Inequality, Opportunity and Poverty

Published — December 24, 2018

Our top stories in business and politics this year

Ajit Pai, chairman Federal Communications Commission, prepares to testify about his budget before a Senate Appropriations subcommittee on Capitol Hill in Washington, Thursday, May 17, 2018.


It’s hard to miss the fact that 5G is coming. From online messaging to ads plastered across subway stations in cities across the U.S., the pitch for faster internet is here.

But it comes at a cost.

This year, our business team looked at how local governments are losing the power to regulate the infrastructure telecommunications companies want to provide. 

We also dove into the bogus basis for net neutrality rules, the new tax law and how the noncompete clauses once reserved for executives are now being rolled out to workers in low-wage or middle-income jobs, making upward mobility more difficult. 

More of our top business stories this year:  

5G wireless pits cities against telecoms and their friends in the FCC

Small cells are the next generation of wireless technology that telecommunications firms and cell-tower builders want to place on streetlights and utility poles throughout neighborhoods nationwide. The small cells come with a host of equipment, including antennas, power supplies, electric meters, switches, cabling and boxes often strapped to the sides of poles. Some may have refrigerator-sized containers on the ground. And they will be placed about every 500 or so feet along residential streets and throughout business districts.

Telecom companies say the cells will be both unobtrusive and safe, and insist the technology is needed to bring faster internet speeds required by a more connected world. But residents like King and some wireless experts say the cells could reduce property values, pose safety risks and forever sully the appearance of cities — if not properly regulated.

Cities and counties like Montgomery figured they could put proposals for small cells through the usual zoning, permitting and citizen input processes that other cell towers and most brick-and-mortar proposals go through. But they may be mistaken. Politically connected telecommunications giants like Verizon Communications Inc., AT&T Inc. and tower-operator Crown Castle International Inc. say that sort of local regulation isn’t appropriate for these sleeker, smaller cells, and they want to cut local governments’ say in the process. They contend they have the law on their side, but perhaps more important, they’ve got powerful friends in state capitols — and in the corridors of power in Washington.

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More in our 5G series: 

FCC says small cells will close the digital divide. Most say they won’t

Many local officials, engineers and wireless consultants contend that the changes Pai advocates won’t do anything to close the digital divide. What they will do, these critics charge, is increase profits for the wireless industry, which wants to cash in on a 5G market that is estimated to grow to $250 billion in annual service revenue in seven years.

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Residents worried about small cell safety have been waiting years for federal guidance

In town halls and city council chambers across the country, local officials are facing the wrath of residents fearful of the next wave of wireless communications soon to sweep the nation.

They worry that the new technology — which will require hundreds of thousands of so-called small-cell antennas placed throughout neighborhoods — could cause adverse health effects because the antennas, located sometimes just a couple dozen feet from houses, will bathe their communities in round-the-clock radio frequencies.

Local governments don’t have any legal authority to block the deployment of the small cells based on health effects, and science on the subject is contradictory. But to soothe their constituents’ concerns, municipal officials are looking to Washington to do what it can: Update the federal government’s decades-old limit for safe exposure to radio waves so they can show residents they are following up-to-date safety guidelines.

Angry mayors and city council members have been waiting for such an assessment for five years now, and still aren’t sure when they’ll get it, if ever, or why it’s taking so long. The Federal Communications Commission, which determines the limits for safe radio-frequency exposure, says it is still working on the exposure limit and declined to provide a date for when it expects to release an updated standard. But the federal health agencies the FCC relies on to set a new standard say little-to-no research has been done.

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Connecticut in Crisis: How inequality is paralyzing ‘America’s country club’

Main Street in Bridgeport, the largest city in Connecticut. Jared Bennett/ Center for Public Integrity

For decades, Connecticut coasted fat and happy off defense firms, insurance companies, and a handful of super-rich financiers who came for the manicured lawns and to escape the higher taxes of neighboring New York and New Jersey. But the good times have ended, and Connecticut has been caught flat-footed.

Blue chip companies like General Electric have either left or are threatening to leave. A yawning budget deficit continues to loom over the state, amplified by some of the nation’s most glaring economic inequality. Greenwich, home to hedge funders and Manhattan corporate titans, and the Norman Rockwell suburbs of Westport, New Canaan and Darien share few priorities with Hartford, New Haven and Bridgeport, gritty cities struggling with searing poverty and fiscal disaster. Connecticut’s political leaders must choose between what seem like equally rotten options: cut services, and push more burden onto the urban poor, or hike taxes, and risk repelling both the suburban rich who pay much of the freight and new businesses that might consider moving here. Put simply, Connecticut is in a bind with precious little room to maneuver.

Connecticut’s troubles are extreme but hardly unique. The recovery that has entrenched Connecticut into the haves and have-nots has been unequal in other regions as well – from Florida to California and down to Texas. As the stock market climbs but wages remain relatively flat, the Constitution State serves as a troubling bellwether of national priorities that seem to favor wealth creation for the few before investments in the broader economy.

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The basis for killing network neutrality rules is bogus, studies say

When the nation’s top telecommunications regulator decided to do away with the widely popular “network neutrality” rules that governed the Internet, his justification was that the regulations were slowing deployment.

But a new analysis by the Center for Public Integrity plus other factors cited by industry experts show that reasoning to be shallow at best and ridiculous at worst.

Most pointedly, while wireline deployment did slow while network neutrality rules were in place, it was due to at least one reason that had nothing to do with regulation: carriers were running out of potential customers, according to a Center analysis of Census and FCC data.

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How Trump’s tax cuts favor whites over minorities

When President Donald Trump last year signed into law the biggest tax overhaul in three decades, many experts concluded it was clear that most of the cuts went to the wealthy. Less clear was that the cuts disproportionately favor whites over minorities — a gulf that will likely worsen a centuries-old economic divide between the races.

The Tax Cuts and Jobs Act, signed by Trump last December, cut the income tax rates across the board for large corporations and many small businesses and partnerships. Individuals received tax preferences in the form of a temporary increase in the child tax credit and the standard deduction. They also received temporary reductions in individual income tax rates.

But over the next few years, the cuts become less generous for those earning the least — and that disproportionately affects minorities far more than whites, according to tax experts and a Center for Public Integrity analysis using Census Bureau data.

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The investment industry threatens state retirement plans to help workers save

Employees at the Annastasia Salon in Portland, Oregon, now have the option to save for retirement through the state’s OregonSaves program. Screenshot/ OregonSaves

Kono is one of the 55 million Americans — about half of the private-sector workforce — who don’t have access to an employer-sponsored retirement plan. Research shows that workers are likely to save more for retirement using such plans than using individual IRAs. The majority of those without a work-based plan option are people who tend to need retirement help the most: those working for small businesses in the low-wage service and hospitality sectors.

Since 2015, Oregon and four other states ­­— California, Illinois, Connecticut and Maryland — have set up these so-called “auto-IRA” programs overseen by the state. Nine more states are considering similar programs this year, among them New York, Missouri and Pennsylvania.

But the investment industry is standing in the way, aggressively deploying trade groups and raising the specter of legal threats to stop the proliferation of these plans. 

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Millions could lose low-cost phone service under FCC reforms

Low income residents, including veterans and seniors, apply for free phone service from Assurance Wireless in San Francisco, Calif., Thursday, April 18, 2013. Alison Yin/AP Images for Assurance Wireless

One of more than 7 million low-income households threatened to be disconnected from their phone service under a government proposal to curtail the federal subsidy program.

Federal Communications Commission Chairman Ajit Pai, appointed to the post by President Donald Trump, wants to remove a majority of wireless providers that participate in the Lifeline program, in an attempt to eliminate “waste, fraud and abuse.”

If such a move were made, the “chaos would be magnificent,” said David Dorwart, the chairman of the National Lifeline Association (NaLA), a trade organization that represents Lifeline businesses.

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Why Mark Zuckerberg’s Senate hearing could mean little for Facebook’s privacy reform

Facebook has faced intense criticism after reports that Cambridge Analytica, a political consulting firm tied to President Donald Trump’s 2016 campaign, accessed the personal data of 87 million Facebook user accounts. Zuckerberg, long reluctant to personally deal with Washington, agreed to come to the capital to testify before a joint hearing of the Senate Judiciary and Commerce committees and at the House Energy and Commerce Committee. To get ready, Zuckerberg was prepped in part by Washington law firm WilmerHale, which specializes in data security and privacy law, according to The Wall Street Journal.

Published reports indicated Zuckerberg’s plans to apologize for the privacy lapses and fake news that led to election meddling, and offer proposals for how the company plans to bulk up protection of users’ privacy. Last month, Zuckerberg suggested in a CNN interview that some government regulation is not out of the question, and offered ideas about what type of rules Congress could pass.

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Noncompete clauses: They’re not just for executives anymore

After the recession, when jobs were hard to come by and workers had less leverage to negotiate the terms of their employment, noncompete clauses started appearing in contracts for workers in low-wage or middle-income jobs like sandwich makers, and they remain a road block for everyone from hair stylists to security guards and house cleaners. The scope of their reach is difficult to determine because many workers don’t realize they’ve signed a noncompete clause until leaving a job. And though many courts are reluctant to enforce overly broad agreements, few low-income workers have the resources to legally challenge them. Several states and localities have attempted to craft legislative solutions, but fixes have been uneven or slow to take hold.

Full employment, economists predicted, would usher in a world where workers, no longer desperate for a job, could shop around for better pay or working conditions. As workers flexed their new bargaining muscle, wages would rise and working conditions would improve because employers would face increasing pressure to find and keep talent — or so the theory went.

But though unemployment fell to 3.7 percent in September, that scenario hasn’t fully played out. And one reason, recent research suggests, is that restrictive clauses in contracts have limited workers’ mobility and their ability to advocate for higher pay.

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Congress snuck dozens of tax breaks into the budget deal. Here’s where they went.

“Tax extenders” are overlooked, underpublicized and painfully arcane, known by a name that doesn’t even make sense — they should be called “tax cut extenders,” because extending the duration of temporary tax cuts is what they do.

In practice, tax extenders are legislative favors, often slipped into folds of federal bills notable for funding bigger-ticket items — such as military programs, disaster relief, infrastructure overhauls.

And despite President Donald Trump’s promise to drain the Washington “swamp,” elected officials and lobbyists conceived a new round of extenders, where they became law inside the bloat of last month’s 652-page budget bill with little public input.

Center for Public Integrity investigation of more than 30 of these provisions reveals they benefit narrow special interests that know how to work the system — from race horse owners to StarKist tuna canners to connoisseurs of two-wheeled electric vehicles.

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