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OSHA Under Fire Over Regulation of Meatpacking in Pandemic

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When the pandemic hit in March, a JBS meatpacking plant in Greeley, Colo., began providing paid leave to workers at high risk of serious illness.

But last month, shortly after the plant was cited by the federal Occupational Safety and Health Administration for a serious virus-related safety violation and given two initial penalties totaling about $15,500, it brought the high-risk employees back to work.

“Now the company knows where the ceiling is,” said Kim Cordova, president of the United Food and Commercial Workers union local that represents the workers, about half a dozen of whom have died of Covid-19. “If other workers die, it’s not going to cost them that much.”

JBS USA said the return of the vulnerable workers in late September had nothing to do with the citation. “It was in response to the low number of Covid-19 cases at the facility for a sustained period of time,” a spokesman said, noting that the company began informing workers of the return in late July.

The JBS case reflects a skew in OSHA’s Covid-related citations, most of which it has announced since September: While the agency has announced initial penalties totaling over $1 million to dozens of health care facilities and nursing homes, it has announced fines for only two meatpacking plants for a total of less than $30,000. JBS and the owner of the second plant, Smithfield Foods, combined to take in tens of billions of dollars worldwide last year.

The meat industry has gotten the relatively light touch even as the virus has infected thousands of its workers — including more than 1,500 at the two facilities in question — and dozens have died.

“The number of plants with outbreaks was enormous around the country,” said David Michaels, an epidemiologist who headed the agency in the Obama administration. “But most OSHA offices haven’t yet issued any citations.”

The disparity in the way OSHA has treated health care and meatpacking is no accident. In April, the agency announced that it would largely avoid inspecting workplaces in person outside a small number of industries deemed most susceptible to coronavirus outbreaks, like health care, nursing homes and emergency response.

Experts concede that with limited resources for inspections, OSHA, part of the Labor Department, must set priorities according to risk. Some, like Dr. Michaels, argue that this makes it more important to issue a rule instructing employers on the steps they must take to keep workers safe. But the agency chose instead to issue a set of recommendations, like six feet of distance between workers on a meat-processing line.

A Labor Department spokeswoman said OSHA already had more general rules that “apply to protecting workers from the coronavirus.”

Around the time of the recommendations, President Trump signed an executive order declaring meatpacking plants “critical infrastructure” to help ensure that they remained open during the pandemic.

Some union officials representing health care workers praise OSHA for its enforcement work. “Given the times we live in, frankly I am thrilled that we’ve gotten OSHA to issue so many citations,” said Deborah White, president of the Health Professionals and Allied Employees, which represents about 14,000 nurses and other health workers in New Jersey and Pennsylvania.

“We see improved health and safety in the workplace because of those citations,” she said. “That’s a win for us.”

But when it comes to meatpacking, many union officials and safety experts said there had largely been a regulatory vacuum, one they worry will lead to another round of outbreaks as cases spike again this fall.

“We’re worried that we’re going to see what happened happen again,” Ms. Cordova of the Colorado local said.

OSHA’s oversight of the meatpacking industry has been in the spotlight in a case filed by workers at a Maid-Rite plant in Dunmore, Pa., accusing the agency of lax regulation.

The suit contended that OSHA had done little for weeks after a worker filed a complaint in April describing insufficient precautions amid an outbreak at the plant, and after other workers filed a complaint in May asserting that they faced “imminent danger” because of the risk of infection there.

When OSHA finds that conditions pose an “imminent danger” to workers, it typically intervenes quickly and asks the employer to mitigate the risk. But in a hearing before a federal judge in late July, a local OSHA official testified that she did not consider the term to be appropriate in the Maid-Rite case.

The official said that because OSHA’s central office had designated all meatpacking facilities to be “medium risk,” the agency would not rush to conduct a formal inspection absent some “outlying” issue. The OSHA area director said that of nearly 300 Covid-related complaints his office had received at the time, it had not deemed any an imminent danger.

The agency inspected the Maid-Rite plant on July 9, months after the initial complaint, finding that many workers were spaced two to three feet apart with no barriers separating them. A Labor Department lawyer said at the hearing that OSHA was still studying the feasibility of requiring the company to space them farther apart.

A Maid-Rite spokeswoman said the company was following guidelines suggested by the Centers for Disease Control and Prevention, “as we have been since they were released.”

OSHA has also been accused by union officials and even company executives of having been slow to visit the two meatpacking facilities that it has cited so far.

Ms. Cordova sent the agency a letter on March 23 asking it to conduct a spot check of the JBS plant and several other workplaces that her union represents. In response, she said, a local OSHA official told her that his office did not have capacity for inspections.

The agency eventually visited the 3,000-worker plant on May 14, after the plant had closed amid an outbreak and then reopened, and several workers had died.

At Smithfield, whose plant in Sioux Falls, S.D., was the other one cited by OSHA, even the company professed frustration over the agency’s inspection constraints.

Keira Lombardo, a Smithfield executive vice president, said in a statement that the company had “repeatedly urged OSHA to commit the time and resources to visit our operations in March and April,” adding, “They did not do so.”

B.J. Motley, the president of the United Food and Commercial Workers local representing workers at the plant, said an OSHA inspection there in mid-May had been thorough, including several dozen interviews. But he said that the company had taken too long to add safety features, and that the penalty was insufficient.

According to Ms. Cordova and Mr. Motley, both plants have provided protective equipment like masks since the spring, but workers often still stand within a few feet of one another.

JBS and Smithfield said they were contesting their citations because the violations applied to conditions at their plants before OSHA had issued guidance. “It attempts to impose a standard that did not exist in March,” the JBS spokesman said.

The companies do not have to take the steps the agency recommended, such as distancing, while they contest the citations, but said their current standards largely exceeded OSHA’s guidance. Both companies said that they had installed barriers between many workers, taken air-purification measures and started virus screening and testing programs. They said that many of the safety measures were in place by late April, and that the rates of infection among their workers were low today.

The Labor Department has defended the penalties for JBS and Smithfield as the maximum allowed under the law for a single serious violation. While OSHA could have cited each plant for multiple instances of the same safety lapses, John L. Henshaw, who served as head of OSHA under President George W. Bush, said this practice was supposed to be reserved for employers who willfully failed to protect workers.

“Either the inspector or the area director or the solicitor’s office — somebody sort of looked at all the evidence and saw what maybe the company was trying to do and did, even though it wasn’t successful,” Mr. Henshaw said.

But Ann Rosenthal, who retired in 2018 as the Labor Department’s top OSHA lawyer after working under administrations of both parties, said the agency could have cited each facility for multiple violations — for different portions of the plant where there were hazards.

“They could well have said that hazards exist on the first floor, the second floor, etc., and could have gotten the penalty over $100,000,” Ms. Rosenthal said. “At least it would have looked like an effort to start to be serious.”

Other experts said the agency could fall further behind in protecting meatpacking workers in the coming months, pointing not just to rising infection rates nationally but to recent changes in the way OSHA regulates employers.

Dr. Michaels, the former OSHA head, cited the agency’s recent reinterpretation of an Obama-era rule that had required employers to report any hospitalization or amputation that resulted from a workplace incident.

Under the new interpretation, outlined last month, an employer is no longer required to report a Covid-related hospitalization within 24 hours of learning about it. Instead, the employer must report only hospitalizations that occur within 24 hours of the worker’s exposure to the virus on the job — timing that may be impossible to determine.

The spokeswoman for the Labor Department said that after initially considering the more expansive interpretation, it had concluded that only the narrower interpretation could be defended in court.

Dr. Michaels said that the regulation was critical for highlighting hot spots and problem areas, and that its weakening was deeply concerning.

“It’s a way to guarantee you have no reports,” he said of the change. “They’re telling employers: ‘Don’t worry. We’re not going to make you do anything.’”

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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