The Bottom LineThe Bottom Line

Economics in Brief: Kellogg Union Workers Reject Tentative Deal

Also, Louisiana program to waive fines for employers runs afoul of federal labor law, and more.

Striking Kellogg's workers Michael Rodarte, Sue Griffin, Michael Elliott, Eric Bates and Mark Gonzalez stand outside the Omaha, Neb., cereal plant Thursday, Dec. 2, 2021.

Striking Kellogg's workers Michael Rodarte, Sue Griffin, Michael Elliott, Eric Bates and Mark Gonzalez stand outside the Omaha, Neb., cereal plant Thursday, Dec. 2, 2021. The union rejected a proposed contract Tuesday, leading Kellogg's to announce it would hire workers to permanently replace those on strike. (AP Photo/Josh Funk)

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Kellogg Union Workers Reject Tentative Deal

Kellogg said it will permanently replace 1,400 workers who have been on strike since October, CNN Business reports, after the union overwhelmingly rejected a proposed labor deal.

Kellogg believes that the tentative deal would have hastened the path to better pay and benefits for all employees. But union workers were adamantly against the proposed two-tier wage system, which would have given newer workers less pay and fewer benefits.

“We have made every effort to reach a fair agreement, including making six offers to the union throughout negotiations, all of which have included wage and benefits increases for every employee,” the company said. “It appears the union created unrealistic expectations for our employees.”

But Trevor Bidelman, union president, said that the company is still not adhering to its demands, Siouxland News reports. “Another big issue is the job security still. People see the writing on the wall. The intention right now is to move more stuff down south and eliminate more of our jobs,” he says. “And cost of living is a big issue with the folks. They’re removing cost of living and replacing that with a one time, three percent wage increase.”

As of right now, Kellogg says there are no plans to continue bargaining, though workers plan to continue their two-month strike.

New Report Reveals Pandemic Worsened Income Inequality

World Inequality Lab’s newest report shows that income inequality during the pandemic has worsened, CNN Business reports.

Billionaires’ combined net worth grew by more than $3.6 trillion last year — and their share of wealth increased by the steepest amount since the Lab began keeping records in 1995 — while the pandemic pushed 100 million people into extreme poverty. And Lucas Chancel, the lab’s co-director, reveals that this number would’ve been even larger without government intervention.

Their findings conclude that “financial deregulation, privatization, and less progressive taxation in richer countries” are the main contributors to inequality. Globally, the richest 10% of the population controls 76% of the world’s wealth, while the bottom 50% only owns 2%. This wealth inequality, however, varies by continent, with Latin America seeing the greatest divide.

Researchers recommend a higher tax rate on the wealthy that could be used to invest in education, health and the environment.

“The work that we’ve been doing really shows that, in fact, these claims — or this idea of trickle-down economics — does not pass the scrutiny of data,” Chancel said. “Key lessons from the past 40 years of data is that the cuts in top tax rates have not triggered prosperity for all, as they were supposed to trigger.”

Louisiana Program That Would Have Waived Penalties for Employers With Misclassified Workers Violates Federal Labor Law

A new Louisiana state law that would have waived taxes and penalties for employers who misclassified their employees as independent contractors will not take effect next month, the LA Illuminator reports.

The reason? It violates federal labor law, the Louisiana Workforce Commission said.

Workers who are misclassified as independent contractors miss out on benefits and unemployment insurance; it has cost the state $9 million in income tax revenue, the Illuminator says.

The “Fresh Start” program would have waived unemployment taxes and interest for employers who agreed to re-classify their misclassified workers going forward.

Louisiana is already one of the more lax states when it comes to worker misclassification, the Illuminator reported in a separate article. Current law gives a warning to employers for the first offense, and the $500 fine sometimes imposed is ten times lower than it is in other states, the Illuminator said.

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter.

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Solcyre (Sol) Burga was an Emma Bowen Foundation Fellow with Next City for summer 2021. Burga graduated from Rutgers University with a degree in political science and journalism in May of 2022. As a Newark native and immigrant, she hopes to elevate the voices of underrepresented communities in her work.

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Tags: covid-19income inequalitypovertytaxesunionsgig economy

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