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Post-Katrina Aftermath: How the Labor Department Fell Down on the Job

The nation's worker protection agency has been in slow decline for a generation, the consequences of which were evident in New Orleans, where predatory reconstruction employers were allowed to thrive. The conclusion of a two-part series.

| Wed Jul. 18, 2007 3:00 AM EDT

After Hurricane Katrina pummeled the Gulf Coast in late August 2005, tens of billions of dollars in federal and private contracts (the largest of which went to companies like Bechtel, Halliburton, and its subsidiary Kellogg, Brown, and Root) were dispatched to New Orleans to fund a clean-up effort the president said would require "a sustained federal commitment to our fellow citizens." That, of course, never came to pass.

Thanks to its initial disastrous rescue effort, today, the Federal Emergency Management Administration (FEMA) receives most of the blame for the chaos in New Orleans. But it wasn't just FEMA. The anatomy of the failed reconstruction is complicated, but understanding what went wrong requires examining the Department of Labor (DOL).

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The DOL has been in decline for a generation, suffering from long-term decreases in funding even as the number of people whose livelihoods it is supposed to protect has grown. The problems have only been exacerbated throughout the six-and-a-half years of the Bush administration. But the consequences have never been more appalling than in New Orleans, where the failure of high-level DOL officials to require proactive oversight of reconstruction employers led to an endless string of abuses, which were detailed in part one of this series. After Katrina, employers, unfettered by rules, became less concerned with the task at hand than with profiting at the expense of workers without protection. They became predators in a lawless environment. Part two of this series examines how the DOL enabled such lawlessness.

What separates the failures at FEMA from the failures at the Department of Labor was the unexpected violence of the hurricane. FEMA should be, by definition, prepared to tackle serious disasters rapidly, and, as it failed to quickly organize, it deserves the criticism it has received so widely. But Katrina was an unusually punishing disaster, and even a perfectly smooth federal response wouldn't have been able to prevent the storm from causing extraordinary damage and claiming a vast number of lives.

By contrast, the abuse of workers, at the hands of companies charged with rebuilding New Orleans, grew out of two preventable—and intertwined—circumstances. Many of the incidents resulted directly from policies written at the highest levels of government. Most others stemmed from the reckless milieu that those policies created.

That's not to suggest that pre-Katrina labor standards were flawless, or even decent. Louisiana, like many other Southern states, had unusually weak state-level protections long before its biggest city was destroyed. But even small adjustments in priorities at the federal level could have forestalled employer abuse.

"There was a significant way it could have been mitigated," said Catherine Ruckelshaus, who directs litigation at the National Employment Law Project in New York City. "When large amounts of federal dollars are put in a region, they come attached with pretty basic standards: environmental standards, labor standards, community-impact standards. In New Orleans there just weren't any."

Instead of imposing any standards, the federal government upended many of the most sweeping federal and state worker protection laws, in some cases by fiat. The administration fully suspended the 1931 Davis-Bacon Act, which requires almost all federally funded public works projects—whether administered by government entities or private firms—to pay its workers the prevailing wage. (If the DOL disagreed with this suspension, it didn't voice its dissent publicly.) The DOL chose not to enforce Occupational Safety and Health Act (OSHA) protections.

Six months after the hurricane, Davis-Bacon was restored. And yet all employers whose contracts were awarded before that date—the vast majority—were allowed to continue to ignore the wage requirement as if the restoration had never happened.

Understanding why the nation's most powerful labor-advocacy organization stood by while policies like these were implemented—and in some cases encouraged them—requires understanding the Department of Labor as an agency in both long- and short-term decline, currently headed by managers with a history of subverting labor protections.

A 2003 study by Annette Bernhardt and Siobhán McGrath of New York University's Brennan Center for Justice found that the budget for the DOL's Wage and Hour investigators—the officials who are tasked with protecting workers from exploitation—decreased by 14 percent between 1975 and 2004. Over the same period of time, enforcement actions decreased by 36 percent. Meanwhile, the number of workers and establishments covered by provisions that fall within the Wage and Hour division's purview increased 55 percent and 112 percent respectively. Under President Bush, the decline has become more pronounced. This year, the DOL's Wage and Hour enforcement budget is 6.1 percent less than it was before Bush took office in 2001.

On June 26, Rep. Dennis Kucinich (D-OH), chairman of the Domestic Policy Subcommittee of the Government Reform and Oversight Committee in the House of Representatives, convened a hearing to investigate the origins of the abuses perpetrated by subcontractors and other employers against those working to clean up New Orleans.

One of the men who testified at the hearing was Paul DeCamp. When Katrina struck, DeCamp, then a senior policy advisor to the Assistant Secretary of Labor for Employment Standards, became one of the architects of the DOL response. Last summer, he became administrator of the Wage and Hour division. While in the private sector, he worked as an attorney with Gibson, Dunn & Crutcher, where he co-authored a white paper that suggested a variety of ways in which employers could legally mitigate the provisions of the Fair Labor Standards Act (FLSA)—a fundamental worker and wage protection law which is one of the strongest on the books.

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