In Cincinnati News: November 30, 2015

We report here on matters that recently piqued the interest of C4AD:

  • Proposed state-wide regulations for ride-sharing services like Uber support the company’s view that its drivers are self-employed contractors
  • A quick look at two local anti-poverty efforts: the Cincinnati Preschool Promise program and Mayor John Cranley’s target without a program
  • A bill in the legislature would reduce financial contributions from Ohio employers while replenishing money in the unemployment fund. To perform this magic, the bill would slash unemployment benefits for workers even more.
  • A bill proposed by Rep. Steve Chabot (R-Westwood), a vigorous opponent of immigration reform, would bring in thousands of unskilled foreign workers for seasonal jobs.

Ohio Legislature paving the way for Uber

The ride-sharing service Uber is often Exhibit A in discussions about the on-demand economy.

Uber contends it is not an employer but a technology platform connecting passengers and drivers with cars.

In the company’s view, the drivers are independent contractors, who are not entitled to expense reimbursements for the use of their cars or basic workplace protections such as minimum wage, overtime pay, workers’ compensation insurance, unemployment insurance, and social security retirement benefits.

This issue of employment status—employee or contractor—is being played out in various courts and regulatory agencies.

Photo by Adam Fagen, licensed under a Creative Commons Attribution License,
Photo by Adam Fagen, licensed under a Creative Commons Attribution License,

Free-market advocates celebrate the on-demand economy as the brave new frontier in the development of the U.S. economy in which workers have the flexibility to work when they want. Labor advocates, on the other hand, contend that the on-demand economy can work effectively using employees rather than contractors.

In June, the Ohio House of Representatives passed House Bill 237 by a vote of 95 to zero. The bill establishes uniform insurance requirements for so-called transportation network companies (TNSs), such as Uber and Lyft, and their self-employed drivers. The text of the bill is clear that drivers are not employees. The bill is now under consideration by the Senate.

“H.B. 237 protects Ohioans from avoidable risks while ensuring innovative businesses such as Uber and Lyft are able to thrive in Ohio,” said co-sponsor Rep. Bob Hackett (R-London) in a post on the Majority Caucus Blog.

In September, Uber announced plans to add 10,000 drivers in the state, including 3,000 just in Columbus, as the Enquirer reported.

Columbus has its own regulations governing Uber.

If the House version of the bill is passed into law, the employment status of drivers as independent contractors would be a settled matter of law. Additionally, it appears the state law would trump the regulations of home-rule cities like Columbus.

Preschool Promise Takes a Long View in the Fight against Poverty

The Enquirer and other local media have provided extensive coverage of Preschool Promise over the last two years. This ambitious anti-poverty initiative is an important topic for all of us in the region. In brief, this is our understanding.

Preschool Promise aims for transformative economic change. It seeks equality of educational opportunity for all kindergartners in the city through high quality, universal preschool for 3- and 4-year olds. Disproportionate numbers of poor and minority children are not ready for preschool. Because they are not preschool-ready, they are unlikely to catch up with their peer’s academic progress, and eventually they drop out of school.

School friends. Photo by Woodley Wonder Workers, licensed under a Creative Commons Attribution License,
School friends. Photo by Woodley Wonder Workers, licensed under a Creative Commons Attribution License,

The economic premise is that the cost of investing in early childhood education, when 90 percent of brain development occurs, avoids even greater future costs of remedial education, higher dropout rates, higher rates of crime and incarceration, and weak earnings potential in the job market…outcomes that tend to reinforce a cycle of poverty.

In a Nov. 4 analysis about the failure of the park levy, the Enquirer asked rhetorically about the implications for future tax proposals including one for the Preschool Promise program, which is estimated to cost between $16 and 18 million per year.

In a Nov. 6 article entitled, Preschool Promise: We’ll do ‘everything differently,’ the Enquirer responded to its own rhetorical question in the manner signified by the title. That is, Preschool Promise would not make the same mistakes made by the park levy.

Finally, in a Nov. 17 contributor’s opinion entitled, YPs lead the way on Preschool Promise, we learned that nearly 7,000 people have already signed up to support Preschool Promise at the polls next November.

How Realistic is Mayor Cranley’s Anti-Poverty Program?

In a Nov. 26 article, the Enquirer asks whether Mayor John Cranley has “set himself up for failure” by his ambitious target to reduce the number of children in poverty by 10,000 in just five years.

The target was set in October, during the mayor’s State of the City address, long before his anti-poverty task force could recommend a program, which is expected in June, and even before the first regular meeting of the task force, which is scheduled for mid-December.

At the same time, the article applauded the goal of reducing poverty in Cincinnati where 44 percent of children live in poverty, compared to 20 percent in Hamilton County. The article quoted Ross Meyer, vice president of United Way, “This is a crisis for our community.”

C4AD covered the mayor’s program HERE.

Ohio unemployment benefits would be slashed under proposed bill

Legislation was introduced Nov. 9 in the Ohio House of Representatives (HB 394) by Rep. Barbara Sears (R-Monclova Township) to address the insolvency of Ohio’s unemployment compensation system.

To make the system solvent, the proposed bill would reduce unemployment benefits by $1.8 billion more than it would reduce employer contributions, according to a fiscal analysis by Ohio’s non-partisan Legislative Service Commission.

“Instead of working in a balanced way to correct insolvency issues in Ohio’s unemployment compensation system, this bill will disproportionately benefit employers while hurting vulnerable Ohio families,” said Rep. Michael Ashford (D-Toledo) in a post on the Minority Caucus Blog.

The Ohio Statehouse. Photo by Bob Hall, licensed under a Creative Commons Attribution License,
The Ohio Statehouse. Photo by Bob Hall, licensed under a Creative Commons Attribution License,

Benefits would be cut from 26 weeks to as few as 12 weeks but not more than 20 weeks, depending on the state unemployment rate at the time of the application. Differences in unemployment rates within the state—due to race, age, gender, industry, or area—would not affect the benefit period, which would be governed soley by the state average.

The bill would require drug testing for some recipients and would stop benefits to Ohioans who receive disability benefits or who were fired because of drug use.

The bill would freeze the maximum weekly benefit amount at $453, until after 2025 according the LSC projections, and deny additional benefits for dependents.

“Generally, these provisions are designed to reduce the number of claimants eligible for new or continuing benefits,” according to the LSC analysis.

“Under the stated goal of making the unemployment trust fund solvent, HB 394 will actually make Ohioans more vulnerable to being thrust into poverty by drastically reducing eligibility for benefits,” said Rep. Christie Kuhns (D-Cincinnati) in the minority blog.

The legislation reportedly has the support of House Republican leadership.

On Nov. 11, the Enquirer published Gannett’s coverage of the proposed bill.

In 2009, the Ohio Attorney General issued a report on the Economic Impact of Misclassified Workers for State and Local Governments in Ohio.

The report notes that employers who misclassify their workers do not contribute to unemployment insurance pools, which accounts in part for shortfalls in Ohio’s unemployment insurance reserves. The report concludes that, at the high end, worker misclassification might cost the state unemployment compensation fund as much as $100 million per year.

Chabot seeks more unskilled foreign worker

On Nov. 18, the Enquirer reported that Rep. Steve Chabot (R-Westwood) is leading an effort in Congress to allow U.S. employers to bring in thousands more unskilled foreign workers for seasonal jobs that last as long as 10 months.

U.S.-Mexico border fence at Algodones Sand Dunes, California. Department of Homeland Security, United States Border Patrol.
U.S.-Mexico border fence at Algodones Sand Dunes, California. Department of Homeland Security, United States Border Patrol.

Chabot, chair of the Small Business Committee and long-time opponent of immigration reform, claims employers cannot find enough Americans to fill jobs in landscaping, hotel housekeeping, food processing and other industries during peak seasons.

Chabot’s bill, the Strengthen Employment and Seasonal Opportunities Now (Season) Act (H.R. 3918), called the Season Act for short, was introduced in Nov. 4. It would reform to the H-2B seasonal guestworker program.