Author Archives: Joe Doc

Happy 50th Birthday, Medicare. Your Patients Are Getting Healthier

By Richard Harris

- A Yale University study analyzed the experience of 60 million Americans covered by traditional Medicare between 1999 and 2013, and found “jaw-dropping improvements in almost every area,” the lead author says.
Ann Cutting/Getty Images

Here’s a bit of good news for Medicare, the popular government program that’s turning 50 this week. Older Americans on Medicare are spending less time in the hospital; they’re living longer; and the cost of a typical hospital stay has actually come down over the past 15 years, according to a study in the Journal of the American Medical Association.

Doctors, hospitals and government administrators have put a lot of effort into making Medicare more efficient in the past 15 years. Dr. Harlan Krumholz and colleagues at Yale University took on a study to see whether that effort has paid off.

“The results were rather remarkable,” says Krumholz, a cardiologist and leading health care researcher. “We found jaw-dropping improvements in almost every area that we looked at.”

The researchers looked at the experience of 60 million older Americans covered by traditional Medicare between 1999 and 2013. They found that mortality rates dropped steadily during that time, and people were much less likely to end up in the hospital.

“If the rates had stayed the same in 2013 as they had been in 1999, we would have seen almost 3.5 million more hospitalizations in 2013,” Krumholz says.

“People who were being hospitalized were having much better outcomes after the hospitalization,” he says. “They had a much better chance of survival.”

And the average cost of a hospital stay dropped too, he says, from $3,290 to $2,801 in inflation-adjusted dollars over the 15-year period for patients in the traditional Medicare program. (Researchers couldn’t quantify the experience in Medicare Advantage, the managed-care alternative to Medicare).

Krumholz attributes the improvement to a wide variety of measures designed to boost patients’ health, from prevention programs to advances in medical care. He says some of the savings also came about because medical care shifted from hospitals to less expensive outpatient clinics.

“They’re pointing out a very good thing in the medical system,” says economist Craig Garthwaite at the Kellogg School of Management at Northwestern University. He says the recession, which helped slow rising health care costs overall, apparently played a minor role in this story of Medicare.

Costs really are being contained, Garthwaite says. One other reason that’s happening is that the federal government is reimbursing hospitals and doctors less for treating Medicare patients.

“That’s an easy way to get control of medical spending in Medicare,” Garthwaite says, but “it’s just not something we can do in the private market, and we have to worry about how sustainable it is for the Medicare program overall.”

With the post-World War II baby boom now reaching retirement age, more and more people are turning 65 and becoming eligible for Medicare. That growth continues to drive up the overall cost of the program, even as that average cost per illness or hospitalization comes down. And as older Americans live longer lives, they use Medicare for more years than previous generations did.

Medicare is still running a bit of a deficit, but the situation is improving. The program’s trustees say its trust fund will be solvent through 2030. Some adjustments would be needed to keep the program in good financial health beyond that date.

Garthwaite says other recent trends could make matters worse, with one especially worrisome example being sharply rising drug prices.

“Some of these [new cancer] products are providing only a few months of life for several hundred thousand dollars,” he says. And the system doesn’t do a good job of making difficult judgments in situations like that.

Joseph Antos, an economist in health policy at the American Enterprise Institute, agrees that the good news from the Yale study doesn’t assure a rosy future. He’s concerned about the financial health of Medicare if, for example, an effective drug for Alzheimer’s disease is developed.

“I would argue that if anybody came up with an effective treatment for Alzheimer’s today, that treatment would be hailed as a major breakthrough and we wouldn’t be looking at the cost,” Antos says.

And that would almost certainly break the pattern that’s been documented over the past 15 years, where improving health has actually helped drive down the cost of medical care.

Source – http://www.npr.org/sections/health-shots/2015/07/28/426740179/happy-50th-birthday-medicare-your-patients-are-getting-healthier

Special vote set for Aug. 11 to elect three to Pa. House

By Aaron Moselle

- A political corruption scandal and an open state Senate seat mean some Philadelphia voters are heading to the polls next month to pick new lawmakers.

Three special elections scheduled for Aug. 11 will mint new state representatives in the 174th District in Northeast Philadelphia; Southwest Philadelphia’s 191st District; and the 195th District in North and West Philadelphia.

Democrat John Sabatina Jr. resigned from his post in the 174th after winning a special election to the state Senate.

Ronald Waters resigned in the 191st after pleading guilty to conflict-of-interest charges. Ditto for Michelle Brownlee, who represented the 195th.

Waters and Brownlee were both part of a sting operation that caught several lawmakers accepting money or cash in exchange for official acts.

Democratic committeewoman Donna Bullock, who last worked for Philadelphia City Council President Darrell Clarke, is one of two candidates running to replace Brownlee.

“I wanted to serve my community … to improve our schools, create job opportunities,” said Bullock.

She will face Republican ward leader Adam Lang, who wants to protect longtime homeowners in his Sharswood neighborhood from being pushed out by gentrification.

“The first piece of legislation I would introduce would be to change the tax assessment system to where a property’s tax assessment is locked in at the value that someone purchases their house,” Lang said.

In the 174th, Republican Timothy Dailey, a teacher, will challenge former City Councilman Ed Neilson.

In the 191st, Democrat Joanna McClinton, chief counsel to state Sen. Anthony Hardy Williams, is going up against political consultant Tracey Gordon, who is running as a member of the Tracey Gordon Party, and Republican Army veteran Charles Wilkins.

The candidates who win will serve the remaining 16 months of the two-year terms.

Voter registration heavily favors Democrats in all three districts, though voters with any party affiliation will be able to cast a ballot.

Source – http://www.newsworks.org/index.php/local/item/84509-special-vote-set-for-aug-11-to-elect-three-to-pa-house-

PA Budget Guru Mike Turzai Fails at First Grade Math

By Sean Kitchen

- Yesterday, Budget Guru and House Speaker Mike Turzai claimed that House Republicans are ready for a veto override, but there’s an issue. A math issue to be exact.

“We have to look at overriding if we’re not going to have a substantive discussion,” Mr. Turzai, R-Marshall, said at a luncheon of the Pennsylvania Press Club, adding that Mr. Wolf’s own budget proposal has too little legislative support for negotiators to simply meet in the middle.

“I can assure you that many of my Democratic colleagues are not interested in Gov. Wolf’s tax package, and they would be more than happy with House Bill 1192,” Mr. Turzai said, referring to the Republican-crafted budget. “Some have even privately called it quite responsible. I think that’s a direction we have to consider.”

But here’s the problem. There are 203 members with Republicans holding 120 seats. To get a veto override, House Republicans would need 13 Democrats to defect and override Governor Wolf’s veto, which will not happen because there is one person who came into Harrisburg with a mandate, and that is Governor Wolf. Wolf campaigned on raising a severance tax and among others to fund public education. Republicans claim to have a mandate because of their outrageous majorities, but they do not because of the ridiculous gerrymandering that happened in 2010.

Source – http://www.ragingchickenpress.org/2015/07/28/pabudget-guru-mike-turzai-fails-at-first-grade-math/

Take Action! Congress Attempting To Strip Due Process For VA Workers

By The Pa. AFL-CIO

- A pair of bills in Congress are seeking to undermine the rights of rank and file workers at the Department of Veterans’ Affairs. These two radical bills, HR 1994 – introduced by Rep. Jeff Miller (FL), and S 1082 – introduced by Sen. Marco Rubio (FL), represent a knee-jerk reaction to calls for accountability at the VA. Instead of taking concrete steps to improve services at the VA, these bills seek to scapegoat front line employees while giving a free pass to managers who engage in misconduct.

If this legislation passes, every VA worker will be an at-will employee, with no meaningful recourse – even if their termination was a result of whistle blower retaliation or discrimination.

Stand with our brothers and sisters in AFGE now! E-mail or call your members of Congress, and tell them to OPPOSE HB 1994 and S 1082.

Go to – https://www.afge.org/?Page=SaveDueProcessattheVA to Take Action! NOW, and to download flyers and fact sheets that will arm you with the information you need today!

Source – http://www.paaflcio.org/?p=6211

DOL Decision Could Mean the End of Wage Theft Through “Independent Contractor” Misclassification

BY David Moberg

- Are you an employee?

It seems like a simple question that must have a simple answer for most people. But definitions in different laws and rulings enforcing the laws vary. And that variation provides an opening for a growing number of employers to cheat governments of taxes and workers of income, benefits and protections by misclassifying their employees, especially as “independent contractors.”

Last week, the administrator of the Department of Labor’s Wage and Hour Division, David Weil, released a “letter of guidance” that clarifies who is an employee and who is an “independent contractor”—that is, essentially an individual running his or her own business. He argues that the most definitive statement from Congress comes from the Fair Labor Standards Act, which says that “to employ” means “to suffer or permit to work.” And, he concludes, “under the Act, most workers are employees.”

The decision is “incredibly important,” says Catherine Ruckelshaus, general counsel and program director of the National Employment Law Project (NELP), a pro-worker nonprofit organization, and may help to clear up confusion in the courts and encourage more enforcement of the law.

In recent years, many companies—from 10 percent to 30 percent or more of employers—employ at least several million people who are misclassified as independent contractors, according to a recent NELP report. They even go so far as to require workers to form a limited liability corporation or franchise (with themselves as the one and only participant) or to sign contracts declaring that they are independent contractors. According to another study from economist Jeffrey Eisenach of George Mason University, the number of independent contractors rose by one million from 2005 to 2010, including both fake and real contractors (often unemployed workers who re-label themselves as “consultants”).

One high-profile example is the Federal Express delivery driver—who wears a FedEx uniform, drives a company truck, follows a route set by the company and still is treated as a contractor. Weil’s ruling may also tip the judgment against companies like the Uber taxi service, increasingly targeted in lawsuits as improperly treating its drivers as independent contractors.

When employers misclassify workers, they often pay less for contractors, but most important, the workers lose a wide range of protections and benefits under the law such as unemployment compensation, workers’ compensation, minimum wage and overtime regulations, and governments lose billions of dollars a year in taxes that support those programs.

In his recent book The Fissured Workplace, Weil argues that workplace phenomena like subcontracting, using independent contractors, franchising and other ways to make employers less responsible for their employees is not just a result of competition driving down costs, whether as a result of globalization, weakening of unions, new technologies or new work processes, but also “pressure from public and private capital markets to improve returns.”

Unlike the “common law” test for who is an employer, which emphasizes the degree of control over one’s work, the FLSA standard usually relies on an “economic realities” test, which examines many different dimensions of work without favoring one above all others. But in his guidance letter, Weil writes, “the ultimate inquiry under the FLSA is whether the worker is economically dependent on the employer or truly in business for him or herself.” But the varied economic realities tested include such questions as how integral the worker is to the business, how much does managerial skill affect possible profit or loss, how big is the worker’s relative investment, does the worker’s success rely on special business skills in addition to any technical skills, what kind of control does the employer exercise, or how permanent is the relation of the worker to the employer.

The impact of this guidance letter may first be felt in courtrooms and in various federal or state agencies, but Ruckelshaus hopes that employers will voluntarily take it seriously. More likely, it will only be quite meaningful if there are systematic state and federal efforts to audit employer behavior, especially in industries where abuses are common, such as lower-skill construction, home care and janitorial work. Unions are also in a position to push for more vigorous enforcement, as Ruckelshaus said the Carpenters have been.

And when it is clear that the workers are not contractors but employees, the unions can do the workers a favor and invite them to join the union.

Source – http://inthesetimes.com/working/entry/18224/independent-contractor-laws-department-of-labor

South Philly man sentenced for illegally transporting undocumented workers

By Jeff Blumenthal

- A South Philadelphia labor contractor was sentenced Thursday to 30 months in prison for illegally transporting undocumented foreign workers and failing to pay employment and income taxes, federal prosecutors in Philadelphia said.

Kim Meas, 60, a native of Cambodia, pleaded guilty last November to two counts of conspiracy to commit an offense against the United States, two counts of transporting illegal aliens and two counts of failure to collect and pay federal income and employment taxes.

In addition to the prison term, U.S. District Court Judge Jan E. Dubois ordered restitution to the IRS in the amount of $1.7 million during three years of supervised release, a $600 special assessment, and $23 million in forfeiture.

Meas was the managing director of LS Services Corp., an employee leasing company in South Philadelphia.

Prosecutors said he negotiated labor leasing contracts with various companies throughout the Philadelphia region and established 14 shell companies to create the illusion that the workers that LS leased to other companies were employed by the shells. The goal of that arrangement, prosecutors said, was to make the shells appear responsible for collecting and paying employment and income taxes for the employees.

Prosecutors said Meas tried to make it impossible for the IRS to determine the identity of the employer of the illegal aliens, as well as the amount of employment and income taxes that the employer of the illegal aliens was required to pay to the federal treasury. Prosecutors said LS also transported the undocumented foreign employees, free of charge, to various work locations in company vehicles.

Source – http://www.bizjournals.com/philadelphia/news/2015/07/23/meas-prison-sentence-undocumented-workers-charge.html

Victory! NY Fast Food Wage Board Recommends $15 Minimum Wage

From Jobs With Justice

- Today, the New York Wage Board recommended raising the minimum wage for fast food employees to $15 an hour. The board said this increase should be implemented by 2018 in New York City and by 2021 in the rest of the state. If State Labor Commissioner Mario Musolino accepts its recommendation, nearly 180,000 New Yorkers who work in the fast-food industry will benefit from the policy.

The announcement is a clear sign that acting together and speaking up for one another for fair wages is paying off. Coming on the heels of major cities like Seattle, San Francisco and Los Angeles raising their minimum wage to $15 per hour, today’s decision by the Wage Board represents an important milestone in the national Fight for 15 movement. It was fast food workers in New York City, after all, who were the first to call for $15 nearly three years ago during their historic strike. Though it was audacious at the time, $15 has since become a rallying cry for working people across the economy, with home care aides, Walmart associates, and even adjunct professors including it among their demands.

New York is one of the few states that can enact a wage board to investigate and raise wages by industry. Governor Cuomo convened the wage board on fast food earlier this spring, shortly after an April 15th day of action that saw strikes and other actions in 200 cities across the country. The three-person board includes representatives of business (Kevin Ryan, chairman and founder of Gilt), labor (Mike Fishman, secretary-treasurer of SEIU) and the public (Byron Brown, the mayor of Buffalo).

The board members reached their decision after holding four hearings across the state, each of which drew hundreds to testify. At the Buffalo hearing, Coalition for Economic Justice led a rally of more than 500 fast food workers and allies from Western New York, while across the state at the Long Island hearing, the crowd of over 400 brought together by Long Island Jobs with Justice included strong labor and faith support. Public comment on the recommendations will be accepted for the next 45 days, after which Musolino will make the final decision.

For far too long, giant corporations like McDonald’s and Burger King have made it impossible for their employees to make ends meet, providing abysmally low wages and ignoring their collective demands for improving their workplaces with a union. The minimum wage in New York is just $8.75 an hour, far too little to raise a family in one of the most expensive states in the country. While opponents of minimum wage increases have long claimed that fast-food jobs are reserved for single teenagers who have few expenses, demographic analysis of the New York workforce proves them wrong. The average age of a fast-food employee in the state is 29 and nearly 40 percent have children. Raising the minimum wage to $15 an hour means these men and women will not have to struggle so hard to meet their families’ basic needs.

”I’m not expecting to get rich off of $15 an hour,” McDonald’s employee Amanda Monroe said. “Just the ability to survive and take care of my family.”

This announcement is big news for everyone in New York, not just fast-food employees. When fast food companies refuse to pay a living wage, employees and their families are forced to rely on public assistance just to get by. In New York, 60 percent of fast-food employees receive public assistance. A study from the Labor Center at the University of California Berkeley found that states are spending $25 billion per year on public assistance programs provided to working families. That’s $25 billion of taxpayer money subsidizing wealthy corporations that refuse to pay their employees a living wage.

“Low wages in the fast-food industry cost New York taxpayers $700 million a year,” said Rev. Kirk Laubenstein, Executive Director at the Coalition for Economic Justice. “Fifteen dollars an hour for fast-food workers will relieve New York taxpayers of a huge public assistance bill.”

Putting additional dollars into the pockets of the people employed by the fast-food giants will also stimulate our out-of-balance economy. At a press conference last month, business representative Kevin Ryan explained that raising fast-food wages will lead to increased spending and potentially job creation. As fewer taxpayer dollars are shuttled towards subsidizing giant corporations’ low wages, more consumer dollars will be poured into the economy. Most importantly, the hardworking men and women who cook our food and ring up our orders will be able to care for their families and live decent lives. Everyone wins!

The willingness of New York State to use the wage board process to raise standards for the fast food industry opens up yet another potential strategy for the Fight for $15 movement, which has seen victories already through ballot initiatives, legislation and collective bargaining. Whether the NY wage board will move on to other industries is yet to be seen, but with 35,000 homecare aides in Massachusetts set to see a raise to $15 through their latest collective bargaining agreement, and ballot measures are underway in Portland, OR and Washington, D.C., it’s clear that the national movement shows no signs of slowing down. Rallies and events have just been announced to spread momentum for $15 and a better life across the country, click here to join an event near you.

Source – http://www.jwj.org/victory-ny-fast-food-wage-board-recommends-15-minimum-wage

Jeb Bush says preventing unpaid overtime abuses will hurt workers. What planet is this guy from?

By Hunter

- I find Jeb Bush’s consistent wrongness on basic economic and labor issues baffling. Not that he is so often wrong, but that he seems to put so much work into it.

Jeb Bush has created a flap with another statement about American workers. In an appearance in Council Bluffs, Iowa, on Tuesday, he said Barack Obama’s proposal to expand overtime pay to millions more managers and white-collar workers would result in “less overtime pay” and “less wages earned.”

The problem, obviously, is that Bush’s statement is hokum. Closing the very frequently abused loophole that allows employers to require employees to work overtime hours with no overtime pay simply by declaring them so-called “exempt” managers will not result in reduced overtime or reduced wages. And experts in the field can’t even parse out where Bush is getting his abuse-of-workers-is-an-economic-win notions, much less Bush’s additional strange claim that the law promoting stronger worker overtime protections “won’t allow” employee bonuses.

Daniel Hamermesh, a University of Texas labor economist, said: “He’s just 100% wrong,” adding that “there will be more overtime pay and more total earnings” and “there’s a huge amount of evidence employers will use more workers.” [...]

Ross Eisenbrey, a vice-president of the Economic Policy Institute, a left-of-center research group, said: “Bush should be embarrassed about how misinformed he was.” Eisenbrey said the proposed rules do nothing whatsoever to bar employers from paying bonuses. “All of that is exactly wrong – and pretty much nonsense,” he said. Eisenbrey and Bernstein wrote a seminal article that helped persuade the Obama administration to change overtime rules.

Between this and his previous insistence that what the American economy really needed is for you workers to simply “work longer hours,” Jeb Bush seems to be aggressively obtuse on economic policy issues—as if his entire economic advisory team is made up of Montgomery Burns and Rich Uncle Pennybags.

Again, it’s not particularly surprising that Jeb Bush, of the Trickle-Down Bush school of economics, would believe that laws restricting the corporate exploitation of workers via an IRS loophole would be a dreadful burden on the ability of our magnanimous and benevolent job-creators to job create most effectively. I would not, however, have expected him to take such baldly anti-worker public stances. That suggests he’s still so mired in catering to the donor class that he has pursued exclusively, up until this point in the race, that he’s finding it difficult to switch to the more nuanced, theoretically populist rhetoric of an actual public campaign. Let them eat cake is what you say in the back rooms, complaining about the shiftless 47 percent and their shiftless ways. You’re not supposed to say that stuff when you’re propped up on a public stage.

Source – http://www.dailykos.com/story/2015/07/20/1403990/-Jeb-Bush-says-preventing-unpaid-overtime-abuses-will-hurt-workers-What-planet-is-this-guy-from

Fair Trade Vital For America’s Future Prosperity

By The PA. AFL-CIO

- Tom Conway, Vice President of the United Steelworkers International Union offers insights from labor negotiations in metals, rubber, paper, oil, chemicals and other industries at the Battle of Homestead Foundation’s Bernard Kleiman Lecture

Pittsburgh, PA: American industrial workers face formidable challenges from voracious foreign corporate competitors, and also home-grown anti-labor forces, said Tom Conway, United Steelworkers vice president and top union negotiator in steel, oil, aluminum and other key sectors. Yet there are encouraging signs as well, with promising new alliances and young union workers increasingly leading the union charge.

Conway shared his perspective with more than 60 people attending the annual Bernard Kleiman Lecture, named in honor of the former Steelworkers Union chief counsel, who also led many union negotiations. The Saturday afternoon, July 11th, event was hosted by the Battle of Homestead Foundation at the 19th Century “Pump House” building, the sole-surviving structure of the Homestead, PA, steel mill.

Conway was a worker and elected union officer at the sprawling Bethlehem Steel plant in Burns Harbor, IN, gaining experience representing industrial workers in negotiations to maintain and improve living and safety standards. Conway is now a respected expert on international trade and its effect on U.S. manufacturing and jobs. He has testified before Congress on many trade issues.

He spoke at the Homestead event in stark terms about the “continuing threat” of unchecked imports on domestic industrial production, and resulting pressure on workers seeking improvements. The Steelworkers’ vice president expressed indignation that young people face fewer job opportunities and that plant shutdowns are “tearing the fabric of one industrial community after another.”

Corporate competitors, frequently from China, have increasingly used espionage, patent and technology theft, threats, deception, and unequal backing from their own governments to take away markets from American steel and other producers. Conway was specific in not blaming every-day Chinese workers for unethical employers. But with John L. Lewis-like disdain, Conway lambasts United States government officials for repeated failure to safeguard the livelihoods of millions of American citizens.

He laid out a vision of an economy where the interests of working families and their communities are properly appreciated and protected, and imported products are checked at all borders, with tariffs in place to make up for any unfair advantages or disadvantages. He outlined the complex and frequently ineffectual trade rules that are currently in place.

Conway captured the audience’s attention – including local students, union members, educators, retirees and history buffs – drawing comparisons between the recent actions of an Allegheny River Valley steel company that is trying to gut the union contract for thousands of workers, and the better-known campaign of Frick and Carnegie in 1892 seeking to crush the workers’ movement in Homestead.

ATI, also known as Allegheny Ludlum or Teledyne, has readied a multi-million dollar war chest for its anti-union campaign. ATI management has brought in paramilitary strikebreakers to five Pennsylvania steel towns, seeking to intimidate union workers, who nonetheless remain resilient and ready to fight back. And like the steel barons of old, ATI bosses demand a broad array of cutbacks, elimination of overtime pay and other hard-won benefits. Conway says the new “company line” from contract talks is that the steel firm no longer wants any “obligations” towards retired workers – who spent their lives making steel there – whatsoever.

Union workers at ATI are mounting an impressive campaign to defend their union and their voice in the workplace. Conway says “shame” can dissuade such belligerent employers. But “overshadowing” this dispute is the fact that “50% of stainless flat rolled steel (ATI’s main product) is imported now.” Like others, this company is facing unprecedented competitive pressure, and it’s trying to make up the difference at the expense of American workers.

Conway warned of dangers to the American people if political leaders allow the gutting of the nation’s industrial might, and also the “fallacy” of economists who think America’s economy and well-being can be sustained “by the buying and selling and trading of money.” He said the rules, or the lack thereof, causing this massive “hemorrhaging” of decent-paying jobs “are all a result of man-made laws, not an unobstructed free market.”

Even with the pressures facing working people and their unions, Conway pointed to many hopeful and positive developments. Young industrial workers are proving themselves capable and determined union leaders, as witnessed in last year’s oil industry strikes, where a new generation took command on the picket lines. He said the labor movement as a whole is “holding together” with demands for immediate action for fair trade, opposing the Trans Pacific Partnership and insisting on a level playing field. This point was affirmed by AFL-CIO Allegheny County Labor Council President Jack Shea at the event.

Conway said that labor has identified and gained many strong new political allies in recent fights. And with corporations and banks expanding from nation to nation, he spoke optimistically about the growing bonds between American unions and unions in countries around the world.

He feels the public is increasingly and rightfully outraged when unfair competition that drains America’s strength is revealed, such as last year when Chinese corporate-government-military computer hackers were discovered searching the emails of numerous local companies for industrial secrets, even vetting the emails of the Pittsburgh-based Steelworkers Union. Also worthy of indignation is the recent loss of advanced engineering innovations from Lehigh University in Pennsylvania. “Once the technology and methodology was developed at Lehigh, U.S. companies transferred the technology to China which then developed the new bridge building industry and has exported it around the world.”

Even some top U.S.-based companies shy away from a strong public stand on trade issues, Conway said, for fear of reprisal by unethical foreign competitors. He feels this makes industrial unions all the more important as a reliable voice for working people on trade justice. The USW and some U.S. companies are promoting the Alliance for American Manufacturing, a group pushing for fair trade, rebuilding America’s infrastructure and the creation of a national manufacturing strategy. Tom Conway urges vigilance and solidarity on the issue of protecting good-paying American jobs and the industries that sustain them.

Howard Scott

Source – http://www.paaflcio.org/?p=6187

Failed Sysco/US Foods Merger Puts Staples/Office Depot Deal In ‘Serious Jeopardy,’ Says American Postal Workers Union

By The American Postal Worker’s Union

- WASHINGTON – The collapse of a planned merger between Sysco and US Foods puts a similar merger of office-supply giants Staples and Office Depot in serious jeopardy, says the American Postal Workers Union (APWU).

“The Federal Trade Commission made a very strong case against the Sysco/US Foods merger,” said APWU President Mark Dimondstein. “Swap out the words ‘food service distribution’ and replace them with ‘office-supply distribution’ and you have a description of the Staples/Office Depot deal. The same arguments prevail.”

Sysco abandoned its merger plans after a federal judge granted an injunction requested by the FTC, and will now pay more than $300 million to exit the deal.

“It’s clear that Staples and Office Depot is now in serious jeopardy,” said Dimondstein. “Both companies should cut their losses and get out of this bad deal sooner rather than later. Right now, they are wasting time and money trying to create an illegal monopoly that will reduce choices and raise prices for consumers, businesses and governments.”

On June 23, U.S. District Court Judge Amit Mehta upheld the FTC’s request for an injunction to block the merger of Sysco and US Foods, which are the two largest suppliers of food and supplies to U.S. restaurants, hospitals, schools and other customers.

An analysis of Judge Mehta’s decision in FTC v. Sysco Corp., carried out by APWU’s attorneys, shows striking similarities between the failed merger of two food-service giants and the proposed merger of Staples and Office Depot.

Judge Mehta summarized his decision by citing a previous case about a merger of organic supermarkets:

“[T]here can be little doubt that the acquisition of the second largest firm in the market by the largest firm in the market will tend to harm competition in that market.”

The same sentence could have been written about Staples, the largest firm in the office-supply superstore market, and Office Depot, the second largest firm.

In attempting to defend its failed merger proposal, Sysco used many of the same defenses Staples has raised in support of its planned merger with Office Depot. For example, Sysco argued that there are many types of food-service distributors and, therefore, many markets with various competitors. But Judge Mehta ruled in favor of the FTC, holding that the relevant market had to be defined more narrowly, by distinct customer needs.

Customers who need one-stop shopping and immediate delivery cannot be grouped together with those served by different forms of distribution. This differentiates Internet retailers from brick-and-mortar office-supply stores.

A compelling similarity between the Sysco-US Foods and Staples-Office Depot mergers is that both would result in a single broad line supply chain for national customers. National customers – including Fortune 500 companies and local, state and federal units of government – negotiate long-term supply contracts with Staples and Office Depot.

Internet retailers and regional suppliers do not compete in this large business-to-business (B2B) and business-to-government (B2G) market. Therefore, a merger of Staples and Office Depot would leave just one company as the only source of large-scale office-supply contracts – the very definition of a monopoly that U.S. anti-trust laws are intended to prevent.

The FTC is currently reviewing the proposed Staples and Office Depot merger and has requested additional information from both companies.

The APWU has opposed the merger due to the negative impact of reduced choice and higher prices on union members, other consumers and U.S. businesses and governments.

In May, the union released “No Sale: Why the Staples Office/Depot Merger Should Be Blocked.”
In June, union representatives met with the FTC to discuss key findings of the report.
On June 12, APWU representatives attended the Office Depot shareholders meeting and briefed South Florida media about its concerns about the proposed merger.

# # #

The American Postal Workers Union represents 200,000 employees of the United States Postal Service, and is affiliated with the AFL-CIO. For more information on the APWU, visit www.apwu.org
- See more at: http://www.apwu.org/news/press-release/failed-syscous-foods-merger-puts-staplesoffice-depot-deal-%E2%80%98serious-jeopardy%E2%80%99-says#sthash.a8VPRklG.nACDL4IM.dpuf

Source – http://www.apwu.org/news/press-release/failed-syscous-foods-merger-puts-staplesoffice-depot-deal-%E2%80%98serious-jeopardy%E2%80%99-says