Monday, April 14, 2014

What if McDonald's slashed its CEO's pay?

My fellow Purple Wisconsin blogger Jennifer Epps-Addison, in advocating for an increase in the minimum wage, suggests the following:

Here's an idea. McDonald's shareholders could pay their CEO $1,000 or $2,000 an hour instead of the $9,200 an hour he currently makes, and use that money to increase the middle class and boost our economy.

How would that work? Would it really "increase the middle class?" Would it even noticeably impact the salaries of McDonald's workers?

Let's find out.

McDonald's CEO Donald Thompson made $13,751,919 in total compensation for 2012. Not all of that was cash compensation available to be "re-directed" to other employees - his salary and bonus was $ 9,560,311. The rest were stock options but let's put that aside and assume that one could either grant options to the employees or sell stock and redistribute the money. Both are dubious assumptions but let's grab as much of Mr. Thompson's pay as we can.

Ms. Epps-Addison seems to want to take around 80-90% of his compensation. To do so, we would have to suspend reality. If McDonald's reduced CEO compensation by that amount, it'd be looking for a new CEO and, like it or not, the candidate pool would be seriously affected. You can't hire Aaron Rodgers for what you pay Matt Flynn. We understand that for sports and entertainment, but the same rules apply to the market for rare executive talent.

But let's wish that problem away and redistribute most of Mr. Thompson's pay to line workers. Here the analysis gets a little tricky.

Most people who work at McDonald's don't work for McDonald's. They work for franchisees who own and operate over 80% of the chain's stores. But McDonald's exercises a great deal of control over those stores and promoting the brand and business practices that make them successful is part of Mr. Thompson's responsibilities. In any event, I am sure that Ms. Epps-Addison does not want to limit this building of the middle class and improving of the economy to less than 20% of McDonalds' employees. (People who own franchises don't make Thompson money so there would be no honey pot for them.) Let's include all folks who work at franchisees.

But McDonald's is a global company and Thompson runs the whole thing. If we are going to scoop up his pay and dole it out to others, it seems a bit chauvinistic to limit the largess to American employees. But let's indulge our inner Ugly American and ignore that problem. Let's look at only US employees.

The National Employment Law Project estimated that McDonald's and its franchisees employed 859,978 people in 2011. That's the best number I can find quickly. If we reduce the CEO's salary by 90 % and give it to each of these employees, their average annual salary increase would be ... $ 14.40.

For a full time worker, the increase in these folk's hourly wage would be about three quarters of a penny.

A few caveats.

Not all 859,978 are low wage workers; much less employed at the minimum wage. But given the nature of McDonald's business, it is fair to assume that the overwhelming majority are. And even if they aren't - even if only half have sufficiently low incomes to be entitled to a chunk of Mr. Thompson's pay - the average hourly increase would be less than two cents per hour.

Nor do all McDonald's employees work full time. There is no way to figure out the average work week, but taking into account the part time nature of the work force would increase value of the hourly increase even if it wouldn't vault these part time workers into the middle class. For example, if the average worker works half time, the hourly increase - if allocated among half of McDonald's and franchisees' total employment, might reach about three cents per hour.

I'm sure there are some other tweaks and ways in which the data can be refined. But I think you get the idea.

Cross posted at Purple Wisconsin.

Thursday, April 10, 2014

Some random thoughts on a new arena

First, it is extremely difficult to make a strong arguments that taxpayers should subsidize an arena. While studies go all over the place, my sense is that it is very difficult to show that subsidized arenas generate enough measurable economic activity to yield a positive ROI. Mostly, they shift entertainment dollars that would be spend on other things.

Second, it is possible to argue that there is a net gain to the locale where a facility is located. A downtown arena may shift entertainment dollars downtown and that leaves the downtown commercially stronger than it otherwise would be. If that's so, then the reluctance of suburban counties to contribute to the cost of an arena makes sense. While people throughout the region may use the arena (and pay the price of admission when they do), the economic benefits aren't felt throughout the region. If one of the purposes of a new arena is to attract suburban dollars to downtown Milwaukee, it's hard to make a case that suburban communities should be compelled to pay for the privilege.

Third, the analysis is complicated by the fact that an arena - and the professional sports team it attracts - can result in benefits that are difficult to measure. If the primary benefits of an arena are the jobs that a facility and the events that it hosts directly benefit, then the case for compelling people to pay for it (because, after all, that's what taxation is - a compulsory taking of people's money) is weak.

But it could be that there are intangible benefits to being a "major league" city and having a vibrant downtown that go beyond the direct benefits associated with sporting events and concerts. Maybe these things make a city a more attractive location for businesses and talented people. If that's true, then the argument that this is a regional responsibility becomes more compelling.

Fourth, if an arena is indeed a powerful generator of economic benefits, we should ask ourselves why any tax money should be needed in order to make it happen. At the very least, one might want to ask why the benefited businesses should not be expected to repay the cost of public contributions to private profit.

Finally, Common Ground's announcement that it "will not support" the new arena is, at best, irrelevant and, at worst, tone deaf. It may be irrelevant because, really, who cares what Common Ground is a fairly standard left wing organization and its constituency may not be critical to the arena decision. It's not apparent to me that they have the political clout to be a player in this.

It may be tone deaf - and a mistake - because many of the people inclined to support more funding for youth athletic facilities will resent Common Ground trying to hold an arena hostage by insisting on a "poison pill" of $ 150-250 million in additional taxation to benefit part of the region. If an arena can't happen without spending on youth facilities in that amount, there will probably be no arena.

I don't know if a case can be made for that level of spending on youth athletic facilities in Milwaukee County or not. My guess is that there are more compelling uses for that money.

I understand that Common Ground believes that better youth athletic facilities are a more compelling need than an arena, although comparing the cost of an arena to a demand for a particular amount for youth facilities seems to be comparing apples to oranges. I also appreciate why it may believe that they may be more able to block funding for an arena than they would be able to obtain funding for youth athletic facilities. They are trying to leverage what they may be able to do into something that they otherwise could not.

But I suspect that they are overreaching.

Cross posted at Purple Wisconsin

Tuesday, April 08, 2014

Shorewood hates freedom of the press

Here’s a story that you’d think the mainstream media would take more interest in.

A number of Wisconsin communities just voted to pull your freedom of speech.

I have often heard that, if the Bill of Rights was ever put to a vote, it would never pass. We’ve just seen an example of that.

Last week, the enlightened citizens of Shorewood, Whitefish Bay and several other communities voted to repeal the freedom of the press and of the free speech rights of organizations ranging from the NAACP to the National Rifle Association,

They passed an resolution calling for the Constitution to be amended to make clear that only “natural persons” have constitutional rights.

But associations of natural persons who have incorporated to form entities such as the Milwaukee Journal Sentinel, Planned Parenthood are ACLU are not themselves natural persons. The amendment would , as a practical matter, repeal the First Amendment right of all of these groups. It would repeal the free exercise rights of organized churches.

Quite frankly, the resolution was as deep bone silly as any resolution regarding creationism or human sexuality passed by the most fundamentalist county in the deepest corner of the benighted south.

You may object that they did not mean to do this. But wouldn’t it be better not to vote for what you did not understand?

Cross posted at Purple Wisconsin.

Monday, April 07, 2014

Johnson respects victim’s desire for confidentiality

So here’s a non-story. 

“Johnson did not tell police of assault allegations three years ago.” 

While I have a great deal of respect for the reporters who worked on the story – I think they are professional and ethical – this story was not handled well. By choosing that headline (I understand that the reporters do not write the headlines) and putting this at the top of the website, the newspaper seems to have intentionally implied that Johnson did something wrong – that he knew about something that he was obligated to disclose and did not. 

That implication is flat out false. Before I explain why, let me disclose that Sen. Johnson is a client of mine in the case of Johnson v. OPM. I have nothing to do with this matter.

The facts are as follows. Ron Johnson employed a woman, who claims that she was touched indecently - sexually assaulted - by Rep. Bill Kramer. At the time, she was working in Johnson’s office and shared her experience with Johnson’s chief of staff – who subsequently shared what she had told him with the Senator. 

Having hired a lawyer, the victim decided that she did not want to press charges. She decided that she preferred to have her lawyer send a warning letter to Kramer making clear that she would come forward if he did not reform his behavior. When recent allegations against Kramer – apparently witnessed by a roomful of people – came to light, she made good on that warning. 

Johnson and his office respected this woman’s decision about how to handle the matter. They did not go to the authorities and repeat what she had told them. For those of you who aren’t lawyers, doing so could not result in charges against Kramer. What the victim told Johnson’s staffers was hearsay. It would be inadmissible in court. 

So the implication of the headline is that Johnson and his staff should have betrayed this young woman’s confidence and done what she did not want to do. 

To be sure, some might criticize her for not coming forward earlier, but I wouldn’t and no one who wasn’t there should do so either.  I am sure that she made the best judgment that she could – taking into account what happened, the likely effect of her testimony and concern for other women. 

She is an individual who was entitled to decide how she wanted to handle what happened to her without need to have the men in whom she confided try to correct her judgment and “make” her do what she did not want to do. She had to take into account a number of things that no one else could fully appreciate. Respecting her as an individual means respecting her decision. 

The article  quotes a Madison lawyer(and Democratic donor) named Fred Gants stating that employers “have a duty to  follow up” on such situations. Again, the way in which Gants’ comments were reported implies that Johnson may have some legal litigation to report this as an assault even if the victim did not want to. 

I hope that Mr. Gants did not intend to imply that. 

I spent over ten years as general counsel to an employer and had to understand what our obligations were in situations like this. I would be interested to see how any lawyer might argue that an employer has a legal duty to go to police and allege that an adult has been sexually assaulted outside of that employer’s work place by someone who does not work for the employer – particularly where the employer has no information about the assault other than the testimony of the victim and the victim won’t testify. 

In the comments to a post by Purple Wisconsin blogger Jay Miller who argues that the headline on the story is misleading, someone asked what headline would be more accurate. 

Here’s one. 

“Johnson respects victim’s desire for confidentiality.”

Cross posted at Purple Wisconsin

Thursday, March 06, 2014

Blurring the lines between the unusual and the routine

Yesterday morning I woke up around 4 am - or, more accurately, my dogs woke up which basically means I'm out of bed. Two hundred pounds of golden retriever is both an immovable object and an irresistible force.

So while they were, let's say occupied, I padded down to the kitchen and surfed to the local paper.

There I saw a banner headline which reminded me, as if I needed reminding, that the most pervasive bias in journalism is in favor of the story. This is not an accusation; lawyers have their own professional biases.

"Walker blurred campaign, county government lines"

A few paragraphs down, we come to the money line - the one that is supposed to dramatically reveal some unsuspected truth. We are told that "Milwaukee County government became a virtual arm of Walker's 2010 campaign for governor."

My goodness, what did they finally find in those e-mails? I have been writing that the story is, at least from a legal perspective,  not new and not interesting. Could I have been wrong?

Of course, I could be wrong. But not this time. While, to be fair, there are some interesting tidbits in the e-mails - there always will be when one has the chance to eavesdrop on what the correspondents (wrongly) regarded as private conversations.

But there was nothing that you would not expect to see in the e-mails of political appointees working for a public official running for office.

They most decidedly do not show that County government became a virtual arm of Walker's campaign. Only a political naif could believe that and the army of reporters who contributed to the story are anything but naive. Indeed, they have written an article that's stance - its foundational assumption-  is so naive as to reveal a profound type of cynicism. If they really expect us to believe that any of this was unusual, they don't think much of us.

From a legal perspective, using the government as an "arm" of the campaign would be to use government workers and taxpayer funds to do campaign work, i.e., raising funds, buying media, organizing lit drops, etc. Other than her fundraising for a candidate other than Scott Walker, the Rindfleisch e-mails don't show that.

What it cannot mean is that political appointees of the government worried about the impact of what they were doing on the campaign and, at times, reached out to the campaign or received advice about how to  respond to political attacks or frame messages. It cannot mean that decisions were influenced by political considerations.

And yet that's all these e-mails show - with one important caveat that I'll get to later.

The group that contributed to the story is experienced and savvy. They don't believe - for one moment - that elected officials and their staff make decisions about messages and budgets and responses to daily events without regard to politics. I am sure that they are aware that politicians running for office talk to their campaign consultants about how what they are doing is affecting the campaign.

They also know - or they should - that it could be no other way. To make policy, you have to address the politics of that policy. To be an elected official - a representative of the people - you had better take into account what the people are thinking and how they'll react. That won't always look pretty, but most of us continue to believe that democracy is a lousy form of government that beats all the alternatives.

We normally don't see the details of this messiness because no one conducts a John Doe investigation into everything they do and gathers tens of thousands of e-mails that remind us - again - that politics ain't bean bag.

But what about the fact that these e-mails were "secret?" That could be significant and that's one of two reasons why I say that the story is only close to a nothing burger.

Once again, the reporters who worked on the story know that it is not unusual for public officials and their staffs to use private e-mails. They know it because I suspect they get e-mails from sources on a regular basis.

That is not, in and of itself, illegal.  Nothing in the law precludes government employees from using private e-mails to conduct official business. There are good reasons for doing so (not everything they may do during the day is official business) and not so good reasons.

Here's the not so good part. If government employees use private e-mails for official business, they may nevertheless be creating a record that, if it is retained (and there is no obligation to keep it)  is subject to production in response to an open records request. So ... if  records were not produced in response to an open records request, then we've got something to write about.

It might not be a crime, but it would be wrong.

As someone who runs an organization that makes numerous open records requests and litigates open records cases, I do not believe that Democrats or Republicans always (ever?) turn over "private' e-mails used for official business.

But they should.

I chuckled when I read e-mails suggesting that the county executive's office "slow down" responses to open records request to match the tardiness with which Mayor Barrett's office was complying with such requests. I can tell you that some of these agencies - yes, we're looking at you, MPS - are almost blackholes when it comes to record requests.

Of course - and here is where I take back some of my snarky "the Journal Sentinel is channeling Inspector Clemenceau" fun. The e-mails - well, actually only the small fraction that are good enough to write about it - are entertaining.

As any litigator can tell you, the advent of e-mail has revolutionized organizational communications and given us all big fat opportunities to embarrass ourselves.

First, they reduce to writing communications that used to be oral and were never memorialized in anyway. In 1989, if I wanted a quick word with the person in the next office, I picked up the phone or stuck my head in the door. Today, even though I can literally talk to my colleague, CJ Szafir through the wall (we office in a very old house; voices carry), I send e-mails.

Second, e-mail is not like the old interoffice memo. It is quick and it seems personal and private. This leads to candid communication which, our common assumption notwithstanding, does not always reflect what we really think or what we would say if we took thirty seconds to thinks about it. Thus, it create s treasure trove for lawyers taking discovery in litigation or political operatives making open records requests.

So it's a bit of fun, but, so far, not much else.

Cross posted at Purple Wisconsin.

Friday, February 28, 2014

Sanctimony, Part I

I suppose that there is no percentage in this for me but I can't help myself. Here are two bits of silliness in the news.

John Schultze, a lawyer with the Department of Transportation has, essentially, been fired because a few years ago he sent around a joke press release touting legalized prostitution as an economic development idea for Wisconsin. Among the benefits of the plan would be job opportunities for W-2 recipients. The release included the undoubtedly offensive suggestion that men who frequent prostitutes probably prefer transsexuals to transvestites.

Now, I certainly understand that prostitution is frequently exploitation of poor women and that's not funny. I suppose one might say that the the bit about transsexuals was "hetero-normative" and we certainly can't have that.

On the other hand, humor often works by being transgressive in the sense that it flips our normal assumptions about things and treats its subject differently than we normally would. Doing so doesn't mean that the humorist endorses what he jokes about.  In this case, the joke was on the idea that someone would think prostitution in the Dells was a good idea.

I have never met John Schultze and wouldn't know him if he came into my office and started telling me the one about the farmer's daughter and the traveling salesman. The joke was executed in a tacky way and not very funny. It was, as we say these days, "NSFW" and, I assume, a violation of the terms of use of the state e-mail policy.

It was all of that and an offense and against good comedic discernment to boot. But was it a firing offense? Have we really become so incapable of exercising judgment about the multiplying third rails of public conversation that we have to destroy everyone who blunders on to something that makes someone - or at least officially protected someones - uncomfortable ? Have our politicians become so focus grouped that they can't stand up for the decent thing to do? No need to answer the last one.

I don't think the joke he forwarded was very funny and I understand that sending it around at work was not the best thing to do. He deserved a reprimand.

But fire the guy? Give me a break.

Cross posted at Purple Wisconsin

Tuesday, February 25, 2014

"I see guilty people."

I have written columns on the legal issues presented - or more accurately not presented - by the closed Doe investigation of former County Executive Scott Walker's office and the recent release of certain documents gathered as part of that investigation.

Of course, I don't expect Democratic partisans to stop. The latest trope is to hammer Walker for not wanting to answer an endless string of questions. He should, they think, be willing to linger over material that was insufficient for even a District Attorney who embarked on a three year proctological examination of Walker's office to issue charges.

Walker's desire to move on is supposed to be a Jedi mind trick - perhaps learned from President Obama ("this is not the resurgent al-Qaeda you were looking for").

I won't comment on the Governor's media strategy. But I think what's happening here is more akin to people who see the Virgin Mary in an oil stain. Walker's opponents see what they want to see.

What none of these folks ever do is point to anything that might conceivably be a crime or even, for that matter, wrong. Although the authors acknowledged it was not a crime, Sunday's Journal Sentinel tried this one: A publication criticized a Walker plan to privatize the airport. Walker asked his staffers to get out a response to the criticism. Within thirty minutes, they did.

Oh the horror! Oh the humanity!

To repeat. It is not a crime for public officials and their employees to put out messages that promote the official and her policies. It is not a crime even if how they do it is informed by a campaign consultant. It is not even a crime for such people to sometimes attend to campaign matters during the day although they may never raise funds during established working hours or from a public building and it may be a violation of workplace policy to use government resources (like a computer or e-mail system to do so). 

It is also not illegal to have a "secret e-mail" system or private e-mail account. Elected official and their staff often have them. They are usually called smart phones and g-mail. The real question is how they are used.  If someone sits in a government office taking in a government salary while raising money, setting up campaign rallies (as opposed to scheduling the boss), doing media buys and conducting opposition research unrelated to some policy objective, then we have a problem (although even then, the applicability of felony misconduct statutes may be questionable as it was in the caucus scandal.)

So if there were evidence of Walker instructing his people to do that, then maybe there's something to talk about it. But, near as I can tell, all we have - after one of the most thorough investigations of any politician in the history of Wisconsin - is two people engaged in fundraising from a county building without any connection of their activities to Walker.

Here's a thought experiment. Human beings as they are, if we took three years and scoured the laundry of Tom Barrett, Jim Doyle or Tammy Baldwin, do you really think we wouldn't find as much?

If you don't think so, I want you to meet my uncle. He just stole sixteen million dollars from the Kenyan government and would like to park it in your bank account.

Cross posted at Purple Wisconsin