences are regional and I believe tied to different regional philosophies and histories. As I mentioned earlier, New England has the lowest criminal supervision rates in the country, along with Utah. The Deep South of the Confederacy has the highest. Utah acts more like New England than the Western states surrounding us, which all have criminal supervision rates double Utah’s. History and community philosophy certainly seems to play a role. Just 150 years ago, the Deep South was being defeated in a war. Violence always plays out in unexpected ways even a century and a half later. The shootings this week in Virginia of two white reporters by a black man was in part a response to the white man who shot and killed nine black church members in Charleston, South Carolina just two months ago. The Virginia shooter reportedly faxed a statement to ABC that said among other things, “What sent me over the top was the church shooting.” The church shootings in South Carolina led to the symbolic lowering of the Confederate flag at the South Carolina state capitol just last month. Violence to the communal body perpetrates more violence. The South is struggling to get out of a violent past, but we should all remember that incarceration itself is a violent act against the individual. On the flip side, the pioneers that settled Utah started out in upstate New York about 175 years ago. It probably isn’t surprising that some of New England has rubbed off on Utah. It would explain things like Orrin Hatch’s long time cooperation and friendship with Ted Kennedy, Mitt Romney being elected governor of Massachusetts, and most recently Orrin Hatch teaming up with the new senator from Massachusetts, Elizabeth Warren, for the Invest for a Healthy Future Act to fund scientific research. The New England culture’s ideas about community and caring for your own migrated across the plains with the pioneers and it shows up in how we treat those accused of a crime in Utah. The real struggle to lower incarceration rates begins by developing a society and a culture where people feel like they belong and will be protected by the society. Even the most violent of gang members won’t attack gang members within the gang, unless the gang’s rules are breached. The trick is realizing that we are all in this legal soup together, and making the punishments for misbehavior feel just, not just for the victims, but for the accused, should be our goal. And in case you were wondering, all your fellow readers of the Ogden Standard Examiner who emailed me about last week’s column — they were all incarcerated. E. Kent Winward is an Ogden attorney. He can be reached at 801-392-8200 or creditcorrection@gmail.com.

jobs

In landmark case, labor board votes to redefine employee-employer relationship

WASHINGTON — A federal labor board voted Thursday to redefine the employee-employer relationship, granting new bargaining powers to workers in an economy increasingly reliant on subcontractors, franchisees and temporary staffing agencies. The decision by the National Labor Relations Board could upend the traditional arms-length relationship that has prevailed between corporate titans such as McDonald’s and its neighborhood franchises. And it comes as concerns are growing about a generation of new Internet-fueled business such as Uber and Lyft that depend heavily on independent contractors that often do not have the benefits and protections of full-time employees. In a case that drew intense lobbying by both business and union groups, Democratic appointees on the panel split 3-2 with Republicans to adopt a more expansive definition of what it means to be an “joint employer.” The decision makes it more difficult for companies to avoid responsibility for the treatment of employees by outsourcing work to others. In doing so, the panel sided with labor advocates and academics who have described an increasingly fissured economy, in which whole industries have been built on business models that offer workers few of the protections of a traditional employer relationship. “With more than 2.87 million of the nation’s workers employed through temporary agencies in August 2014, the Board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances,” the board said in a release accompanying its decision. The board’s action is just the latest to tackle the trend. The Department of Labor has cracked down on employers who misclassify workers as independent contractors, and the Occupational Safety and Health Administration has directed inspectors to consider whether principal employers might be at fault for the safety violations of their subcontractors. Courts, meanwhile, have been scrutinizing companies like FedEx and Uber for their use of contractors. Employers are pushing back. Businesses that might be subject to the new joint employer definition have warned that it could undermine established business practices that have kept the U.S. economy competitive by holding down labor costs. As a result of the decision, some businesses may try to legally distance themselves from their partners to avoid joint employer status, but others may find they need to exert more control. Corporations are “trying to have it both ways — have the benefits of the control, and not the disadvantages,” said Timothy Glynn, a professor at Seton Hall University Law. “Where I think it would be very difficult to give up control is circumstances where there’s some exacting need for quality, timeliness, or consistency in the product.” Like a fast food franchise, for example. While the case did not address franchising directly, the new standard will apply in a major series of cases involving McDonald’s scheduled for arguments before the NLRB in the fall. The International Franchise Association has been lobbying against a change in definition for more than a year, arranging public hearings, airing ads, and rallying franchisees to make politicians aware of the decision’s potential implications. “The Board’s tortured analysis will undoubtedly be met with skepticism and will be rejected by local franchise owners, legislators and, ultimately, the courts,” said IFA president Steve Caldeira in a press release. “IFA and its allies are asking Congress to intervene to halt these out-of-control, unelected Washington bureaucrats to preserve the established joint employer standard.” Congressional Republicans have already obliged, attaching a rider to the federal budget that would prevent the implementation of a new joint employer standard. Responding to the decision, House Education and the Workforce Committee Chairman John Kline, R-Minn.,) vowed to “roll back” the NLRB’s shift, while Senate Health Education Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., announced he would introduce a bill to “invalidate” the ruling. The NLRB’s ruling came in a case concerning a recycling company called Browning-Ferris Industries of Milpitas, Calif., which used a temporary staffing agency called Leadpoint to provide workers. A Teamsters local tried to organize the employees, but it wanted Browning-Ferris to qualify as a “joint employer,” figuring that bargaining would be ineffective unless it also included the larger company whose demands affect the working environment. A regional NLRB official disagreed, and the Teamsters appealed. This time, the NLRB’s general counsel sided with the union, recommending in an amicus brief that the board ignore a standard in place since the 1980s and apply a broader definition of what it means to be a joint employer. The Board’s Democratic majority agreed and struck down earlier cases that had articulated the previous standard, saying that the growth of the contingent workforce has rendered the definition out of step. In the process, the board reversed the regional director’s decision, deciding that Browning-Ferris exercised sufficient control over hiring, firing, discipline, supervision, and work hours to qualify as a joint employer under the new standard. It ordered that ballots impounded after the Teamsters’ election in April 2014 be counted, which — if the union wins — would allow it to bargain directly with the recycling company as well as the staffing agency that hired the workers. “Today’s decision is another step to show that companies can no longer claim they are not employers when problems arise,” said Ron Herrera, director of the Teamsters Solid Waste and Recycling Division. “Instead of pointing fingers if a worker gets hurt, companies will now be accountable.” The issue has not just been a bone of contention between unions and employers. It also created sharp disagreements within the labor board: The two Republican appointees authored a blistering dissent, arguing that the new standard goes beyond the body’s authority and could unintended consequences. “Under the majority’s test, the homeowner hiring a plumbing company for bathroom renovations could well have all of that indirect control over a company employee!” the dissent read. “We suppose that our colleagues do not intend that every business relationship necessarily entails joint employer status, but the facts relied upon here demonstrate the expansive, near-limitless nature of the majority’s new standard.”