In the USA...
New Afghan war phase, with no decisive end seen
A new chapter of the Afghanistan war is opening with a slimmed-down Western force doing more advising than fighting, a resilient Taliban showing little interest in peace talks, and Americans tempted to pull the plug on a conflict now in its 12th year.
By ROBERT BURNS
AP National Security Writer
KABUL, Afghanistan —
A new chapter of the Afghanistan war is opening with a slimmed-down Western force doing more advising than fighting, a resilient Taliban showing little interest in peace talks, and Americans tempted to pull the plug on a conflict now in its 12th year.
A decisive end seems nowhere in sight.
The allied offensive that just ended, spearheaded by an influx of 30,000 U.S. troops, hammered the Taliban in its southern strongholds. Yet the insurgency persists as the American-led international military coalition hands off security responsibilities to the Afghans before exiting in two years.
"We are probably headed for stalemate in 2014," says Stephen Biddle, a George Washington University political science professor who has advised U.S. commanders in Afghanistan and Iraq. If that is the case, the U.S. will have to pump billions of dollars a year into Afghanistan for decades to prevent its collapse, Biddle says.
What began in October 2001 under the Pentagon's hopeful banner of "Operation Enduring Freedom" has hardened into enduring resistance. The Taliban take heavy losses but regenerate as fast as they fall. They also maintain links to a range of other extremist groups, including al-Qaida and the Pakistan-based Haqqani network.
U.S. commanders say with confidence that their war campaign is on track, and President Barack Obama seemed to agree in his debate last Monday with challenger Mitt Romney.
"There's no reason why Americans should die when Afghans are perfectly capable of defending their own country," Obama said.
Yet the path forward is dotted with question marks:
-Will Afghanistan's security forces be capable of holding off the Taliban on their own? Afghan forces outnumber the Taliban by more than 10-to-1, but currently not a single Afghan army battalion is capable of operating in the field without American advisers.
-If the Afghan forces falter, will the U.S. extend its stay or send in reinforcements to avoid a Taliban takeover?
-Will the U.S.-led military coalition hold together even as France and others dash for the exits in coming months?
-Will enough Afghans come to embrace the corrupt government in Kabul as a preferred alternative to the militant Taliban?
-Will the Afghans manage a peaceful transfer of power after a presidential election scheduled for 2014, in which President Hamid Karzai cannot run again? The independent International Crisis Group warned this month of a "precipitous slide toward state collapse" unless steps are taken soon to prevent a repeat of the "chaos and chicanery" of the 2009 presidential election and the 2010 parliamentary vote.
U.S. Defense Secretary Leon Panetta, who championed the additional American troops, remains optimistic.
"We've come too far, we've fought too many battles, we have spilled too much blood not to finish the job that we are all about," Panetta said in Brussels this month after meeting with his counterparts from NATO nations.
The "job" Panetta referenced is no longer to defeat the Taliban before 2015 or to eradicate al-Qaida in its Afghan redoubts, but to create an Afghan security force that can at least hold the substantial gains achieved by the U.S.-led international alliance.
It's not even clear whether the U.S. still expects to get peace negotiations with them started by 2015.
U.S. officials have said for years that the Taliban were unlikely to talk peace unless they felt their battlefield chances were slipping away. Those chances did take a heavy hit when the fresh American forces came on, yet the Taliban still show no appetite for negotiations.
Nevertheless, coalition military officers still speak of softening up the Taliban.
"Our task is to put our fist down the throat of the Taliban and squeeze his heart so that he will talk," said Australian Maj. Gen. Stephen Day, the coalition's chief of plans. He argues that the additional troops made the Taliban "a bit more quiescent," if not yet willing to negotiate.
Panetta and others assert that the troop increase also drove the Taliban farther from population centers and created an opportunity for the Afghan army and police to grow in numbers and experience.
The U.S. now has 66,000 troops in Afghanistan, joined by about 37,000 from allied countries. Decisions on how many more U.S. troops to withdraw next year won't come before the presidential election, but there are abundant signs that additional reductions will be ordered at some stage in 2013.
Army Brig. Gen. John Charlton, a deputy commander of coalition forces in Afghanistan's eastern provinces, says he is emphasizing to Afghan military leaders that the time has passed when they can expect the coalition to bear the lion's share of the fighting.
"Starting now, you've got to step it up," he said he's now telling them.
Charlton and other U.S. commanders interviewed recently in Kabul and at several remote outposts in eastern Afghanistan said they see marked improvement in the performance and confidence of Afghan forces this year.
Roger Noble, an Australian brigadier general who is a deputy operations chief for the international coalition, said he sees "pockets of excellence," but others see mediocrity and worse in the wider pool of Afghan forces. Noble acknowledged that Afghan soldiers are sometimes disillusioned with superiors whose corruption saps morale.
Some U.S. commanders express worry that no matter how much better the Afghan forces get before most Western forces go home in 2014, it could all be for naught if the Afghan government fails to strengthen its legitimacy in the eyes of ordinary Afghans.
Adding to a sense of unease is anger over a rising number of killings of U.S. and coalition troops by Afghan soldiers and police out of personal pique or in apparent sympathy with the Taliban. At least 57 coalition personnel, mostly Americans, have been killed so far this year in 40 "insider attacks." The latest was Thursday, when two U.S. servicemen were killed by a gunman in an Afghan police uniform.
After a spurt of insider attacks in August and September, one of Congress' most vocal advocates of pursuing the war, U.S. Sen. John McCain, R-Ariz., was so fed up that he called for a re-evaluation of the Obama administration's troop withdrawal plan, saying it might need to be speeded up. He later said that was a bad option.
American public support for the war has dropped precipitously during Obama's term in the White House.
A Pew Research Center poll in early October found that 60 percent of respondents favored removing U.S. troops from Afghanistan as soon as possible, with 35 percent saying they should stay until the country is stable. That's a nearly complete reversal from a September 2008 Pew Research poll that showed 33 percent wanted troops out as soon as possible and 61 percent said they should stay until the country has stabilized.
October 27, 2012 12:00 PM
Wall Street Accountability and the Election
By Mike Lux
There is finally, finally, finally some momentum starting to build toward accountability for the biggest banks. The results of the election will determine whether it continues to build or completely fades away.
I will be the first to admit that there is a certain irony in that last sentence. Tim Geithner and Eric Holder haven’t exactly been jumping up and down in excitement to prosecute the Too Big To Fail banks for their evident fraud in pumping up the housing bubble and making billions off it. The wheels of justice have turned pathetically slowly. Martin Luther King said that “the arc of the moral universe is long, but it curves toward justice”, but in the case of banks this big and powerful, that arc is even longer. Inch by inch, though, the wheels long stalled have begun to move, and now the pace is beginning to pick up.
In the last several weeks, JP Morgan (twice), Wells Fargo, and now this week Bank of America have all been taken to court by different parts of the government. And while we don’t know how things will turn out, none of these are small potato cases. Together, they represent the broadest cases against the TBTF banks that we have seen since the crisis hit. And the Residential Mortgage Backed Securities task force co-chair says that more are coming.
My colleagues in the Wall Street accountability movement, burned by the lack of action from the DOJ for 4 years, have been understandably skeptical of the RMBS task force, especially when it took what seemed like forever to bring its first case. But without that commission from the President, I don’t think any of these cases would have been brought, because it focused resources (definitely not enough, but some) on investigations, and it raised the political stakes on not doing anything.
Where this heads next will be fascinating. I suspect what Schneiderman and the other more aggressive prosecutors in the task force want to do is to build a web of tough, broad cases against these banks in order to given them maximum leverage. Such a legal strategy could well reap major benefits as investigations proceed.
But imagine a scenario where President Obama loses, and the Democrats lose the majority in the Senate.
The multi-agency, multi-jurisdictional task force shuts down, ending the center of gravity for all these legal cases, and ending the pooling of staff resources by all these agencies. The expectations and pressure points for activists to push on getting legal action goes away completely. The DOJ goes from being slow and reluctant on big bank financial fraud cases to being completely hostile to them. The Consumer Financial Protection Bureau, the single most aggressive regulatory agency in government which has already filed numerous actions and new regulations against financial abuse, is completely dismantled. Senate chairman like Carl Levin who have been doing strong oversight against Wall Street are no longer committee chairs. And the Senate goes from their budget conference committees pushing for more money for regulators to joining the House in appropriating a lot less.
All momentum for filing new cases against fraudulent bankers goes away, as do most of the investigatory resources, and the big banks once again have their complete run of the store with quite literally no cop on the beat.
But here’s another scenario, a little dream of mine. In addition to the President being re-elected, and the RMBS task force and CFPB continuing, we get some new Senators as well: Elizabeth Warren sitting on the Finance committee, and being able to grill the big bankers in hearings on a regular basis; Sherrod Brown, co-author of the legislation to break up the biggest banks and re-institute Glass-Steagall, returns despite being the number one target of Karl Rove; Tammy Baldwin, who fought as a House member against Glass-Steagall’s repeal and brings it up in nearly every stump speech, comes into the Senate; former Byron Dorgan (who was the big banks’ number one opponent in the Senate before he retired) staffer Heidi Heitkamp comes to the Senate to continue Dorgan’s tough-on-Wall-St legacy; one of the strongest opponents of big money in politics, Chris Murphy, is the new Senator from CT. And the Wall Street big money boys, having bet heavily on Mitt Romney and the opponents of all these new Senators, forced to reckon with the fact that all their gold could not buy them this election.
I have just been reading Jeff Connaughton’s new book “Why Wall Street Always Wins”. With a title and subject like that, it is rather grim. But the story it tells of how worried and flustered the denizens of Wall Street got when just one Senator, Ted Kaufman, came at them hard is a reminder that if we could actually get a half dozen Senators with the courage and the fortitude to take on Wall Street, it could make a huge difference. And if we combined that political pressure with a legal strategy that kept weaving its web of cases against the big banks, kept subpoenaing and deposing them, kept building the legal pressure? Who knows, we might actually finally bring justice to some of these bank executives who blatantly violated the law thinking their political power would forever keep them safe.
My PAC is working to help all 5 of those tough-on-Wall Street Senate candidates, help me put them over the top. Elections do matter. Winning them doesn’t guarantee anything, but it does give an opportunity for good things to happen.
October 27, 2012 09:30 AM
Why Florida is Sitting on $300 Million Meant to Help Homeowners
By Cora Currier -- ProPublica
Florida has the highest percentage of home loans in foreclosure in the country. So why is more than $300 million that could help homeowners sitting unused?
Florida was awarded those millions in February as part of the $25 billion national settlement between five of country's biggest banks and forty-nine states and the District of Columbia. The settlement resolved allegations of wrongful foreclosures and other mortgage servicing abuses, and required banks to offer some homeowners the opportunity to modify their loans or refinance, or, in some cases pay homeowners directly for wrongful foreclosure.
The banks also had to pay $2.5 billion directly to state governments. Florida's sum was the largest, after California, in part a measure of how deeply the mortgage crisis affected the sunshine state.
Yet Florida is one of just a few states where the Attorney General has not announced plans for a significant portion of the money. We've contacted every state to find out what they were doing with that money. Of the $2.5 billion going to states, just over a billion dollars has been pledged for housing-related programs, while a roughly equal amount has been diverted to plug budget holes or fund programs unrelated to the foreclosure crisis. $378 million is still to be determined, and almost all of that is Florida's.
Florida's funds are caught between the Attorney General, Republican Pam Bondi, and the Republican state legislature. Bondi has pledged to make the money available to homeowners; earlier this year, she called for suggestions from the public. Some state lawmakers, however, insist that it needs to go through the regular appropriations process u2014 where it could potentially be siphoned off into other programs. And that wouldn't happen until March, when the legislative session begins.
"We were very happy about the Attorney General's commitment early on that the money be used within the spirit of the settlement," said Jaimie Ross, president of the Florida Housing Coalition, an advocacy organization. "But is it just going to sit there until the legislature starts so that we can wait to see how they want to use it? The silence is deafening."
A spokesman for the Attorney General said, "it's a matter of having a dialogue between the two sides." He could not give a timeline for when a decision might be reached. The 2013 budget request Bondi submitted to the legislature last week made no mention of the settlement.
The mortgage settlement states that Florida's money can be spent "as directed" by the Florida Attorney General for "purposes consistent with" the settlement, such as programs aimed at homeowner protection or consumer fraud. But the legislature should still "play a role," according to Katie Betta, a spokeswoman for incoming State Senate President Don Gaetz, a Republican.
The Democratic minority leader of the state senate, Nan Rich, said, "It's unconscionable to be sitting on this money." 11 percent of Florida's mortgaged homes are currently in foreclosure, and the state saw 92,000 completed foreclosures in the year ending August 2012, second only to California.
Both Rich and Jaimie Ross of Florida Housing Coalition expressed concern that the legislature could divert the money away from housing. One Democratic representative has already suggested it be used to fund a pay raise for state employees.
It wouldn't be the first state to see that happen. In May, we showed how almost one billion dollars that states received for the settlement had gone to plug budget holes or fund programs unrelated to the housing crisis. California, for example, received $410 million, but it all went to the general fund. Ultimately, the Attorney General's office ended up with just $18.4 million earmarked for housing counseling and overseeing the settlement.
Arizona's state assembly diverted $50 million u2013 more than half the state's total u2013 to the general fund. Housing advocates challenged the transfer in court, but a judge ruled this month that it was legitimate. North Carolina legislators also ended up rerouting $7.8 million that had been intended for housing counseling to free up money in the state budget.
New Jersey put the $75 million it received towards various social programs, including affordable housing. But the money funded preexisting programs, rather than supplementing them or starting new initiatives, as part of an effort to balance the budget.
A spokesman for the state treasury told us earlier this year that the settlement did not require them to spend extra money. "If we put [the money] into the budget and don't have to cut something else, that's a net gain," he said. (The treasury didn't respond to our more recent requests for comment.)
Advocates and some lawmakers protested the decision not to boost spending for housing. They say it may follow the letter of the settlement, but not the spirit. According to CoreLogic, New Jersey had the second-highest percentage of mortgages in foreclosure, after Florida.
What other states are doing with the money
When we first mapped out where the settlement millions were going, many states hadn't yet outlined plans. We've updated our comprehensive map to show developments since then. Here's a sampling of what's happened:
Attorneys general and lawmakers are still working out how the money will be used in a few other states besides Florida:
Some of the states that turned over their settlement money to their legislature haven't yet seen it spent. The biggest case is Texas, where the legislature won't meet until January to determine how to budget the $134 million it received. There's no requirement that any of that money be spent on housing.
Additional reporting by Paul Kiel.
Poll: Majority of Americans are racist against blacks
By Jonathan Terbush
Saturday, October 27, 2012 19:40 EDT
So much for a post-racial America.
A slight majority of all Americans show some prejudice toward blacks, whether the realize it or not, according to an Associated Press poll released on Saturday.
In the survey, 56 percent of Americans showed some anti-black feelings, whether implicitly or explicitly. That percentage has actually risen in the four years since President Obama took office—up from 49 percent in 2008—indicating that, if anything, anti-black attitudes have become more prevalent since that landmark election.
That finding is based on poll questions that both directly asked respondents questions about their feelings toward particular races, as well as more subtle questions that gauged racial attitudes without mentioning the subject. Yet on the questions that explicitly gauged overt racism, a slim 51 percent majority of Americans still showed anti-black bias, versus 48 percent who did not.
Republicans were far more likely than Democrats to show some sign of anti-black bias. Seventy-nine percent of Republicans exhibited an explicit anti-black attitude on the more direct questions, versus thirty-two percent of Democrats who did the same.
That finding came one day after Colin Powell’s former chief of staff said his Republican party was “full of racists.”
The survey also found that not only had the nation inched deeper into anti-black sentiment, but that other races are now subject to more negative perceptions as well. In 2011, an AP survey detected anti-Hispanic responses from 51 percent of Americans; that figure rose to 57 percent in the latest poll.
The findings could pose some trouble for Obama’s reelection effort. Pollsters estimated that the president could lose two percentage points off the national vote as a result of the worsened racial attitudes.
The AP survey was conducted onnline between August 30 and September 1, and has a margin of error of four percentage points. Though online surveys are typically regarded as less accurate than live-call polls, the pollsters said such a format was preferable as people are less willing to divulge their true feelings on such controversial issues when speaking to a real person.
October 27, 2012
U.S. Set to Sponsor Health Insurance
By ROBERT PEAR
WASHINGTON — The Obama administration will soon take on a new role as the sponsor of at least two nationwide health insurance plans to be operated under contract with the federal government and offered to consumers in every state.
These multistate plans were included in President Obama’s health care law as a substitute for a pure government-run health insurance program — the public option sought by many liberal Democrats and reviled by Republicans. Supporters of the national plans say they will increase competition in state health insurance markets, many of which are dominated by a handful of companies.
The national plans will compete directly with other private insurers and may have some significant advantages, including a federal seal of approval. Premiums and benefits for the multistate insurance plans will be negotiated by the United States Office of Personnel Management, the agency that arranges health benefits for federal employees.
Walton J. Francis, the author of a consumer guide to health plans for federal employees, said the personnel agency had been “extraordinarily successful” in managing that program, which has more than 200 health plans, including about 20 offered nationwide. The personnel agency has earned high marks for its ability to secure good terms for federal workers through negotiation rather than heavy-handed regulation of insurers.
John J. O’Brien, the director of health care and insurance at the agency, said the new plans would be offered to individuals and small employers through the insurance exchanges being set up in every state under the 2010 health care law.
No one knows how many people will sign up for the government-sponsored plans. In preparing cost estimates, the Obama administration told insurers to assume that each national plan would have 750,000 people enrolled in the first year.
Under the Affordable Care Act, at least one of the nationwide plans must be offered by a nonprofit entity. Insurance experts see an obvious candidate for that role: the Government Employees Health Association, a nonprofit group that covers more than 900,000 federal employees, retirees and dependents, making it the second-largest plan for federal workers, after the Blue Cross and Blue Shield program.
The association, with headquarters near Kansas City, Mo., was founded in 1937 to help railway mail clerks with their medical expenses, and it generally receives high scores in surveys of consumer satisfaction.
Richard G. Miles, the association’s president, expressed interest in offering a multistate plan to the general public through insurance exchanges, but said no decision had been made.
“Our expertise in the Federal Employees Health Benefits Program would be useful in the private marketplace,” Mr. Miles said in an interview. “But we are concerned about the underwriting risk in providing insurance to an unknown group of customers.”
To be eligible to participate in the multistate program, insurers must be licensed in every state. The Government Employees Health Association recently bought a company that has the licenses it would need.
The new health care law stipulates that at least one of the multistate plans must provide insurance without coverage of abortion services. If a plan does cover abortions, it must establish separate accounts, one with money for abortion and one for all other medical services.
National insurance plans will be subject to regulation by the federal government, state insurance commissioners and state insurance exchanges. That mix could cause confusion for some consumers who have questions or complaints about their coverage.
The federal standards will pre-empt state rules in at least one respect: the national health plans will automatically be eligible to compete against other private insurers in the new exchanges, regardless of whether they have been certified as meeting the standards of those exchanges.
The administration has promised to “work cooperatively with states.” But it is unclear whether the government-sponsored plans will have to comply with all state laws and consumer protection standards; whether they will have to comply with state benefit mandates; and whether they will have to pay state fees and taxes levied on other insurers to finance exchange operations.
The National Association of Insurance Commissioners, which represents state regulators, expressed alarm at the prospect of a double standard.
“It is absolutely essential that multistate plans compete on a level playing field with other qualified health plans, which are subject to state insurance law,” the association said in a letter to the Office of Personnel Management.
Consumer groups expressed similar concerns. The national insurance plans and other carriers must be subject to identical standards, they say, or consumers cannot make valid comparisons.
“Multistate plans have real potential benefits for consumers,” said Ronald F. Pollack, the executive director of Families USA, a liberal-leaning consumer group. “But there is also potential trouble if the multistate plans are exempted from some consumer protection standards.”
Robert E. Moffit, a senior fellow at the conservative Heritage Foundation, said he worried that “the nationwide health plans, operating under terms and conditions set by the federal government, will become the robust public option that liberals always wanted.”
Insurers are pleading with the Office of Personnel Management to provide more detailed guidance.
“We are concerned that O.P.M. has not yet released rules specifying the requirements for the multistate plan,” said Jay A. Warmuth, a lawyer at UnitedHealth Group, one of the nation’s largest insurers.
Rules for the new program have been under review by the White House for three months, and officials said they would be issued soon.
October 27, 2012
Pentagon Reopens Program Allowing Immigrants With Special Skills to Enlist
By JULIA PRESTON
Thousands of immigrants were so eager to enlist in the American military during the last two years, despite the strong odds that they could be sent to combat zones, that they signed a petition on Facebook asking the Pentagon to let them join.
Now they will have the chance. Late last month, the Pentagon reopened a program to recruit legal immigrants with special language and medical skills, which was active for a year in 2009 but was suspended in January 2010.
The program is small; it will enlist a total of 1,500 recruits each year for two years, mainly in the Army. But military officials said the yearlong pilot program brought an unusually well-educated and skilled cohort of immigrants into the armed services.
“Their qualifications were really stellar,” said Naomi Verdugo, assistant deputy for recruiting for the Army. “And we have been very pleased about how these folks have been performing.”
The program is open to immigrants on temporary visas, who otherwise would not be eligible to enlist. Its powerful lure is that it allows them to naturalize as United States citizens quickly, in most cases at the end of basic training, which lasts about 10 weeks. Most immigrants on temporary visas, whether they are students or workers with particular skills, must wait years — for some nationalities, more than a decade — to become citizens.
Eileen Lainez, a Pentagon spokeswoman, said the program was intended to fill “some of our most critical readiness needs.” This time around, the Army is looking for dentists and surgeons, and for psychology professionals to help with the severe emotional strains soldiers have undergone in the wars in Afghanistan and Iraq.
Officials are also looking for native speakers of 44 languages, including Azerbaijani, Cambodian-Khmer, Hausa and Igbo (both spoken in West Africa), Persian Dari (spoken in Afghanistan), Portuguese, and Tamil (spoken in South Asia). Spanish is not on the list of languages.
Recruiting officers were quietly frustrated that Pentagon officials took more than two years to restart the program. The renewal became tangled in a broad security review after the shooting rampage in 2009 at Fort Hood, Tex., according to accounts from military officials. The background checks for the immigrants were scrutinized with added caution, even though the man charged in the killings, Maj. Nidal Malik Hasan, is a native-born American.
In renewing the program, military officials added a new layer of security screenings, Ms. Lainez said.
To make their case to the Pentagon, recruiting officers compiled dossiers on the first class of immigrants, of whom 943 out of 1,000 were in the Army. On average, immigrants who enlisted in the Army language program scored 17 points higher (on a scale of 99) than other applicants on an entrance test, said Capt. Carol Stahl, who manages the program for the Army. One-third of the first class of recruits had master’s degrees or higher.
One-third of the class went into the Special Forces, a highly selective assignment that can often lead to combat missions, Captain Stahl said. Attrition was one-quarter the rate of other soldiers who entered at the same time.
A soldier from Nepal who entered with the first class, Sgt. Saral Shrestha, just won the Army’s Soldier of the Year award after a grueling four-day competition involving fighting skills at Fort Lee, Va.
“This was a boost of very high quality people,” said Margaret Stock, an immigration lawyer in Alaska who is a retired lieutenant colonel in the Army Reserve and helped devise the program. Even before they enlist, she said, the immigrants have been screened because they have to pass background and occupational checks for their temporary visas.
To qualify, immigrants must have been living in the United States legally for at least two years. They must be high school graduates and pass the entrance test.
The program — known as Military Accessions Vital to the National Interest, or Mavni — is not open to illegal immigrants, who are barred by law from enlisting. In general, immigrants who are not citizens must have a permanent resident visa, known as a green card, to enlist.
The first round filled up quickly, and the Army turned away thousands of people. Many of them signed the Facebook petition and were hoping the program would start again.
Health care professionals, who enlist as officers, must serve either three years of active duty or six years in the Reserves. Immigrants who enlist based on their language skills must serve for a minimum of four years of active duty. Participants who fail to serve their term can lose their citizenship.
One of the first temporary immigrants the Army accepted this year was Dr. Amen Dhyllon, 33, a dentist practicing in Philadelphia who was born in India and came to the United States in 2006. Dr. Dhyllon said he completed a postdoctoral program at the University of Pennsylvania in June combining two dental specialties.
Dr. Dhyllon said he was eager to become an American citizen.
“Even in the position where I am today,” he said, “no one would appreciate me as much as people appreciate me here. This country does not differentiate between color or accent. Here, if you are good, people will put you to the front.”
Dr. Dhyllon said he was not worried about the risks of service. He said he was attracted to the Army because of the wide range of patients he would see.
“I can be part of the culture,” he said. “I can learn everything about this country from the root.”
October 27, 2012
A Part-Time Life, as Hours Shrink and Shift
By STEVEN GREENHOUSE
SPRING VALLEY, Calif. — Since the Fresh & Easy grocery chain was founded five years ago, it has opened 150 stores in California and positioned itself as a hip, socially responsible company.
A cross between Whole Foods and Trader Joe’s, the company brags that its house brands have no artificial colors or trans fats, that two-thirds of its produce is grown locally and that its main distribution center is powered by a $13 million solar installation.
But in one crucial respect, Fresh & Easy is just like the vast majority of large American retailers: most employees work part-time, with its stores changing many of their workers’ schedules week to week.
At its store here, just east of San Diego, Shannon Hardin oversees seven self-checkout stations, usually by herself. Typically working shifts of five or six hours, she hops between stations — bagging groceries, approving alcohol purchases, explaining the checkout system to shoppers and urging customers to join the retailer’s loyalty program, all while watching for shoplifters.
“I like it. I’m a people person,” said Ms. Hardin, 50, who used to work as an office assistant at a construction company until times went bad.
But after nearly five years at Fresh & Easy, she remains a part-time worker despite her desire to work full-time. In fact, all 22 employees at her store are part-time except for the five managers.
She earns $10.90 an hour, and with workweeks averaging 28 hours, her yearly pay equals $16,500. “I can’t live on this,” said Ms. Hardin, who is single. “It’s almost impossible.”
While there have always been part-time workers, especially at restaurants and retailers, employers today rely on them far more than before as they seek to cut costs and align staffing to customer traffic. This trend has frustrated millions of Americans who want to work full-time, reducing their pay and benefits.
“Over the past two decades, many major retailers went from a quotient of 70 to 80 percent full-time to at least 70 percent part-time across the industry,” said Burt P. Flickinger III, managing director of the Strategic Resource Group, a retail consulting firm.
No one has collected detailed data on part-time workers at the nation’s major retailers. However, the Bureau of Labor Statistics has found that the retail and wholesale sector, with a total of 18.6 million jobs, has cut a million full-time jobs since 2006, while adding more than 500,000 part-time jobs.
Technology is speeding this transformation. In the past, part-timers might work the same schedule of four- or five-hour shifts every week. But workers’ schedules have become far less predictable and stable. Many retailers now use sophisticated software that tracks the flow of customers, allowing managers to assign just enough employees to handle the anticipated demand.
“Many employers now schedule shifts as short as two or three hours, while historically they may have scheduled eight-hour shifts,” said David Ossip, founder of Dayforce, a producer of scheduling software used by chains like Aéropostale and Pier One Imports.
Some employers even ask workers to come in at the last minute, and the workers risk losing their jobs or being assigned fewer hours in the future if they are unavailable.
The widening use of part-timers has been a bane to many workers, pushing many into poverty and forcing some onto food stamps and Medicaid. And with work schedules that change week to week, workers can find it hard to arrange child care, attend college or hold a second job, according to interviews with more than 40 part-time workers.
To be sure, many people prefer to work part time — for instance, college students eager for extra spending money and older people earning money for presents during the holiday season.
But in two leading industries — retailing and hospitality — the number of part-timers who would prefer to work full-time has jumped to 3.1 million, or two-and-a-half times the 2006 level, according to the Bureau of Labor Statistics. In retailing alone, nearly 30 percent of part-timers want full-time jobs, up from 10.6 percent in 2006. The agency found that in the retail and wholesale sector, which includes hundreds of thousands of small stores that rely heavily on full-time workers, about 3 in 10 employees work part-time.
Retailers and restaurants use so many part-timers not only because it gives them more flexibility, but because it significantly cuts payroll costs.
According to the Bureau of Labor Statistics, part-time workers in service jobs received average compensation of $10.92 an hour in June, which includes $8.90 in wages plus benefits of $2.02. Full-time workers in that sector averaged 57 percent more in total compensation — $17.18 an hour, made up of $12.25 in wages and $4.93 in benefits. Benefit costs are far lower for part-timers because, for example, just 21 percent of them are in employer-backed retirement plans, compared with 65 percent of full-timers.
At the Fresh & Easy store here, Ms. Hardin is forever urging her boss to give her more hours, she said, but instead, “they turn around and hire more people.” Some weeks, her boss gives her an extra shift when a co-worker is sick or on vacation.
Officials of Fresh & Easy, which is owned by Tesco, the largest supermarket company in Britain, declined to be interviewed. But the company noted that its entry-level pay was $10 an hour, substantially higher than at most retailers, with quarterly bonuses on top of that. Also, the company said it offered excellent benefits, including health insurance to anyone averaging more than 20 hours a week.
Ms. Hardin said her recent quarterly bonuses averaged less than $200, and while she appreciated the health insurance, she often could not afford the co-pays to see a doctor.
To supplement her income, she moonlights 15 or so weekends a year as a security guard at San Diego Chargers and San Diego State football games. But she still has such a hard time making ends meet, she said, that she has gone to the movies just three times in the last five years. Nor does she own a television.
“A couple of people offered me a used TV, but I can’t afford cable,” she said. “I have a tooth that’s falling apart, but I can’t afford the crown for it.”
At the Jamba Juice shop at 53rd Street and Lexington Avenue in Manhattan, along with the juice oranges and whirring blenders is another tool vital to the business: the Weather Channel.
The shop’s managers frequently look at the channel’s Web site and plug the temperature and rain forecast into the software they use to schedule employees.
“Weather has a big effect on our business,” said Nicole Rosser, Jamba’s New York district manager.
If the mercury is going to hit 95 the next day, for instance, the software will suggest scheduling more employees based on the historic increase in store traffic in hot weather. At the 53rd Street store, Ms. Rosser said, that can mean seven employees on the busy 11-to-2 shift, rather than the typical four or five.
Such powerful scheduling software, developed by companies like Dayforce and Kronos over the last decade, has been widely adopted by retail and restaurant chains. The Kronos program that Jamba bought in 2009 breaks down schedules into 15-minute increments. So if the lunchtime rush at a particular shop slows down at 1:45, the software may suggest cutting 15 minutes from the shift of an employee normally scheduled from 9 a.m. to 2 p.m.
Karen Luey, Jamba’s chief financial officer, said the scheduling software “helped us take 400, 500 basis points out of our labor costs,” or 4 to 5 percentage points, a savings of millions of dollars a year.
At Jamba Juice, which has 770 outlets, managers used to piece together their stores’ weekly schedules on an Excel spreadsheet. It took managers about two hours to slot in 25 to 30 employees, all generally part-time except for the store manager and one or two shift managers. With the Kronos software, scheduling takes just 30 minutes.
The software keeps tabs on when workers are available, their skills and who makes the most sales per hour. While such software is a powerful tool, management’s judgment is still important, said Aron J. Ain, Kronos’s chief executive. “The budget is how many people you need at a certain time,” he said, “but the magic is deciding who is to work at what time.”
The rise of big-box retailers like Walmart, with their long operating hours and complex staffing needs, has contributed to the increase in part-timers.
Mr. Flickinger, the retail consultant, said when Walmart spread nationwide and opened hundreds of 24-hour stores in the 1990s, that created intense competitive pressures and prompted many retailers to copy the company’s cost-cutting practices, including its heavy reliance on part-timers.
Susan J. Lambert, an expert on part-time work and a professor of organizational theory at the University of Chicago, said the use of part-timers had also escalated because of the declining power of labor unions. “They set a standard for what a real job was — Monday through Friday with full-time hours,” she said. “We’ve moved away from that.”
Many corporations place store or restaurant managers under strict limits about what their payroll or employee hours can be each week, usually based on a formula tied to sales. These formulas usually give managers little flexibility to increase the hours assigned.
David Henson, a former assistant manager at a Walmart in Thief River Falls, Minn., said part-timers would sometimes come into his office on the brink of tears.
“A lot of them were single mothers. They said they weren’t earning enough to support their families,” he said. “They desperately wanted more hours, but we weren’t able to give them.”
Some, Mr. Henson said, were eager to take second jobs. But if they said they were unavailable during certain hours, then the managers and scheduling software would reduce their hours further, he said. Many workers concluded that it was simply not worth it.
David Tovar, a Walmart spokesman, said that less than half of Walmart’s hourly employees were part-time and that the company provided better wages and benefits than many competitors. But he acknowledged that part-time employees with less availability were typically assigned fewer hours.
Katherine Lugar, executive vice president of the Retail Industry Leaders Association, said that the industry’s scheduling practices worked well, and that retailers did their best to accommodate employee needs. “Happy employees provide better service,” she said.
She noted that millions of Americans preferred part-time work. “Many individuals come to retail because it is flexible, like the working mom who wants to work when kids are in school, or the graduate student,” she said.
When the Hours Fade
The day after Desmond Anthony graduated from Western Carolina University, he moved to Manhattan with the dream of becoming a Broadway actor and singer.
He knew he had to support himself with something else, and by Week 2, he had applied for 20 retail jobs, including one at the sprawling Express store in Herald Square, an emporium of slim jeans, sequined T-shirts and booming music.
“When I first walked into Express, I said, ‘Oh my God, this place is awesome and there’s music and it looks like a happening place,’ ” Mr. Anthony said.
Express offered him a job the next day. Mr. Anthony, 6-foot-4 and with a booming voice and big smile, said that after receiving just four hours of training, he began alternating as a greeter, cashier and sales floor assistant.
At first, he usually worked five days a week, often racking up 30 hours. But after several months, he said, he and many co-workers had their weekly hours cut to 12 or 15 and occasionally none at all.
“I’d go to the managers and say, ‘What is the issue? Am I not pulling my weight?’ ” he said. “And they’d say, ‘We just don’t have enough money.’ ”
“ ‘So how am I supposed to support myself? ’ I asked, and they said that was not their problem.”
Mr. Anthony said it was hard to survive. At $8.25 an hour, 15 hours a week equaled about $500 a month. His share of the monthly rent was $800, with several hundred more for utilities, phone and subway fares. Some days he went hungry, he acknowledged, and he repeatedly turned to his parents for help.
He and his co-workers held out hope that, come the holiday season, their hours would pick up. “But then they hired 15 more workers,” he said.
The store’s schedule for each coming week, he said, was supposed to be posted on Wednesdays, but often didn’t go up until Friday or Saturday. With so little notice, he sometimes had to scrap plans for auditions.
At one point, he said, his weekly schedule dwindled to two assigned days and two or three days when he was supposed to call the store in the morning to see whether managers wanted him to come in that day.
Mr. Anthony quit last February, upset that Express had given him an annual raise of just 25 cents an hour. He now works at a Zara apparel store on Fifth Avenue, which, he said, gives him 30 hours a week and does more to accommodate his scheduling needs.
Express says that about 85 percent of its employees are part-time. “It’s really more for flexibility than for anything else,” said Michael Keane, the company’s executive vice president for human resources. “It helps our ability to match associate staffing to traffic levels.”
Mr. Keane said many young people were eager to work part-time there, attracted by a hip atmosphere and the clothing discounts for employees.
With regard to Mr. Anthony’s complaints, Barbara Coleman, an Express spokeswoman, said stores aimed to post worker schedules a week or two in advance. “An associate will be notified in advance if they are scheduled for a call-in shift,” she said.
As for the hiring surge that upset Mr. Anthony, Ms. Coleman said, as the holidays approach, Express typically increases its part-time work force by nearly 20 percent to accommodate extended hours and the rush of shoppers.
In New York’s fiercely competitive retail world, Mr. Anthony’s experience is not unusual. Workers at Abercrombie & Fitch, Nine West and Bed Bath & Beyond told similar stories.
A 2011 survey of 436 employees at retailers in New York City, as diverse as luxury establishments on Fifth Avenue and dollar stores in the Bronx, found that half of the city’s retail workers were part-time and only one in 10 part-time workers had a set schedule week to week. One-fifth said they always or often had to be available for call-in shifts, according to the survey, which was overseen by researchers at City University of New York.
“We’re seeing more and more that the burden of market fluctuations is being shifted onto the workers, as opposed to the companies absorbing it themselves,” said Carrie Gleason, executive director of the Retail Action Project, an advocate for retail workers that helped conduct the survey and is financed by foundations and the Retail, Wholesale and Department Store Union.
That union wants more labor deals like the one it has at Macy’s flagship store in Herald Square in Manhattan. Although that store has many part-timers, the more senior workers can reserve days off and learn their schedule six months in advance.
Mr. Flickinger, the retail consultant, said companies benefited from using many part-timers. “It’s almost like sharecropping — if you have a lot of farmers with small plots of land, they work very hard to produce in that limited amount of land,” he said. “Many part-time workers feel a real competition to work hard during their limited hours because they want to impress managers to give them more hours.”
Ms. Rosser, the Jamba Juice district manager, amplified on the advantages.
“You don’t want to work your team members for eight-hour shifts,” she said. “By the time they get to the second half of their shift, they don’t have the same energy and enthusiasm. We like to schedule people around four- to five-hour shifts so you can get the best out of them during that time.”
October 27, 2012
In Dairy Industry Consolidation, Lush Paydays
By ANDREW MARTIN
THERE was a time not long ago when Gregg L. Engles was considered a genius in the dairy industry, a shrewd C.E.O. who had cobbled together a string of local businesses to create the nation’s largest milk bottler, Dean Foods.
Dean’s Web site described Mr. Engles as the primary architect of dairy consolidation, the often painful and perhaps inevitable shift to fewer, larger farms and bottling plants. His company’s soaring share price made him a Wall Street star.
In fawning profiles in the business press, dairy clichés flew: Mr. Engles was “cream of the crop,” “head of the herd” and “milkman to the nation.”
These days, however, as he prepares to step aside as chief executive of Dean Foods, Mr. Engles, 55, is perhaps better known for his paychecks, which continued to be hugely generous even as his company’s fortunes tumbled.
The Motley Fool noted in March that he had averaged $20.4 million in compensation over the previous six years, while Dean’s stock fell 11 percent a year, on average. Forbes ranked him among its Worst Bosses for the Buck in 2011.
Wall Street soured on the nation’s milkman.
A long-running antitrust lawsuit in a federal courthouse in Greeneville, Tenn., offered one possible explanation for his early success, by contending he engaged in a conspiracy more than a decade ago that helped expedite dairy industry consolidation and make himself a bundle.
Filed by a group of dairy farmers in 2007, the lawsuit said Mr. Engles cut a deal with the head of the nation’s largest dairy cooperative, the Dairy Farmers of America, to eliminate competition in the Southeast. Another lawsuit was filed in Vermont in 2009, involving allegations of a similar scheme in the Northeast. Dean Foods, whose brands include Garelick Farms, Land O Lakes and Horizon Organic, has settled both lawsuits, without admitting wrongdoing; the suits continue against the D.F.A.
By normal rhythms of the industry, Mr. Engles and Gary Hanman, 78, a former chief executive of the D.F.A., would be financial adversaries. That’s because bottlers try to buy raw milk as cheaply as possible. Many farmers joined cooperatives in the hope they could leverage their numbers for higher prices.
But according to the lawsuit, the deal that Mr. Engles made with Mr. Hanman went against normal economics. Mr. Engles promised that the D.F.A. would be the exclusive supplier to Dean’s milk plants. The D.F.A., in turn, promised a reliable supply of Dean’s main ingredient, raw milk, at the lowest prices, plus rebates and credits so Dean could acquire more milk plants, the suit says.
It all resulted in a small group of men making enormous sums of money, according to files in the Southeast lawsuit that recently became public. One business partner of Mr. Hanman was paid $100 million by Dean’s predecessor and the D.F.A. for his stake in milk plants; the partner had paid $6.9 million for it two years earlier. A business partner of Mr. Engles was paid more than $80 million for his investment in milk plants; that partner had paid little more than $5 million.
Mr. Hanman was paid $31.6 million during his seven-year tenure as chief executive, including bonuses for increasing the cooperative’s market share, according to court records.
As for Mr. Engles, his compensation over the last decade comes to $156 million, according to Equilar, a firm that tracks executive pay.
Dairy farmers say they didn’t share in the riches. Instead, they say that they were paid suppressed prices for raw milk, and that the fallout continues. They are seeking more than $1 billion, including penalties, in the Southeast; the damage estimate for Northeast farmers remains under seal.
Dr. Sam Galphin, a North Carolina dairy farmer and veterinarian, said the Dean-D.F.A. pact was devastating to dairy farmers in the Southeast, cutting into incomes and ultimately forcing some out of the business. He said he continues to get suppressed prices for raw milk because there are few if any options for farmers, and he expects to lose $100,000 on his dairy farm this year.
“Even today there is no competition in this market,” he said. “Half of the people who were in business when the lawsuit was filed are now out of business.”
Through a Dean spokeswoman, Mr. Engles declined to comment for this article. Dean settled the suit with the Southeast farmers for $140 million in July, and settled with the Northeast farmers a year earlier, for $30 million, In both cases, it admitted no wrongdoing.
“We continue to be confident that we operated appropriately in our raw milk procurement,” a Dean Foods statement said. “We settled these cases to avoid the expense, uncertainty and distraction of litigation and the possibility of a lengthy appeals process.”
Mr. Engles is stepping down as C.E.O. in coming weeks, though he will remain chairman. On Friday, Dean had an initial public offering of its WhiteWave-Alpro unit, which includes the Silk and Horizon Organic brands; Mr. Engles will be C.E.O. of the new company.
Mr. Hanman referred questions to his lawyer, who declined to comment. A trial in the Southeast case against the D.F.A. is scheduled to begin in January; the Northeast case against the cooperative has not reached a trial stage.
Richard P. Smith, the D.F.A.’s current president and chief executive, disputed the notion that the pact between Dean and the D.F.A. was a conspiracy that suppressed prices for farmers. Instead, he characterized it as a business decision that didn’t always work out the way the cooperative had hoped.
He maintained that the D.F.A. was able to charge Dean and other processors higher prices in the Southeast, but that this was often offset by the costs of bringing in additional milk from elsewhere to meet bottlers’ demands.
But Mr. Smith, who succeeded Mr. Hanman in 2006, said the D.F.A. had been “hung up on big rather than best.”
As for the payments to its former business partners, he said: “The premise of a lot of these partnerships was D.F.A. would bring the milk and largely the investments and the partners would bring the expertise and know-how. And if all things worked out, it would be a win-win.
“Obviously when you look at some of the facts, some of it looks skewed, there is no doubt.”
The Justice Department conducted a 26-month antitrust investigation into the dairy industry during President George W. Bush’s second term and recommended that enforcement action be taken against Dean Foods and the D.F.A., but no charges were filed, according to state and federal officials.
GREGG ENGLES stumbled into the dairy business, though he seemed destined to consolidate something.
According to several published profiles, he was born in Durant, Okla., and raised primarily in Denver. His father was a doctor.
His early résumé is impressive: Dartmouth College, Yale Law School, law clerk for Anthony M. Kennedy, who was then a judge on the United States Court of Appeals. Mr. Engles was admitted to the bar in Colorado and Texas.
But working for a law firm didn’t interest him. Young lawyers he knew were making money but seemed bored with their jobs. By contrast, several entrepreneurs “impressed him as being fully engaged in their work,” according to a 2002 article in Chief Legal Officer, a publication that is now defunct.
“Many lawyers let knowledge of risk paralyze them,” Mr. Engles was quoted as saying. “They focus exclusively on risk, while entrepreneurs focus primarily on opportunity.”
After unsuccessful ventures, Mr. Engles and a partner paid $22 million, most of it borrowed, for Reddy Ice, a packaged-ice company. Mr. Engles then set about consolidating the packaged-ice business, tripling his company’s size in seven years through acquisitions, according to a Forbes article in 2000.
During a golf game, Cletes Beshears, who was known as Tex and had run the dairy business of the Southland Corporation, then the parent of 7-Eleven, suggested that Mr. Engles could do the same in the dairy business.
“By the time we had made the turn,” Mr. Engles told The Dallas Morning News in 1999, “Tex and I had become partners in the dairy business.”
Their first in a series of acquisitions was a $100 million leveraged buyout of Suiza Dairy in Puerto Rico. Suiza went public in 1996 and, four years later, after 40 acquisitions, was the nation’s biggest dairy processor. But Mr. Engles wasn’t finished. He set his sights on his biggest rival, Dean Foods.
If Mr. Engles stumbled into the milk business, his ally in the Dean acquisition, Mr. Hanman, seemed destined to run a dairy cooperative.
He grew up on a livestock farm in north central Missouri, married his high school sweetheart and earned a bachelor’s degree in agricultural economics from the University of Missouri, according to the Cooperative Hall of Fame. He also earned a master’s in dairy marketing.
After a lengthy stint in the milk marketing office of the Agriculture Department, he began working for dairy cooperatives in 1964. Described as whip-smart and politically savvy, with a folksy demeanor that made him popular with farmers — he wore bright red suspenders with “Dairy Farmers of America” down the front — he rose quickly through the ranks.
But the ascent wasn’t without controversy. He was questioned, but not charged, in an investigation into accusations that the Nixon administration bolstered milk price supports after the dairy industry pledged $2 million in campaign contributions. In 1988, he was suspended from trading for two months on the National Cheese Exchange in Wisconsin for bragging to members about boosting the price of cheese. And in 2008, the D.F.A., Mr. Hanman and a colleague paid a $12 million fine to settle charges that they had tried to manipulate milk futures.
Like Mr. Engles, Mr. Hanman was a proponent of consolidation. The D.F.A. was created in 1998 through the merger of four smaller cooperatives, one of which was overseen by Mr. Hanman.
And, like Mr. Engles, Mr. Hanman went against the time-honored practices of his trade. For instance, instead of squabbling with bottling companies over price, he sought joint ventures with them. Such arrangements gave members “greater market security and an opportunity to capture income from the retail market,” he was quoted as saying in a 2000 academic article published in the International Food and Agribusiness Management Review.
One joint venture was Suiza Foods. The D.F.A. owned a third of Suiza’s dairy division and provided Suiza’s plants with raw milk. “The Suiza relationship reflects a major strategy change compared to the traditional role of a full-service milk cooperative,” the academic paper said.
The lawsuits take another view, contending that it was the beginning of a relationship that ultimately increased the power — and paychecks — of a small group of executives at the expense of unwitting dairy farmers.
“I ENJOYED our meeting on Friday, and came away more convinced than ever that we share common interests in the evolution of the dairy industry, and that we can do an enormous amount of business together,” Mr. Engles wrote in a 1997 letter to Mr. Hanman that is part of the court file.
As part of Suiza’s deal with Mr. Hanman, Mr. Engles agreed to provide exclusive supply agreements to the D.F.A. The deal gave the cooperative an outlet for its farmers’ milk, but also forced farmers to sign up with the cooperative if they wanted to continue selling to Suiza plants. The cooperative, in turn, agreed to use credits and rebates to help Suiza expand, and it turned over its share of milk bottling plants to Suiza.
Such deals worked out very well for the cooperative’s partners in the milk plants. For instance, Pete Schenkel, a business associate of Mr. Hanman, was paid $100 million in 2000 for his share of Southern Foods, a dairy processor, by the cooperative and Suiza.
Allen Meyer, Mr. Schenkel’s partner at Southern Foods, turned a $70 million profit on one bottling venture with the cooperative, and Robert Allen, a veteran dairy executive, made $22 million on his two-year investment in bottling plants with the cooperative.
On their investments in bottling plants with the D.F.A., Mr. Beshears made more than $80 million and Tracy Noll, who had worked with him in the dairy side of the Southland Corporation, made more than $26 million, court records show.
As Mr. Engles claimed a greater and greater portion of the dairy processing industry, he told The Dallas Morning News in 1999 that he hoped to achieve a market share of 30 percent to 40 percent in three or four years.
In fact, it took him just two years. He worked out the deal to buy Dean Foods on a hunting trip in South Dakota with Mr. Hanman and Mr. Schenkel, among others, court records show.
The merged entity kept the Dean Foods name and worked out an arrangement with D.F.A. that expanded their relationship and their control over dairy farming and milk processing, particularly in the nation’s eastern third.<