Pay your workers: Stanford should not compound on government’s mistakes

Opinion by Mohit Mookim and Rob Reich
April 11, 2020, 12:28 p.m.

Stanford’s decision to discontinue pay for many subcontracted workers during the coronavirus outbreak is a mistake. We stand in solidarity with these workers — over 130 of whom are being laid off through contractor UG2, based on previous Daily reporting. And we appeal to University leadership to go much further in protecting its workers than the recent announcement that 56 furloughed kitchen workers (not part of UG2) will receive pay continuation through May 3.

The Stanford Students for Workers’ Rights petition asking the University to pay its contract workers has amassed over 5,000 signatures. Over 400 Stanford faculty members signed a petition of their own.

We have signed and endorsed these petitions. However, we want to add another dimension to the case for supporting subcontracted workers: We must take account of larger political dynamics at play and recognize that, at best, philanthropy should play a secondary role in meeting the basic needs of humans — especially in an emergency.

The COVID-19 pandemic is a public health crisis and an economic crisis. By all accounts, Stanford has risen to the challenge of the public health dimension. It was early to impose physical distancing. It was one of the first universities to mandate virtual teaching. And many of its faculty are redirecting their research toward combating the many facets of the pandemic.

What of the economic dimension, however? Here the response for subcontracted workers has been a disappointment. To be sure, the University must be enduring a great deal of financial stress right now, with several revenue streams collapsing at once. Revenue from the Stanford Hospitals surely is down, the loss of room and board from spring quarter is nontrivial, and the summer session appears to be a total wipeout. Finally, the value of the endowment must be down significantly. It is a terrible scenario. After all, the University is an expensive operation, with $11.6 billion in annual costs according to the FY19 Financial Report

But Stanford generated $12.2 billion in operating revenues last year, yielding net gains of $600 million. On top of that, Stanford collected $1.1 billion in donations and saw a $1.8 billion return to its endowment in the 2019 fiscal year. And of course, our $27.7 billion endowment dwarfs that of other universities, many of which have committed to paying all contracted workers — including USC, University of Chicago, Duke, Penn, MIT and Northwestern.

What would be required to follow in the path of our peers?

It’s striking how marginal the financial burden to the University would be: The estimated cost of paying the 130 subcontracted workers through spring quarter is $1.71 million. At $1.1 billion in donations, Stanford raised more than $3 million every day last year. While the financial outlook of the University is newly bleak, Stanford should be willing to pay one half of one day’s philanthropic haul to protect its most vulnerable service workers during a once-in-a-century pandemic.

Stanford has the resources, so it should use them to pay all of its workers. Nevertheless, the ideal response would not be left in the hands of companies or nonprofits to do the right thing — including universities with big endowments. In times of crisis, financial security should be provided by government. 

The latest unemployment figures indicate that 1 in 10 Americans are out of work. Many Americans live paycheck to paycheck — a study from February 2020 suggests nearly half the nation — so sweeping action is required to keep millions of people afloat.

Realistically, only government can appropriately respond to the vast scope of the problem. We know that employers large and small are struggling to make ends meet, just the same as families. Government can provide support to businesses and nonprofit organizations to curb the number of jobs lost, as economists have suggested. Or government can provide broad, comprehensive relief for contractors, gig workers and employees who are losing work, struggling to pay the bills and may need healthcare. Or, hopefully, both. 

The U.S. Congress passed the CARES Act on March 27 with strong bipartisan support. In addition to support for businesses, the CARES Act increases the weekly benefit of unemployment insurance by $600 over the next four months. Many adults will also receive a $1,200 unconditional cash grant at some point in the next few months. (This is on top of the maximum of $450 per week a laid-off worker can receive from California unemployment benefits.)

Though it is welcome, the CARES Act is not enough to protect working families, especially in locations with an exceptionally high cost of living like the Bay Area. The social safety net was never particularly strong in the United States, and right now the political climate makes a broad expansion of social benefits unlikely. Perhaps with a different presidential administration and congressional leadership we could expect a political response commensurate with the scale of the problem, but for now, we resort to asking the next most capable institutions to step up: employers themselves. 

Employers have special responsibilities to their own workers — subcontracted or otherwise — and in a crisis, they should protect those workers to the best of their capacity.

The basic nature of this responsibility to workers does not depend on the relative wealth of the employer. A well-endowed, large research university like Stanford has an obligation to its subcontracted workers, and so too does the neighborhood mom-and-pop art shop. As the recent petitions make clear, Stanford’s relative wealth gives it the capacity to fulfill its responsibility to contract workers. (What’s more, according to a simulator created by the American Council of Education, Stanford University also stands to receive more than $7 million from the CARES Act.)

But workers with more cash-strapped employers are no less deserving of an assurance of continued financial security, which is why — just as we ask Stanford to do what is within its capabilities — we must keep pushing for the government to act to the full extent of its capabilities as well. This could look like larger bailouts for families, not businesses, and providing universal access to debt-free health care.

What should we do when the federal government responds inadequately and Stanford refuses to pay its subcontracted workers? Our first task is to act politically and to express our opposition. Beyond this, we are left with acts of individual charity — the strategy of last resort. Student activists leveraged this strategy to raise an impressive $230,000. Unfortunately, this sum is far from enough. Charity is no substitute for justice.

The current pandemic has laid bare the unpreparedness of U.S. public health infrastructure and the injustice of our social safety net for vulnerable populations. Once the crisis passes, we must do whatever we can to strengthen both. In the meantime, in the midst of emergency, Stanford should not turn its back on members of our community. 

Mohit Mookim ’18 is a researcher at the Center for Ethics in Society. He majored in philosophy and public policy.

Rob Reich is a professor of political science and director of the Center for Ethics in Society.

Contact Mohit Mookim at momookim ‘at’ and Rob Reich at reich ‘at’

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