In at least two instances, the Santa Clara County Democratic Central Committee United Democratic Campaign has accepted large checks from influential state labor unions, but failed to report those contributions in a timely manner. The potential violations are easy to spot because the party’s disclosure reports for receiving funds don’t match the unions’ disclosure reports for giving money.

On Sept. 15, the State Building and Construction Trades Council of California PAC distributed $153,000 to various Democratic campaign committees. All of the contributions were reported on a late disclosure report, Form 497, filed on the same day with the Secretary of State’s office.

Among the contributions was a $25,000 check to the Santa Clara County Democratic Party. However, that contribution wasn’t reported by the Democratic central committee until Oct. 7, more than three weeks after it was sent. In the 90 days preceding an election, state law requires both parties in a campaign transaction of $1,000 or more to file a Form 497 disclosure report within 24 hours.

The $25,000 from the Construction Trades Council isn’t the only contribution filed late by the party. A second contribution of $34,000 from the American Federation of State, County and Municipal Employees, AFL-CIO (MPO) committee was disclosed by the union on Sept. 26, but not reported by the Santa Clara Democratic Party until Oct. 2, nearly a week late.

Ultimately, those funds helped fund two State Assembly candidates running in targeted seats. On Oct. 14, the Santa Clara County committee transferred $65,000 to Tim Sbranti and $25,000 to Ken Cooley. Both Democrats are running in competitive races and have relied on union money transferred through county central committees.

Santa Clara Democratic Party denies wrongdoing

The Santa Clara County Democratic Party has denied any wrongdoing, claiming it is in compliance with state law.

“The two contributions you referenced were received and reported timely and in compliance with all campaign finance rules and regulations,” said Steve Preminger, chairman of the Santa Clara County Democratic Party. “Both contributions were received directly by our accounting firm, Henry Levy and Co., and reported within 24 hours of receipt.”

When pressed for an explanation for the discrepancies, Preminger said, “I repeat that when a check is received, the proper filing takes place. It is that simple.”

It is logical that a recipient campaign committee will lag behind the contributor in filing a disclosure report. Checks must go through the mail and be processed by the campaign treasurer. In most circumstances, the processing time takes a few days.

Indeed, the other six campaign committees that received contributions from the State Building and Construction Trades Council of California on Sept. 15 reported the funds within 10 days. The Democratic Central Committee of Marin, Democratic Party of Mendocino County and Sacramento County Democratic Central Committee, which received checks from the State Building and Construction Trades Council of California, reported their $25,000 contributions on Sept. 18. Assemblyman Rob Bonta, who received $3,000 on the same transaction report, also reported the check on Sept. 18.

The Stanislaus County Democratic Central Committee claimed to have received the funds on Sept. 19, and thus, used the weekend to report its contribution on Sept. 22.

Only the Los Angeles County Democratic Party pushed the limits of “processing time” by reporting its $25,000 contribution on Sept. 24, nine days after the contribution was made.

Santa Clara County Democratic Party pattern of questionable campaign behavior

So, why did Santa Clara County Democrats wait three weeks to report their pass-through union contributions to Cooley and Sbranti?

The Santa Clara County Democratic Party has a history of testing the limits of campaign finance laws. Last year, San Jose Inside, the best independent news source in Silicon Valley, reported the county party “became the target of a FPPC investigation for coordinating with the South Bay Labor Council” to funnel money to Cindy Chavez’s campaign for county supervisor. The coordination was revealed “after identical mailers were sent out by each of the three entities,” according to San Jose Inside.

In recent weeks, the Fair Political Practices Commission has targeted several Republican legislative committees for questionable transfers between political party committees. Yet a spokesman for the state’s political watchdog said it is not currently investigating the Santa Clara Couny Democratic Party.

“If we are made aware of any discrepancies by the Secretary of State’s office, as does happen, or if anyone files a complaint, then we will look into the matter,” said Jay Wierenga, FPPC communications director.

Maybe that complaint could come from Santa Clara County Democrats. After all, Santa Clara Democratic central committee members routinely decry “money in politics.”

“I gave a well-attended talk on how money in politics is the single biggest obstacle to legislation dealing with the climate crisis,” Craig Dunkerley, a member of the Santa Clara County Democratic Central Committee, wrote in a recent post on the party’s blog. “Being on a train gave rise to the useful metaphor of parallel tracks, representing the need to work on fixing the money-in-politics problem along with whatever else anyone in the audience might rate as their #1 priority.”

Mismatched Reports: State Building and Construction Trades Council

Mismatched Reports: AFSCME

By Katy Grimes

Occasionally the Legislature gets it right and kills a bad bill. Today may be one of those days.

By Wayne Lusvardi

Proposition 31 was wiped out by voters yesterday.  The Government Performance and Accountability Act got just 39 percent of the votes, with 61 percent against.

Part of the likely reason it lost big was that it was undoubtedly the most confusing voter initiative on the ballot.  Factions of both Democrats and Republicans opposed and endorsed it.

The California Republican Party endorsed it but the California Federation of Republican Women opposed it.  The American Federation of State, County and Municipal Employees and the California Teachers Association opposed it.

But the liberal leaning think tank California Forward, headed by former Democratic state Assembly Speaker Robert Hertzberg and funded by European billionaire Nicolas Berggruen, were its main supporters.

The official position of the Libertarian Party of California was opposed to Proposition 31.  Interestingly, the California Green Party lined up with Libertarians in opposing it.  However, the proposition has appealed to many libertarian-leaning organizations, such as the Lincoln Club of Orange County and the Reason Foundation.

Voters that may have been looking for who supported or opposed Prop. 31 as a guide to how to vote were often confused.  The typical guides of party label did not serve as reliable.  This indicates that political parties in California have a decreasing hold on voters, despite the emergence of a de facto Fusion Party in California.

Confusion

The confusion by the Republican Party was perhaps typical of the party’s problems in California.

Moreover, few recognized that, if enacted, Prop. 31 would make it nearly impossible to make any substantial cuts to the state budget, including to public pension plans.  Neither would it limit the use of bonds or voter initiatives to fund local public projects.

Until later, many supporters did not look at the fine print that created a new unelected layer of local government — called Strategic Action Plan Committees — that would regionalize revenue sharing in California.

Prominent author Stanley Kurtz wrote an article in National Review, “California’s Awful Prop.31: Is This Your Future?”, and came out against California Proposition 31. He cited my articles here at CalWatchDog.com.

Then Republicans began to take notice.  The question then became: Could  the collective Republican mind be changed after the party had officially supported it at their annual convention? Given that Prop. 31 lost, apparently that happened.

In its September newsletter, the California Federation of Republican Women reconsidered its prior position on Proposition 31 and reversed its position to oppose it.  This was partly in response to our article “California Prop. 31 Will Regionalize State Revenue Sharing.”

Prop. 31 did have some good points that should be brought back in future reforms, such as two-year budgeting. But this time around, voters saw that the bad outweighed the good.

By John Seiler

It seems that no bad idea goes unpassed in the California Legislature. Yesterday the Assembly Labor and Employment Committee passed AB 1439, by Assemblyman Luis Alejo, D-Watsonville. It would increase the minimum wage in California by the rate of inflation, while preventing decreases during times of deflation. Currently, California’s minimum wage is $8 an hour, 75 cents above the the federal minimum of $7.25.

But copious research shows that minimum wage laws destroy the jobs of just those workers Alejo and others want to help: black and Latino minorities.

Black economist Walter Williams has pointed out how a high minimum wage “cuts off the bottom rung of the ladder” of employment. Few people stay for long at the minimum wage. Once they prove competence and show up for work on time, employers usually raise their wages above the minimum, or risk losing such good workers to other employers.

What the minimum wage does is make low-level jobs prohibitively expensive for employers. The employers then just don’t hire people, farm out the work to India or China, move the whole company to another state or country or go out of business. Alejo does not propose putting a shotgun to employers’ heads and forcing them to hire people at his new minimum wage.

Williams wrote a classic study on this in 1977, “Government Sanctioned Restraints that Reduce Economic Opportunity for Minorities.”

He pointed out, for example, that if someone’s labor value is only at the minimum wage, but not higher, then raising the minimum wage means that person will lose his job.

Youth and minorities

Williams wrote that two groups of people especially are affected by the minimum wage: youngsters, who have little work experience; and minorities, who may have suffered discrimination, or went to bad schools. And most affected of all are minority youngsters. “These workers are not only made unemployable by the minimum wage, but their opportunity to upgrade their skills through on-the-job training also are severely limited,” he wrote.

He noted that youth employment always is higher than general unemployment, even during prosperous times. And black youth unemployment has been especially bad; it “has ranged from two to three times the unemployment for white youths.” Black youth unemployment, he reported in 1977, in some areas is as high as 50 percent.

That’s one dismal statistic that hasn’t changed in 35 years. The Bureau of Labor Statistics reported that today black youth unemployment remains at 50 percent.

But it wasn’t always that way. Williams pointed out that in 1948 black youth unemployment actually was 9.4 percent —  less than the 10.2 percent of white youth. That situation held until the late 1950s.

So, what happened in the late 1950s to cause the crash in jobs for blacks, especially black youngsters?  Was it racism? It can’t be that, Williams wrote, because racism was a lot stronger in 1948, when Jim Crow laws segregated blacks in the South; and in the North, tacit discrimination was rampant. The great Jackie Robinson debuted as the first black player in Major League Baseball only in 1947. Race relations improved in the 1950s.

The real culprit: the minimum wage was hiked to freeze out black workers, in the late 1950s going up 33 percent, to $1 an hour.

As Williams described it, “The minimum wage law gives firms effective economic incentive to to hire only the most productive employees which means that firms are less willing to hire and/or train the least productive which includes teenagers and particularly minority teenagers. But holding all else constant, such as worker productivity, such a wage law gives firms the incentive to indulge in whatever preferences that they may hold.”

For example, a company might be able to hire 1) a white youth who went to a decent public school at $9 an hour; or 2) a Latino youth who went to a wretched public school, but can be trained, at $8 per hour, the current minimum wage in California. So the company saves some money by hiring the Latino, puts some effort into training, and gets a good employee. But if the minimum wage is hiked to $9 an hour (or higher) by Alejo’s AB 1439, then the Latino youth never will be hired. The white youth will be hired instead because he went to a decent school and doesn’t require training.

That’s how insidious minimum-wage laws are in destroying jobs. As Williams wrote, it allows a prejudiced employer to “discriminate at zero cost.”

Paying for discrimination

But if there’s no minimum wage, then what about discrimination? What if an employer doesn’t like Latinos or blacks? Then it’s going to cost him. With no minimum wage, he’ll have to pay the higher wage to the white worker, instead of the lower wage to the minority worker. He’ll lose money.

By contrast, his competitor in the same business who isn’t prejudiced, is happy to gain a competitive edge by hiring, and training, minority youth. That competitive edge might be just what it takes for him to survive in the dog-eat-dog world of competitive business, while his prejudiced competitor goes broke.

Unfair?

Is it unfair to the minority youth who’s paid less? Yes. As President John F. Kennedy said, “Life is unfair.” But what’s worse: a job that pays less but delivers crucial job experience and a slot on a resume — or having no job at all because the minimum wage prevented one from being hired? Obviously, working is better. And as mentioned earlier, a first, low-paying job rarely is the last job one will hold.

Williams wrote that it’s “offensive to the sensibilities of many people” that some workers are paid less just because of their race or color. But he then noted that in South Africa, which still suffered under the full force of apartheid in 1977, white racist unions supported minimum wage laws and “equal pay for equal work” laws for blacks precisely to freeze out the black workers.

And Williams pointed out that it has been unions in America that also have backed minimum-wage laws to keep minorities from competing with white workers. That hasn’t changed. AB 1439 is supported by the American Federation of State, County and Municipal Employees; the Laborers’ International Union of North America, Locals 777 & 792; and the National Association of Social Workers, California Chapter.

Back in 1977, Williams warned that increasing the minimum wage, which happened in 1978, would keep high unemployment for minority youth, discourage such youth from pernanently entering the work force by cutting off that “bottom rung” of the crucial employment ladder, create more dependency on government programs and “some of these youth will turn to various forms of anti-social behavior.”

Shortly after the minimum wage was hiked, despite Williams’ warning, the crack epidemic hit America’s inner-city youth. And even today, as noted earlier, black youth unemployment remains at 50 percent.

If AB 1439 is passed, it could raise that number even higher.