Local 202 members on strike at Hunts Point Produce Market, Bronx, New York City, Thursday, January 21, 2021. Photo: Brett Wallace.
This is an ongoing series about labor and the U.S. economy. Suggestions are welcome. For brevity, I focused on three things in this update – 1) a 1970’s style militant strike in the Bronx, 2) Biden’s Economic Plan, and 3) Reddit vs. Wall Street.
1. Over 1,400 Workers Win Strike at Hunts Point for Wages and Respect
- If you have ever eaten fresh produce in the New York area, it most likely came through Hunts Point. The Hunts Point Produce Market is the largest globally, serving about 60% of the fresh produce to restaurants and grocery stores in the New York area. The market, an industrial distribution hub based in the Bronx and a critical lifeline of fresh food to the city, remained open through the pandemic. It was shut down for seven days after Local 202 unionized warehouse workers walked off their jobs when contract negotiations with management broke down.
- Last Saturday morning, around 10:15 am, I followed hundreds of cheering workers into the market as they went to vote, sign and ratify their three-year contract. The final result was 97% of workers voting in favor of the new agreement. While the newly ratified contract does not immediately include the $1.00 per hour raise they fought for, it does represent the largest wage increase they’ve received in the history of the union.
- These workers fought hard for this victory by walking out on the 32 cent counter offer they were first offered, standing up for themselves amidst their management and the NYPD coming down on them, while inspiring the community around them with their fortitude. Their result shows the power that numbers of workers have when they fight hard and rally support for what they believe in.
- For more details, I encourage you to read the first-hand reports from Amir Khafagy and Luis Feliz Leon – both of whom I met on the picket line. You can also read my full post on the strike here.
- I spent this week editing a short film on the strike based on my footage and conversations with workers as it unfolded. Stay tuned for more on that project.
Hunts Point Strike. Photo: © Brett Wallace 2021
2. Biden introduces ‘Made in America’ economic plan
- During his inauguration speech, Biden announced a two-step plan to provide immediate pandemic relief, followed by a longer-term effort to rebuild the economy. First Rescue, then Rebuild. In my last update, I shared how Biden continues to commit to getting the next $1,400 payment (after the initial $600 December payment) out for those who qualify.
- Last week, Biden issued new Executive Actions to accelerate pandemic relief in terms of food, expedited relief payments, and coordinated benefit delivery teams. To fund his plan and with interest rates as low as they are, Biden signaled an increase in Federal deficit spending funded by the Treasury department. In coordination, Janet Yellen, new Treasury secretary, announced her new priorities aligned to Biden’s plan — developing jobs and rebuilding the country’s infrastructure.
- Part 2 of Biden’s plan will focus on rebuilding the economy. It’s unclear how much of Biden’s plan will make it through Congress, but it is worth noting the intentions and levers of the plan. The plan includes a range of financial investments and emergency food and nutrition assistance.
- We don’t know what the economy will look like after this pandemic. The financial establishment feels that we were in a good place in February 2020 (holding my head in my hands) and seeks that form of economic restoration. And, I have not seen Biden link the pandemic response, economic crisis, and environmental crisis to capitalism itself – which continues to boom and bust, again and again. So, one of the looming questions in my mind – how will Biden’s agenda go beyond just restoring the existing system to confront the structural problems, accelerated by neoliberalism, that have been assaulting working-families for decades- stagnant wages, pay disparities, wealth inequality, discrimination and disparities by race and gender, marginalized neighborhoods left out of recovery, post-industrial communities with no job mobility, the disparity in technology and educational resources, and others. I don’t know beyond thinking that Biden will need to be pulled further into confronting structural change from progressives and activists or fall back on stabilizing Wall Street. Here are the key levers to Biden’s plan that I’ve read about thus far.
- Biden’s Rebuild Plan
- Jobs. Biden described his plan would create 18 million jobs over a four-year period by investing in infrastructure, manufacturing, innovation, research and development, and clean energy. This is a small dent in the jobs impacted by the pandemic. What will the scarring be on the labor market? Will the labor market recover enough to power the structural changes needed to reform capitalism or end it? And, for people who spend their whole lives working, how will they be better off? Will the plan create enough jobs to help alleviate the burdens facing working-families?
- Incomes. Biden states these will be “good-paying jobs.” What will these new jobs look like – in terms of wages, benefits, unionization? Hopefully, these are not more of the low-wage, high churn, non-union positions that companies such as Amazon boast about creating. See my earlier post on jobs and who’s hiring at scale.
- Biden’s “Made in America” initiative aims to direct large amounts of taxpayer money to reconstruct the “backbone of America labor” – think investments in WWII era Fordist manufacturing and the unions that power it. Biden claims not to accept the view that automation and globalization mean fewer good-paying jobs in America. And, he does not talk about the services economy and specific plans for it. In one example, Biden’s Made in America executive order seeks to redirect the increased procurement of supplies and services by the U.S. Government to American, not foreign, companies (overseen by the Office of Management and Budget). More American-made steel and iron to rebuild roads, bridges, ports, transferring American-made goods. It sounds grand given the complexity of today’s global supply chains and sourcing of components (just think about all the products that go into a vehicle). It will be interesting to see how the plan supports workers in the American supply chain. For example, in trucking, the most popular job in the country, the wages and collective power of independent owner-operator truckers has been under assault from corporate interests. On a related topic, the trade war and tariffs on imported goods from China will be interesting to watch regarding its impact on Made in America.
- Biden also indicated his plan would increase dramatic R&D investments in AI, biotechnology, and clean technology, where American innovation is being outpaced.
- Debt. What aggressive steps need to take to help millions of people who cannot pay for rent, mortgages, medical bills, food provisions, and student loans? This is where aggressive levers must be deployed that would be orthogonal to the capitalist system – massive debt write-downs and abolishments at scale, full employment, UBI with no strings attached.
- Biden shared the administration will provide flexible grants and low-cost capital to help the hardest-hit small businesses. There is no clear strategy here yet to get small businesses the help they need. As we now know, the rollout of Paycheck Protection Plan loans was unfairly distributed, favoring those businesses who already had access to the banks distributing the loans. p.s. as a part of this, what happens in the arts and cultural sector?
- Biden campaigned on raising corporate taxes throughout his campaign. What happens to the corporate tax rate? You may remember in the 2018 Tax Cut and Jobs Act, the corporate tax rate was lowered from 35% to 21%.
3. Occupy 2.0? The Reddit Rebellion Vs. Wall Street
- The extreme volatility in stocks this week started from the subreddit channel, r/WallStreetBets. Now, the Wall Street establishment is up in arms after an online army of individual investors capitalized on some of its short-bets.1
- Melvin Capital, a typical hedge fund, had an aggressive short position worth billions on Gamestop [NYSE: GME]. Enter the online army of individual investors, each with a few hundred or thousand dollars in their trading accounts, and a collective plan to aggressively purchase and hold Gamestop stock (and other Meme stocks). As Gamestop stock skyrocketed 400%, Melvin Capital lost billions. The army capitalized on Melvin’s short. This sounds like the emergence of a movement, an Occupy 2.0, to leverage capital’s own tools in its home arena – the free market.
- Wall Street swiftly retaliated – as if the “free market” was not rigged enough. Robinhood, a brokerage firm claiming it democratizes finance, froze individual investors from trading Gamestop and other stocks. Other brokerage firms followed. Suddenly, everyday people could not trade, causing many to lose money and igniting public fury. This led to a wave of protest in the form of 1-star ratings on the Robinhood app until Google intervened. Wall Street (and Big Tech) demand deregulation when they are winning, but when they are getting burned, they shut people out of the system.
- Robinhood’s main revenue comes from order flow payments from Citadel and others – it made $100 million in the first quarter of 2020. 2 When Melvin Capital went under, hedge funds Citadel and Point72, which is owned by billionaire art collector Steve Cohen, dropped $2.75 billion to save Melvin Capital. Citadel owns Melvin. And, a huge amount of Robinhood’s revenue comes from Citadel. This is the market manipulation that set off yesterday’s class-action lawsuits and congressional scrutiny.
- The White House says “it should not be a surprise” that Citadel paid Janet Yellen, former head of the Federal Reserve, $810,000 for speaking at three events in the last few years.
- This morning Robinhood took another billion-dollar injection from existing investors. These investors will receive additional equity in the company and will profit when Robinhood goes public (assumed to be this year).
- It’s not hard to see how the online army and millions of Americans are furious and distrustful of the rigged, parasitical financial system – a system that does not produce or make anything while reaping the rewards of corporate breed divorced from the material reality most Americans live in. It does not matter to Wall Street if you lose all of your money. But, if a hedge fund loses all its money, Wall Street intervenes to manipulate the market. How do you want your “free” market? Open, heavily regulated, destroyed?
Recommended reading – Moira Weigel and Ben Tarnoff on the rising union movement in Silicon Valley. In addition, given all the news about vaccines, here is a piece from last year by Rob Larson on the racket of Bill Gates’s Philanthropy.
p.s. I’ll dive into the updates on Leon Black, Apollo management, and MoMA in a future update.
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- Short selling means betting and profiting when a stock price drops. In crude terms, let’s say you borrow some shares of Gamestop from a broker and sell them right away. If the Gamestop stock drops, you can buy it at a lower price and return the shares you borrowed from the broker. You take home the difference in the drop in profit. This is the complete opposite of what most people do when buying a stock – they hope it goes up.
- “Robinhood Makes Millions Selling Your Stock Trades … is That So Wrong?” Fortune. Last modified July 8, 2020. https://fortune.com/2020/07/08/robinhood-makes-millions-selling-your-stock-trades-is-that-so-wrong/.